The FCC decided to override a statutory stay of Burson- Marsteller’s $3.5 million contract to provide the agency with DTV transition “consumer education and awareness campaign support services,” FCC Assistant General Counsel Maureen Duignan said Tuesday. Under the bid protest that Washington public relations firm Weber Merritt filed Friday at the Government Accountability Office, the FCC could have suspended the contract, which Weber Merritt alleges should have been awarded instead to a small-business vendor (CED May 12 p1). But the “head of procurement activity” at the FCC “has authorized performance of the contract awarded to Burson-Marsteller that is the subject of this protest,” Duignan said in e-mails to Weber Merritt and Burson- Marsteller. “The authorization for continued performance is based upon a written finding that urgent and compelling circumstances that significantly affect the interests of the United States will not permit waiting for the decision of the GAO concerning the protest,” Duignan said. That’s an obvious reference to the June 12 analog cutoff, when most of Burson- Marsteller’s contract work is expected to be finished. A GAO decision on the Weber Merritt protest isn’t due until Aug. 17 under the GAO’s standard 100-day review period for ruling on such protests. Though Burson-Marsteller’s contract work for the FCC’s DTV outreach campaign goes forward, the GAO’s review of Weber Merritt’s protest will continue, FCC officials said Tuesday. If the Comptroller General finds in favor of Weber Merritt’s complaint, said a commission official, the GAO could order the agency to pay Weber Merritt bid preparation costs and perhaps other restitution, given that the DTV transition will have passed by the time any decision is made. It’s customary in the federal contracting process for the awarding agency to issue requests for quotations first to small businesses in historically underutilized business zones, then next to small businesses, finally opening up the process to bids from all vendors, the official said. The FCC didn’t do that with the DTV contracts because there wasn’t time, the official said. If it had done so, it’s likely the PR contract couldn’t have been awarded until June, the official said. A commission spokesman confirmed only that the agency was aware of the protest, but declined further comment.
Paul Gluckman
Paul Gluckman, Executive Senior Editor, is a 30-year Warren Communications News veteran having joined the company in May 1989 to launch its Audio Week publication. In his long career, Paul has chronicled the rise and fall of physical entertainment media like the CD, DVD and Blu-ray and the advent of ATSC 3.0 broadcast technology from its rudimentary standardization roots to its anticipated 2020 commercial launch.
A Washington public-relations firm filed a formal protest at the Government Accountability Office accusing the FCC of improperly awarding mega-agency Burson Marsteller a $3.5 million contract to provide DTV transition “consumer education and awareness campaign support services” through the analog cutoff June 12. The firm, Weber Merritt, confirmed the complaint Monday.
Sirius XM has made an “extraordinary positive turnaround” in its financial performance the past two quarters, posting its second straight quarter of positive adjusted income from operations, CEO Mel Karmazin said in an earnings call Thursday. Still, the company’s “cash-flow growth story” that Karmazin stressed masked less favorable Q1 results, as total subscriptions fell 2 percent from Q4 and 10 times as many retailer aftermarket customers as OEM subscribers dropped Sirius XM service.
Zoran’s integrated single-chip device for Blu-ray players “is functional and will be available for sampling this summer,” CEO Levy Gerzberg said during an earnings call Tuesday. “While this market is not expected to reach the mainstream consumer this year,” analysts project that the Blu-ray hardware business could reach 40 million units by 2012, he said. In Q-and-A, Chief Financial Officer Karl Schneider answered with a “yes and no” when asked whether Zoran’s legal fight with DTS had delayed deployment of the Blu-ray device. Zoran sued DTS in October, alleging that it had refused to license its multichannel surround technologies for Blu-ray on fair and reasonable terms. Zoran hopes the case will be resolved soon, he said. Zoran’s DTV business jumped 39 percent from Q4, Gerzberg said. He credited stronger demand for LCD TVs smaller than 32 inches. “Demand was concentrated in major retail channels, such as Best Buy and Wal-Mart, where brands powered by Zoran … had leading positions,” he said. They include Funai’s Emerson, Magnavox and Sylvania brands, as well as Polaroid, Sanyo and Best Buy’s private labels Dynex and Insignia, he said. “Additionally, we're seeing more of our customers’ products entering new retail outlets, such as Costco and TigerDirect, where previously, they had not been volume suppliers.”
EBay thinks the Supreme Court’s 2007 Leegin decision, which loosened restrictions on manufacturers’ retail price maintenance (RPM) policies, “is undermining consumer benefits delivered by innovative retailers, especially on the Internet,” Tod Cohen, the company’s vice president and deputy general counsel for government relations, told a House Subcommittee on Courts and Competition Policy hearing Tuesday. EBay wants Congress to reinstate the “per se” rule on RPM illegality that Leegin did away with, Cohen said. “There is evidence that small- and mid-size Internet retailers are a primary target of aggressive RPM policies,” Cohen said. “EBay’s own experiences confirm that many large, established businesses attempt to limit low-price intra-brand competition by continually scanning our platforms to identify sellers offering their products at a lower price. They then use a range of tools to identify the seller and stop low price competition, using different tactics depending on the circumstances of the seller.” Many are using Leegin as a legal “green light” to more aggressively thwart low-price competition, Cohen said. “Established retailers and manufacturers attempting to enforce traditional business models contend that innovative Internet retailers are able to offer lower prices to consumers because they ‘free-ride’ on their traditional retail counterparts,” Cohen said. But “the truth is that the Internet turns the traditional free-rider justification for RPM on its head,” Cohen said. “Internet retailers and services provide significant pre-sale information to consumers. The open Internet has completely revolutionized the consumer information experience. Consumers regularly turn to the Internet to search for product information, make product comparisons and check prices before visiting and purchasing from established retailers. In fact, it could even be argued that the largest and most established manufacturers and their largest retail partners are free-riding on the tremendous consumer information tools created by Internet innovators.” He urged the subcommittee to “aggressively scrutinize the Leegin decision and adopt appropriate measures to protect consumers and retail innovators.” RPMs “should be shown to harm competition” until a manufacturer can prove otherwise, FTC Commissioner Pamela Harbour said. The Leegin decision “can’t be reconciled with the legislative history of the antitrust laws,” Harbour said. RPMs have been shown to raise consumer prices 30 percent, she said. That’s one fact that’s “indisputable” about RPMs, she said. Attorney Thomas Hungar, former deputy solicitor general in the Bush administration, was the lone witness to back the Leegin decision. The record is clear that better services, more information and wider product selection will result from RPMs,” Hungar said. RPMs have “pro-competitive effects that benefit consumers,” Hungar said. “There’s no reason to believe that Leegin will promote the widespread use of RPMs” where they're not needed, Hungar said. There’s “no basis for denying manufacturers the flexibility of RPMs” where and when they need them. Congress “should not legislate hastily” to overturn the impact of Leegin “on the basis of rhetoric and speculation,” Hungar said.
The courts or the International Trade Commission or the Patent and Trademark Office, not the FCC, are the proper venues for challenging DTV patents if one deems they're not being licensed on reasonable and nondiscriminatory (RAND) terms, DTV licensors’ heavy hitters told the FCC in written comments Monday. All, including ATSC, Funai, LG, MPEG LA, Philips, Qualcomm, Thomson and Zenith, urged the commission to deny a Vizio-Westinghouse Digital petition that the FCC initiate a rulemaking to regulate the patent fees and impose fines on licensors that don’t comply.
The chairman of the LCD TV Association has written the FCC for the third time in less than a month, this time to “retract” his first two letters, which were in support of member Vizio in its DTV patent fight against Funai. “It has come to my attention that some of the Association’s member companies have business relationships” with both Funai and Vizio, Bruce Berkoff told the commission in a letter Tuesday. “Also, I have been made aware that a company whose board I serve on also does business with both companies. Therefore, it is most appropriate if I do not offer any commentary in this case or other matters involving these companies.” Berkoff first wrote the FCC March 30, asking it to grant Vizio’s motion for temporary relief on Funai’s DTV patents. Ten days later, he wrote the commission to clarify that the opinions he had expressed March 30 were his, not the association’s. Berkoff hasn’t responded to our requests for comment.
Weekly DTV coupon redemption rates have fallen nearly 10 percentage points in the month since the NTIA began accepting orders for replacement coupons from consumers whose first vouchers expired or were lost or stolen (CED March 25 p4), agency data show. Cumulative redemptions fell to 55.9 percent the week of April 17 from 56.1 percent a week earlier, the NTIA said. The redemption rate for coupons expiring last week fell to 52.2 percent, the lowest percentage since a week in May 2008 when only 48.8 percent were redeemed. Redemptions the week ended March 20 -- four days before NTIA announced replacement coupons were available -- were 61.8 percent. That’s the last time the rate exceeded 60 percent. The total coupons redeemed climbed to 28.04 million in the NTIA’s latest report, released Thursday, from 27.6 million a week earlier. Coupons expiring in mid-April were distributed in January, when demand spiked to record highs amid publicity over waiting lists for the vouchers.
The Commerce Department signed a contract extension with IBM under which the government will pay the vendor $52.9 million in economic stimulus money to distribute and redeem up to 15 million more coupons and prolong consumer education activities through Aug. 31, say documents newly posted at NTIA’s Web site. The 15 million extras bring to 71.5 million the total number of coupons NTIA and IBM have contracted for. Of the 15 million new coupons, the government will pay IBM $2.22 per transaction for the first 5 million, $1.66 each for the rest, the documents say. Redemptions of all 15 million will cost the government 33 cents per transaction, they say. The government also will pay IBM $1.3 million to compile a waiting list of up to 5 million coupons, or 26 cents for each coupon, should one be needed in another backlog, they say. The 5 million is only an estimate that can go higher, they say. Of the $3.5 million to be spent on consumer education, the focus will be “on outreach to remaining unprepared populations and activities, such as conducting demonstrations on the installation of converter boxes,” they say. Consumer education “will be targeted to the approximately 5 million households that remain unprepared for the end of analog broadcasts in June,” they say. “Our outreach efforts will continue to be focused on those populations that have a higher propensity to be over-the-air households (minorities, rural, senior, disabled, low income), but with a particular emphasis on the African-American and Hispanic populations that currently lag behind the national average in preparedness.” IBM also will develop strategies and define tactics” to reach the 18-34 crowd, and will “further target” efforts in the 27 markets “where need is greatest,” they say.
The FCC said it wants to fine Hauppauge Computer Works $175,000 for violating the DTV tuner mandate. The company admitted that it had shipped interstate seven models of analog-only TV tuner boards for PCs after the rule took effect in March 2007, said a commission notice of apparent liability. The notice said it wasn’t disclosed how many units Hauppauge shipped because the company has requested that the information remain confidential. The company has told the FCC that it doesn’t think the DTV mandate covers its devices because they're not TV sets and they aren’t like set- top boxes, VCRs or DVD recorders since they have no output to a video monitor, the notice said. Hauppauge contends its tuner boards are “computer peripheral devices, or simply components of a multimedia PC, that could not operate without being installed in a PC and provided with additional software,” it said. But the company’s position is wrong, the FCC said. Its tuner boards are designed to receive TV signals that have been broadcast over the air in accordance with commission rules, it said. “Therefore, they clearly meet the definition of a television broadcast receiver,” the FCC said. Hauppauge didn’t respond to our requests for comment.