Back to the [Drawing] Board

In the Boardroom

It has been quite some time since I used this medium to write about business issues, but now that I have returned, it seems like old hat.  My extended absence has been due in no small part to the pursuit of other ventures--most of which have focused on helping business entities to compete and communicate more effectively.  Much of this time has been spent in the boardrooms of corporations--meeting with directors, CEOs, executives, lawyers and C-suite leaders. 

My mission has been to help these business leaders to understand the virtue and value of conducting their business in the public interest. In essence, connecting corporate priorities with larger --sometimes competing -- interests. Whether the company is in the telecom, media, technology (TMT) industry; the banking, finance and credit industry; the energy sector; the biotech and pharmaceutical industry; the entertainment or hospitality industry, many of the challenges are similar.

Thus, as I return to writing about these issues and industries, I look forward to receiving more comments and recommendations from readers in the time ahead. 

Beware Government Bearing Gifts

After a ten-year stalemate in the epic war with Troy, Greek king Odysseus devised a clever ruse that would become the stuff of legend. He built a large wooden horse, placed it outside the city gates, and waited for the Trojans to take it in.  Believing the war to be over, and the horse to be a gift, the unwary Trojans accepted it against the advice of Cassandra and Laocoon, who warned their compatriots to beware of Greeks bearing gifts.  Led by Odysseus, Greek soldiers lying in wait, dropped from the Trojan horse that night and sacked the city.  Troy succumbed and Greece lives on today.

This tale contains a modern day moral if we cast the government as Greeks and the broadcasters as Trojans.  Over the next few years, the U.S. government is scheduled to auction some of the most valuable airwaves, or spectrum, owned by television broadcasters to make way for more wireless and mobile services.  This gift to America's future is courtesy of President Obama, former FCC Chairman Genachowski, and a penurious Congress who endorsed the plan in 2012--all, of course, to advance broadband and the public interest.

Today, we are less than a year away from the scheduled broadcast incentive auction, but all is not well.

FCC Chairman Tom Wheeler pitches the sale as a “once-in-a-lifetime opportunity”, implying the quest for spectrum soon could come to a close.  Given such talk, broadcasters might want to heed Laocoon's advice. Nothing about the proposed auction is what it purports, which could explain why the National Association of Broadcasters (NAB) has opted to sue the FCC.

In exchange for their valuable spectrum holdings, broadcasters ostensibly will receive serious cash.  But this is a decision not to be taken lightly.  It portends a drastically and indelibly changed communications landscape, which tilts invariably in favor of the wireless industry.  The first installment of the tripartite auction yielded over $40 billion for the sale of AWS-3 wireless spectrum.  This was double the most liberal projection, and has ushered in a new stage of anticipatory irrational exuberance for the broadcast spectrum to come. 

To be fair, the prospect of gaining tens, if not hundreds, of millions of dollars for underutilized spectrum is hard to argue against.  For some broadcasters, this would be a long-overdue reward for years of thankless toil in the vineyards.  After all, the auction is completely voluntary. And yet, relinquishing a scarce and irreplaceable resource, at any cost, could spell the end of broadcasting as we now know it, especially as those left standing are "repacked" into new and unfamiliar spaces.  If there is a broadcast victory to be had, it may be pyrrhic.  Once sold, the spectrum is forever gone, and with it a unique nexus and claim to communities across America.

Of course, the market is anything but predictable, and the incentive auction could prove too complicated, contentious or concessional for broadcasters to embrace wholesale. While some hope for such an outcome, the die appears to be cast.  The cruel irony, however, is that broadcasters have been the most reliable partners to government--ever present through disasters, emergencies, and times of trouble.  In exchange for such enduring loyalty, the government has proffered a scheme to reallocate spectrum that may be predatory, if not altogether plunderous.  The fact that it is voluntary does not lend it verisimilitude.

Broadcasters were once known as a hearty bunch.  To prevail in the broadband future, they will need every bit of wit to survive this latest Trojan horse.  The prescient among them should unfurl the warning flags when the government flashes an incentive, subsidy, or credit to motivate industry complicity. And lest they forget the admonition of Cassandra, if a gift looks too good to be true, it probably is, even if left at the front gate of your once-impenetrable fortress.

An abbreviated version of this blog was published in The New York Times

(c) Copyright.  Adonis E. Hoffman, 2015.  All rights reserved.

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Business in the Public Interest

Business in the Public Interest

"Government and industry were never intended to be natural adversaries. The mission of business is to create value for shareholders, to do right by employees, to respect and contribute to the communities where it operates, and to deliver quality goods or services to the market. If it does these things with a sense of purpose and vision, the greater good and the public interest will be well served, and the public will regain trust in the inherent value of business in our society.There is no reason why government and industry cannot work separately, but in sync, to address the compelling issues in society that affect us all."

--Adonis Hoffman, Esq.

Founder & Chairman

Business in the Public Interest

2015 -A Preview of Media, Communications, and Technology Regulation, Law and Policy - A Full Agenda

Big Data, Privacy and Consumers

Responsible Technology

The Internet of Things

Technology, Consumers and Society

"While technology is thought to be neutral, the way it is used by business and industry--and its effect on consumers and society--can alter the human condition well into the future. The global challenge for any industry today is to balance innovation and commerce on the one hand with responsible business practices on the other. All stakeholders should recognize that technology can and should advance our society and positively contribute to humanity's greater good. Those companies who align their business practices with these basic ideals will master the market, gain ground with consumers, and leave an enduring corporate legacy."

--Adonis Hoffman, 

Business Leadership Today

Data Protection is the New Business Currency

When the companies we know and trust get hacked, a piece of society's soul dies. Like returning home to a ransacked house, it is hard not to feel personally violated when your online privacy is invaded in a large scale data breach.

When hackers recently broke into JP MorganChase, they took more than sensitive financial information--they robbed us of our trust. After all, if we cannot trust one of the world's richest financial firms to protect its own assets--and our information--who can we trust?

According to the Identity Theft Resource Center, there have been 579 reported data breaches so far this year. Companies large and small, from Home Depot, Target and KMart, to unknown retailers have been victimized at one level or another. While consumer protection and banking laws generally provide adequate, after-the-fact, relief for those who are affected, the harsh reality is that our data remains highly unsecured.

When the vaulted CBS news magazine 60 minutes turned the spotlight on data brokers, it opened the nation's eyes to an industry which has been operating somewhat in the shadows for years. The emphasis of the story was that Big Data companies which collect, analyze and sell personal information are unregulated, and the subtext was a call for such.

Following these breaches, there should be little doubt that some kind of reasonable governmental regulation to protect the online data of average Americans is in order today. The elusive challenge has been, and continues to be, how to balance the privacy concerns of consumers with the constitutionally-protected commercial rights of companies. To this equation, technology can add the missing link, so to speak. Those web entities in the vast Internet ecosystem who are serious about respecting consumer privacy should provide them with easy, transparent choices to get off the grid. No loopholes, no slippery legalistic exceptions. Just a simple way--if we choose--to opt out of some things or everything, and to be patently protected from intrusion of any kind.

I know options exist in today's market that provide some of these features, but not all. As we move ever closer to living our lives entirely online, it would be good for industry to build in a modicum of real control for the ordinary person who wants it. But that may be too much to ask. While we have much to be thankful for when it comes to the Internet of things, respect for, and protection of, personal privacy appears not to be one of them.

Mr. Hoffman has been a legal and communications advisor to advertisers, marketers and technology companies, and has held senior legal positions at the FCC and the U.S. House of Representatives. He is an adjunct professor at Georgetown University's Communication, Culture & Technology Program.

(c) copyright 2014. Adonis E. Hoffman. All rights reserved.

Privacy, Big Data, Security and Consumers

Privacy is a hot-button issue today. With a raging war for the private data of the average consumer in full gear, there is a growing cleavage along the privacy Maginot line.

On one side are marketers, advertisers, Internet and data companies, who want unfettered access to as much personal information as possible. On the other side are a confederation of consumer advocates, privacy purists and think tanks that want to limit or disallow commercial access to personal data, altogether.

 In the middle are consumers, who mostly want to keep getting as much free online stuff as possible, but who are clueless about the cost of compromised privacy. At stake are billions of dollars in advertising revenue and profits from the warehousing of rich consumer data, which are dearly valued by retailers selling everything from cars to computers.

Today, privacy has moved from the playbook of shrill consumer activists to the pinnacle of the policy agenda. In Washington, the issue has spawned countless conferences, debates and organizations devoted to finding a solution. Congress and regulatory agencies appear to be baffled by divergent paths forward.

“Big data” has made its way into the popular lexicon. We have seen the global fallout when massive databases are hacked or compromised, and recently witnessed the government’s authority to compel Internet companies to share or surrender their closely held consumer data. Yet, even as new revelations unfold on the fragility and security of data, most Americans are lost in the cloud(s) when it comes to their online personal privacy.

Thus, when I learned Google had pierced the privacy veil to help arrest a Houston man for having and promoting child pornography images in his Gmail account, I applauded its bold action and the ensuing implications.

In this case, Google's decision to report criminal activity to the National Center for Missing and Exploited Children led to a societal outcome that trumps privacy, any day.

Internet companies have been trying, somewhat in vain, to reassure consumers that privacy is paramount, recently arguing against mandatory privacy restrictions in favor of voluntary commitments. The advertising industry has launched an ambitious self-regulatory regimen to govern online behavioral advertising practices, and consumers are now empowered to search the web anonymously, and opt out of almost all online tracking.

We live now in a world where security reigns supreme. In the 13 years since Sept. 11, 2001, most Americans have embraced the government’s right and responsibility to thwart terrorism through advanced surveillance. We also have accepted — albeit grudgingly — government’s right to collect private information on anyone, including a national registry of suspicious citizens, organizations and events. With limited constitutional restraint, the courts have balanced this power by presuming such data collection is in the interest of national security and inures to the greater good. On that there should be little discord, Edward Snowden notwithstanding.

For many citizens today, though, the main concern is no longer government intrusion, but the compilation of data by private concerns--"Big Brother" by another name. In a world where "the Internet of things" is an emerging reality, the challenge for policymakers is to develop a set of rules that balance the consumer’s right to privacy against the marketer’s well-established, constitutionally protected, right to commercial speech. They also should determine whether corporations, like government, have an unencumbered right to collect, store, manipulate and otherwise use, our individual personal data.

When consumers blithely consent to let Google, Facebook and others collect their personally identifiable information as a condition of free and continued use, a social contract is formed and the veneer of privacy fades. There is scant evidence that most Americans know the true cost or character of the private information they relinquish in an ostensibly fair exchange of data for service. That certainly seems true for Millennials, including those in my own household.

As a society, we have evolved to a point where erstwhile concerns of the government as Big Brother seem almost quaint. Government collection of information has been legitimized by real world terror. Not so much when it comes to private actors--until now.

To be clear, I believe most companies are careful and responsible when it comes to the respect and protection of consumer privacy. Were it not so, the market would soon exact its due. But we must acknowledge there is problem with the lack of clear rules. In their absence, neither consumers nor commercial entities can predict what is in, or out of, bounds.

And no matter what your views on privacy, that kind of unsettled uncertainty is not good for business under any circumstances.

(c) Adonis E. Hoffman, 2014