Tech Brief: Thune Sees Republican-Led FCC as Leverage for Net Neutrality Legislation

Washington Brief

  • Senate Commerce Committee Chairman John Thune (R-S.D.) said the threat that a Republican-led Federal Communications Commission could nullify the agency’s net neutrality rule may bring congressional Democrats to the negotiating table on net neutrality legislation. (Morning Consult)
  • The Senate confirmed Mike Pompeo to be the next director of the Central Intelligence Agency in a 66-32 vote, and he was later sworn in by Vice President Mike Pence. His confirmation vote, initially scheduled for Friday, was delayed by Senate Democrats who voiced concerns over government surveillance policies. (The Washington Post)
  • Republican FCC commissioner Ajit Pai said he’s been selected by President Donald Trump to be 34th chairman of the FCC. Pai does not require immediate Senate confirmation for the post since he’s already a commissioner. (Morning Consult)

Business Brief

  • Yahoo Inc. Chief Executive Marissa Mayer said the timeline of Verizon Communications Inc.’s proposed $4.8 billion acquisition of Yahoo is being pushed back from the first quarter to the second quarter of this year. Yahoo continues to deal with the fallout of two massive hacks that compromised hundreds of millions of user accounts. (CNET)
  • The European Commission said Amazon.com Inc. has offered to settle an EU antitrust investigation by pledging not to enforce controversial clauses in its e-book deals with publishers for five years. The commission said it would need publisher feedback before determining whether to close the case without imposing fines or declaring antitrust law violations. (Bloomberg News)
  • Samsung Electronics Co.’s fourth-quarter profits were its highest in three years. Despite the safety recall and discontinuation of its flagship Galaxy Note 7 smartphone, strong sales in display panels, memory chips and other components made up the difference. (The Wall Street Journal)

Chart Review

Events Calendar (All Times Local)

Tuesday
Senate Commerce Committee markup 10 a.m.
New America event on the internet’s political future 12 p.m.
National Association of Broadcasters, Capital Assets Conference 12 p.m.
Telecommunications Industry Association panel on transportation communications 3:15 p.m.
Former FCC Chairman Wheeler speaks at Harvard 4 p.m.
Wednesday
National Association of Broadcasters, Capital Assets Conference 8:30 a.m.
Commerce Dept. spectrum management advisory committee meeting 1 p.m.
Thursday
USTelecom event on broadband investment 12 p.m.
FCBA meeting on White House’s cybersecurity report 12:15 p.m.
Friday
R Street event on Airbnb, rental sharing economy 8 a.m.
FCC Consumer Advisory Committee meeting 9 a.m.

 

General

Samsung Electronics Profit Growth Driven by Component Sales
Eun-Young Jeong and Timothy W. Martin, The Wall Street Journal

Samsung Electronics Co. recorded its highest operating profit in more than three years, as booming sales of components helped the company shrug off last year’s recall of 3 million Galaxy Note 7 smartphones. On Tuesday, Samsung said its fourth-quarter net profit rose sharply to 7.09 trillion Korean won ($6.1 billion).

Toshiba board to approve plans to split off chip business on Friday: source
Taro Fuse, Reuters

Toshiba Corp’s board will meet on Friday to approve plans to make its chip business a separate company and hopes to raise more than 200 billion yen ($1.8 billion) by selling a 20 percent stake in it, a person with direct knowledge of the matter said. The sale is part of the conglomerate’s efforts to avoid being crippled by an upcoming multi-billion dollar writedown for its U.S. nuclear business, although it would not completely offset a charge that other sources have said may exceed $4.4 billion.

Alphabet Gets Robotics Pioneer Back After Her Stint With Apple
Mark Bergen, Bloomberg News

Alphabet Inc. re-hired Yoky Matsuoka to oversee technology at its Nest Labs Inc. smart home unit, snapping up the robotics and artificial intelligence expert after she recently left Apple Inc. As Chief Technology Officer, Matsuoka will work closely with Nest’s engineering and product teams to define a long-term technology roadmap.

Trump Is Taking Action Without Sharing Basic Information With the Public
Samantha Cole, Vice News

On Friday evening, Donald Trump issued his first Executive Order as president, a move “minimizing the financial burden” of the Affordable Care Act. Nearly three days later, the text of the order hadn’t been posted to the official White House website or to the Federal Register, an official record of the actions of the executive branch and its agencies.

Obama’s Tech Surge Is One Effort Trump May Not Reverse
Brad Stone, Bloomberg News

As Silicon Valley girds for a possible rollback of net neutrality, the H-1B visa program and other prized policies, here’s a bit of potentially favorable news: The administration of U.S. President Donald Trump seems to be ready to embrace the “Obama tech surge,” the organized insertion of technologists and modern digital tools into the highest branches of the federal government. Early this month, leaders of the U.S. Digital Service and other tech teams under Barack Obama met with three members of the Trump transition: Reed Cordish, assistant for intragovernmental and technology initiatives; Gerrit Lansing, chief digital officer at the Republican National Committee; and Dirk Eyman, the RNC’s director of network operations.

Dollar Rebounds With Oil as Pound Falls on Brexit
Cecile Gutscher, Bloomberg News

In Europe, the Stoxx 600 Index had added 0.3 percent by 5:39 a.m. ET with miners leading the gains. S&P 500 futures were broadly unchanged.

Intellectual Property

Amazon Offers to Settle EU Probe Over E-Books Contracts
Stephanie Bodoni and Aoife White, Bloomberg News

Amazon.com Inc. is poised to settle a European Union probe into its e-book deals with publishers by changing controversial clauses, according to regulators. Amazon won’t enforce clauses that required publishers to offer it terms as good as or better than those they sign with other e-book distributors and will avoid them in future contracts, the European Commission said in a e-mailed statement that outlined details of the company’s offer to settle the investigation.

How Apple’s lawsuit threatens Qualcomm’s business model
Ari Levy, CNBC

Qualcomm’s licensing business is a profit-making machine. Almost every time a smartphone is sold, the chipmaker gets a cut, because of its patents on communications standards.

Telecom, Wireless and TV

Thune: Net Neutrality Repeal Threat Could Bring Democrats to Compromise
Amir Nasr, Morning Consult

Senate Commerce Committee Chairman John Thune is eyeing another chance to pass legislation that would implement a telecom law for the internet. His latest push to do so was thwarted by the Federal Communications Commission passing its own net neutrality rule in 2015.

Ajit Pai Is Officially the New Chairman of the FCC
Brendan Bordelon, Morning Consult

Republican Federal Communications Commission Commissioner Ajit Pai announced Monday that he has been selected by President Donald Trump to serve as the 34th chairman of the FCC. In a statement, Pai said he is “deeply grateful” to be chosen to succeed Democratic chairman Tom Wheeler, who stepped down Friday.

Yahoo says Verizon buyout delayed but still on
Richard Nieva, CNET

Yahoo, dealing with questions around two massive hacks, said Monday it’s pushing the timeline of its expected $4.8 billion buyout by Verizon from the first quarter to the second quarter of this year. “The opportunities ahead with Verizon look bright,” Yahoo CEO Marissa Mayer said in a statement.

Tidal, Jay Z’s Streaming Service, Sells a Stake to Sprint
Ben Sisario, The New York Times

In a joint announcement, the two companies offered few details of the partnership, saying only that Sprint customers who subscribe to Tidal would receive content available only to them and adding that more information would be revealed later. Sprint is controlled by SoftBank of Japan.

Mobile Technology and Social Media

Uber tripled its lobbying efforts in 2016
Melanie Zanona, The Hill

Uber nearly tripled its federal lobbying efforts in 2016 compared with the previous year, reaching an all-time high of more than $1 million. In the last three months of 2016, the ride-hailing firm spent $390,000 on lobbying, according to disclosure forms.

Snapchat cracks down on fake news and clickbait
Richard Nieva, CNET

Snapchat is growing up as a place for news. Snap, the parent company for the popular social network, said Monday it updated its guidelines for publishers, cracking down on images that are misleading or have no editorial value.

Apple’s Legal Assault on Qualcomm Is Part of Phone Margin Grab
Ian King and Alex Webb, Bloomberg News

Apple Inc. is piling onto lawsuits that attack the way Qualcomm Inc. licenses technology for mobile phones in a widespread effort to rake back profits in a slowing market. The latest suit by Apple, filed Friday, alleges that Qualcomm has unfairly used the power of its patents, which cover the fundamentals of phone systems, and its chip business to prop up its dominant position in the industry.

Cybersecurity and Privacy

Senate confirms Mike Pompeo as CIA director
Greg Miller, The Washington Post

Mike Pompeo was confirmed as CIA director by the Senate on Monday, putting the conservative Kansas congressman in charge of an agency that is bracing for its most contentious relationship with the White House in decades. The vote was 66-32.

Messaging App Has Bipartisan Support Amid Hacking Concerns
Mara Gay, The Wall Street Journal

Signal, a smartphone app that allows users to send encrypted messages, is gaining popularity in the political world amid rising fears about hacking and surveillance in the wake of a tumultuous election year. Political aides close to President Donald Trump, former President Barack Obama, and former Secretary of State Hillary Clinton are users.

The Encryption Wars Will Return One Way or Another
Joseph Marks, Nextgov

Disputes over encryption and digital security are sure to rock Congress and the executive branch this year, sparked by sudden crises rather than coolheaded consideration, a top congressional aide said Monday. “I see no way in which that was a one-time skirmish,” Austin Carson, legislative director for House Homeland Security Chairman Michael McCaul, R-Texas, said during the State of the Net conference.

California state lawmaker wants schools to teach about Russian hacks
Joe Uchill, The Hill

California Assemblymember Marc Levine (D) intends to introduce legislation to change school curricula to include the role of Russian hacking in the 2016 presidential election. “Students need to understand how [President] Trump’s policies are colored by the way he rose to power,” said Levine.

Hacker Says He Attempted to Extort UK Bank Lloyds With DDoS
Joseph Cox, Vice News

A hacker has claimed responsibility for a reported distributed-denial-of-service (DDoS) attack against UK bank Lloyds, and says he attempted to extort the financial giant, too. Through 11-13 January, Lloyds Banking Group Plc customers could not access online banking services

Opinions, Editorials and Perspectives

Retransmission Consent: Time To Repeal And Replace
Charles McDonald, Morning Consult

In 1992, Congress passed a law that allowed local TV stations to collect fees from cable and satellite TV providers. These “retransmission consent” payments flowing to “free TV” providers were supposed to replace lost ad revenue to help finance investment in local news and entertainment programming tailored to the needs of the communities where they operate.

Humble Pai one of the best-prepared FCC chairs in history
Adonis Hoffman, The Hill

Incoming Federal Communications Commissioner (FCC) Chair Ajit Pai will rise to the top spot as one of the best prepared and best-liked commissioners in FCC history. The classic Washington joke is that every U.S. senator wakes up in the morning, looks in the mirror and sees the face of the next American president staring back.

Make the FCC Great Again
Berin Szóka, RealClearPolicy

Last Friday, Republicans took control of the Federal Communications Commission (FCC). Expect them to reverse quickly the most controversial decisions of the Obama FCC. They will change fundamentally how the agency works — including a renewed emphasis on bipartisanship.

How the Trump administration can promote a free global internet
Daniel Calingaert, The Hill

After the Russian hacking of the Democratic National Committee, policymakers rightly pointed out the need for quicker and more decisive U.S. responses to digital intrusions to better deter future attacks. But U.S. interests in the internet extend well beyond cyber-defense.

What Silicon Valley can expect under Trump
April Glaser, Recode

Since the election, Trump has named only a handful of appointments to serve his administration, making it difficult to grok what a Trump presidency means for many of the complex issues that are dear to Silicon Valley — like immigration, network neutrality, self-driving cars and surveillance. Of the 690 positions the incoming administration needs to fill and get confirmed by the Senate, only 30 have been named, according to a tracker run by the Washington Post and the nonprofit Partnership for Public Service.

Research Reports

How Broadband Populists Are Pushing for Government-Run Internet One Step at a Time
Robert D. Atkinson and Doug Brake, Information Technology and Innovation Foundation

Broadband networks are a critical part of America’s digital technology system and, as such, the issue of how to continue to drive investment and innovation in these networks is worthy of robust and sustained debate. But the broadband policy debate should be transparent about what it really involves: Is America better off with an ISP industry that is structured the way the vast majority of the U.S. economy is structured (private-sector firms competing to provide the best product or service at a competitive price, with the role of government to limit abuse and support gaps where private-sector competition does not respond), or do we want to transform this largely successful industry model into either a regulated utility monopoly model or government-owned networks?

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