It has always been true in ALL companies that there the purchasing folks/selection folks can be bribed. Why do you think there are "free trips", golf outings, dinners. These are all winked at forms of bribery. If you are doing this at ANY level, you are putting your ethics at risk.
The difference with the alternate carriers was their MANAGEMENT made all kinds of personal wealth growth decisions by bilking their suppliers for Stock.
re: Overheard in DallasIt has always been true in ALL companies that there the purchasing folks/selection folks can be bribed. Why do you think there are "free trips", golf outings, dinners. These are all winked at forms of bribery. If you are doing this at ANY level, you are putting your ethics at risk.
Ah ethics, what a nice theory to think that participants in our industry would strive for.
Unfortunately, the libertarians' ideal of market self regulation and the real world outcome of regulatory capture seem to have the same outcome, i.e. little to know controls of bribery and graft leading to many unethical behaviors, the least of which is biased "research" claiming serving one building within a zip code as broadband for the entire area and defining broadband as 200Kbs.
Meanwhile the Supreme court make decisions such that proving parallel conduct and uncompetitive tactics by incumbents in now effectively untouchable by the judicial system.
Glad we federalized, um or, deregulated the industry. Ethics and behavioral controls have really improved! :-(
With the June 2 vote by the Federal Communications Commission on a series of rule changes that would dramatically reshape the nation's media landscape rapidly approaching, it is abundantly clear that honest players in the debate have determined that making the changes would spell disaster for democratic discourse, cultural diversity and the public interest that the FCC is supposed to defend.
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The examination of FCC travel records by analysts with the Center for Public Integrity reveals that FCC commissioners and top staffers have been flown to hundreds of conferences, conventions and broadcast-industry events in Las Vegas (330 trips), New Orleans (173 trips), New York (102 trips), London (98 trips), as well as San Francisco, Miami, Anchorage, Palm Springs, Buenos Aires, Rio de Janeiro, Hong Kong, Beijing and Paris. Often, according to the study, the FCC aides merely attend events as observers GÇô but they do so in style, spending the night in elite accommodations such as the Bellagio Hotel and Casino in Las Vegas and at the resorts of Amelia Island, Florida, and Hilton Head, South Carolina.
This sort of high-flying junketeering costs a lot of money. But money, it seems, is no object when media conglomerates and their lobbying arms are wining and dining the people who regulate the scope GÇô and potential profitability GÇô- of their empires.
Over the past eight years, according to the Center for Public Integrity, FCC commissioners and staffers have taken almost $2.8 million in trips that were paid for by the interests they are supposed to police. Companies with big business before the FCC this spring, such as Viacom and Rupert Murdoch's News Corp., have paid for trips. So too have lobbying groups such as the National Association of Broadcasters ($191,472 for junkets by 206 FCC officials) and the The National Cable and Telecommunications Association ($172,635 for junkets by 125 FCC officials). While some of these groups and companies may disagree on particular points, the bottom line, Media Access Project president Andy Schwartzman told the Center for Public Integrity researchers, is that the firms and interest groups that pay for this travel can all buy "access" and "personal face time" with the men and women who set the rules that media concerns must live by. In contrast, explained Schwartzman, "It's impossible for the public to get the same kind of access with those officials."
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While FCC officials defend the junkets, offering arguments like that of Commissioner Kathleen Abernathy, who issued a statement saying that accepting the expense-paid travel opportunities "serves a crucial information-gathering purpose that is necessary to effective decision making."
But Consumer Federation of America research director Marc Cooper, one of the savviest observers of media policy making in the U.S., argues that, "It is silly to say they [FCC officials] don't lose some of their objectivity when they are being wined and dined like they are at these industry events."
Center for Public Integrity director Charles Lewis is blunter. Assessing the study's findings, he said, "The idea that the FCC can render an objective, independent judgment about media ownership is laughable."
How cozy a relationship can all-expense-paid junkets to international hotspots buy?
One indicator may be found in a study by the Center for Public Integrity's data gathering initiative, that details how the FCC GÇô which receives millions of dollars in federal funding to conduct authoritative research that supposedly allows it to serve the public interest GÇô frequently relies on information from the private sector.
This study, according to the Center's researchers, revealed that:
* "(The) FCC's reliance on non-government private data is so ingrained that when public interest groups asked for access to data underlying a series of media ownership reports last fall, the FCC relented only after issuing a quasi-judicial 'protective order' meant to keep the information secret." * "When the Center was constructing its database of media companies, researchers and reporters were repeatedly referred by FCC staff to private companies for basic information on ownership, audience reach and cable subscribers. Getting market share information, which is key when reviewing whether broadcasters are within existing FCC limits, was all but impossible without going outside the agency."
In other words, FCC officials who let the industries they regulate pay for their junkets are also willing to let the private-sector provide the make-or-break "research" on which the commision will decide what is in the public interest.
"The report is astonishing," says Lewis, "because it reveals more than ever before just how incestuous the relationship is between the Federal Communications Commission and the broadcasting and cable industries it is supposed to regulate."
re: Overheard in DallasDo you think new technology from incumbents is less buggy than that from startups?
I think the reality is that much in new technology gets debugged in the field. When I was involved in software for the space program the trend was towards leveraging Commercial Off the Shelf (COTS) software because the quality assurance costs of custom sw were so high and quality wasn't as good (more on that below). Many of today's startups outsource QA to low cost countries and have very limited capabilities to debug problems in the field, not to mention the limited field exposure in the first place. I don't think anybody in their right mind would deploy in mass something with equipment provided by a startup, particularly today's startups where the primary business objective seems to be for the control investors to liquidate their holdings to a naive public (not to mention the cozy 401K deals) at a maximum profit for themselves.
This report documents the results of testing performed using commercial off-the-shelf (COTS) routers and Internet protocols (IPGÇÖs) to determine if COTS equipment and IP could be utilized to upgrade NASAGÇÖs current Space Transportation System (STS), the Shuttle, and the International Space Station communication infrastructure. Testing was performed by NASA Glenn Research Center (GRC) personnel within the Electronic Systems Test Laboratory (ESTL) with cooperation from the Mission Operations Directorate (MOD) Qualification and Utilization of Electronic System Technology (QUEST) personnel. The ESTL testing occurred between November 1 and 9, 2000. Additional testing was performed at NASA Glenn Research Center in a laboratory environment with equipment configured to emulate the STS. This report documents those tests and includes detailed test procedures, equipment interface requirements, test configurations, and test results. The tests showed that a COTS router and standard transmission control protocols and Internet protocols (TCP/IP) could be used for both the Shuttle and the Space Station if near error-free radio links are provided.
re: Overheard in DallasThose were alternate carriers and CLECs. RBOCs have strict policies against such things.
Right, RBOCs are ethical organizations and will be even more so with continued deregulation. Hey, wasn't it Michael Powell complaining about the Mercedes divide when congress was asking about the digital divide? I suspect he's got his fancy car now so at least that inequity has been addressed.
re: Overheard in DallasI also find it curious that such conflicts have never been written up as an article on LR.
LR is on the decline. The chances of them doing any real investigative reporting is likely nil. They don't even put up a real broadband poll, i.e would you prefer VZ to use our monthly payments to secure capital to deploy 1Gbs or would rather VZ spend the money on crap like FiOS (not to mention paying T's Whitacre a "competitive" wage?)
Also, from what I hear, it's near impossible to get a VC to publish their real returns, so asking them to publicize their inside dealings may be a bit much to dream of. Hey, financiers have to make money some way and it seems building real companies and real cash flows isn't really the end objective anyway.
re: Overheard in DallasSeven: Name one or it is just speculation.
You're right: one possibility is that without my naming one, it is only speculation. There is another possibility.
RJ: Also, from what I hear, it's near impossible to get a VC to publish their real returns, so asking them to publicize their inside dealings may be a bit much to dream of.
That was not what I am proposing. An example: A smart shareholder-lawsuit lawyer is going to examine conflicts-of-interest. Eventually, someone is going to subpoena information from a CEO /BoD/other officers for their investments.
As soon as it is revealed that the CEO of CorruptCo has an investment with a particular VC, and that the VC has invested in StartupCo which is acquired by CorruptCo for too much money, then the Shareholder-Lawsuit lawyers are going to make a ton of money.
Someone at LR might also uncover such a hard-hitting story. But that would require some pretty good contacts and probably somebody with an ax to grind, perhaps somebody who was screwed by their investors, in order to lay out one of these arrangements.
re: Overheard in DallasAs soon as it is revealed that the CEO of CorruptCo has an investment with a particular VC, and that the VC has invested in StartupCo which is acquired by CorruptCo for too much money, then the Shareholder-Lawsuit lawyers are going to make a ton of money.
Stevery; I have no idea if EBAY execs had personal gain associated with the Skype deal, but I would think that their executives would have learned how to shield themselves from any shareholder lawsuits. They've been through it once and settled for $3M so they should know the rules and how to circumvent them by now. Also, I think they could argue that the price was set by the market (even if the market didn't really consist of arms length actors.) CorruptVC has many companies in which to pull strings and recent supreme court rulings may makes it near impossible to connect CorruptCoOne and CorruptCoTwo. Finally, there was no perceptable shareholder loss associated w/the write-down. So I think the Skype investors, whoever they are, won't need to be moving their winnings to offshore accounts.
Your example would require some more information before it became a problem.
Let's say that CorruptCEO gave $1M to VC to put into a $100M investment pool. Two things you should note.
The CorruptCEO is a vast minority of any investor and needs returns from many companies. Also, the dollars from that CEO to any individual startup are a vast minority of the funds involved in the startup.
Now to the acquisition side, I continue to state that almost every single acquisition that is made is priced well above its actual value. That is because most of these are made with purchaser's stock, and Management/BODs treat it as free. This is NOT true from a shareholders perspective, as the dilution affects the value.
From a financial standpoint, the value of ANY acquisition is the value of the discounted cash flow of the deal + the net value of any acquired assets. This would have to include any view to changes in the acquired company's business parameters. This can affect the value of the deal quite considerably.
As to overpaying, the reality is the value is ACTUALLY provided to the board by the bankers involved. A fair value opinion has to be done as part of the process. It is very clear that management has a lot of influence over that, but has to be somewhat defensible.
So even if your CorruptCEO wanted to get that single company acquired to line his pockets, it is not clear that any such acquisition would do so. Any such vested interest SHOULD be disclosed to a BOD. If it is not, then that represents one form of ethics issue. If it is and the BOD still proceeds with the acquisition, then there is no actual ethical issue.
If I look at Skype - Ebay, my commentary has been and continues to be that I did not understand the cash component of the deal. If I were an Ebay BoD member, I would want to understand what I am getting for my >$1B that I could not get by spending that money myself. For example:
1 - Could I spend $250M to develop VoIP enhancements to bidding?
2 - Could I spend $250M to develop a customer list (my idea is make a $2M lottery that I give away money per month for verifiable customer info)?
All of that ignored any stock component. That was my issue with that particular deal. I did not see why the money was not spent in a better way.
re: Overheard in DallasThere are several issues for start-ups and large equipment vendors with the current model.
It is virtually impossible to get startup funding for a telecommunications equipment company these days. The VCs know that the tier 1 companies will generally not buy from a startup and therefore there is no high valuation out by acquistion or IPO.
Verizon is the most onerous. Historically, they have used the startups to understand innovation and guide the incumbents to move in their preferred direction.
Beyond that, the current RFP process creates overspending and lack of monies for innovation in the industy. Case in point, the current Packet Optical Device RFP has six large equipment vendors investing heavily in development for that opportunity. Only one or two will be selected and deployed. The aggregate money spent by the industry on this will likely not be recouped. Hence several companies will lose money that could have been spent in other ways.
Unless the RBOCs focus on providing opportunities and collaboration with startups, there will not be any VC money flow. In terms of the large equipment companies, there either needs to be more consolidation or specialization.
Stevery,
Name one or it is just speculation.
It has always been true in ALL companies that there the purchasing folks/selection folks can be bribed. Why do you think there are "free trips", golf outings, dinners. These are all winked at forms of bribery. If you are doing this at ANY level, you are putting your ethics at risk.
The difference with the alternate carriers was their MANAGEMENT made all kinds of personal wealth growth decisions by bilking their suppliers for Stock.
seven