Why are so many media companies breaking up or shedding assets? Well, the answer certainly has something to do with stock price. As this nice piece in yesterday's (U.K.) Telegraph noted, Viacom alone has lost 36% of its value over the past five years. "We do not control the price of the stock," says Viacom leader Sumner Redstone, "although we think about it a great deal." I bet they do now! In fact, we know that declining stock price has led to the split Viacom plans to complete by the end of June. The end result will be two smaller companies, one containing MTV Networks and the Paramount movie studio, the other containing the older media properties (CBS Television, Infinity Broadcasting, Paramount Television, and book publisher Simon & Schuster.)

The Wall Street Journal blames a coalition of cable and municipalities for defeating Texas's proposed statewide video franchising law, which would relieve the Bells' video offerings (and cables' too!) from city-by-city franchise negotiations -- otherwise known as shakedowns. Being subject to local franchising requirements will surely slow down the Bells' video rollout.

In this, consumers lose quicker entry and competition in the video and broadband markets. The Journal portrays the Texas loss as foreshadowing similar losses across the nation -- kind of like France's EU vote, but with much less world-historical consequence.

Were I a cynic, I would lament that we are forestalling video and broaband competition to instead increase in local government tax revenue. Perhaps with the additional revenue, the municipalities can build their own broadband systems since the private platforms are taxed so heavily. But I am not a cynic, so I will look to the last sentence of the Journal article quoting NCTA Head Kyle McSlarrow: "It may be appropriate that Congress affirm that these kinds of services be dealt with a very light economic regulatory touch,..." Now that would be the way to deliver all players from this local tax morass.

Media guru Ben Compaine has posted an important new essay on his site entitled: "Peercasting as the New Western Frontier." Ben argues that the Internet and new media are creating the equivalent of a new Western frontier for the expansion of ideas and creativity. Here's how he puts it:

"The expansive western frontier offered anyone an opportunity to build a farm and become an independent member of society. Free land thus tended to relieve poverty in the Eastern cities while on the frontier it fostered greater economic equality.

What does this have to do with the media? Here's what: Though it may be a tad premature to know with certainty, in the equally unlimited expanses of information available through the Internet and its related ecosystem I see the makings of a similar safety value for expression and communication."

Whether is web sites, blogs, Net radio, P2P, podcasting, vodcasting, or whatever your new favorite form of media transmission may be, these new forms of "peercasting" as Ben calls them are revolutionizing today's media marketplace by giving every man, woman and child the opportunity to speak to the whole planet.

CNET has a story today on some of the challenges cropping up for municipalities trying to jump on the "free Wi Fi" bandwagon. Of course, a great deal has been written on this issue (see here, and here) but it was the following line that really shook me.

"But once a system has overcome interference problems, the biggest concern is how to handle network abusers, such as spammers, illegal file-swappers and people launching virus attacks."

I agree with Patrick on the encouraging words of Chairman Martin in his talk with Tech Daily's Drew Clark. The Chairman has his priorities exactly right in noting that market competition enhances consumer welfare, and that government's role is to set rules within which market competition can thrive. The Coasian translation of this point would have the government define property rights and enforce private bargains -- and Coase would have it that this would predominately benefit consumers over state superintendence of bargains and manipulation of property rights.

In an interview with Tech Daily's Drew Clark, FCC Chairman Kevin Martin said this in response to a question about his general philosophy as a regulator:

"The free market is a better way for delivering innovation to consumers," he said. "The most important role of government in that sense is setting an environment in which the benefits of that free market can flow to consumers."

Bravo! We at PFF agree that it is all about the consumers, and that free markets best reward consumers. I look forward to watching Chairman Martin put that philosophy into action.

The FCC's latest action to mandate VoIP providers provide E911 is not surprising. The political obviousness of being "for" E911 is apparent even to VoIP providers, because they cannot afford too many headlines like this, notwithstanding they fully-disclose the service's E911 limitations.

Is the mandate an entry barrier that disadvantages "portable" VoIP services like Vonage and Lingo? Certainly.

More than that, the current E911 situation is a tale of unfortunate political economy, antiquated network architecture, balkanized systems and costly backwards compatibility. What's more, it is no one's fault; rather, it is the product of a series of unfortunate choices about how we regulate, architect and disburse funds for 911 service.

Dale Hatfield probably knows more than anyone about the nation's E911 system. So much, he wrote a report on it. I asked Dale what he thought of the current situation,

Somewhere buried in today's TR Daily [subscription required] and entirely absent from many other publications is the following conclusion from a recent study of communications taxation: State and local governments tax telecom services at a rate more than twice the rate of other industries.

That this finding merits so little prominence is itself unremarkable given the heavy emphasis on issues that should evolve significantly in the foreseeable future (e.g., mergers, digital TV, indecency, 911 requirements). More remarkable is the sad truth that heightened tax burdens on communications services are commonplace and unlikely to change significantly anytime soon.

Forbes believes that the E911 VoIP mandate is a clear entry barrier and instance of raising rivals' costs.

Fun Fact of the Day... The three major blog tracking sites, Technorati, BlogPulse, and PubSub are now all reporting that they are monitoring over ten million blogs.

We live in amazing times where 10 million people have become their own broadcast station. And yet, as I noted in a recent post, there remains a crowd who say it all doesn't make a difference. Just crazy.