Recently in Telecom Category

Security expert Bruce Schneier quotes the Wired story on the NSA's wiretapping and data-mining program at AT&T. He also links to Narus, the likely maker of the NSA/AT&T Big-Brother machine, and more detailed discussion at the Daily Kos.

Narus's website says it provides "real-time traffic insight." You don't say. Here's the website for their NarusIntercept suite of equipment and software.

Wow.

A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit rejected the Federal Communication's Commission's "broadcast flag" rule yesterday. [Opinion here.] Ernie Miller is tracking the online press reports.

The "broadcast flag" is a copy protection mechanism for digital TV broadcasts. The FCC's regulations required manufacturers of digital TV receivers to design their products to recognize when a digital TV transmitter had set the "broadcast flag" on a digital TV signal. If the digital TV receiver detected the "broadcast flag," it was required to send the content only to certain digital outputs that would recognize the broadcast flag or to an analog output. It permitted receivers to record the TV broadcast only if they could do so in a way that would make it impossible for another device to copy the recording.

In other words, the rule is designed to prevent people from recording a digital TV transmission on a computer and then sharing it with anyone else or taking clips from it. The rule works by requiring manufacturers to make equipment in a way that honors the demands of TV producers.

The Court of Appeals held that the FCC lacked authority to regulate what equipment does to recordings of transmissions after receiving them. The FCC's job is to regulate how transmissions work, not how people use recordings.

The FCC may continue to press the case, and the intervening Motion Picture Association of America (MPAA) will most likely request en banc review or petition the Supreme Court for certiorari even if the FCC does not. If the courts deny further review or decide against the MPAA and FCC, the MPAA will lobby Congress to extend the FCC's authority. MPAA could ask Congress to codify the broadcast flag regulations in a statute, but it might prefer to have the FCC continue oversight of the rules and retain the ability to change them.

I oppose the notion that the MPAA should dictate how computer equipment is built and how it treats data, and I don't like what I perceive to be a general atmosphere of overreaching at the FCC, so I like the D.C. Circuit's ruling. I also think it's founded on good legal analysis and reached the right conclusion as a matter of law.

The "broadcast flag" regulations appear in the Code of Federal Regulations at 47 C.F.R. 73.9000-73.9009 and 47 C.F.R. 76.1901-76.1909.

See also Susan Crawford's discussion of the ruling and FCC jurisdiction, with a link to her article on the topic.

[Via Slashdot:]

Instead of a guy constantly repeating "Can you hear me now?" over the phone, Verizon tests its network using a fleet of specially-equipped Ford Taurus wagons. Because it's driving around anyway, it also tests its competitors' networks.

Jon Gales of MobileTracker went on a ride-along with a Verizon Wireless network tester in Florida and wrote up this report, with photos.

I use one of Verizon Wireless's competitors. I'm pretty satisfied with my wireless phone service, but I can never be sure that my phone will work inside buildings. My calls sometimes drop when I'm indoors, especially at the fringes of a wireless cell or in buildings with a lot of steel, concrete, or stone (for example, in downtown Denver).

Not even Verizon Wireless's would want to promise perfect indoor service, though, and Jon Gales's article demonstrates that Verizon Wireless's testing program is focused on outdoor reception.

Telecommunications industry trivia: Verizon Wireless (VAW) LLC is a separate organization from Verizon Communications, Inc. The latter company is most well-known as the incumbent regional Bell operating carrier in the northeastern United States, though it also has three other divisions. Verizon Wireless is jointly owned by Verizon and Vodafone Group Plc. Vodafone is a British wireless carrier, spun off from Racal Electronics, that went on an acquisition spree in the late 1990s and early 2000s. There was a minor controversy in 2000 over whether the FCC should allow a company with significant foreign ownership to acquire U.S. radio licenses. Discussion of the issue tapered off, and we now have both Verizon Wireless and T-Mobile. (Deutsche Telekom AG owns T-Mobile.)

I've only dealt with Verizon Wireless once. The people I talked to in the Court Orders & Subpoenas division of their legal department were courteous and efficient, but they're not the people that most customers have to deal with (one hopes!).

Slashdot linked a story by the BBC reporting that the U.S. hosting service The Planet terminated the contract of the Iranian Student News Agency (ISNA).

According to the article, ISNA is "semi-official" and may have some connections to the Iranian government. (If I recall correctly, the fundamentalist revolution in Iran called itself a "student" revolution, which may have some connection to the name of the organization.) Assuming so, the policy concerns, from the perspective of the United States, are different from a termination of a more liberal website.

There may be no effective way for a U.S. ISP to distinguish between the two kinds of websites, though, nor is it at all clear that the U.S. government should systematically engage in content-based discrimination between them. From a practical standpoint, ISP operators can't read Farsi and are unfamilar with the culture and politics of Iran, and can't be expected to make those calls anyway. It's not surprising that some ISPs are taking a bright-line approach and terminating accounts of Iranian entities and Iranians not resident in the United States, even if it silences some voices that the United States would probably like to amplify.

Assume an Iranian national resided legally in the U.S. and used a webpage hosted in the United States to write in favor of the existing Iranian government. Can the ISP terminate the contract because he is an Iranian national? Can the government require the ISP to do so without running afoul of the First Amendment? What if the Iranian national moves back to Iran?

I'll stop talking about the FCC eventually. First, I direct you to Kevin Werbach's interpretation of what the FCC was thinking and what it got wrong:

The trouble is that you can't just give the tech vendors something, and the incumbent carriers something, because they play different roles. Intel, Cisco, and Microsoft won't be the ones building the networks. The telcos have to deploy the infrastructure, and they won't do that if they feel wronged by the FCC's overall decision and have no competitive pressure. The order does precisely that. It re-energizes the Bells' obstructionist strategy, and it takes away near-term competitive threats from independent DSL providers that might have spurred them to invest anyway.

Verizon Senior VP Tom Tauke's quote says it all: "The future of telecommunications is broadband, and on this issue the commission appears to have moved in the right direction but may have important details wrong. Moreover, the future investment in the wireline network is tied to a strong financial base for the overall business." Doesn't sound like someone planning to "jump start investment in next-generation networks," as Commissioner Martin predicted.

That's what I worry. Meanwhile, Dana Blankenhorn thinks that there's still an opportunity for intermodal competition for companies that aggressively plan and develop those markets now. He also thinks it's likely that state regulators will turn the screws on incumbent providers if they don't actually roll out fiber to the home.

This leaves the Wireless ISP space wide-open. Earthlink has an opportunity to become a mega-WISP. It must extend its footprint, and work to gradually switch its present DSL and cable customers to wireless. ...

Current WISPs say their biggest problem lies in backhauling traffic from their customers to the Internet core. Even when competitive fiber exists, they can't afford to step it down from the 10 Gpbs speed of a single optical fiber to the 11-54 Mbps their customers need.

This is Covad's opportunity. Multiplex the fiber, then use wireless cable to get those signals to WISP central offices. ...

I have to confess I'm a little confused by the term "wireless cable."

Dave Winer linked both these postings on Scripting News, and I suspect that more links on the topic will appear there.

CNET is running a Reuters report on the 3GSM World Congress in Cannes, France. This is a gathering of people from all the companies that have stakes in next-generation mobile telephony.

The article reports that telecommunications companies have become wary of further investment in "3G" technologies when there isn't a lot of evidence that there's a lot of money to be made in the market.

"3G technology is ready. The thing is now to turn it into a mass market product," said Kurt Hellstrom, the head of the world's largest mobile network maker, Ericsson of Sweden. "Many different players need to work together," he said.

These companies are all looking for the "killer application" or applications that will catapult demand for high-speed data transport over mobile phones.

I want high-speed mobile data, but I don't want it for little telephone cameras, or to download games to a phone, nor really for anything else to do with the phone. I'll want a 3G phone when I can use it as a data conduit for more flexible devices. For example, I want to be able to set a laptop computer (or handheld device) next to my wireless phone and be able to access the internet over a high-speed connection. Some phones will have (already have?) the Bluetooth wireless technology to make this possible, though I don't know how secure Bluetooth is (I don't want the guy across the table with his laptop using my phone connection without my permission.) Perhaps the phone and the PDA will be built into one device, in which case it needs to be full-featured as far as both are concerned-- all the benefits of a phone and all the benefits of a PDA.

I don't want a fancy videophone. I don't want a camera in my phone. I want something to use with my computer. I don't know how much effort the wireless companies are putting into that market, though, or if it's even much of a market.

Wow, I guess it's really been a big day for the telecom topic here. I ought to find something else to talk about.

Dan Gillmor writes about today's FCC decision, saying that we can't count on intermodal competition to keep the ILECs down:

The Bells' dishonesty in this debate has been egregious, if unsurprising given their history. They continue to claim that they're forced to sell access to their copper lines at a loss. If this were true, they would be moving in on each others' territories, offering competing services. They haven't, and I'll bet they won't.

Maybe none of this matters. Maybe competition from wireless will break the power of the phone and cable monopolists. Or maybe municipalities and other governments and electric or gas utilities will start deploying fiber competitively. Nothing would be better for America than to see the Bells humbled, once and for all; they loathe any kind of innovation that threatens their annuity income.

But we are taking a big chance here. If the phone giants can leverage their power in new markets, we are going to be in for some difficult times ahead.

Declan McCullagh reports today in a CNET article on the upcoming FCC hearing on "Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers." The FCC is going to reconsider the rules that apply to incumbent local telephone companies regarding when they have to share their own networks with competitors, and at what prices. The process of sharing selected capabilities of a network with competitors is called "unbundling," because the different network capabilities are "unbundled" from each other and leased to competitors at regulated rates.

Section 251 of the 1996 Telecommunications Act gives the FCC the power to decide what parts and capabilities of their networks incumbent providers must unbundle and lease to competitors. The Act contains a general policy of promoting competition. At the same time, competition on the merits of service only happens if a company can gain some competitive advantage from innovation. If an incumbent carrier has to share everything new it comes up with, it has no chance to pull ahead of its competitors on the basis of its improved technology. If companies don't have that chance (coupled with the fact that other companies are going to be trying to do the same thing), then it's not worth their effort to implement the newer technology in the first place. We want new technology. So, where do we draw the lines on requiring incumbent companies to lease their service to competitors?

The FCC needs to come up with some kind of new rule tomorrow. McCullagh explains,

In two different cases, the Supreme Court and three appellate judges have concluded that [former FCC Chairman] Hundt's regulations imposed on the Bell companies go far beyond what Congress said the FCC could do. Now the FCC is under court order to draft more reasonable rules or have them struck down in their entirety--and the deadline is Thursday, the same day as the vote.

There are a lot of people who believe that incumbent telephone service providers are using obsolete equipment and who think that incumbents are hoping hoping for rules that will help them keep some of the monopolistic nature of their incumbency. That may be indeed be a threat. Here's a question, though. If tomorrow's ruling allows ILECs (incumbents) to raise their resale prices, and if that in turn puts a pinch on competitive wireline carriers, doesn't that create additional incentives for intermodal competition through cable systems, wireless systems, and other kinds of technology that don't depend on the relays and pairs of copper wiring owned by the incumbent? Won't 'voice over IP' services only further propel innovation in those technologies? If ILECs truly are obsolete and get too heavy-handed with their pricing in the short term, then we should expect to see intermodal competition take off in the longer term, shouldn't we? Or am I being too optimistic here? I've never been a fan of the ILECs, but I'm trying to see some silver lining around the cloud of potential higher pricing.

McCullagh's article also discusses how the political process at the FCC could affect the rules. Of five commissioners, two seem to oppose dramatically relaxing constraints on incumbents, one strongly favors it, one seems to favor it, and one swing voter favors relaxing constraints at the federal level but wants to allow states to regulate the incumbents more freely. If the swing voter, Kevin Martin, gets his way, the FCC will relax its own restraints on incumbents, but state public utilities commissions will still be able to impose some unbundling requirements even if the FCC does not.

[CNet article] / [FCC meeting agenda] / [FCC Notice of Proposed Rulemaking (PDF)] / [47 U.S.C. § 251]

Ernest Svenson and Rick Klau love their Handspring Treos. When I've got a steady income, I'll be in the market both for a new PDA and a new cellphone, and this sort of combination seems to be the way to go. I'm a little glad I don't have the money to splurge right now, though. I want to see what happens with these technologies in the next several months.

I'm a SprintPCS customer, and I will probably continue with them for another year once my annual contract concludes because they've given me decent service in this area (I live near Denver, Colorado). That means that I'll be looking for a phone that supports at least the CDMA2000 1xRTT standard. I think most current contenders offer at least one phone that supports that wireless protocol. One reason (aside from being broke) I hesitate now, though, is that most current offerings use yesterday's PalmOS technologies. Handspring's Treo and Samsung's I330 both run version of PalmOS 3.5.2 -- the same as my girlfriend's three-year-old Palm. They also run the VZ or EZ versions of the Motorola Dragonball processor, at 33MHz.

Now, maybe I'm overhesitant. There's a good chance that I wouldn't need more from a PalmOS device than what that kind of device can provide. After all, if one wants more, one might not want it all to be built into a telephone. I worry about buying an 'older-style' PalmOS device built into a phone at exactly the time when Palm, Sony, and other PalmOS device manufacturers aim to push users and developers away from those older devices and toward PalmOS 5 running on ARM processors. I was an Apple user back when the PowerPC came out, and even though there was plenty of software around for my little 68LC040-based machine for a while, it became a drag before long. Right now, the ARM architecture with PalmOS 5 costs just a bit too much to build into a phone and still have an affordable product, but that will probably change before long.

If I had the money and my anxieties about PDA obsolescence were allayed, I'd get the Treo. It has the Palm screen on the lower half of a clamshell, which I like much better than Kyocera's decision to place the screen on the top half. I also like the thumb-keyboard, which I haven't seen any Handspring competitor offer on a phone.

Ooh, one more catch. I want something that will let me attach a full-size keyboard to take notes with. Maybe that's the point at which one should just admit that the phone-PDA combination isn't going to fly and just get one of each. (Bluetooth-enabled, of course!)

Compare the proposals I reported (but which, I should stress, I did not mean to advocate by reporting) in the immediately foregoing post with this report in Larry Lessig's blog about broadband prices in Japan. How much of the difference comes from effective unbundling, and how much comes from the fact that people tend to live closer together in Japan?

Doc wonders whether to be creeped out by this speech by FCC Commissioner Kevin J. Martin. I'm not sure whether people who support fail fast policies should be creeped out, but they probably should not be encouraged.

Commissioner Martin clearly sympathizes with the plight of incumbent carriers who have "stranded costs" -- investments in obsolete equipment that present pricing rules will not allow them to recover. He refers to this plight when he says that "industry conditions cry out for answers. Companies are struggling under too much debt, unable to recoup the past investments they have made. Markets are valuing companies at depressed levels, leaving companies with little capital. Carriers are postponing the purchase of the equipment necessary to deploy competitive local and advanced services, leaving the manufacturers to suffer the consequences." The message: Incumbents are stuck with the costs of legacy equipment. They're so busy trying to cover those costs that they can't buy newer, better equipment. Martin proceeds with his discussion having thus framed the economic scenario.

Commissioner Martin proposes changes to the TELRIC (Total Element Long Run Incremental Cost) computation system for resale rates that would certainly run counter to 'fail fast' policy goals if they were applied to the resale of existing equipment. However, Martin expressly advocates these changes only for "new investment on a going forward basis." It's not clear from this speech that he would give incumbents higher resale rates for services on old equipment as well. With regard to high-speed fiber-optic data services, Martin says, "I believe that incumbents should be given the proper incentives to push fiber deeper into their networks and closer to the American consumer."

Martin appears to think that incumbents will be significant (perhaps the most significant) innovators and deployers of high-speed fiber services. He would not require ILECs to provide open access on new fiber-optic loops, or he would at least limit the bandwidth they are required to provide to the amount that they provide already. This is what he means by saying, "I believe that the Commission should freeze the service capacity level that must be made available on new or upgraded facilities to the service capacity level provided by the ILEC prior to the new investment in an upgraded facility." One can argue that this would do no more than to put ILECs on the same footing as anyone else who might successfully run fiber-to-the-home. I'm not in a position to evaluate that argument right now.

Martin's speech reveals no intent to allow incumbents to fail. This doesn't mean that he doesn't foresee that it could happen. If it is to happen, though, he intends that it be because they truly failed to compete, not because the FCC made it hard for them to invest in new equipment.

I'll summarize Commissioner Martin's proposals below, and leave the economic analysis to someone more able: