News Roundup: FCC Ruling May Lead to Better Internet Service; Fundraising Updates; etc.
The FCC voted to raise the minimum thresholds needed to meet the definition of broadband. Internet service providers now must provide download speeds of at least 25Mbs and upload speeds of at least 3Mbps to call their services “broadband.” The previous standard was 4Mbps for download speed and 1Mbps for upload speed.
While this sounds pretty innocuous, the new definition may have some interesting consequences.
A little background: In 1996 Congress mandated that the FCC report on whether broadband is being deployed to all Americans in a reasonable and timely fashion, and Congress defined broadband as high-quality capability that allows users to originate and receive high-quality voice, data, graphics, and video.
The first and most obvious consequence of the FCC’s new definition is that providers of slower Internet services (like DSL) won’t be able to label themselves as broadband providers anymore, or at the very least it will be more challenging for them to do so.
Another consequence may be that slower Internet providers don’t get subsidies from the FCC, which will issue $9 billion in subsidies to expand broadband services.
Last, this new definition may imperil the pending Comcast-Time Warner merger, as the two companies currently provide 60-70% of our nation’s broadband services. With little competition in the newly defined broadband market, the Department of Justice may determine the merger runs afoul of antitrust laws. Alternatively, the FCC may determine the merger is not in the public’s best interest given the lack of competition in the broadband industry.
Another successful IPO today, as Shake Shack’s trading price more than doubled. This is good news for Shake Shack, but it’s better news for the investment bankers. The investment bankers take the risk and reward of the IPO by purchasing the shares at a set price from a company and then selling them to the public for whatever they can get. Shake Shack probably left some money on the table when it reached its agreement with its investment bankers. But at least the public is excited about the company.
Despite depressed valuations for Bitcoin, Coinbase—a secure hosted Bitcoin wallet—raised $75 million from an impressive array of investors that includes Andreessen Horowitz, Union Square Venutres, Ribbit Capital, The New York Stock Exchange, a subsidiary of USAA, and BBVA.
Quantum computing company D-Wave Systems raised $29 million to build the computers of the future.
Barb Darrow urges caution when entering into Amazon Web Service’s customer agreements, and is particularly concerned about a clause requiring users of AWS services to waive rights to challenge the intellectual property rights of Amazon, its affiliates, its vendors, its customers, its licensors, etc.
In a perhaps unrelated story, Amazon is reportedly creating a platform to help inventors create and sell their products.
Federal appellate courts have split on whether companies commit securities violations under Section 10(b)(5) if they fail to disclose information required by the SEC. The Ninth Circuit had previously ruled that such an omission, by itself, would not create 10(b)(5) liability. But earlier this month, the Second Circuit ruled that such an omission would create 10(b)(5) liability. The parameters of 10(b)(5) are a big deal, because violators of the law can face criminal penalties and multimillion dollar judgments.
Massachusetts followed in the footsteps of Washington and a handful of other states by passing legislation to create a state crowdfunding exemption. Massachusetts companies will now be able to raise up to $2 million dollars from Massachusetts residents when complying with the new legislation.
Taylor Swift has trademarked the phrases “This Sick Beat,” “Nice to Meet You. Where You Been?” and a few other phrases which feature in her most recent album. It seems likely she’ll use these phrases for apparel or other swag.
Noteworthy Advice for Startups