US rebukes Yahoo over China case

Yahoo's senior officers say the firm has to comply with local laws

A US congressional panel has criticised internet firm Yahoo for not giving full details to a probe into the jailing of a reporter by Chinese authorities.

Yahoo had been "at best inexcusably negligent" and at worst "deceptive" in evidence given to the House Foreign Affairs Committee last year, it said.

Yahoo's Michael Callahan originally told Congress he did not know why China wanted the reporter's details.

Shi Tao was jailed after Yahoo helped Chinese officials identify him.

Chief executive Jerry Yang said his firm had always been open with Congress and that it was "fully committed to protecting human rights".

Yahoo has previously said it had to comply with Chinese laws to operate in the country.

'State secrets'

Democratic Representative Tom Lantos, chairman of the House committee, issued a stinging rebuke to the US-based internet giant at Tuesday's hearing.

This was inexcusably negligent behaviour at best, and deliberately deceptive behaviour at worst Tom Lantos House Foreign Affairs Committee

At issue is whether Michael Callahan, Yahoo's executive vice-president and general counsel, gave false information to the panel during an investigation in February 2006.

Mr Callahan said then that he did not know why the Chinese authorities wanted to trace Shi Tao - who was jailed for 10 years - but it has since emerged that other Yahoo employees had a document stating it was to do with the "suspected illegal provision of state secrets".

Mr Callahan wrote a letter to Congress last week to apologise and stating that the pertinent information only came to his attention months after he gave testimony.

Mr Lantos said any big company operating in China should have been aware of the authorities' repression of free speech.

He also questioned how Mr Callahan could not have known of the document referring to "state secrets" - a charge commonly used to prosecute dissidents and pro-democracy activists.

Chinese computer users are barred from accessing some websites

"Yahoo claims that this is just one big misunderstanding," Mr Lantos said.

"Let me be clear - this was no misunderstanding. This was inexcusably negligent behaviour at best, and deliberately deceptive behaviour at worst."

Mr Callahan responded that there had been confusion over the information Yahoo had about the demand made by Chinese authorities.

He apologised for the "misunderstanding" and for not letting the House committee know when the additional information came to his attention.

Urged by Mr Lantos to "beg the forgiveness" of Shi Tao's mother, who was present at the hearing, both Mr Callahan and Mr Yang turned and nodded silently to her.

Mr Lantos added: "I do not believe America's brightest and best companies should be playing integral roles in China's notorious and brutal political repression apparatus."

Shi Tao was jailed for sending on to foreign websites an e-mail from the ruling Communist Party warning journalists not to cover the 15th anniversary of the Tiananmen Square massacre in 2004.

Blocked content

Last month, the House committee backed legislation which would prevent internet companies such as Yahoo from co-operating with authorities in China and elsewhere.

Under the legislation, companies would also have to reveal terms and phrases they filtered in certain countries.

The bill, introduced by Republican representative Chris Smith, still needs approval from the House Energy and Commerce Committee.

The Chinese government enforces strict laws on internet use, blocking content it considers a threat, including references to the Tiananmen Square massacre and notable dissidents.

If you enjoyed this post, make sure you subscribe to my regular Email Updates!

Plaid Cymru MP scoops web award

Mr Price's website was praised as an 'outstanding example'.

Plaid Cymru's Adam Price has won the British Computer Society's best MP website award.

His site, which can be used by both English and Welsh speakers, was considered "an outstanding example" of design, engagement and accessibility.

Health Secretary Alan Johnson's website won the accessibility award. Labour's Paul Flynn's won for design and colleague Derek Wyatt's for engagement.

Judging was by BCS' president Nigel Shadbolt and key political journalists.

MPs, whose websites were highly commended, were: Tory Nadine Dorries, Conservative mayoral candidate Boris Johnson, and Independent anti-war MP George Galloway.

Some of the worst comments were: 'Is he more interested in himself or his voters?', 'Wouldn't vote for him', 'Which party does this woman belong to?' Nigel Shadbolt British Computer Society

The judges marked MPs on sites that engaged with constituents and presented the world in politics, particularly to young people, "in an exciting and dynamic manner".

Professor Shadbolt said standards "varied enormously", with the best combining "excellent content with newest forms of media, such as video and blogging in a bid to get up-to-date, relevant information" out to their constituents.

"Some of the worst comments were: 'Is he more interested in himself or his voters?', 'Wouldn't vote for him', 'Which party does this woman belong to?' and 'Self-promoting as usual'."

Professor Shadbolt said he was particularly concerned that a large number of MP websites had not been shortlisted because they had failed the accessibility test.

"This means that the large minority of the population with various disabilities would be unable to properly access these sites," he said.

"And this last category, particularly with an ageing and increasingly IT-reliant society, they ignore at their political peril."

If you enjoyed this post, make sure you subscribe to my regular Email Updates!

'$100 laptop' begins production

The first machines have started rolling off the production line

Mass production of the so-called $100 laptop has begun, five years after the concept was first proposed.

Computer manufacturer Quanta has started building the low-cost laptops at a factory in Changshu, China.

One Laptop per Child (OLPC), the group behind the project, said that children in developing countries would begin receiving machines this month

Last month, OLPC received its first official order for 100,000 machines from the government of Uruguay.

"Today represents an important milestone in the evolution of the One Laptop per Child project," said Nicholas Negroponte, founder of OLPC.

The organisation had reached the critical stage despite "all the naysayers," he said.

Price hike

Since Professor Negroponte first put forward the idea of distributing low-cost laptop to children in developing countries in 2002, the plan has been both praised and mocked.

Intel chairman Craig Barret described the XO laptop, as the machine is known, as a "$100 gadget" whilst Microsoft founder Bill Gates questioned its lack of hard drive and "tiny screen".

Other critics have questioned the need for the laptops in countries which, they said, had more pressing needs such as sanitation and health care.

But Professor Negroponte has always maintained that the project is about education not technology.

However, the green and white XO machines pack a number of innovations which make them suitable for use in remote and environmentally hostile areas.

The machine has no moving parts and can be easily maintained. It has a sunlight-readable display that allows children to use it outside and, importantly for areas with little access to electricity, it is ultra low power and can be charged by a variety of devices including solar panels.

Although OLPC eventually plan to sell the machines for $100 or less, the current price is $188 (£93).

Christmas gift

Initially OLPC has said that it required three million orders of the XO to make production viable.

Uruguay is the first country to order the machines

Governments were originally offered the machines in lots of 250,000.

So far, however, the organisation's only confirmed order is from Uruguay. The South American country has ordered 100,000 of the machines with an option to purchase a further 300,000.

Other governments have expressed interest in the machines.

For example, the government of Mongolia has announced that it plans to launch a pilot project providing 20,000 laptops, to children aged six to 12.

OLPC has also allowed a limited number of the machines to be bought by people in North America through its Give 1 Get 1 programme (G1G1), which will allow members of the public to buy a machine for themselves as well as one for a child in a developing country.

The programme will offer laptops between the 12 and 26 November. OLPC said that the start of production means that people participating in the scheme will receive their XO by December this year.

If you enjoyed this post, make sure you subscribe to my regular Email Updates!

Symbian dismisses Google Android

Symbian powers more than 165 million phones

Google's dominance of the web will not translate to the mobile phone market, a senior executive at Symbian has said.

John Forsyth, vice president of strategy at Symbian, the platform that powers many of the world's phones, said Google lacked experience.

Google has formed an alliance with 33 firms to develop an open platform for mobile phones, called Android.

Meanwhile, the head of Nokia in the UK said the firm was in discussions with Google about using the platform.

Simon Ainslie, Nokia UK's managing director, said: "We are always open to discussion and debate on that. We were not ready to make any commitment to it or discuss it at the time."

"We are having ongoing discussions with Google."

'Very happy'

Mr Ainslie said the time was not right to make any announcement as to "how we can work with them".

He also said that Nokia was very happy with its partnership with Symbian.

He said: "It's the world's most used platform. It's not a simple solution to make a platform work on a mobile."

It's a bit like the common cold. It keeps coming round and then we go back to business John Forsyth, Symbian, on the Open Handset Alliance

Mr Forsyth said Google had to be aware that making a "mobile OS is a very specialised form of rocket science.

"It's not search rocket science."

He said the alliance was yet another attempt to launch a Linux-based operating system to drive mobile phones.

"About every three months this year there has been a mobile Linux initiative of some sort launched.

"It's a bit like the common cold. It keeps coming round and then we go back to business. We don't participate in these full stop. We make our own platform and we are focused on driving that into the mobile phone market at large ever more aggressively."

Symbian's recent financial results show it sold 20.4m smartphone software licenses in the last quarter of 2007 and since the company was launched nine years ago more than 165 million phones have been shipped using its platform.

'Deeply unsexy'

Mr Forsyth said there was nothing to indicate that Google's dominance of the web would make it successful as a mobile phone platform provider.

"Search and a mobile phone platform are completely different things.

"It's costly, arduous and at times a deeply unsexy job of supporting customers day by day in launching phones. That's something there's very little experience of in Google's environment.

"if you are a serious phone maker and you are asked to bet your handsets on somebody, you would want to bet on someone with a track record of delivery and support."

Mr Forsyth also questioned whether developers would flock to the system.

"It's very clear what developers want - volume and a stable platform that doesn't keep breaking. You have to have a lot of zeroes in your sales figures before a developer gets out of bed.

"They are talking about having a phone by the end of next year. It's not one that is going to ignite developers."

If you enjoyed this post, make sure you subscribe to my regular Email Updates!

Funds freed up for UK innovation

More than £1 billion has been awarded in UK grants

UK pioneers of research into new materials, green energy and future communications will share a £100m government fund to back innovation.

More than 76 research and development projects covering eight technology priority areas will share the money.

The money has been made available through the Technology Strategy Board which promotes innovation in business.

The board has funded more than 700 projects with a total of £1bn since it was formed in 2004.

The new money for projects starting this year was announced by Innovation, Universities and Skills Secretary John Denham.

Pioneers in healthcare, green energy and business competitiveness will benefit, along with work on advanced cell therapies to treat wounds and eventually organs, and ways to allow patients with chronic conditions to be monitored from home.

Environmental priorities include better materials for use in wind and wave farms, efficient lighting for shop fronts and systems to better exploit small-scale local energy production.

Mr Denham said: "New research in these important eight key technology areas will make a real difference to the economy and to our lives.

"This is an excellent programme that fills the gap between pure science and industry Dr Nicholas Warrior, Nottingham University

"Our work on innovation will help businesses to succeed and improve public services, meeting the challenges of the 21st century and enhancing people's life chances."

The new round of funding has been welcomed by the Science Council, the body which represents scientific bodies and professionals around the UK.

The council's chief executive Diana Garnham said the eight target areas touched "almost all areas of science, engineering, technology and mathematics".

She added: "The funding will involve many different types of professionals, not just in science and technology but in business as well."

Dr Nicholas Warrior, who received funding from previous rounds of the Technology Strategy Board, said the grants had made a huge difference to his research at Nottingham University.

"This is an excellent programme that fills the gap between pure science and industry.

"We would not have been able to pursue our work without the help of the Board."

Dr Warrior is working on research to develop advanced materials from recycling carbon fibre, which provide a lightweight and strong alternative to metals like steel.

Carbon fibre materials are often found in planes, boats, racing cars and body armour.

World production of carbon fibre is about 25,000 tonnes per year but it is difficult and costly to recycle.

Dr Warrior's research project aims to make the process of recovering carbon fibre from composite materials much simpler.

If you enjoyed this post, make sure you subscribe to my regular Email Updates!

Apple iPhone debuts in UK stores

Customers rushed to buy the new handsets

Apple's much-hyped iPhone has finally hit shelves in the UK.

Staff cheered as throngs of excited customers made their way into Apple's flagship store in London.

A small number of Apple fans keen to get hold of the handset had started queuing at stores overnight and numbers swelled to around 300 for the launch.

First out of the store with the £269 internet enabled device was 20-year-old north London student Tom Jasinski who said "It was worth the wait".

"I got here 26 hours ago," he told PA. "It is a great piece of hardware. It is a great thing and I love it."

The BBC's Rory Cellan-Jones described the scene in London as "mayhem".

He said before the doors opened at the store, Apple staff were walking up and down the lines of people "whipping them into a frenzy".

The internet enabled handset has also gone on sale at more than 1,300 other stores around the UK with each customer limited to two handsets each.

The first European handsets were sold at the T-Mobile store in Cologne, Germany just after midnight on Friday morning.

T-Mobile's parent company Deutsche Telekom said it had sold over 10,000 iPhones in Germany by late afternoon.

"It was love at first sight," one 50-year-old man told Reuters news agency.

The iPhone will go on sale in France on 29 November and Asia in 2008.

Lock-down

Although the wait is over for some fans, there are concerns that consumers are only able to use the phone with the 02 mobile network.

The phones can be unlocked for use on other networks but this voids the warranty and could break the device if software updates from Apple are installed.

As many as 250,000 users in the US have unlocked the device using free and paid-for software to make the phone work on different networks, and to load third-party software not supported by Apple.

Critics have pointed out that the device, while boasting an innovative user interface which makes it simple to use, lacks technology found in rival phones.

The iPhone only works on slower 2G networks, limiting its usefulness as a mobile web browser, but it does also connect to wi-fi hotspots.

In the UK, iPhone owners can connect to the net for free at thousands of The Cloud's hotspots.

Greg Joswiak, head of marketing for the iPhone, denied that the phone had sacrificed function over form by choosing 2G.

"We wanted to make sure that we had a very small device and good battery life. You can't do that today with 3G.

Talk time

"It's just too power hungry, which is why most 3G phones have nowhere near eight hours of talktime."

GEEK TEST

One of the iPhone's big rivals, the Nokia N95, has four hours of talk time on a 2G network, while Apple's device has up to eight hours, according to technical specifications provided by both firms.

Customers have to pay in advance for the iPhone and cannot get it free on a mobile contract.

The Apple phones costs £269 and the minimum monthly contract with O2 is £35.

Jonathan Arber, an analyst with Ovum, said: "In the long term it will be interesting to see how consumers will react to having to pay for this device.

"Obviously in the UK most consumers are used to getting their devices for free."

Mr Arber also pointed out that the UK mobile market is predominantly made up of pre-pay users.

I don't like be imposed upon as to which network I want to switch to iPhone unlocker Daryl

"That's a huge section of the market that is not going to be purchasing an iPhone. In the contract segment there are a lot of people who are not going to pay £35 a month.

"But for a large group of people the iPhone is certainly an attractive proposition."

According to analysts M:Metrics 10% of 16,000 mobile phone users surveyed in the UK expressed strong interest in buying the iPhone.

Fifty per cent of the survey sample with a strong interest had not paid for their current phone and almost half were on a pre-pay contract.

'Love experience'

Apple has sold 1.4 million iPhones since it went on sale in the US and O2 and T-Mobile are expecting strong sales.

Graham Gilbert was the first to buy the iPhone at the London store

Mr Joswiak said: "People love their experience with the iPhone. They don't love the experience with other phones. That is why our sales are through the roof."

"We assume that the device will find a very good reception on the market," said Rene Bresgen, a spokesman for Deutsche Telekom, owners of T-Mobile in Germany.

More than a 1,000 O2 shops, Carphone Warehouse stores and Apple shops are expected to sell the device.

Some iPhone owners in the UK have not been content to wait for the official release and have bought the device in the US and unlocked it for use on any network.

One owner, called Daryl, told BBC News he had bought 14 phones in the US for himself and friends and unlocked them.

He said he had unlocked his original phone because he didn't want to be tied to one network.

"I like the current network I am on and I'd like to stay with that network. I don't like be imposed upon as to which network I want to switch to.

"Also the actual O2 network doesn't have very good coverage where I live; Orange has good coverage where I live, that's why I chose them first, and why I want to stay with them."

If you enjoyed this post, make sure you subscribe to my regular Email Updates!

Skynet military launch is delayed

The Ariane rocket will be rolled back for testing

The launch of the UK's Skynet 5B military communications satellite from French Guiana has been delayed.

The spacecraft's Ariane rocket has developed an electronic problem in one of its solid fuel boosters and will be rolled back to an inspection shed.

The flight, originally timed for Friday night, is not now expected to take place until Monday at the earliest.

The £3.6bn Skynet project is designed to give British commanders access to more information, much faster.

"We tried to understand what's going on [in the electronic equipment] but unfortunately we did not succeed," explained Jean-Yves Le Gall from Arianespace, the company which runs the Kourou spaceport in French Guiana.

"We are now taking the launch vehicle back to the Final Assembly Building where we will investigate the equipment and replace it."

The countdown was stopped six hours, two minutes and 34 seconds before the scheduled lift-off.

Video demand

The Skynet 5B platform is set to join in orbit the 5A satellite, which was lofted successfully in March and is already handling secure traffic for UK forces in Iraq and Afghanistan.

The spacecraft, which have been developed by EADS Astrium in Stevenage and Portsmouth, provide-two-and-a-half times the bandwidth capacity of their predecessors, the Skynet 4 satellites.

Controllers take no risks with a launch

The greater performance is necessary because military commanders are starting to use information-rich applications, such as video, in their operations.

Only today, the Ministry of Defence announced it had started flying its new Reaper Unmanned Aerial Vehicles (UAVs) in Afghanistan. The planes will gather intelligence on Taliban activities and their pictures can be fed back to the UK via Skynet 5A for further analysis, if necessary.

The problem with the Ariane rocket also delays the launch of Skynet 5B's co-passenger - a Brazilian satellite called Star One C1 which will deliver broadband internet services to consumers in South America.

Delays to launches are not uncommon. Officials constantly monitor the rocket and its payload and if there is the slightest doubt, the flight is stood down. Skynet 5A was itself held on the ground for 24 hours when a fault developed in the launch table.

"This is the price for total quality; we do not want to take any risks, and this is why we replace equipment anytime we could have a problem," said Mr Le Gall.

The technical teams responsible for the satellites will continue to monitor their systems over the weekend. Umbilical connections to the Ariane allow engineers to talk to the spacecraft even though they are closed inside the top of the rocket.

"At this stage, the thing we worry about is the battery [in 5B]," explained Patrick Wood, the Skynet programme chief at Astrium.

"The team will be monitoring the charge on the lithium ion battery, and checking it is on external power. Once we've got a resumed launch time, we will go with our standard test sequence," he told BBC News.

The RAF is now using Reaper, which was formerly known as Predator B

If you enjoyed this post, make sure you subscribe to my regular Email Updates!

Emap claims 'good interest' shown by potential buyers

Emap claims 'good interest' shown by potential buyers

Emap insisted yesterday that it was on track to sell the various divisions of its business, countering an increasing perception that the process was running into trouble.

The company behind FHM, Kiss Radio, Heat and the Nursing Times said in a formal statement that it had received "good interest in all parts of the group from both trade and private equity".

If you enjoyed this post, make sure you subscribe to my regular Email Updates!

BSkyB chief attacks 'police powers' to collect licence fee

BSkyB chief attacks 'police powers' to collect licence fee

James Murdoch yesterday launched an attack on the BBC's state funding and "police powers" to collect the licence fee as the chief executive of British Sky Broadcasting gave further details of its new technology plans.

The BBC had seen a 28 per cent increase in its funding over the past five years while its audiences had declined by more than 10 per cent, Mr Murdoch claimed.

"In most cases where the private sector starts to innovate and provide things, the state happily steps back. Here we have a state that's stepping forward and I think we have to question that," he said at the Monaco Media Forum. Viewers should be wary of the use of state funds for a national news service, he said. "I wonder if we're wary enough."

Mr Murdoch's comments were challenged at the event by Ashley Highfield, the BBC's director of future media and technology, who denied any state influence over the BBC's news coverage. "I made no comment about your news," Mr Murdoch told Mr Highfield in a testy exchange, "[but] the BBC's a state agency with police powers to collect a tax."

BSkyB is facing two investigations by Ofcom, its regulator, and a Competition Commission review of its 17.9 per cent stake in ITV, taken a year ago.

The group has begun a public relations campaign in recent weeks to emphasise the choice and competition it has brought to the UK television market since the satellite broadcaster launched 18 years ago.

Yesterday, Mr Murdoch said Ofcom had done "a tremendous job", but questioned whether any "regulatory bureaucracy" could keep up with the pace of change in the media and communications industry.

Regulators should challenge transgressions, he said, "but do it when these happen rather than determine an outcome and then create a long-winded system for getting there".

Mr Murdoch also addressed how technology was changing BSkyB's business, saying that it was working to introduce ethernet-enabled set-top boxes with as much as a terabyte of local memory enabling users to store their media on the devices.

BSkyB could defend its profit margins as it expanded from pay television into broadband and telephony better than incumbent telecoms providers with legacy tariffs to protect, he argued, because telecoms costs had come down faster than the cost of making television.

If you enjoyed this post, make sure you subscribe to my regular Email Updates!

Emap sale on track

Emap sale on track

Emap shares were boosted on Friday after it declared that an “offer period” for the company had commenced as it said it had received “good interest” from both trade and private equity buyers in all parts of the group.

Emap, which has been assessing interest in the potential sale of its three divisions said it continued to be “encouraged by progress” on its strategic review.

The comments made against a backdrop of reduced bid activity will likely soothe jitters about whether the break up will proceed and helped push the shares up by 2.5 per cent in early trade to 858 ½p.

Some analysts had predicted shares would drop to 770p if the break-up was pulled. The average break-up value on Emap’s shares is £10.34, based on a Reuters poll of 11 analysts, with a range of 925p-£11.67.

Alex DeGroote, analyst with Panmure Gordon, said: “The key point is that with deals falling apart all over the place this is encouraging. It underlines the fact that these are trophy assets and people are still willing to buy them in this context.”

Emap’s business-to-business division, which includes titles such as Nursing Times and Retail Week, is thought to have attracted first-round bids of £1.3bn or more from Apax Partners with an equity contribution from Guardian Media Group, Candover, Cinven, Permira and Providence Equity Partners.

Consumer magazines has drawn offers of about £700m from a group comprised of Hearst, Quadrangle and Exponent as well as Apollo, Cinven and Providence. Global Radio, which bought Chrysalis’s stations this year has made an offer for Emap’s broadcasting assets. Phil Riley, the former chief executive of Chrysalis Radio, has also led a bid for Emap’s radio assets.

Emap on Friday also asked parties interested in acquiring its business-to-business division to consider buying the Emap’s plc title for a nominal sum, indicating that they expected to sell the other two parts of the business first.

The company said the proposal was being made purely as a possible way of enabling the return of cash, including the proceeds of any potential disposals, to shareholders in an efficient manner.

Emap added that it had not received any approach to acquire Emap as currently constituted and that the commencement of the offer period was not a consequence of any proposal received to date. “The review continues to examine all options including the potential sale or demerger of some or all of the constituent parts of the group.”

The company is without a chief executive since the departure of Tom Moloney in May. Alun Cathcart, the chairman took over day-to-day control of the company after Mr Moloney’s departure.

David Arculus, a former executive at Emap, last month threw down a gauntlet to the directors of the company, saying the board had “lost its way” as he put himself forward as a potential chairman.

Emap is due to announce half-year results on November 13.

If you enjoyed this post, make sure you subscribe to my regular Email Updates!

Fans descend on UK iPhone launch

Fans descend on UK iPhone launch

Hordes of iPhone fans descended on Apple’s flagship Regent Street store in London yon Friday hoping to be the first to get their hands on the much-hyped mobile device.

The earliest had been queuing since 8am the previous morning, through freezing rain. Many had been in line for at least 10 hours.

When the doors opened at 6.02pm fans ran in to the store between lines of cheering staff. They emerged moments later, like Olympic athletes crossing the finishing line, brandishing their boxed iPhones in triumph.

O2, the UK’s largest mobile phone operator, which secured exclusive rights to supply telephone contracts for the iPhone in the UK, said it had ordered “hundreds of thousands” of iPhone handsets to meet demand over Christmas and into the new year.

Carolina Milanesi, analyst at Gartner, a consultancy, said between 350,000 and 400,000 iPhones could be sold in the first two months.

O2 has taken on 1,427 extra staff to cope with demand, including 700 in its customer service call centres, and 727 sales assistants in shops. This is a nearly 12 per cent increase in the company’s UK workforce.

Charles Dunstone, chief executive of Carphone Warehouse, which is also selling the iPhone, said he expected the handset to be the top-selling product this Christmas. Last week the company forecast it could sell 10,000 devices in the first day.

In the US, 1m units were sold in the first 74 days after the iPhone launched at the end of June. Apple aims to sell 10m units globally during 2008.

The iPhone, whose design, multi-touch screen and web browser have won many fans, costs £269 including tax. Customers are required to sign up to a 18-month contract with O2, ranging from £35 to £55 a month, putting the total cost of the device at up to £1,259.

Ahead of the iPhone launch, hundreds of “grey market” iPhones have already been put up for sale on the internet.

If you enjoyed this post, make sure you subscribe to my regular Email Updates!

Providence might abandon Clear Channel deal

Providence might abandon Clear Channel deal

Providence Equity Partners may abandon plans for a $1.2bn deal to buy 56 US television stations from Clear Channel Communications, in the latest example of a private equity takeover facing collapse because of the credit squeeze.

People familiar with the matter on Thursday said Providence was considering its options after the performance of the stations, mostly in medium-sized cities such as Memphis, Tennessee and Monterey, California, had sharply deteriorated. They said general market conditions were a factor in Providence’s thinking, but that specific factors such as the departure of several key people at the stations also played a part. Providence and Clear Channel did not comment.

The break-up fee for the deal is $45m, which Providence would have to pay if it wanted to walk away without reaching an accommodation with Clear Channel. Providence could also seek a renegotiation of the deal at a lower price, although the discount would have to be extremely big, given how much the business has suffered since the transaction was announced in April, said one person involved in the talks.

The deal would add to the $200bn tally of failed buy-outs so far this year, according to Dealogic. From Sallie Mae, to Harman International and Acxiom, a string of private equity deals signed in early 2007 have unravelled.

Clear Channel decided to sell the TV stations in an effort to streamline its business ahead of its $20bn sale to Bain Capital and Thomas H Lee Partners, the private equity groups. However, the side-deal with Providence was not a condition of the overall sale of the company, which is still pending and should be unaffected. Clear Channel shares were down 3.1 per cent to $34.80.

The move by Providence could affect the value of deals currently under way to sell TV stations. Rupert Murdoch’s News Corp is in the process of selling nine of its Fox TV stations. Mr Murdoch, chairman and chief executive of News Corp, said the sales process was still under way. He said he did not expect to get as much as a sale would have brought in six months ago, but that News Corp was prepared to take a haircut.

TV stations are increasingly being spun out of media companies. For example, EW Scripps plans to split into two publicly traded companies in response to shareholder unhappiness over its slow-growing newspaper business. Belo also plans to spin off its newspaper group from its stable of TV stations as it believes the two types of assets are no longer appealing to the same group of investors.

If you enjoyed this post, make sure you subscribe to my regular Email Updates!

Fans descend on UK iPhone launch

Fans descend on UK iPhone launch

Hordes of iPhone fans descended on Apple’s flagship Regent Street store in London yon Friday hoping to be the first to get their hands on the much-hyped mobile device.

The earliest had been queuing since 8am the previous morning, through freezing rain. Many had been in line for at least 10 hours.

When the doors opened at 6.02pm fans ran in to the store between lines of cheering staff. They emerged moments later, like Olympic athletes crossing the finishing line, brandishing their boxed iPhones in triumph.

O2, the UK’s largest mobile phone operator, which secured exclusive rights to supply telephone contracts for the iPhone in the UK, said it had ordered “hundreds of thousands” of iPhone handsets to meet demand over Christmas and into the new year.

Carolina Milanesi, analyst at Gartner, a consultancy, said between 350,000 and 400,000 iPhones could be sold in the first two months.

O2 has taken on 1,427 extra staff to cope with demand, including 700 in its customer service call centres, and 727 sales assistants in shops. This is a nearly 12 per cent increase in the company’s UK workforce.

Charles Dunstone, chief executive of Carphone Warehouse, which is also selling the iPhone, said he expected the handset to be the top-selling product this Christmas. Last week the company forecast it could sell 10,000 devices in the first day.

In the US, 1m units were sold in the first 74 days after the iPhone launched at the end of June. Apple aims to sell 10m units globally during 2008.

The iPhone, whose design, multi-touch screen and web browser have won many fans, costs £269 including tax. Customers are required to sign up to a 18-month contract with O2, ranging from £35 to £55 a month, putting the total cost of the device at up to £1,259.

Ahead of the iPhone launch, hundreds of “grey market” iPhones have already been put up for sale on the internet.

If you enjoyed this post, make sure you subscribe to my regular Email Updates!

Sprint Nextel’s WiMax partnership axed

Sprint Nextel’s WiMax partnership axed

The future of Sprint Nextel’s ambitious plans to roll out a nationwide wireless broadband network based on an emerging 4G technology called WiMax was cast into further doubt on Friday after the struggling US mobile carrier cancelled plans for a WiMax partnership with Clearwire.

The decision came just a month after Gary Forsee, Sprint Nextel’s former chief executive and architect of its WiMax strategy, resigned under pressure from the board.

The news sent Clearwire shares down more than 22 per cent to $14 in early trading. The WiMax provider founded by Craig McCaw, the US wireless industry pioneer, posted a sharply higher quarterly loss but reported service revenues that more than doubled to $41.3m compared with the same period in 2006.

Sprint said it remained “fully committed to developing WiMax services and deploying a WiMax network that will allow customers to realise the benefits of a mobile broadband internet experience”.

But the company added: “In light of this announcement, Sprint is reviewing its WiMax business plans and outlook and the company expects to comment further on these topics early next year.”

Sprint Nextel investors have become increasingly concerned about the carrier’s plans to spend $5bn by the end of 2010 to build a nationwide WiMax network at the same time as the company is struggling with its core mobile phone operations in the wake of the August 2005 acquisition of Nextel Communications.

If an incoming new chief executive at Sprint Nextel does decided to slow or cancel the carrier’s "Xohm” WiMax project – or spin it off as a separate business as some analysts have suggested – it could have far reaching implications for the US communications and media distribution sectors.

“While it’s clearly premature to interpret today’s news as a Sprint capitulation to shut down its WiMax venture, we believe that this is potentially a move in the right direction,” said Craig Moffett of Sanford Bernstein.

“If a WiMax shutdown does materialise, we would view it as a decidedly positive development for Sprint, as the company would then be able to focus on its core – and severely challenged – wireless business,” he said.

Such a decision could also affect US satellite TV operators which have signed agreements with Clearwire to use WiMax technology to enable them to offer a "triple play” bundle of video, voice and broadband data services.

Mr Moffett added, “The unwinding of the Sprint/Clearwire partnership opens the possibility of cable operators joining forces with Sprint and offering nationwide WiMax via a joint venture with Sprint, perhaps where Comcast would contribute the spectrum it acquired in the AWS [spectrum] auction last year – as their ‘answer’ to the wireless question.”

If you enjoyed this post, make sure you subscribe to my regular Email Updates!

Commission emboldened by Microsoft battle

Commission emboldened by Microsoft battle

The European Commission has turned its attention to alleged market abuse by other US technology companies now it has concluded its battle with Microsoft.

Its antitrust court victory two weeks ago has freed resources and emboldened it in its investigations of how US companies conduct their business in Europe.

However, it has yet to prove it can act quickly to correct markets, with investigations of indeterminate length being spread over numbers of years.

First in the firing line is the world’s biggest chipmaker, Intel.

The Silicon Valley company has until next Monday to respond to a “statement of objections” issued by the Commission in July.

It has been accused of abusing its dominant position in PC microprocessors – offering chips below cost and inducing computer makers not to buy from its rival, Advanced Micro Devices. Intel denies the allegation.

AMD first lodged a complaint against Intel in 2000, so it took seven years of inquiries by the Commission to produce the Statement of Objections. Intel executives say their legal team has been wading through a huge amount of documentation, suggesting the company may apply for an extension in the next few days.

Qualcomm's case has not reached the “objections” stage.

The company emphasised on Monday the antitrust complaints against it were being handled under a new policy.

The Commission initiates proceedings, without expressing a view on the merits of the complaints and without issuing a Statement of Objections.

This leaves open various courses of action including a rejection of the complaints, seeking a settlement with Qualcomm or issuing a Statement of Objections.

Analysts at UBS Securities said it would be unusual for the Commission to mandate royalty rates “particularly given separate agreements already negotiated with the various parties”.

Given the complexity and potential impact to the related parties, they said the outcome was difficult to predict and that a quick resolution would be a surprise.

If you enjoyed this post, make sure you subscribe to my regular Email Updates!

Big power groups warned on long-term contracts

Big power groups warned on long-term contracts

Dominant European gas and electricity distributors should free customers from long-term contracts or face legal action, the European Commission said on Thursday, citing an agreement with Distrigas, the Belgian company, as a blueprint.

The Commission on Thursday dropped an antitrust action against Distrigas, which has a more than 80 per cent share of its home market, in return for guarantees that it would make more gas available to competitors.

The case is one of a series of actions by the EU’s leading antitrust authority against incumbent energy companies, which it believes are freezing out newcomers with long-term deals.

Distrigas, owned by the private French utility, Suez, said it would not sign any new contracts with gas retailers that are longer than two years or with industrial customers for longer than five years, with the exception of new power stations. Some 70 per cent of the gas it had contracted to supply would be available on the market each year.

It could tie only about 20 per cent of the total market to long-term contracts, according to the agreement, which lasts until the end of 2010.

Neelie Kroes, the competition commissioner, said Distrigas’s dominance of the volume and duration of supply kept new entrants from recruiting customers. “Its long-term gas supply contracts make it difficult for competitors to build up a customer base and delay the development of competition.”

The Commission indicated other companies should follow suit. It has launched a formal investigation into EDF of France and Electrabel of Belgium for excluding competition in their respective home electricity markets with similar long-term contracts.

“If they (companies)were to behave in a way similar to Distrigas with its commitments then they would normally not be subject to an antitrust case by the Commission,” said a spokesman for Ms Kroes. “This is applicable in the electricity sector too.”

If you enjoyed this post, make sure you subscribe to my regular Email Updates!

EU fines cut if groups admit to cartels

EU fines cut if groups admit to cartels

Published: October 26 2007 20:32 | Last updated: October 26 2007 20:32

Companies could receive lower fines if they admit guilt in cartel cases, the European Union’s antitrust regulator proposed on Friday.

With an increasing workload and ever tougher financial penalties, the European Commission’s overstretched competition directorate aims to close cases more quickly so it can handle more.

“Companies would benefit by drawing a line under their past illegal behaviour, the Commission would benefit by freeing up resources to pursue more cartels and the European economy would benefit because more cartels would be punished more quickly,” Neelie Kroes, the competition commissioner said.

Ms Kroes’ spokesman stressed this was not a move towards a US-style plea-bargain system. “There would be no negotiations. It is at our discretion,” he said.

Nor would it affect the successful leniency scheme that encourages whistleblowers.

Under that scheme if one member of a cartel informs the authorities of its existence it escapes punishment. It must also hand over documentation and actively assist investigators.

The settlement procedure would come into play after an investigation was ­concluded.

“We would ask a company if it agreed with the findings. If it did and accepted liability, it could receive a lower fine,” said a Commission official.

He said that with fines rising it could be a tempting offer for those found guilty but there was no question of taking away legal rights such as an appeal in court. Fine totals have increased from €683m ($982m, £333m) in 2005 to €1.85bn in 2006 to €2.5bn in the year so far.

Brussels is allowed to fine companies up to 10 per cent of turnover but rarely goes that far.

Separately, Ms Kroes on Friday asked EU governments to reclaim illegal subsidies to business more quickly.

If you enjoyed this post, make sure you subscribe to my regular Email Updates!

Matsushita and Samsung under investigation

Matsushita and Samsung under investigation

Competition authorities from across the world are investigating a group of Asian electronics makers including Japan’s Matsushita and South Korea’s Samsung on suspicion of price fixing in the shrinking market for cathode-ray tubes.

Matsushita, which sells under the Panasonic and National brands, confirmed on Friday that Japan’s Fair Trade Commission had raided the Osaka offices of its CRT subsidiary, MT Picture Display. Samsung confirmed that South Korean authorities were probing its CRT business.

The European Commission said in a statement that it was inspecting unnamed CRT makers. “The Commission has reason to believe that the companies concerned may have violated EC Treaty rules on cartels and restrictive business practices,” it said.

Other Asian CRT makers are also understood to be under investigation.

Demand for cathode-ray tubes, used in older-style television sets and computer monitors, is dropping with the rise of flat-screen technology.

Matsushita expects industry-wide sales to fall to 69m units globally by 2010 from 112m in 2006.

Samsung’s CRT business operates at a loss, and the company said last month it was considering closing the operation. Matsushita ended CRT production in Europe and the US in 2005 and closed an MT Picture Display plant in Thailand in September.

CRT sales contribute less than 1 per cent of group revenues for Matsushita, which like Samsung and other big electronics makers has switched its focus to LCD and plasma displays.

Matsushita combined its remaining CRT operations with those of Toshiba until earlier this year when its partner sold out of the venture.

An official close to the Japanese investigation said the price-fixing investigation was likely to take at least nine months. If Matsushita is found to have colluded with other manufacturers it could be fined an amount equal to 10 per cent of its CRT sales during the period of collusion, he said.

Matsushita shares ended down 4.3 per cent on Friday compared with a 1.2 per cent decline in Japan’s benchmark Nikkei average. Samsung shares rose 0.3 per cent.

If you enjoyed this post, make sure you subscribe to my regular Email Updates!