Don’t count out a “cable surprise” disrupting CenturyLink’s $34 billion acquisition of Level 3, Raymond James financial advisers said Tuesday. The companies announced the deal Monday, and it’s expected to get regulatory OK (see 1610310033). “We still believe Comcast and/or Charter paying a similar price for Level 3 could be accretive to both providers and gets them a better platform to sell into medium and larger enterprises,” Raymond James analysts wrote investors. CenturyLink/Level 3 would provide big cost savings, said the analysts, estimating about $850 million of annual operating expenditure synergies and $125 million in capital expenditure savings. Level 3 has about $10 billion of net operating loss carryforwards that make the deal “much more attractive,” and the companies expect cash tax saving to be at least $650 million annually for the first four years after the transaction, they said. But Raymond James predicted softer business for the combined company in the early going. “As we have said with prior business services combinations, it is very likely the combined company growth rate will experience softness post-closing vs. on a standalone basis given the nature of combining two sales forces and changes,” the analysts said. Also, the transaction likely means less business for vendors like Infinera that today sell to both companies, they said in a separate note Monday.

Aides to Democratic presidential nominee Hillary Clinton apparently considered lauding federal regulators for blocking Comcast's attempted buy of Time Warner Cable last year in a Clinton opinion piece that ultimately appeared in Quartz Oct. 20, 2015. That’s according to new emails released by WikiLeaks Tuesday, the result of an apparent hack of campaign manager John Podesta’s email account that U.S. intelligence officials believe involves the Russian government. “Should we applaud the FCC and Justice blocking the Comcast-Time/Warner merger?” asked Clinton adviser Mandy Grunwald in an Oct. 19 email reviewing a draft of the piece. Traveling press secretary Nick Merrill responded within the hour, addressing Kristina Costa, the aide who first circulated the draft requesting edits: “As the boyfriend of an FCC staffer who helped block that merger, yes. Kristina, her name is Val if you could please compliment her by name.” A few minutes later, Clinton aide Michael Shapiro weighed in and referred to an exchange he and Clinton domestic policy adviser Sara Solow had with Comcast Senior Executive Vice President David Cohen, who has donated thousands of dollars to Clinton's bid: “I think we were trying to keep this as a diagnosis of what's wrong with capitalism systemically, rather than naming specific folks. Sara and I talked to David Cohen today to give a heads up -- and our sense was we'd get deeper into broadband concentration specifically once we do our technology innovation agenda, rather than to some extent previewing or preempting it here.” That Quartz piece last year detailed Clinton’s desire for robust antitrust enforcement and mentioned priorities such as retaining strong net neutrality rules, but no reference to Comcast/TWC was included in the final version. Gonring, Spahn President Andy Spahn emailed Podesta in February to give “a head’s up” of a Senate letter to federal regulators from signers including Clinton primary opponent Sen. Bernie Sanders, I-Vt., “calling for higher scrutiny of the Charter-Time Warner deal,” acquisitions of TWC and Bright House Networks that ultimately cleared regulators. “It's not a surprising development, and we don't anticipate the letter getting much play, but it could come up on your end given Sanders' involvement,” Spahn told Podesta. “Please keep us in the loop if it becomes an issue for you. Happy to get you or someone on your team more information if need be.”

The FCC quadrennial review order and rules on media ownership were published in Tuesday's Federal Register, starting the clock for expected multiple appeals from both broadcasters and public interest groups (see 1610240049). The regulations establish TV joint sales agreement attribution rules, require disclosure of shared service agreements, and establish a definition of an eligible entity. Those seeking to challenge the rules in court have 10 days to file to be included in the lottery for venue, and 60 days to simply be involved in the case. The rules have an effective date of Dec.1, the FR notice said.

The President’s Council of Advisors on Science and Technology formed a working group focused on semiconductors, said group co-chairmen John Holdren, director of the Office of Science and Technology Policy, and Paul Otellini, a former head of Intel, in a White House blog post Monday. “Semiconductors are essential to many aspects of modern life, from cellphones and automobiles to medical diagnostics to reconnaissance satellites and weapon systems,” they said. “Additional public and private investments in R&D are almost certain to be required if the past remarkable pace of improvements in price and performance of semiconductors and the benefits deriving therefrom are to continue -- R&D that looks to create new technologies that can leapfrog beyond the limits of today’s technology and explore entirely new computer architectures and their integration into systems well beyond the traditional computing sphere, including automotive and other mobile applications.” The group “will identify the core challenges facing the semiconductor industry at home and abroad and identify major opportunities for sustaining U.S. leadership” and “deliver a set of recommendations on initial actions the Federal government, industry, and academia could pursue to maintain U.S. leadership in this crucial domain,” the co-chairs said.

ICANN said it paid CEO Göran Marby $314,881 during FY 2016, including $196,154 in salary. Marby was an adviser from early April through late May, when he officially took over as a permanent replacement to former ICANN CEO Fadi Chehadé. ICANN's payments to Marby included $104,642 for moving and travel-related expenses, the organization said in a report. ICANN said it paid Chehadé $845,503 during the fiscal year, including $417,174 in salary and $208,814 for “at-risk pay.” ICANN board Chairman Steve Crocker and other board members received a total of $1.9 million in payments from the organization, including a combined $1.2 million in reimbursements of expenses related to the board's six face-to-face meetings during FY 2016. Crocker received $212,230 from ICANN, including $75,000 in salary. All other ICANN board members receive $45,000 salary per year.

Midsize telcos disputed the FCC's proposed 11 percent rate cut for legacy business data services, with CenturyLink saying the reduction would be unjustified and bigger than the commission projected. "Because the proposal under consideration contemplates that above-tariff contract charges would be reduced to the tariff rates before the 11% reduction takes effect, the total cuts will necessarily be greater than 11% -- and perhaps significantly greater -- with serious consequences for ILECs’ ability to recover costs and continue to invest in rural broadband," said a CenturyLink filing Friday in docket 16-143. The commission's "record clearly establishes the presence of strong BDS competition" and the agency "not only ignores the evidence, but declines to conduct any analysis of the BDS geographic market at all," said a release Monday from the Invest in Broadband for America coalition citing the filing (the coalition includes CenturyLink, Cincinnati Bell, Consolidated Communications, FairPoint Communications and Frontier Communications). FCC Chairman Tom Wheeler is planning a Nov. 17 vote on a BDS item that would subject ILEC legacy DS1 and DS3 services (with data speeds under 45 Mbps) to price-cap rate regulation and cuts, while adopting a lighter-touch approach for packetized Ethernet services (see 1610270054). The "draft BDS proposal would unduly affect mid-size ILECs, like Frontier, in ways that would be deeply harmful to investment in American broadband connectivity and jobs," said a Frontier filing on a meeting with Office of Strategic Planning Chief Paul de Sa. The telco urged the commission to "carefully consider the current state of market competition in how it implements any reform to existing grants of Phase II pricing flexibility, noting the particularly competitive nature of the transport market." The proposed 11 percent reduction "should be pro-rated" for certain ILECs such as Consolidated that haven't been regulated under price caps "for the entire period of efficiency gains the downward adjustment purports to address," said a Consolidated filing on meetings with aides to Wheeler and Commissioner Jessica Rosenworcel, and with Wireline Bureau staffers. CenturyLink is buying Level 3 (see 1610310033).

Security researchers doing controlled research on consumer devices are temporarily exempt from the Digital Millennium Copyright Act as long as they don't violate the Computer Fraud and Abuse Act, starting Friday as authorized by the Librarian of Congress, wrote FTC Tech Policy Fellow Aaron Alva in a Friday blog post. Researchers previously couldn't investigate security vulnerabilities because DMCA makes it illegal to circumvent controls that prevent access to copyrighted material, he said. But the LOC has allowed exemptions from time to time for various technologies to take away any legal hurdle and protect conduct, he said. Alva said that in this case security researchers must act in good faith and meet a few requirements to be exempt, such as legally acquiring a device or software and doing research in a controlled setting to avoid harming the public. He said if the requirements are met then a researcher can test a connected toaster and gauge the risk from attack, but not steal a toaster, hack into it or set it on fire. "The exemption covers a broad array of consumer devices such as electric toothbrushes, home thermostats, connected appliances, cars, and smart TVs," as well as medical devices, he said, but it doesn't apply to "highly sensitive systems such as nuclear power plants and air traffic control systems."

The FCC gave guidance to Lifeline providers on implementing rolling recertification of users under an agency overhaul order approved in March (see 1603310056). "The Commission adopted rules to change the subscriber eligibility recertification process from once each calendar year to a rolling process based on each subscriber’s service initiation date," said a Wireline Bureau public notice in docket 11-42 listed in Friday's Daily Digest. The rolling recertification requirement is intended to improve administrative efficiency and reduce burdens on carriers, the Universal Service Administrative Co. (USAC), and a national Lifeline verifier to be set up, said the PN, but there had been various requests for clarification. The bureau said the "rolling recertification process for each subscriber must be completed, not merely begun, by 12 months following the subscriber’s service initiation date, and every 12 months thereafter," and the process wouldn't be considered complete until a carrier has de-enrolled all affected subscribers. "The Bureau also clarifies the time period in which carriers generally should attempt rolling recertification efforts," the PN said. "Consistent with the USAC administrative process, we strongly encourage carriers to begin recertification within 150 days prior to the subscriber’s anniversary date." Among other clarifications, the bureau said "the service initiation date is the date on which the subscriber began to receive Lifeline-supported service from the current ETC" (eligible telecom carrier).

CEO Mike Poth said FirstNet is making strides toward awarding a contract to build a national public-safety broadband network, but he indicated a decision won't be reached by a Nov. 1 target date. "We have made significant progress in the evaluation process and are moving closer to a contract award," he said in a blog post Thursday. Poth said FirstNet accomplished many tasks needed to award the contract ahead of schedule, including by issuing a request for proposals (RFP) in January, answering hundreds of questions about its content, and evaluating proposals. "From the outset, FirstNet set an aggressive schedule for the procurement knowing that the timing of the award would depend on many factors given its significance and complexity, some of which are outside our control," he wrote. "This is a highly complex acquisition that requires the input and support of multiple agencies and entities; it is critical that all parties are thorough and follow the necessary processes so that FirstNet gets this right for public safety. With all of this in mind, FirstNet will continue to execute the acquisition process outlined in the RFP beyond the November 1st target date for the award." A public-safety consultant recently suggested the award schedule could slip (see 1610140041).

The FCC's new ISP privacy rules more closely align to the FTC's approach than initially proposed, but the areas of departure still are a disservice, said USTelecom President Walter McCormick Thursday. Those departures include classifying all web browsing as sensitive information, he said: "The FCC’s argument that broadband providers have unique access to consumer information compared to other internet firms is simply wrong." He also said Chairman Tom Wheeler's push for a proceeding to consider a ban on mandatory arbitration clauses in service contracts "threatens to do a disservice to consumers who seek speedy resolutions to problems that may arise, and goes well beyond the agency’s statutory mandate." Information Technology Industry Council CEO Dean Garfield also was critical of the FCC's 3-2 vote Thursday to adopt the new rules (see 1610270036). The broadband privacy rules, if they match up with the FCC's summary, "will be problematic for the internet ecosystem at large," he said. And Telecommunications Industry Association CEO Scott Belcher said the privacy rules "place burdensome regulatory requirements on ISPs ... [creating] an uneven playing field" and disincentivizing investment. "Consumers will benefit the most if American companies are encouraged and supported as they seek to lead the world in making 5G and IoT innovations a reality," he said.