Jul 01, 2020
Report: Boeing Fell Short in Disclosing Key Changes to Max
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By DAVID KOENIG, AP Airlines Writer
A government report says Boeing did not give regulators documents about changes it made in a key system blamed in two deadly crashes of its 737 Max jet, and that officials responsible for approving the plane did not know how powerfully the system could push the plane's nose down.
Government personnel involved in flight tests knew about changes Boeing made to the flight-control system, but engineers responsible for certifying the plane did not, according to the report, which is expected to be released Wednesday.
Engineers for the Federal Aviation Administration didn't perform a detailed examination of the flight-control system, called MCAS, until after the first crash, in October 2018 off the coast of Indonesia.
In that crash and another less than five months later in Ethiopia, MCAS pushed the nose of each plane down and pilots were unable to regain control. The crashes killed 346 people and led regulators around the world to ground every Boeing 737 Max — nearly 400 of them.
This week, Boeing and the FAA began certification flights using FAA test pilots. If the FAA deems the flights satisfactory, it could let airlines resume using the plane later this year, which would be a massive victory for Boeing even as the company contends with dozens of wrongful-death lawsuits filed by families of passengers.
Many of the findings in the report by the Transportation Department's acting inspector general have previously been published in news accounts. But the report provides more evidence for lawmakers who want to overhaul FAA's process for approving new aircraft.
The report was requested by Transportation Secretary Elaine Chao and congressional leaders, including Rep. Peter DeFazio, D-Ore., and Sen. Roger Wicker, R-Miss., whose committees are investigating the FAA's approval of the Max.
In a comment attached to the report, FAA said the inspector general's view “will help FAA to better understand some of the factors that may have contributed to the crashes and ensure these types of accidents never occur again.” The agency said it was working on improvements to the aircraft-certification process.
In a statement, Boeing spokesman Bernard Choi said the company is making sure that improvements to Max “are comprehensive and thoroughly tested." When the plane returns, he said, "it will be one of the most thoroughly scrutinized aircraft in history, and we have full confidence in its safety.”
The inspector general's report is a timeline of the plane’s history from design work in 2012 until 2019, when the plane was grounded.
In early development of the Max, Boeing indicated MCAS would not activate often, and so the system didn't receive a detailed review by FAA. In 2016, as the plane was going through test flights, Boeing changed MCAS to increase its power to turn the nose down under some conditions. But the company did not submit documents to the FAA detailing this change, the inspector general found.
FAA flight-test personnel knew, “but key FAA certification engineers and personnel responsible for approving the level of airline pilot training told us they were unaware of the revision to MCAS,” the inspector general said.
The FAA began reviewing its certification of MCAS more than two months after the Indonesian crash. It was the first time agency engineers had taken a detailed look at the system, according to the report.
As disclosed during a House Transportation Committee hearing last year, an FAA analysis estimated that Max planes might crash 15 more times if MCAS were not fixed. However, the agency let the plane continue to fly while Boeing began fixing the system, a job Boeing expected to complete by July 2019.
The second Max crash occurred in March 2019.
The Associated Press obtained a copy of the report ahead of its publication. The findings were previously reported by Reuters.
David Koenig can be reached at http://www.twitter.com/airlinewriter
Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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The biggest media and technology companies are having an identity crisis
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Media companies are having an identity crisis. And, just like in life, coming to grips with who they are will define the rest of their existence.
It used to be simple: there were content companies, distribution companies and technology companies. Disney was a content company. It made movies and TV shows. Comcast was a distribution company. It provided cable hookups to watch programs that Disney (and many others) make. Google was a technology company. It made phones and set-top boxes and operating system software.
The blurring began about a decade ago, when Comcast acquired NBCUniversal (the parent company of CNBC). AT&T, mostly a tech company, went big into distribution when it acquired DirecTV in 2015, then bought content behemoth Time Warner in 2018.
As television has grown more and more connected to the internet, new layers of distribution have developed. Companies like Roku aggregate streaming applications through hardware. Companies like Netflix aggregate content within a platform.
Some companies, like Comcast, are trying to play at nearly every level of the media supply chain, offering broadband, creating Flex broadband boxes, developing and selling the Xfinity/X1 operating system, creating Peacock as a new digital distribution platform and selling NBCUniversal content to other platforms.
Establishing dominance at every level will be difficult. It's part of the reason why Peacock and AT&T's HBO Max are holding out from carriage deals with Roku and Amazon, as CNBC reported earlier this week. It's also why Google suddenly jacked up its YouTube Live pricing 30% in the middle of the pandemic. Companies can only do so many things well.
The path these companies choose will dictate how much they spend on content, their M&A strategies, and ultimately, their stock prices. Welcome to the new world order of media.Three tiers of "distribution"
There are now three different tiers to content distribution, each relying on the layers below it.
The base level of distribution is the same as it's always been -- a pipe to the home. The only difference is now the connection may be mobile broadband (such as Verizon's 5G Home) instead of cable or fiber.
The next level of distribution is new -- aggregating streaming applications, which are replacing linear networks as the main channels of content, and delivering them in new types of hardware and software.
In the old world, pay-TV companies owned this level of distribution. You'd get a set-top box through Comcast or Dish, and it would contain all the linear TV channels that you subscribed to.
But cable companies often didn't make their own set-top box, and the makers of those boxes (Cisco, Pace, Arris, TiVo, Broadcom, etc.) didn't shift quickly or successfully enough to offer digital TV hardware.
Instead, that market went to Roku and Amazon (Fire TV), which control about 70% of the more than 400 million connected U.S. TVs. Apple (Apple TV), Google (Android TV/Chromecast), Samsung, Comcast (Xfinity/Flex), Microsoft (Xbox) and Sony (PlayStation) also play in this world.
That's a lot of companies aiming to "control the living room," as Lightshed media analyst Rich Greenfield wrote in a note to clients this week. The companies that control your TV can theoretically run your entire home through connected devices and voice applications. It's not a stretch to imagine consumers living in an Apple House or an Android House or an Amazon House.
The third level of distribution are companies aggregating content from different producers within their subscription video services. This is Netflix and Amazon Prime Video and Hulu -- services that have licensed content from other companies and added their own original programming. These companies want you to spend as much of your life as possible within their application. As Netflix has said, the main competition is sleep.
These kinds of services act as mini-cable services or jumbo networks. "Three to five" of them will ultimately succeed, said Starz CEO Jeff Hirsch in an interview.
"Whether it's Peacock, HBO Max, Netflix, Amazon or Disney and Hulu, these guys are going to fighting to be the primary aggregator that serves everybody in the home," Hirsch said. "Eventually it's going to be kids, sports, news and weather. These guys are fighting to replace the traditional cable TV bundle."Defining yourself
The overlap is where things start to get messy -- and where all of the intrigue of media and technology lies right now.
As Hirsch said, it appears AT&T's HBO Max and Comcast's Peacock would like to join the ranks of the large umbrella platforms. They want their applications to be the center of your viewing world -- hence the slogan "HBO Max: Where HBO Meets So Much More." This is partly why both of those companies are currently fighting Amazon and Roku in carriage negotiations.
But it'a not clear yet that Peacock will have the breadth of content to do this.
Then there's ViacomCBS, which is planning to launch its expanded CBS All Access application later this year. Does ViacomCBS also want to be a platform? Its CEO Bob Bakish said earlier this year that he wanted to be both a platform and an arms dealer, keeping some content exclusive and licensing some to other distributors, like it did with Peacock earlier this month.
Can HBO Max get enough subscribers to pay for the amount of content spend it will need to compete with Netflix? Is Apple TV content to be a premium niche service or does it want to be Netflix?
With Disney+, ESPN+ and Hulu, Disney seems primed to be one of the dominant content companies. But so far, Disney doesn't own a living room device. Could Disney acquire Hulu? Could it build something itself? Does it want to be something closer to Comcast? Does Netflix?
"You could end up with somebody that has Charter's Spectrum broadband into the home, with an Apple TV, spending their time watching Peacock," said Hirsch. "It kind of feels like if you put all these companies in a pot and shake it out, it's kind of mud."
Disclosure: Comcast is the owner of NBCUniversal, parent company of CNBC and CNBC.com.
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