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Facebook, Google, Amazon May Be Caught Up In Netflix Regulatory Flap

Netflix ’s ( NFLX ) revelation that it has reduced the quality of video streaming to the wireless customers of AT&T ( T ) and Verizon Communications could complicate Web regulatory issues for Internet giants such as Alphabet ’s ( GOOGL ) Google, Facebook ( FB ) and Amazon.com ( AMZN ), says a Guggenheim Partners analyst. Netflix last week fessed up to throttling video to AT&T and Verizon ( VZ ) customers for several years, but not to the wireless subscribers of Sprint ( S )or T-Mobile US ( TMUS ). Netflix says it lowered video quality to protect its own customers from exceeding the monthly data caps of AT&T and Verizon. Sprint still offers unlimited data plans while T-Mobile typically slows network speeds rather than imposing overage fees, said a report. Paul Gallant, an analyst at Guggenheim, says Netflix’s policies do not violate federal “net neutrality” rules, which bar Internet service providers from throttling, blocking or prioritizing Web traffic. The rules apply only to ISPs, not Internet firms, noted Gallant. The Federal Communications Commission in February, 2015 expanded net neutrality rules to wireless networks for the first time. A federal court is expected to rule on a legal challenge to the FCC’s new net neutrality rules in April. “Getting ‘caught’ doing this may put Netflix on its heels in Washington at a time when important (Internet) policies like interconnection pricing and zero rating are fluid and could go either way,” said Gallant. T-Mobile and Comcast ( CMCSA ) have adopted video policies referred to in the telecom industry as “zero rating” because streaming does not count toward monthly data caps and there are no payments involving content partners. FCC chairman Tom Wheeler has pushed for competition between Internet video providers, also called over-the-top (OTT), and the pay-TV industry. “ISPs have long complained that they are being unreasonably singled out for regulation within the Internet ecosystem. This Netflix report may highlight for government officials the leverage possessed by large Internet companies,” added Gallant. “Slowing streams to specific wireless (users) implies a range of steps a large edge provider could take to disadvantage an ISP relative to its competitors. With video becoming a rising priority of Internet giants like Google , Amazon, and Facebook , the issue of interconnection fees and zero-rating services will remain important battlegrounds — with the current FCC actively supporting OTT-based competition.” Image provided by Shutterstock .

Pandora Founder Tim Westergren Returns As CEO, Stock Hits Sour Note

Pandora Media ( P ) surprised Wall Street on Monday by announcing that current CEO Brian McAndrews is out, to be replaced by co-founder and former CEO Tim Westergren, even as buyout rumors continued to swirl around the Internet music company. Pandora, the top music streaming service, is facing increasing competition from Apple ( AAPL ) Music, privately held Spotify, Amazon.com’s ( AMZN ) Prime Music and Google Play Music, a unit of Alphabet ( GOOGL )-owned Google. Pandora stock was down more than 9% in midday trading in the stock market today , near 10. Pandora stock is down nearly 40% in the past 12 months and slid to an all-time low of 7.10 on Feb. 12 over concerns about competition from Apple Music and others, as well as the company’s slowing user growth and engagement. In a statement, Pandora said Westergren will take over immediately from McAndrews, who has been Pandora’s CEO for less than three years. Westergren co-founded the Internet radio company 16 years ago and served as CEO from 2002 to 2004. “The CEO change came as a surprise, and the timing certainly isn’t optimal from a perception standpoint, given that Pandora’s share price had been rebounding from its 52-week lows,” said Stifel analyst John Egbert said in an industry note Monday. “It’s unclear what the root cause of the change was, whether it was driven by the board, Mr. McAndrews’ decision to leave, or Mr. Westergren’s strong desire to return to an operating role.” Stifel, however, mainted a buy rating and price  target of 16 on Pandora stock. In the company’s statement, Westergren said Pandora is “on the cusp of realizing an extraordinary vision: fundamentally changing the way listeners discover and enjoy music, and the way artists build and sustain their careers. We are pursuing a once-in-a-generation opportunity to create a massive, vibrant music marketplace. We have the audience, the technology infrastructure, the monetization engine and most importantly the right team with the passion and commitment to do it.” In other changes, Pandora CFO Mike Herring will now also serve as president, overseeing revenue, licensing, finance, legal and IT functions. Sara Clemens will now serve as Chief Operating Officer after previously serving as Chief Strategy Officer and will oversee Ticketfly, the live-event and ticket sales business that Pandora acquired last year to expand its offerings and take on rivals Apple Music and Spotify. Also, independent board member Jim Feuille takes over from Westergren as chairman. In the near term, Pandora will see higher content acquisition expenses, say analysts, following a ruling in December from the Copyright Royalty Board. This panel determines the rate to be paid to music labels and artists each time one of their songs is played on the Internet, under a statutory license for the period stretching from Jan. 1, 2016, to Dec. 31, 2020. Pandora on Thursday said it was expanding the size of its board from nine seats to 10, with the addition of Anthony Vinciquerra, He is a senior adviser with private equity firm TPG (formerly Texas Pacific Group), in its technology, media and telecom group. According to Dealreporter, Pandora is attracting buyout interest  from such companies as Amazon.com, Alphabet ( GOOGL )-unit Google and Yahoo ( YHOO ). The New York Times reported in February that Pandora was “working with Morgan Stanley to meet potential buyers,” and has held talks about putting itself up for sale. Shares of Apple, Alphabet and Amazon were all down a fraction in midday trading Monday.  

Apple iPhone 8: 5.8″ OLED Display, Glass Case In 2017: Analyst

Apple will revamp its iPhone lineup in 2017, according to a new note by Ming-Chi Kuo at KGI Securities, according to various reports. The 2017 smartphone will have a curved glass body, similar to the iPhone 4/4s “flat sandwich” design, Kuo said, AppleInsider reported .  But instead of flat glass it will likely have curved glass front and back. The 5.8″ iPhone — presumably the iPhone 8 — will use AMOLED displays. While there have been widespread rumors that Apple would turn to OLED displays, Kuo had previously predicted that they wouldn’t be used until after 2017. Organic light emitting diode displays are thinner and more power-efficient than liquid crystal displays. They also have higher color saturation and are more flexible than LCDs. Samsung, Motorola, LG, the  Alphabet ( GOOGL ) Google Nexus and the upcoming HP Inc. ( HPQ ) HP Elite x3. The 2017 iPhone also will use some form of wireless charging , 9To5 Mac said, citing Kuo’s note. It will also have some new biometric features, possibly facial or eye recognition. The 5.8-inch phone could replace the current 5.5″ size entirely if there is sufficient OLED supply, Kuo said. If not, it could be a new high-end model on top of the 5.5″ design. Apple also will have a 4.7-inch model in either case. The iPhone 7 due out later this year may not be radically different from the iPhone 6/6s, aside from being thinner and having no headphone port.