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REPUBLICA PRESS
Your Business & Political News Source

Telephones and Telecommunications

Russia, Blocked From the Global Internet, Plunges Into Digital Isolation

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“For the moment I do plan to work in Russia,” he said. “How this may change in the future, especially if YouTube will be blocked, I don’t know.”

Unlike China, where domestic internet companies have grown into behemoths over more than a decade, Russia does not have a similarly vibrant domestic internet or tech industry.

So as it is cordoned off into its own digital ecosystem, the fallout may be severe. In addition to access to independent information, the future reliability of internet and telecommunications networks, as well as the availability of basic software and services used by businesses and government, is at risk.

Already, Russian telecom companies that operate mobile phone networks no longer have access to new equipment and services from companies like Nokia, Ericsson and Cisco. Efforts by Russian companies to develop new microprocessors were in doubt after Taiwan Semiconductor Manufacturing Company, the largest maker of essential semiconductors, halted shipments to the country. Yandex, Russia’s largest internet company, with a search engine more widely used than Google in Russia, warned it might default on its debts because of the crisis.

“The whole IT, hardware and software market that Russia relies on is gravely damaged right now,” said Aliaksandr Herasmenka, a researcher at the University of Oxford’s program on democracy and technology. The Russian authorities could respond by loosening rules that have made it illegal to download pirated software, he said.

The Ukrainian government has also pressured internet service providers to sever access in Russia. Officials from Ukraine have asked ICANN, the nonprofit group that oversees internet domains, to suspend the Russian internet domain “.ru.” The nonprofit has resisted these requests.

Denis Lyashkov, a self-taught web developer with more than 15 years of experience, said Russia’s censorship campaign was “devastating” for those who had grown up with a less restricted internet.

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U.S. Reaches Agreement to Release Huawei’s Meng Wanzhou

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For its part, the Chinese government has underwritten the cost of installing Huawei gear, in an effort to dominate networks from Latin America to the Middle East.

Ms. Meng came to personify that effort. Her determination to wire up Tehran, at a time in which the West was seeking to contain Iran’s nuclear program, attracted protests among American officials. For that reason, some China hard-liners objected on Friday to news that the charges were being dropped.

“It sends the wrong message to Chinese business executives around the world that it’s permissible to engage in fraudulent transactions with Iran and North Korea,” said Michael Pillsbury, a scholar at the Hudson Institute who was a top China adviser to former President Donald J. Trump. “I fear that another part of the message has been that the Biden team approved selling Huawei some types of chips and technology, which will also undercut the message that Huawei should not be involved in 5G telecommunications systems of our friends and allies.”

Huawei mustered a furious effort in Washington and in Canada to get Ms. Meng released. But she refused to plead guilty to bank and wire fraud charges stemming from Huawei’s deal in Iran. Months later, she agreed to a deferred prosecution agreement, which will ultimately lead to dropping all the charges against her.

The case began when Canadian authorities arrested Ms. Meng, 49, in December 2018, at the request of the United States. She owns two imposing homes in Vancouver, and was allowed to stay in them with an ankle bracelet to track her whereabouts. She eventually settled at her gated, seven-bedroom mansion in the city’s exclusive Shaughnessy neighborhood, where she received painting lessons and private massages.

She instantly became one of the world’s most famous detainees — especially because she is the daughter of Huawei’s famous founder and chief executive, Ren Zhengfei, a former People’s Liberation Army officer who turned his small telecommunications firm into a national champion.

In January 2019, the Justice Department indicted Huawei and Ms. Meng. While the charges focused on bank and wire fraud, in announcing the indictment, the Justice Department alleged that Huawei employees, including Ms. Meng, lied to bank officials when asked about whether Huawei was unlawfully engaged in business with Iran, knowing that U.S. sanctions on Tehran would prevent the banks from financing the sale.

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How AT&T Got Here, and What’s Next.

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AT&T is painting a rosy picture for the future of its media business, which it will spin off and merge with Discovery. That new streaming giant is a formidable stand-alone competitor to Netflix and Disney. The move leaves AT&T to focus on its telecom business, which looks less bright after being overshadowed by its expensive — and ultimately futile — deal-making binge in media and entertainment under its previous chief, Randall Stephenson.

The DealBook newsletter explains how AT&T got here, in three key deals:

  • A $39 billion bid to buy T-Mobile. After regulatory pushback, in 2011 AT&T walked away from an effort to become the country’s largest wireless company. T-Mobile paired up instead with Sprint, and the two went on to buy huge amounts of spectrum in the high-stakes battle for 5G, leaving AT&T behind as it lobbies regulators to step in. The failed deal hit AT&T with a $3 billion dollar breakup fee, at the time the largest ever.

  • The $67 billion acquisition of DirectTV. In 2015, AT&T bet on cable TV as a way to amass customers whom it could eventually convert to streaming. But DirectTV bled subscribers as customers cut the cord, and AT&T unloaded a stake in the company last year to TPG that valued DirectTV at about a third of its acquisition price. The deal also cost AT&T about $50 million in advisory fees, according to Refinitiv.

  • The $85 billion acquisition of Time Warner. In 2018, Stephenson called the deal a “perfect match,” but the combined group struggled to invest in its telecom business while also spending enough to compete with the entertainment specialists at Netflix and Disney. Three years later, AT&T is now spinning off the company so it can (re)focus on its quest for 5G market share. AT&T paid $94 million in advisory fees to put the two companies together and an estimated $61 million to split them apart.

buy another independent studio, MGM.

In a sign of the pressure that players face to spend big to bulk up, shares in Comcast, the telecom company that owns NBCUniversal, fell 5.5 percent on Monday.

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AT&T’s WarnerMedia Group to Merge With Discovery

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It’s as if Logan Roy, the fictional patriarch of the Waystar Royco media empire on HBO’s popular series “Succession,” masterminded the deal himself: AT&T has thrown in the towel on its media business and decided to spin it off into a new company that will merge with Discovery Inc.

The transaction will combine HBO, Warner Bros. studios, CNN, TNT, TBS and several other cable networks with a host of reality-based cable channels from Discovery such as Oprah Winfrey’s OWN, HGTV, the Food Network and Animal Planet.

But it raises numerous questions about what that will mean for popular shows and streaming platforms, whether entertainment bills will go up or down, or what will happen to the people working at WarnerMedia and Discovery.

WarnerMedia is known for producing some of the industry’s biggest theatrical and television hits.

HBO last year captured more Emmys than any other network, studio or platform, and its hit shows include “Succession,” “Curb Your Enthusiasm” and “Last Week Tonight With John Oliver.” It also has a huge library that includes “The Sopranos,” “Game of Thrones” and “Sex and the City.”

Netflix, the industry leader, has over 200 million subscribers, and everyone else is far behind.

Both WarnerMedia and Discovery have invested heavily in streaming. WarnerMedia has spent billions building HBO Max, which together with the HBO cable network has about 44 million customers. Discovery has 15 million global streaming subscribers, most of them for its Discovery+ app.

The companies plan to invest more in both services to get those numbers much higher. David Zaslav, the chief executive of Discovery, who will run the new business, said on Monday that he envisioned hundreds of millions of subscribers around the world, but that will be tough as Netflix and Disney invest in new shows of their own to keep a grip on the market.

Jason Kilar, who was hired to run AT&T’s media group only last year, is most likely on his way out. He was kept in the dark about the deal until a few days ago, and he has hired a legal team to negotiate his departure, according to two people briefed on the matter.

But it could mean the elevation of other executives within WarnerMedia. On Monday, Mr. Zaslav praised Toby Emmerich, the head of the film division, Casey Bloys, who runs HBO, and Jeff Zucker, the leader of CNN. Mr. Zucker and Mr. Zaslav are also longtime golfing buddies.

When asked about his plan for the management team, Mr. Zaslav said he would not favor Discovery executives.

“Philosophically, our view is we don’t know better,” he said. “There’s a reason WarnerMedia is where it is today.”

The companies expect the deal to be finalized in the middle of next year, and they anticipate annual cost savings of $3 billion. That usually means layoffs are coming.

WarnerMedia already went through several rounds of deep staff cuts after AT&T’s purchase of the company in 2018 as Mr. Stankey, who led the unit for a time, slimmed down the operations. Executives and managers were let go as he combined HBO, Warner Bros., CNN and the other cable networks under a single management team.

When Mr. Kilar came aboard last year, he cut further. Over 2,000 employees were laid off in the process.

To realize $3 billion in cost savings will inevitably mean more layoffs — at both WarnerMedia and Discovery. Mr. Zaslav said there was “a treasure trove of talent” at WarnerMedia, and emphasized the fact that Discovery doesn’t make scripted shows.

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HBO Max Gains Traction in a Crowded Field

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AT&T added 2.7 million new customers to HBO and HBO Max in the first quarter, a boost for the company’s new streaming effort in an increasingly crowded field.

The company’s WarnerMedia division, which includes HBO, recorded $8.5 billion in revenue for the period, a 9.8 percent jump over last year, when theater sales and advertising revenue plummeted during the pandemic. Led by the chief executive Jason Kilar, WarnerMedia also includes the cable networks CNN and Turner and the Warner Bros. film studios.

HBO is the cornerstone of AT&T’s media strategy, and the company sees HBO Max as a way to keep its mobile customers from fleeing, offering the streaming platform at a discount to its phone subscribers.

In its report on the year’s first quarter, AT&T stopped disclosing the number of active HBO Max users, obscuring how many people are actually tuned into the new streaming service.

reported earnings on Tuesday, remains the leader, with 67 million customers in the U.S. and nearly 208 million in total.

Netflix’s dominance has started to wane, in part because of newer entrants like HBO Max and Disney+. Netflix added four million new subscribers in the quarter, with a little more than 400,000 in the U.S.

Netflix chalked up the comparatively sluggish growth to the production slowdown that came when Hollywood studios largely stopped making new shows and films during the pandemic. The company said it expected a more successful second half of the year, when returning favorites and highly anticipated films become available.

In the case of HBO Max, the streamer likely got a boost from an unorthodox strategy championed by Mr. Kilar: The sibling company Warner Bros. plans to release its entire lineup of 2021 films on HBO Max on the same day they’re scheduled to appear in theaters. The announcement rumbled throughout Hollywood, angering agents and filmmakers who stood to lose out on crucial bonuses and commissions by short-circuiting the old theatrical release schedule.

global expansion of HBO Max starting this June, along with a lower-cost version of the service that will include commercials. The company has about 19.7 million HBO customers overseas that it hopes to convert into HBO Max subscribers.

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Lending Apps in India Shame Borrowers Who Can’t Pay Money Back

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HYDERABAD, India — The harassing calls began soon after sunrise. Kiran Kumar remained in bed and, for hours, thought about how he was going to end his hostage of a life.

The cement salesman had initially borrowed about $40 from a lender through an online app to supplement his $200-a-month salary. But he couldn’t pay the mounting fees and interest, so he borrowed from others. By that morning, Mr. Kumar owed roughly $4,000.

Even worse, the lenders had the phone numbers of those closest to him, and were threatening to make his problems public.

“If I am labeled a fraud in front of everyone, my self-respect is gone, my honor is gone,” Mr. Kumar, 28, said in an interview. “What is left?”

devastated by the impact of the coronavirus on the Indian economy.

About 100 loan apps have been removed from the Google platform, according to the Indian government. A Google spokesperson said it reviewed hundreds of loan apps and removed those that violated its terms.

The investigations are raising alarms in India over the vulnerability of a population of 1.3 billion who are still getting accustomed to digital payments. Online transactions in India will reach more than $3 trillion by 2025, according to PwC, the consulting firm. Further fraud findings could spur the government, which has already limited the personal data that online companies can use, to take a tighter grip on the industry.

The apps also speak to the global nature of online fraud. Many of the companies use techniques that flourished in China two years ago before the authorities there shut them down, and that have since reappeared elsewhere.

The loan apps emerged at a desperate time. The government enacted a tough, two-month lockdown a year ago to contain the virus, plunging India into a deep recession. Millions were thrown out of work. Traditional forms of lending, like banks and microlenders, were temporarily closed.

With names like Money Now, First Cash, Super Cash and Cool Cash — according to police documents — the apps came and went on Google’s app store in India, some reappearing with a slight change of identity. Most were built with off-the-shelf software that made their creation as easy as starting a blog, said Srikanth Lakshmanan, one of the coordinators of Cashless Consumers, a collective of technology volunteers who have been studying the apps.

Aasra.info for more resources.

Cao Li contributed reporting from Hong Kong.

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