PeerFlow

Movie King of the Internet: Bad Idea

Andrew Odlyzko asks what if the duopoly gets its way and completely does away with net neutrality:

But what if they do get their wish, net neutrality is consigned to the dustbin, and they do build their new services, but nobody uses them? If the networks that are built are the ones that are publicly discussed, that is a likely prospect. What service providers publicly promise to do, if they are given complete control of their networks, is to build special facilities for streaming movies. But there are two fatal defects to that promise. One is that movies are unlikely to offer all that much revenue. The other is that delivering movies in real-time streaming mode is the wrong solution, expensive and unnecessary. If service providers are to derive significant revenues and profits by exploiting freedom from net neutrality limitations, they will need to engage in much more intrusive control of traffic than just provision of special channels for streaming movies.

— The delusions of net neutrality, Andrew Odlyzko, School of Mathematics, University of Minnesota Minneapolis, MN 55455, USA odlyzko@umn.edu http://www.dtc.umn.edu/odlyzko Revised version, August 17, 2008

Why is that?

But video, and more generally content (defined as material prepared by professionals for wide distribution, such as movies, music, newscasts, and so on), is not king, and has never been king. While content has frequently dominated in terms of volume of traffic, connectivity has almost universally been valued much more highly and brought much higher revenues. Movies cannot be counted on to bring in anywhere near as much in revenues as voice services do today.

The Internet isn't about Sarnoff's Law (broadcast content like TV, radio, and newspapers) or even about Metcalfe's Law (1-n connectivity, like telephone or VoIP): it's about Reed's law, 2n-n connectivity, such as blogs, P2P, and facebook). That's my interpretation; Odlyzko probably wouldn't agree.

Anyway, that video content such as movies is king is one of the primary delusions Odlyzko addresses in this paper. The other is that movies need to be streamed in realtime. It is mysterious why people continue to believe that in the face of the massive evidence BitTorrent and other P2P services that deliver big content in chunks faster than realtime. I can only attribute this second delusion to a bellhead mindset that still thinks in terms of telephone, which was realtime because nobody knew any other way to do it back in the analog-copper-wire-connection day.

As Odlyzko sums it up:

The general conclusion is that the story presented by service providers, that they need to block net neutrality in order to be able to afford to construct special features in their networks for streaming movies, is simply not credible. If lack of net neutrality requirements is to be exploited, it will have to be done through other, much more intrusive means.

So why let the duopoly force a policy on everyone else that won't even work to the advantage of the duopoly?

One way to get net neutrality would be to let the duopoly have its way, and wait for it to implode. However, given that for streaming video to have any chance of succeeding, the duopoly would have to clamp down on everything else to eliminate any competition, I shudder to think what this would mean. The Internet as a source of real news and opinion would go away. Given that the vestigial traditional news media in the U.S. (TV, radio, newspapers) provide so little news, there's a very good chance that most people in the U.S. wouldn't even know how bad they had it as the country sped its slide into parochialism and irrelevance. How many people even know now that the U.S. has slid from #1 to #23 or whatever the latest number is in broadband uptake? If the duopoly is given its head, even fewer would know.

If we let King Kong Telco and T Rex Cableco battle it out to be Movie King of the Internet, where does that leave poor Fay Wray Public?

FCC, FTC, Congress, executive, and courts, not to mention the public, should all read Odlyzko's paper, and should all refuse the duopoly's demand for special privileges that won't even produce profits for the duopoly. Then all of above should legislate, enforce, and maintain net neutrality so we will all profit and benefit. Yes, even the duopoly can win with this.

-jsq

Porter's Five Forces and Net Neutrality: What If Distribution Channels are Open?

Here's a take on why telcos so adamantly oppose net neutrality:

The eager and almost rabid application of Porter's "Five Forces" (Supplier Power, Customer Power, Threat of New Entrants, Threat of Substitute Products, Industry Rivalry) to technology products and services has bred an entire generation of MBAs in marketing positions dedicated to developing and maintaining closed systems and closed hardware platforms. This is particularly egregious in the case of business models that are effectively based on distribution channels. In conventional analysis there is nothing wrong with making your living on distribution channels. Remember, that in 1979, when Porter developed the Five Forces framework, distribution channels were highly expensive to create and maintain and, owing to these costs, constructing them effectively presented a significant barrier to entry. Your product didn't even have to be particularly good, because the threat of substitutes was reduced via the difficulty and expense of the competition actually getting those substitutes (however good they might be) to your customers. Suppliers, if they wanted access to your customer base as a proxy to sell their raw materials, had to go through you. New entrants had to build an entirely new distribution channel. Customers were stuck. You owned the market. But you had to guard this distribution channel carefully. And you had to make sure you hadn't forgotten something simple and critical. That's not part of a conventional Porter analysis. But why would it be? Conventional distribution channels are quite physical, antique and boring.

— The Five Forces/Circles of Hell, a Private Equity Professional, Going Private, 27 April 2008

The article goes on to detail how Blockbuster used the old Porter model of closed distribution channels and Netflix used an existing open distribution channel: the U.S. Postal Service.

To spell out the telco connection:

Social Welfare: Reed Asks Yoo

David P. Reed asks a question and Christopher S. Yoo responds on Farber's Interesting People list. I'm posting both in full here, with my thoughts at the end; basically, law isn't a science, and anecdotes can turn into legal cases; some have already regarding net neutrality.

From: David P. Reed [dpreed@reed.com]
Sent: Saturday, May 10, 2008 11:50 AM
To: David Farber
Cc: ip
Subject: Re: [IP] re-distribution of op-ed on Net Neutrality -- a reaction and a reply from one of the authors

I read through the long comment by Chris Yoo below, and as a non-lawyer interested in policy, I ask the following simple question:

Is there a well-regarded (one might ask for scientifically reasoned) argument that antitrust law as currently interpreted and practiced has a substantial impact measured in some currency like $ on social welfare?

Otherwise this entire argument is about nothing more than vaporware proceeding from a faith that competition (however loosely defined) creates social welfare best. AFAIK, this is largely an article of faith, just as the "End of History" was a grand article of faith posited by many of the same people as "truth".

It is just not fair to imply that the core of "today's settled antitrust law" carries even the level of weight as Darwin's Theory of Evolution. There have been no replicable studies of its practice.

Law professors and lawyers who don't challenge its truthiness squarely are merely behaving as dogmatic mandarins always do - asserting authority of professional status, rather than rigor of reasoning, experiment, or argument.

I say this not as FOX News or Hillary Clinton would call an elitist, but as a person who genuinely is unconvinced by magical faith in authorities.

That's Reed's question. Yoo's response, and my thoughts, after the jump.

ISPs Escalate Ignoring FCC

Fox started the trend of ignoring the FCC when it does something they don't like. Now the duopoly has gotten up to the same trick:

Comcast, AT&T, Time Warner Cable, and cable research company CableLabs were all invited to participate several weeks ago, but declined, Martin said. The commission again reached out to Comcast after the announcement this week that it would develop a P2P bill of rights with Pando Networks, but they again sent their regrets, he said.

— ISPs Give FCC Cold Shoulder at Internet Hearing, by Chloe Albanesius, PCMag.com, 04.17.08

You may recall at the previous hearing, at Harvard, FCC chair Kevin Martin couldn't hear the difference between participant and consumer, while Comcast hired shills off the street to take up seats so people with things to say couldn't. Now the duopoly is painting the FCC as unduly critical of themselves, and the press is going along with that, including the hometown Silicon Valley newspaper, the San Jose Mercury News, which should know better:

Panopticon Click: NYTimes and Wapo Catch on to Packet Privacy

When both the New York Times and the Washington Post catch on, the idea of online privacy protection from ISPs must be catching on:

It’s not paranoia: they really are spying on you.

— The Already Big Thing on the Internet: Spying on Users, By ADAM COHEN, New York Times, Published: April 5, 2008

Some specifics:

The online behavior of a small but growing number of computer users in the United States is monitored by their Internet service providers, who have access to every click and keystroke that comes down the line.

— Every Click You Make: Internet Providers Quietly Test Expanded Tracking of Web Use to Target Advertising By Peter Whoriskey, Washington Post Staff Writer, Friday, April 4, 2008; Page D01

Some say privacy is only distant nostalgia; I say we need to do something about it. We need packet privacy.

Laissez faire won't get 'er done. As Cohen writes:

Billboard Liberation Front: AT&T Works in More Places, Like NSA

Billboard Liberation Front explains warrantless wiretapping to the public.

-jsq

Canadian Net Neutrality

In Canada, an ISP has even gotten up to blocking striking employees' website:

During the Telus strike in 2005, the corporation blocked access to a website run by striking Telus employees called “Voices for Change” (and at least 766 other websites). Those familiar with network-control issues in Canada also accuse Rogers and Bell of limiting peer-to-peer (P2P) applications, which people use to share audio, video and other digital data with one another. So, here we have ISPs blocking or at least limiting the use of what is likely the most innovative, creative and participatory use of the Internet. In response to customer concerns, Bell recently admitted that they “are now using Internet Traffic Management to restrict accounts that are using a large portion of bandwidth during peak hours. Some of the applications that are included are the following: BitTorrent, Gnutella, LimeWire, Kazaa….”

— The Fight for the Open Internet, Steve Anderson, Canadian Dimension magazine, January/February 2008 issue

The rest sounds very familiar:

Packet Privacy and Net Neutrality

Everybody's familiar with consumer identity privacy, as in protecting passwords and social security numbers and complying with HIPAA, GLBA, SOX, PIPEDA, et al. But what about packet privacy?

Never mind net neutrality, I want my privacy. As in packet privacy. The telcos say they need to sell non-neutral routing of traffic to recover the cost of building broadband networks. Moving from the Internet, where a packet-is-a-packet, to something that looks suspiciously like the 20th century telephone network requires remarrying the content and connectivity that TCP/IP divorced. It requires deep packet inspection. It requires looking at the content of communication.

AT&tT does not plan to roll out two physical pipes to every end point in order to sell Google enhanced access. The new telco plan calls for content-based routing to separate traffic into media and destination specific VPNs (Virtual Private Networks). Laws exist to address the substantial privacy threats created by the fact telephone companies know Mr. Smith called Mr. Jones, but the privacy risks associated with “content routing” replacing “end point routing” enter an different realm.

— Forget Neutrality — Keep Packets Private, by Daniel Berninger, GigaOm, Sunday, January 14, 2007 at 8:30 PM PT

Despite Berninger's phrasing, packet privacy isn't something separate from net neutrality: it's one of the key features of it. The point is that net neutrality isn't just about pricing policies or technical means of content routing: it's about privacy. And privacy is an issue that everybody understands. Stifling, throttling, or disconnecting without announced limits, censoring, wiretapping, and espionage: these are all violations of packet privacy.

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AT&T vs. Apple: iPhone and Maybe 700Mhz

AT&T's CEO Randall Stephenson announced next year's 3G iPhone a few weeks before this year's iPhone's likely biggest sales over the holidays:

So what's up? Was it a simple slip? Or is the guy so out of touch with reality that he doesn't realize that with a few words he has probably deferred -- maybe forever -- at least a million new customers worth to Wall Street at least $1 billion in market cap for his company?

I don't think Stephenson's statement was by accident and I don't think he is out of touch with reality. I think, instead, he was sending a $1 billion message to Apple CEO Steve Jobs.

— When Networks Collide: AT&T suddenly doesn't like Apple so much. By Robert X. Cringely, Pulpit, PBS, 29 November 2007

Well, it could be either. This is the same AT&T that couldn't produce its own iPhone and had to make a deal with Apple; AT&T could be so out of touch that it doesn't know what it's doing in this announcement. And maybe Stephenson resents that so much that he does want to hurt Apple even if it hurts AT&T. If he thinks he can get away with it, it amounts to the same as being out of touch, because Apple could produce an unlocked iPhone and sell it on all AT&T's networks, especially if Stephenson gives Jobs enough excuse to break Apple's contract with AT&T. Or, as Cringely points out, Apple could join Google in bidding for 700Mhz spectrum, or enable its Apple computers for VoIP, or come up with something else that isn't covered by the existing contract. Jobs and Apple know how to innovate. Telcos don't. No wonder AT&T is scared.

-jsq

Verizon Unlocked by 2008?

Well, this is news:

Verizon Wireless today announced that by the end of 2008 it will "provide customers the option to use, on its nationwide wireless network, wireless devices, software and applications not offered by the company." — Verizon Wireless To Open Its Network, Platform, GigaOm, by Om Malik, Tuesday, November 27, 2007 at 6:38 AM PT Comments (12)

Reacting to Google bidding for 700Mhz? Responding to customer demand? Of course, it says by the end of 2008, so Verizon will know who won the U.S. elections by then and could change its mind.

Om Malik follows up with some speculations and consequences, including you'll have to pay full price for your phone. He didn't mention that that might mean that Verizon is also reacting to the iPhone, which, while closed (in the U.S. at least, although unlocked in China) already has users paying full price, and plenty of users did.

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PlusNet: Honest Prioritization

Unlike Comcast and Cox, PlusNet in the U.K. says what it is doing:

The principles of PlusNet's network management policies

• To make sure that time-critical applications like VoIP and gaming are always prioritised
• To protect interactive applications like web-browsing and VPN from non-time sensitive download traffic
• To flex the network under demand to cope with normal peaks and troughs from day to day and month to month
• To flex the network more gracefully than other ISPs in the event of unusual demands in traffic or disaster situations such as a network failure
• To provide a service relative to the amount each customer pays in terms of usage and experience
• Provides a 'quality of service' effect, meaning multiple applications running on the same line interact with each other effectively, and use of high demand protocols like Peer-to-Peer doesn't swamp time-sensitive traffic such as online gaming or a VoIP call.

— Traffic Prioritisation, PlusNet, accessed 26 Nov 2007

Interestingly, this list does not cite video as the most-favored application, instead it lists VoIP and gaming, which are participatory services. However, scan down to their table of types of traffic, and VoIP and gaming are Titanium, while video-on-demand is the highest level, Platinum.

China: Unlocked iPhones

Can't get an unlocked iPhone inthe U.S.? Try China:

The iPhone is readily available in computer superstores in most large Chinese cities. In Beijing's Zhong Guancun, a 15-story mall filled with technology vendors, almost all the stalls are stocked. Two weeks ago, the blogger of Too Many Resources for the iPhone asked several of these vendors whether they could sell him 100 iPhones. They all answered "No problem."

— China's New 'Love Craze' — Black Market iPhones, By Aventurina King, Wired, 11.19.07 | 7:00 PM

These are unauthorized uninsured iPhones. Apparently they aren't copies: they're the real thing. The iPhone is manufactured in China, and these ones are shipped out and back through Hong Kong or eBay.

Meanwhile, back in the U.S. of A., you're stuck with an iPhone that works only on AT&T's network, while the FCC finagles a spectrum auction so lockin will continue and plans further media consolidation so you won't know anything better.

Bruce Sterling sums it up:

(((China is the New America because, not only do they have sexy movies, they have iPhones that actually work and aren't choked to death with legalistic BS IP consumer lock-in.)))

— China: The New America (part II), By Bruce Sterling, Beyond the Beyond, November 20, 2007 | 7:44:11 AM

-jsq

Decreasing Competition: Teletruth Documents FCC Harm to Wireline

Here are the main points:

• 56% Drop in Competitive Local Exchange Carrier Lines: Loss of 10 Million Competitive Lines Since 2004 -- and Falling.
• Lack of Competitive Choices Led to Massive Local and Long Distance Price Increases; Billions in Investor Losses.
• FCC's Deregulation Picked Winners and Losers -- The Duopoly -- Creating Economic Harms to Wireline-Competition, Favoring Cable Companies.

...

DROP 10,330,000 lines -56%

Only 7.1% competitive lines.

— Part One: Harm to Wireline Competition: Harm to Customers and Investors. TeleTruth, 15 November 2007

Many details are in the report. The bottom line is that there is no effective competition in wireline POTS in the U.S.

-jsq

Wiretapping before 9/11: AT&T, NSA, Verizon, Level 3

Why would an administration that currently has access to all data going over the Internet want more competition in the ISP market?

Mark Klein going to Washington to blow the whistle some more on AT&T on giving NSA unfettered access to AT&T's network:

"If they've done something massively illegal and unconstitutional -- well, they should suffer the consequences," Klein said. "It's not my place to feel bad for them. They made their bed, they have to lie in it. The ones who did [anything wrong], you can be sure, are high up in the company. Not the average Joes, who I enjoyed working with."

— A Story of Surveillance, Former Technician 'Turning In' AT&T Over NSA Program, By Ellen Nakashima, Washington Post Staff Writer, Wednesday, November 7, 2007; Page D01

While the Washington Post, for example, does get at one main point:

Contrary to the government's depiction of its surveillance program as aimed at overseas terrorists, Klein said, much of the data sent through AT&T to the NSA was purely domestic. Klein said he believes that the NSA was analyzing the records for usage patterns as well as for content.

It neglects to mention an even bigger point:

Mosh by Nokia: A Telco Invents Something!

I'm always complaining about the telephone companies, so this item is refreshing:

When George Linardos was ordered to clear his diary to help dream up new business for Nokia (NOK1V.HE: Quote, Profile , Research), he imagined six weeks brainstorming on the terrace of a five-star hotel in the Caribbean.

What he got was a pot of porridge every morning at a Spartan hotel hours from Finnish capital Helsinki, with forests and snow all around.

Seeing the same half a dozen faces for 45 days and craving greater social interaction, Linardos and his team came up with a site aimed at making informal networking easier, especially for people without access to a PC.

The result, Mosh (http://mosh.nokia.com/), a social networking site that is accessible from mobile phones, is the latest piece in the puzzle for Nokia as it tries to build an Internet stronghold to balance a maturing cellphone business.

— Nokia's Mosh marries mobile with social networking, by Tarmo Virki, Reuters, 23 October 2007

Not only invented something, but something the inventor personally wants to use! This is the way Unix got invented, and Linux, by that other Finn, Linus Torvalds. I don't know how successful Mosh will be, but that's not the point, no more than how well a talking dog talks. And it's also beside the point that the invention simply crosses two existing ideas: mobile phones and social networking web sites. Many inventions are like that. A telephone company invented something!

Of course, it wasn't a U.S. telephone company.

-jsq

Qwest Case and National Competitiveness

This case will forever be murky if retroactive telecom immunity for participating in illegal wiretapping passes, yet it has already thrown some light on some of the murkiest areas of government-corporate interaction.

Former Qwest CEO Joseph P. Nacchio, who has been convicted of insider trading for selling stock while Qwest's stock price was tanking, claims he had reason to believe Qwest would get lucrative government contracts, and that Qwest was denied them because he refused to participate in an illegal program. When this happened is very interesting:

The phone company Qwest Communications refused a proposal from the National Security Agency that the company's lawyers considered illegal in February 2001, nearly seven months before the terrorist attacks on Sept. 11, the former head of the company contends in newly unsealed court filings.

— Former Phone Chief Says Spy Agency Sought Surveillance Help Before 9/11, By Scott Shane, October 14, 2007

So if Nacchio is right, massive wiretapping by the current U.S. administration didn't start as part of the "War on Terror"; it must have started for some other reason.

The best the prosecution has been able to come up with is:

Who's the Second Largest Contributor to U.S. Congress Members?

AT&T. Time Warner, Bellsouth, and MCI all show up in the same list.

Major AT&T recipients include Sen. Jay Rockefeller, D-WV who is a big supporter of retroactive immunity for telco spying, and who recently (spring 2007, just as the telcos started pushing for that immunity) got a big spike in Verizon employee contributions, as well.

Also Sen. Harry Reid, Senate Majority Leader, gets significant AT&T contributions. This is the same Harry Reid who won't honor Sen. Chris Dodd's hold on the bill containing that amnesty.

-jsq

Fitch: More RLEC Consolidation

Likely consolidation in Rural Local Exchange Carriers:

RLECs are experiencing relatively little organic growth, the company says, because the increased revenues from such growing services as high-speed data "have not materially offset declining voice revenues. The erosion of the traditional wireline voice business of the RLECs, mainly by competition from cable multiple-system operators (MSOs) and wireless operators, has already led to some industry consolidation over the past year."

Over the longer term, RLECs also face the uncertain effects of increased competition on service revenues for the rural operators as well as uncertainties on the regulatory side.

"In the absence of meaningful organic growth, acquisitions become a means for rural carriers to increase revenues, cash flow and diversity," says John Culver, senior director at Fitch Ratings.

— Lack Of Growth Could Spell RLEC Demise, TelecomeWeb, 12 Oct 2007

The RCCC acquisition may be one of these.

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FCC, Telcos, Congress, and FISA

The FCC won't investigate possible illegal telco activities:

The head of the U.S. Federal Communications Commission declined to investigate reports that phone companies turned over customer records to the National Security Agency, citing national security concerns, according to documents released on Friday.

FCC Chairman Kevin Martin turned down a congressional request for an investigation as a top intelligence official concluded it would "pose an unnecessary risk of damage to the national security," according to a letter National Intelligence Director Michael McConnell sent to Martin on Tuesday.

— FCC won't probe disclosure of phone records, By Reuters, October 6, 2007, 4:00 PM PDT

It seems unlikely the FCC will investigate active wiretapping, either. National security: the root password to the Constitution.

But Congress won't let the telcos off the hook, well, not completely:

House Democrats have refused to submit to Bush administration requests to save telecommunications companies that assisted in a warrantless wiretapping scheme from lawsuits or prosecution, and they want to require judicial approval for future efforts to spy on Americans.

...

Under the new law, the Attorney General or Director of National Intelligence would be authorized to receive blanket warrants to eavesdrop on several foreign intelligence targets who could call into the United States, but the bill would restore FISA court reviews of targeting procedures and steps taken to "minimize" Americans' exposure to surveillance. If an American is to become the "target" of surveillance, intelligence agencies would be required to seek an individualized warrant from the FISA court.

— Proposed FISA update would not give telecom companies legal protection, by Nick Juliano, RawStory, Tuesday October 9, 2007

The Foreign Intelligence Surveillance Court already is so secretive that although its court rules say it has a seal, there's no image of it available anywhere on the web that I could find, and it already lets intelligence agencies apply within a few days for retroactive authorization for wiretaps.

Of course, this bill would have to pass the Senate and get signed by the president or get enough votes to override a veto. But at least the former law didn't retroactively immunize the telcos, and this bill doesn't, either.

-jsq

Google v. Verizon v. FCC + Lobbyists

Verizon is suing the FCC about the watered down rules the FCC passed recently. Now Google has filed a complaint with the FCC about that. And apparently Verizon has been having private meetings with FCC Chairman Kevin Martin. Could this be one source of the illegal leaks the GAO finds the FCC providing to lobbyists?

While Verizon's court case proceeds through the legal system, the company's competitors have grown unhappy with the way that Verizon has handled its FCC lobbying. Frontline Wireless has gone so far as to ask the FCC to bar Verizon from the auction because Verizon has allegedly not disclosed some of its lobbying contacts with the agency quickly enough or in enough detail.

Despite Verizon's reticence to spell out exactly what it has been talking about with FCC Chairman Kevin Martin in private meetings, Google believes that it has pieced the conversation together. Google's understanding is that Verizon wants the FCC to impose the open access requirements only on the network, not on the devices. That is, Verizon could still sell handsets that are locked and controlled by the company, but its network would have to be open to unlocked handsets from any operator.

According to Google's new public statement on the issue, "From our perspective, this view ignores the realities of the U.S. wireless market, where some 95 percent of handsets are sold in retail stores run by the large carriers. More to the point, it is simply contrary to what the FCC's new rules actually say." Those rules focus on customer freedom to access content and applications from any device.

In a filing with the FCC, Google asks the agency to stick to its original plan. The company points out that while the open access rules might make the spectrum less attractive to Verizon (and thus might bring in less money at auction), the rules actually make it "more attractive, not less" to Google.

— Google attacks Verizon's attempt to water down 700MHz "open access" rules, By Nate Anderson, ars technica, October 04, 2007 - 11:11AM CT

Silly Google! Verizon is part of the incumbent duopoly, and you're not!

-jsq

Benton, Universal Service, TPRC, Social Contract

Many good papers on aspects of universal service at the Benton Universal Service Project:

As Congress and the FCC put universal service reform at the top of its telecom policy agenda, the Benton Foundation is supporting a series of papers advancing a new vision for Universal Service -- for making broadband as universal as telephone service is today and a pathway for retaking the lead as a broadband leader. This project outlines the policy rationale, the pathway forward, and the 12 key steps for advancing universal broadband and modernizing the universal service program for the information age.

Many of the authors of the papers are on a panel this afternoon at TPRC, including topicssuch as

The social contract implicit in telephony universal service versus the social contract implicit in broadband universal service.

Hm, maybe Verizon could learn from that one?

-jsq

Verizon Blocks and Unblocks Pro-Choice Group

Here's what happens when you have a telco thinking the Internet is subject to its internal policies and political predilictions:

Saying it had the right to block “controversial or unsavory” text messages, Verizon Wireless last week rejected a request from Naral Pro-Choice America, the abortion rights group, to make Verizon’s mobile network available for a text-message program.

But the company reversed course this morning, saying it had made a mistake.

“The decision to not allow text messaging on an important, though sensitive, public policy issue was incorrect, and we have fixed the process that led to this isolated incident,” Jeffrey Nelson, a company spokesman, said in a statement.

“It was an incorrect interpretation of a dusty internal policy,” Mr. Nelson said. “That policy, developed before text messaging protections such as spam filters adequately protected customers from unwanted messages, was designed to ward against communications such as anonymous hate messaging and adult materials sent to children.”

Mr. Nelson noted that text messaging is “harnessed by organizations and individuals communicating their diverse opinions about issues and topics” and said Verizon has “great respect for this free flow of ideas.”

— Verizon Reverses Itself on Abortion Rights Messages, By Adam Liptak, New York Times, September 27, 2007

Is the Internet a public network, or isn't it? If it is, I don't see why any ISP should be blocking messages based on content. (Spam is a different matter: spam is unsolicited.) There are various opinions as to what laws, if any, cover text messages. But the main point isn't even legal. If the telco-provided network isn't a public network, it's not the Internet.

-jsq

Verizon Sues FCC

Well, even though the FCC only provided half-measures to open up the 700Mhz market, Verizon thinks that's too much and is suing the FCC because it partly unlocked cellphones:

Verizon Wireless seeks judicial review on the grounds that the Report and Order exceeds the Commission's authority under the Communications Act of 1934, as amended, 47 U.S.C. §§ 151, eg. seq., violates the United States Constitution, violates the Administrative Procedure Act, 5 U.S.C. § 701 et. seq., and is arbitrary capricious, unsupported by substantial evidence and otherwise contrary to law.

— Verizon Wireless v. FCC, Case No. 07-1359, U.S. Court of Appeals, D.C. Circuit, 10 Sep 2007

Curious how the burden of proof always seems to be on anybody but the telcos and cablecos. I mean, didn't the FCC get the memo that it was only supposed to do anything if somebody proved market failure?

-jsq

PS: Seen on SavetheInternet.com

Now this would be a good thing if it happened:

House telecom subcommittee Chairman Edward Markey (D-Mass.) repeated his call for the Federal Communications Commission to investigate widespread allegations of telecom privacy law violations by intelligence agencies that received cooperation from telecom carriers in anti-terrorist surveillance efforts.

— Markey renews calls for FCC investigation into wiretapping, By Jeffrey Silva, RCCWireless News, September 12, 2007 - 2:13 pm EDT

That would be about as likely as Gonzales starting such an investigation.

Oh, wait:

After Markey wrote Martin in March to ask him to launch an investigation into whether telecom privacy laws have been broken, the FCC chairman wrote Attorney General Alberto Gonzales to verify that the agency could not conduct such a probe because it would violate federal laws governing disclosure of state secrets. Gonzales, who recently announced his resignation, has yet to respond to Martin.

Markey points at a number of events since his first request, such as that it's not a secret anymore that the government has been using telcos to wiretap.

It would be good if the FCC were to represent the public interest, rather than just the telco and cableco and the administration's interest.

-jsq

PS: Seen on Fergie's tech blog.

The chutzpah:

Ed Shakin, a lawyer for Verizon, said network-sharing requirements are no longer needed in certain cities now that cable companies and other competitors have rolled out Internet and phone service. "What competitors want are artificially low prices," he said. "It comes down to a fight about price, not availability."

— Telecom Changes Put Competition on the Line, By Kim Hart, Washington Post Staff Writer, Thursday, September 6, 2007; Page D01

So Verizon is reducing the number of competitors, but as long as there is at least one, that's enough, they say. Apparently Verizon thinks its competition is the Highlander: There Can Be Only One.

-jsq

Shortly after a high level U.S. official acknowledged that telephone companies have helped the government in illegal spying, this comes out:

WASHINGTON — The Bush administration wants the power to grant legal immunity to telecommunications companies that are slapped with privacy suits for cooperating with the White House's controversial warrantless eavesdropping program.

The authority would effectively shut down dozens of lawsuits filed against telecommunications companies accused of helping set up the program.

The vaguely worded proposal would shield any person who allegedly provided information, infrastructure or "any other form of assistance" to the intelligence agencies after the Sept. 11, 2001 terror attacks. It covers any classified communications activity intended to protect the country from terrorism.

— Bush Seeks Legal Immunity for Telecoms, By KATHERINE SHRADER, Associated Press Writer, August 31, 2007 - 5:02 p.m. EDT

Let's let President Nixon sum it up:

Well, when the president does it that means that it is not illegal.

— Richard M. Nixon interviewed by David Frost, 19 May 1977.

Yet the same administration can't be proactive about effective regulation of first-mile Internet access for effective competition.

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Jeff Pulver has an interesting point that orty years later it's an Internet company that delivers what a telco long ago promised:

During the past couple of weeks I have come to appreciate just how simple and easy it has become to send Video Messages to friends on Facebook. While the concept of a video phone dates back to the work of AT&T and their demonstrations at the 1964 World’s Fair, it has taken the advent of the Video application on Facebook and it’s general ease of use to get me to take the time and use it as part of my daily (Internet) life. While I have discovered how the Facebook video application can be used in various ways, my favorite is to send a personal video message to a friend.

— My Favorite Facebook Application: Video, Jeff Pulver, Jeff Pulver blog, August 27, 2007

While a telco did invent or at least publicize the videophone, forty years later it's an Internet application that delivers something like it on a mass scale. And maybe one reason the Facebook version of it is popular is that it isn't quite like what AT&T predicted: it isn't interactive television. Experience indicates people don't necessarily want to be seen live any old time regardless of their state of dress or coffee.

And more obviously, there's no fancy equipment to buy, so the worldwide clientele is already there on the Internet. It's the difference between distributed participation and being sold a centralized service.

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Well, I had been waiting to post something about the telcos and domestic wiretapping until more news came out, since much of it was still hearsay. But now National Intelligence Director and former National Security Agency Director Mike McConnell has confirmed it:

Now the second part of the issue was under the president's program, the terrorist surveillance program, the private sector had assisted us. Because if you're going to get access you've got to have a partner and they were being sued. Now if you play out the suits at the value they're claimed, it would bankrupt these companies. So my position was we have to provide liability protection to these private sector entities.

— Transcript: Debate on the foreign intelligence surveillance act, By Chris Roberts, ©El Paso Times, Article Launched: 08/22/2007 01:05:57 AM MDT

Ryan Singel points out in Wired's Threat Level blog that this is even though the same McConnell signed a sworn declaration in April saying to reveal that NSA and Verizon had such a relationship "would cause exceptionally grave harm to the national security."

BT made an interesting presentation at an IETF meeting in which it described a spectrum whose endpoints are

• demand side — freedom to degrade others
• ...
• supply side — freedom to degrade competitors

— re-ECN architectural intent by Bob Briscoe, UCL, BT, 68th IETF, Unofficial Birds of a Feather (non-BoF), Prague, 21 Mar 2007

My, freedom is so degrading.

Forbes, normally more of a capitalist tool than a flaming radical rag, keeps covering AT&T's Pearl Jam fiasco:

AT&T's “content monitor” hit the mute button during part of Pearl Jam’s “Blue Room” Live Lollapalooza Webcast sponsored by the telecom, depriving viewers of some anti-George Bush lyrics—and handing live ammunition to “net neutrality” proponents in the form of an almost perfect example of what they predict will happen if a few companies are allowed to control the broadband pipeline.

— AT&T Silences Pearl Jam; Gives 'Net Neutrality' Proponents Ammunition, Staci D. Kramer, PaidContent.org, 08.09.07, 7:45 PM ET

Their followup gets even better:

AT&T spokesman Michael Coe said that the silencing was a mistake and that the company was working with the vendor that produces the webcasts to avoid future misunderstandings. He said AT&T was working to secure the rights to post the entire song - part of a sing-along with the audience - on the Blue Room site.

— AT&T Errs in Edit of Anti-Bush Lyrics, By MICHELLE ROBERTS, Forbes, 08.10.07, 10:59 AM ET

While the lumbering dinosaur was working on that, Pearl Jam already had the uncensored version on their site.

And it just keeps getting better.

Susan Crawford reads the 700Mhz auction rules and confirms the worst:

1. Those Carterfone protections don't mean too much. The no-locking, no-blocking requirements are hedged in by substantial limitations: the winning licensee will be able to lock and block devices and applications as long as they can show that their actions are related to "reasonable network management and protection," or "compliance with applicable regulatory requirements." In other words, as long as the discrimination can be shown to be connected (however indirectly) to some vision of "network management," it will be permitted. (Discrimination "solely" for discrimination's sake is prohibited, but that's not too difficult to avoid.)

— Many, many devils in the details: 700 MHz rules, by Susan, from Susan Crawford blog, 13 Aug 2007

So it's ILECs vs. CLECs, round two. Guess who'll win?

And even supposedly Cmr. Copps "grudgingly accepted" these rules. Seems to me we need a whole new FCC, so we can get some real rules of the road.

And what we really need is some real competition.

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FCC Commissioner Michael Copps has a way with words. Last year he said we should be talking about Internet freedom rather than net neutrality. And now he says we're

playing Russian roulette with broadband and Internet and more traditional media

— FCC Commissioner: US playing "Russian roulette with broadband and Internet" By Nate Anderson, ars technica, August 03, 2007 - 09:20AM CT

And the Russians are winning.

How are those merger conditions coming along?

Remember the story back in June about how AT&T had extremely quietly started offering $10 DSL as was required in its deal to buy BellSouth? The company was promoting many other, more expensive, DSL options, but the only way you could get the required $10 version was if you specifically knew to ask about it. Broadband Reports points to an interview from an Atlanta newspaper with AT&T CEO Randall Stephenson where he's asked about the $10 DSL. The interviewer points out that no story about AT&T resulted in a more irate response from AT&T customers as its story about the hidden offer for $10 DSL, suggesting that this was a huge issue for AT&T customers. Stephenson's response? First he denies that the company made it hard to find, and then he says that they're not promoting it because customers don't want it. This, despite the clear response from customers to the very newspaper who was conducting the interview. Then, he basically admits that the $10 DSL doesn't work very well, saying that they don't promote it because they don't want to give customers a product that sucks. Of course, he says that as if it's not his company that has quite a bit of control over whether or not the product sucks.

— AT&T CEO: We Don't Promote $10 DSL Because No One Wants It, Techdirt, 1 August 2007

This is even though the AJC reporter introduced the question with:

Of all the things the AJC has written about AT&T lately, none has caused more reader irritation than AT&T's $10 a month DSL offer, which was required by the Federal Communications Commission when you bought BellSouth.

— Q&A: AT&T CEO Randall Stephenson, By Scott Leith, The Atlanta Journal-Constitution, Published on: 07/27/07

The techdirt writer goes on to point out that this is what SBC used to do with naked broadband, too, i.e., dance around and do nothing. After all, without regulation or competition, it's good to be king!

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What hath mergers wrought?

AT&T and MCI long distance increased over 200+% since 2000 for low volume users, 80% increase in Verizon local service in New York City since 2000, 472% since 1984, new bogus late fees or ‘shortfall’ fees, a 29% increase of the Universal Service Fee since 2006, and increases to every service, from packages, toll calls, and calling features to inside wire maintenance --- it goes on and on. Worse, plans are being made to increase the FCC Line Charge to $10.00, increase Universal Service and even add new fees.

Competition was supposed to lower prices. Instead, America’s phone customers have been taken advantage of, especially low income, low volume users, and seniors. Teletruth has received multiple AT&T and Verizon bills ALL showing major increases, new charges, and new problems. If competition did exist for local, long distance, packages, etc. then all of these increases would not have happened.

— AT&T and Verizon Local and Long Distance NJ and NY Phone Bills Show Massive Price Increases. Phone Mergers and a Lack of Competition Are to Blame. FCC Phone Rate Data Are Hiding the Problems. TeleTruth News Alert, 25 July 2007

Mergers and bad regulation, that is.

The Martin 700Mhz wireless acution plan leaves the same two big incumbents, AT&T and Verizon, in place. And Verizon is probably going to be a bit bigger soon, once it absorbs RCCC. Should we expect a different outcome this time?

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Previously I wondered where the big wireless telephone carriers would find enough bandwidth to buy outside the pending 700Mhz auction, as Republican Commissioner Robert M. McDowell suggested. Well, the place to look is the stock market. A day before the FCC decision of yesterday, the stock of Rural Cellular Corp (RCCC) went up about 30% on news that Verizon was buying RCCC. Such a sale has to have been pending for some time; probably at least six months. So it seems that McDowell's assertion is useful political cover for Verizon, if not prediction of future acquistions. Maybe both; I guess we'll see.

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The Post has some interesting analysis of which FCC commissioners said what when they approved Chairman Kevin Martin's 700Mhz wireless auction plan:

The "open-access" provision was endorsed last month by FCC Chairman Kevin J. Martin, a Republican, and gained support from the two Democratic commissioners, Jonathan S. Adelstein and Michael J. Copps. Deborah Taylor Tate, a Republican commissioner, also voted in favor of the deal. Martin said he hoped the proposal would encourage a new entrant to compete with the cable and phone companies that provide broadband service.

Republican Commissioner Robert M. McDowell voted against the proposal, arguing that placing any conditions on the sale of airwaves would hurt smaller carriers by making smaller licenses without any requirements appealing to larger bidders.

"Smaller players, especially rural companies, will be unable to match the higher bids of the well-funded giants," he said.

— FCC Approves Airwave Use For All Phones, Wireless Network Opened To Options if Not Firms, By Kim Hart, Washington Post Staff Writer, Wednesday, August 1, 2007; Page D01

It's not clear to me where the bigger players will find enough smaller licenses without any requirements to be worth their while. Unless those licenses are also attractive because of the Universal Service Fund.

What did the corporate players say?

In case it wasn't obvious why the telcos want local TV franchise laws repealed:

A federal judge has thrown up a roadblock in front of AT&T as it attempts to roll out its new U-Verse IPTV service in the state of Connecticut. In an opinion issued yesterday, Judge Janet Bond Arterton ruled that AT&T's U-Verse IPTV service is a cable television service like any other and is therefore subject to local franchising agreements.

— Federal judge: AT&T U-Verse == cable TV, By Eric Bangeman, ars technica, Published: July 27, 2007 - 10:44AM CT

But isn't it different from cable if it's carried over IP?

The regulatorium in action:

A decade-old telephone tax intended to help bring affordable service to rural areas has instead turned into something quite different: a bottomless and politically protected well of cash for cell phone companies that do big business in rural America.

Over the past four years, there’s been nearly a tenfold increase in government subsidies paid to a handful of so-called “competitive” providers — cellular phone companies paid by the fund to offer service in rural areas where an existing carrier already receives a subsidy.

The Universal Service Fund has collected $44 billion over its 10-year lifetime from a surcharge on the phone bills of nearly every American.

Regulators and lawmakers have long viewed the fund as inherently flawed. Even a member of the federalstate board that runs the program calls it “bizarre.” But efforts to change it have been derailed repeatedly by companies that benefit from the largess, and by supporters in Congress who represent sparsely populated states.

— Federal fee on phones is windfall for cell firms, By John Dunbar, ASSOCIATED PRESS, Updated: 07/29/07 6:37 AM

The article goes on to say wireless telephone companies benefit the most because they can connect rural customers at much less cost than landline telcos can. But that's not all.

Cringely gets anxious over Google's floor bid for 700Mhz. After pointing out that Verizon and AT&T coming around to Kevin Martin's leaked counterproposal of watered down "open access" rules, he says:

Look who Google is up against -- all the largest Internet service providers in the U.S. Google will not win this even if they win the auction, because the telcos and cable companies are far more skilled and cunning when it comes to lobbying and controlling politicians than Google can ever hope to be. The telcos have spent more than a century at this game and Google hasn't even been in it for a decade. And Google's pockets are no deeper than those of the other potential bidders.

— Is Google on Crack?: Eric Schmidt bets the ranch on wireless spectrum, Robert X. Cringely, Pulpit, 27 July 2007

Cringely is missing the point about who Google is up against. These outfits have not been the largest ISPs for more than a century. They've been telephone companies for more than a century. And being around for a long time isn't necessarily a sure win. Look at the Vatican; it's been around for two thousand years, and it's managed to lose most of its traditional heartland of Europe. Sure, Google is fragile, in some senses even more fragile than Microsoft, as Cringely points out. But even Microsoft is losing market share from IE to an open source browser, Firefox. Google, as a proponent of open source that actually understands it, has a fair chance here. The incumbent duopoly telcos aren't really in the Internet business; Google is.

Maybe Cringely's right that Google alone couldn't win the auction. But Google and Sprint possibly could. Sure, Sprint is a phone company, too. But that doesn't mean it's going to side with the rest if it scents profit. Maybe with a little help from Apple.

Let's hope that's what Google is really up to, rather than expecting to get Martin to change the rules and then wait for AT&T to deliver another striped bass.

I also don't think Cringely is taking into account the stakes here.

Apple has a reputation for "using its partners to its benefit":

Blackberry Co-CEO Jim Balsillie sees the same thing happening with the recent launch of the iPhone.

Balsillie recently criticized Apple’s seeming willingness to commoditize the iPhone as an Apple product, rather than bringing AT&T Wireless in as an equal partner.

He also has issues with the iPhone being free of AT&T’s logo and with activation having to go through Apple’s iTunes music store rather than the AT&T Mobility site.“It’s a dangerous strategy,” says Balsillie.

“It’s a tremendous amount of control. And the more control of the platform that goes out of the carrier, the more they shift into a commodity pipe.”

— Blackberry CEO Says Steve Jobs & Apple Screwing Over AT&T. CEOSmack 7 July 2007

Meanwhile, AT&T is still locking the customer into a 2 year contract, even though the customer is paying full price for the iPhone, unlike most other phones AT&T sells. So it would appear AT&T is using Apple to gain AT&T customers.

And maybe Apple didn't want AT&T as a full partner because Apple perhaps is preparing to have iPhone work on other networks, as well? That would be a good thing.

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Positions on future uses of the 700Mhz spectrum formerly occupied by analog TV aren't just for presidential candidates anymore. Congress is hearing arguments:

Rep. Edward J. Markey (D-Mass.), who chairs the subcommittee that handles telecommunications and Internet issues, urged the FCC to "seize this opportunity to create an open-access opportunity for wireless service in this auction." He added that wireless carriers are "exerting far too much control over the features, functions and applications that wireless gadget makers and content entrepreneurs can offer directly to consumers."

— FCC Auction Should Allow for Open Wireless Network, Say Lawmakers, By Kim Hart, Washington Post Staff Writer, Thursday, July 12, 2007; Page D08

Some search, VoIP, and computer companies say auctioning off some of that spectrum with open access requirements would promote competition, while telcos claim it would hurt their investments, stifle competition, and reduce revenues to the government from the auction. I think it may well reduce direct government auction revenues, but the economic benefits of real competition should be worth it. You'd think the nominally free market supporting telcos would agree with that.

You may recall that the FCC at the last minute in 2006, after the elections and before the electees took office, agreed to some conditions on the merger of Bellsouth with AT&T. Among them was a $10/month DSL plan.

The merger commitment specifies that the plan had to be offered. That means to me that it has to be put forth as an option!!! (If there's a fifty pound striped bass somewhere out there in the ocean, that's not an offer of fish!)

So I don't think AT&T is honoring its $10/month commitment.

— Is AT&T Honoring its Merger Commitments? David Isenberg, isen.blog, Friday, July 06, 2007

This is the same $10/month service USA Today announced AT&T was developing back in January. Maybe they'll just keep "developing" it until the 48 month time limit expires, or make it available to a few people and claim they've honored their commitment.This is what SBC used to do: claim availability if one person per ZIP code could get a service, and the FCC let them get away with that.

Isenberg asks:

Do you think the FCC will investigate?

You do want fries with that iPhone, don't you?

Following up on the launch difference between AT&T and Apple stores, we've got three separate accounts of people reporting that AT&T is forcing them to buy accessories along with their iPhone at three different AT&T stores. This was definitely not the case at Apple stores, and for AT&T to decide this on their own to cash in on the launch is pretty damn shady.

— Breaking: Several AT&T Stores Forced Customers to Buy Accessories With iPhone By Jason Chen, Gizmodo, 30 June 2007

This is even though the iPhone costs about $500 because it is not subsidized by the telco (unlike most other phones they sell, which can cost $0), yet you're still required to sign up for a two year contract. And AT&T is one of the companies we're supposed to trust to provide us Internet service without charging extra for particular services.

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Here's an interesting exercise in framing net neutrality:

On the one side are traditional media - phone and cable companies, the carriers - in rare agreement. They do not want to be regulated, and they want to preserve the profitability potential that protects their network upgrades. They are therefore joined by some hardware tech firms. On the other side is what might be called the internet-industrial complex - consisting of idealistic net community folks, small start-ups, large Silicon Valley corporations pretending to be both - and Hollywood, in another strange bed fellowship.

The US Congress is in the middle; by the latest count six bills are pending, and while none is likely to be passed for now, the process itself has been a boon.

— A third way for net neutrality, By Eli Noam, Financial Times, 29 August 2006

Note "internet-industrial complex", in analogy to Eisenhower's phrase, "military-industrial complex". Yet the cablecos and telcos are said to be "in rare agreement" when actually they have long been acting on the same side on this issue; after all, it's in both their (short-term) interests to keep the number of players down. With no competition, there's no real market, and thus no real competition (which long-term means they won't be competitive with their international competitors, which are already offering speeds ten times faster for similar prices).

I don't usually blog the same article twice, but Cringely said something else important (the all-caps emphases are his):

Now let's look at this in the context of net neutrality. For the cable companies, at least, it probably doesn't matter. That's because while cable Internet service and cable VoIP service both use the CMTS, it is easy for the cable company to configure its VoIP product as completely separate from its Internet product. IF YOUR CABLE OPERATOR WILL SELL YOU VOIP SERVICE WITHOUT INTERNET SERVICE, THEN NET NEUTRALITY DOES NOT APPLY.

If excess Internet traffic causes problems for the VoIP services of these cable companies, they can prioritize their own VoIP packets with impunity because VoIP isn't defined as an Internet service. And for that very reason, packet prioritization can -- and will -- occur even if the broadband ISP has signed an agreement promising net neutrality.

The next level of this ploy is to validate the un-Internetiness of the VoIP system through public service interconnects like 911. "Should calling the police get priority treatment?" will be the question and most courts won't say "no."

— Beyond Net Neutrality: If at first you don't succeed, change the game. Robert X. Cringely, I, Cringely, April 6, 2007

The various VoIP companies better be worried about this trick, because it's all the incumbent duopoly really needs to say their own VoIP is an essential public service and any others are interfering with public safety.

Copyright is not just for Internet radio anymore:

AT&T Inc. has joined Hollywood studios and recording companies in trying to keep pirated films, music and other content off its network — the first major carrier of Internet traffic to do so.

...

As AT&T has begun selling pay-television services, the company has realized that its interests are more closely aligned with Hollywood, Cicconi said in an interview Tuesday. The company's top leaders recently decided to help Hollywood protect the digital copyrights to that content.

"We do recognize that a lot of our future business depends on exciting and interesting content," he said.

— AT&T to target pirated content, It joins Hollywood in trying to keep bootleg material off its network. By James S. Granelli, L.A. Times, June 13, 2007

Now it's for Internet video. Which is what "James W. Cicconi, an AT&T senior vice president," meant by "exciting and interesting content." Nevermind participatory customer-generated content, or that customers might not want AT&T monitoring their content.

"Who else they gonna listen to? The public?"

Savetheinternet.com produced a memorable satire on the policies of just-retired AT&T CEO Ed Whitacre. We've already seen that new AT&T CEO Randal Stephenson isn't steering a much different course, and Time-Warner CEO Ed Parsons seems to think the cablecos and telcos are the original natives of the Internet and will win at Little Big Horn. Meanwhile, the FCC has time to try to regulate Cher. Maybe the FCC needs to hear some different opinions.

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Big telcos have been blocking calls by conference call services that route through places such as Iowa that have low rural rates for backhaul. Now one of them, freeconferencecall.com, is declaring victory:

As most of you know, we have been engaged in a battle with several major telecom carriers over the last few months. While we continue to take every precaution to safeguard our customers, several have undoubtedly been affected by the carriers' strong-arm battle tactics. Their decision to block incoming calls to our conferencing and voicemail numbers interrupted thousands of users including small businesses, non-profits, universities and entrepreneurs alike. We have taken this issue to the courts, the government and the press, but the pivotal difference has been the outcry and support from our customers. The Federal Communications Commission, the State Attorney Generals and the telecom giants heard your collective voice and agreed to stop all call blocking. We would like to thank you for getting involved and colleague. Together we can redefine the communications industry!

—Freeconferencecall newsletter, 27 May 2007

I don't know about redefining the communications industry, but they do seem to have won this round. Even the FCC agrees.

Verizon gets you for long distance you don't use:

Now some phone companies are adding a new line item to monthly bills: a charge for not making long-distance calls.

The category of customers affected by the new fee is the shrinking subset of people who have no-frills home-phone service and don't pay for a long-distance-calling plan.

Verizon last month introduced the $2 fee. It is charged to customers who could dial out for long distance, but don't subscribe to a long-distance service and don't make long-distance calls.

— Phone companies levy new fee for not making calls, John Murawski, Raleigh News & Observer, Thursday, May 3, 2007

Save the Internet found a recent quote by new AT&T CEO Randall Stephenson

We’re going to control the video on our network. The content guys will have to make a deal with us.”

— AT&T’s New Boss Wants Your World Delivered to Him, Save the Internet, 27 April 2007

Some say this is necessary to pay for infrastructure.

FCC Investigating Wiretapping?

Now this would be a good thing if it happened:

House telecom subcommittee Chairman Edward Markey (D-Mass.) repeated his call for the Federal Communications Commission to investigate widespread allegations of telecom privacy law violations by intelligence agencies that received cooperation from telecom carriers in anti-terrorist surveillance efforts.

— Markey renews calls for FCC investigation into wiretapping, By Jeffrey Silva, RCCWireless News, September 12, 2007 - 2:13 pm EDT

That would be about as likely as Gonzales starting such an investigation.

Oh, wait:

After Markey wrote Martin in March to ask him to launch an investigation into whether telecom privacy laws have been broken, the FCC chairman wrote Attorney General Alberto Gonzales to verify that the agency could not conduct such a probe because it would violate federal laws governing disclosure of state secrets. Gonzales, who recently announced his resignation, has yet to respond to Martin.

Markey points at a number of events since his first request, such as that it's not a secret anymore that the government has been using telcos to wiretap.

It would be good if the FCC were to represent the public interest, rather than just the telco and cableco and the administration's interest.

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PS: Seen on Fergie's tech blog.

Copper-Based Competitors

The chutzpah:

Ed Shakin, a lawyer for Verizon, said network-sharing requirements are no longer needed in certain cities now that cable companies and other competitors have rolled out Internet and phone service. "What competitors want are artificially low prices," he said. "It comes down to a fight about price, not availability."

— Telecom Changes Put Competition on the Line, By Kim Hart, Washington Post Staff Writer, Thursday, September 6, 2007; Page D01

So Verizon is reducing the number of competitors, but as long as there is at least one, that's enough, they say. Apparently Verizon thinks its competition is the Highlander: There Can Be Only One.

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Intended vs. Legal

Shortly after a high level U.S. official acknowledged that telephone companies have helped the government in illegal spying, this comes out:

WASHINGTON — The Bush administration wants the power to grant legal immunity to telecommunications companies that are slapped with privacy suits for cooperating with the White House's controversial warrantless eavesdropping program.

The authority would effectively shut down dozens of lawsuits filed against telecommunications companies accused of helping set up the program.

The vaguely worded proposal would shield any person who allegedly provided information, infrastructure or "any other form of assistance" to the intelligence agencies after the Sept. 11, 2001 terror attacks. It covers any classified communications activity intended to protect the country from terrorism.

— Bush Seeks Legal Immunity for Telecoms, By KATHERINE SHRADER, Associated Press Writer, August 31, 2007 - 5:02 p.m. EDT

Let's let President Nixon sum it up:

Well, when the president does it that means that it is not illegal.

— Richard M. Nixon interviewed by David Frost, 19 May 1977.

Yet the same administration can't be proactive about effective regulation of first-mile Internet access for effective competition.

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Facebook as PicturePhone

Jeff Pulver has an interesting point that orty years later it's an Internet company that delivers what a telco long ago promised:

During the past couple of weeks I have come to appreciate just how simple and easy it has become to send Video Messages to friends on Facebook. While the concept of a video phone dates back to the work of AT&T and their demonstrations at the 1964 World’s Fair, it has taken the advent of the Video application on Facebook and it’s general ease of use to get me to take the time and use it as part of my daily (Internet) life. While I have discovered how the Facebook video application can be used in various ways, my favorite is to send a personal video message to a friend.

— My Favorite Facebook Application: Video, Jeff Pulver, Jeff Pulver blog, August 27, 2007

While a telco did invent or at least publicize the videophone, forty years later it's an Internet application that delivers something like it on a mass scale. And maybe one reason the Facebook version of it is popular is that it isn't quite like what AT&T predicted: it isn't interactive television. Experience indicates people don't necessarily want to be seen live any old time regardless of their state of dress or coffee.

And more obviously, there's no fancy equipment to buy, so the worldwide clientele is already there on the Internet. It's the difference between distributed participation and being sold a centralized service.

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Duopoly Spies

Well, I had been waiting to post something about the telcos and domestic wiretapping until more news came out, since much of it was still hearsay. But now National Intelligence Director and former National Security Agency Director Mike McConnell has confirmed it:

Now the second part of the issue was under the president's program, the terrorist surveillance program, the private sector had assisted us. Because if you're going to get access you've got to have a partner and they were being sued. Now if you play out the suits at the value they're claimed, it would bankrupt these companies. So my position was we have to provide liability protection to these private sector entities.

— Transcript: Debate on the foreign intelligence surveillance act, By Chris Roberts, ©El Paso Times, Article Launched: 08/22/2007 01:05:57 AM MDT

Ryan Singel points out in Wired's Threat Level blog that this is even though the same McConnell signed a sworn declaration in April saying to reveal that NSA and Verizon had such a relationship "would cause exceptionally grave harm to the national security."

Freedom to Degrade

BT made an interesting presentation at an IETF meeting in which it described a spectrum whose endpoints are

• demand side — freedom to degrade others
• ...
• supply side — freedom to degrade competitors

— re-ECN architectural intent by Bob Briscoe, UCL, BT, 68th IETF, Unofficial Birds of a Feather (non-BoF), Prague, 21 Mar 2007

My, freedom is so degrading.

AT&T: Net Neutrality Tool?

Forbes, normally more of a capitalist tool than a flaming radical rag, keeps covering AT&T's Pearl Jam fiasco:

AT&T's “content monitor” hit the mute button during part of Pearl Jam’s “Blue Room” Live Lollapalooza Webcast sponsored by the telecom, depriving viewers of some anti-George Bush lyrics—and handing live ammunition to “net neutrality” proponents in the form of an almost perfect example of what they predict will happen if a few companies are allowed to control the broadband pipeline.

— AT&T Silences Pearl Jam; Gives 'Net Neutrality' Proponents Ammunition, Staci D. Kramer, PaidContent.org, 08.09.07, 7:45 PM ET

Their followup gets even better:

AT&T spokesman Michael Coe said that the silencing was a mistake and that the company was working with the vendor that produces the webcasts to avoid future misunderstandings. He said AT&T was working to secure the rights to post the entire song - part of a sing-along with the audience - on the Blue Room site.

— AT&T Errs in Edit of Anti-Bush Lyrics, By MICHELLE ROBERTS, Forbes, 08.10.07, 10:59 AM ET

While the lumbering dinosaur was working on that, Pearl Jam already had the uncensored version on their site.

And it just keeps getting better.

700Mhz: Duopoly As Usual

Susan Crawford reads the 700Mhz auction rules and confirms the worst:

1. Those Carterfone protections don't mean too much. The no-locking, no-blocking requirements are hedged in by substantial limitations: the winning licensee will be able to lock and block devices and applications as long as they can show that their actions are related to "reasonable network management and protection," or "compliance with applicable regulatory requirements." In other words, as long as the discrimination can be shown to be connected (however indirectly) to some vision of "network management," it will be permitted. (Discrimination "solely" for discrimination's sake is prohibited, but that's not too difficult to avoid.)

— Many, many devils in the details: 700 MHz rules, by Susan, from Susan Crawford blog, 13 Aug 2007

So it's ILECs vs. CLECs, round two. Guess who'll win?

And even supposedly Cmr. Copps "grudgingly accepted" these rules. Seems to me we need a whole new FCC, so we can get some real rules of the road.

And what we really need is some real competition.

-jsq

Russian Roulette

FCC Commissioner Michael Copps has a way with words. Last year he said we should be talking about Internet freedom rather than net neutrality. And now he says we're

playing Russian roulette with broadband and Internet and more traditional media

— FCC Commissioner: US playing "Russian roulette with broadband and Internet" By Nate Anderson, ars technica, August 03, 2007 - 09:20AM CT

And the Russians are winning.

It's Good to be King!

How are those merger conditions coming along?

Remember the story back in June about how AT&T had extremely quietly started offering $10 DSL as was required in its deal to buy BellSouth? The company was promoting many other, more expensive, DSL options, but the only way you could get the required $10 version was if you specifically knew to ask about it. Broadband Reports points to an interview from an Atlanta newspaper with AT&T CEO Randall Stephenson where he's asked about the $10 DSL. The interviewer points out that no story about AT&T resulted in a more irate response from AT&T customers as its story about the hidden offer for $10 DSL, suggesting that this was a huge issue for AT&T customers. Stephenson's response? First he denies that the company made it hard to find, and then he says that they're not promoting it because customers don't want it. This, despite the clear response from customers to the very newspaper who was conducting the interview. Then, he basically admits that the $10 DSL doesn't work very well, saying that they don't promote it because they don't want to give customers a product that sucks. Of course, he says that as if it's not his company that has quite a bit of control over whether or not the product sucks.

— AT&T CEO: We Don't Promote $10 DSL Because No One Wants It, Techdirt, 1 August 2007

This is even though the AJC reporter introduced the question with:

Of all the things the AJC has written about AT&T lately, none has caused more reader irritation than AT&T's $10 a month DSL offer, which was required by the Federal Communications Commission when you bought BellSouth.

— Q&A: AT&T CEO Randall Stephenson, By Scott Leith, The Atlanta Journal-Constitution, Published on: 07/27/07

The techdirt writer goes on to point out that this is what SBC used to do with naked broadband, too, i.e., dance around and do nothing. After all, without regulation or competition, it's good to be king!

-jsq

Mergers + Bad Regulation = Higher Prices

What hath mergers wrought?

AT&T and MCI long distance increased over 200+% since 2000 for low volume users, 80% increase in Verizon local service in New York City since 2000, 472% since 1984, new bogus late fees or ‘shortfall’ fees, a 29% increase of the Universal Service Fee since 2006, and increases to every service, from packages, toll calls, and calling features to inside wire maintenance --- it goes on and on. Worse, plans are being made to increase the FCC Line Charge to $10.00, increase Universal Service and even add new fees.

Competition was supposed to lower prices. Instead, America’s phone customers have been taken advantage of, especially low income, low volume users, and seniors. Teletruth has received multiple AT&T and Verizon bills ALL showing major increases, new charges, and new problems. If competition did exist for local, long distance, packages, etc. then all of these increases would not have happened.

— AT&T and Verizon Local and Long Distance NJ and NY Phone Bills Show Massive Price Increases. Phone Mergers and a Lack of Competition Are to Blame. FCC Phone Rate Data Are Hiding the Problems. TeleTruth News Alert, 25 July 2007

Mergers and bad regulation, that is.

The Martin 700Mhz wireless acution plan leaves the same two big incumbents, AT&T and Verizon, in place. And Verizon is probably going to be a bit bigger soon, once it absorbs RCCC. Should we expect a different outcome this time?

-jsq

RCCC Stock Up Just Before 700Mhz Auction

Previously I wondered where the big wireless telephone carriers would find enough bandwidth to buy outside the pending 700Mhz auction, as Republican Commissioner Robert M. McDowell suggested. Well, the place to look is the stock market. A day before the FCC decision of yesterday, the stock of Rural Cellular Corp (RCCC) went up about 30% on news that Verizon was buying RCCC. Such a sale has to have been pending for some time; probably at least six months. So it seems that McDowell's assertion is useful political cover for Verizon, if not prediction of future acquistions. Maybe both; I guess we'll see.

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FCC's Martin Wireless Auction Plan

The Post has some interesting analysis of which FCC commissioners said what when they approved Chairman Kevin Martin's 700Mhz wireless auction plan:

The "open-access" provision was endorsed last month by FCC Chairman Kevin J. Martin, a Republican, and gained support from the two Democratic commissioners, Jonathan S. Adelstein and Michael J. Copps. Deborah Taylor Tate, a Republican commissioner, also voted in favor of the deal. Martin said he hoped the proposal would encourage a new entrant to compete with the cable and phone companies that provide broadband service.

Republican Commissioner Robert M. McDowell voted against the proposal, arguing that placing any conditions on the sale of airwaves would hurt smaller carriers by making smaller licenses without any requirements appealing to larger bidders.

"Smaller players, especially rural companies, will be unable to match the higher bids of the well-funded giants," he said.

— FCC Approves Airwave Use For All Phones, Wireless Network Opened To Options if Not Firms, By Kim Hart, Washington Post Staff Writer, Wednesday, August 1, 2007; Page D01

It's not clear to me where the bigger players will find enough smaller licenses without any requirements to be worth their while. Unless those licenses are also attractive because of the Universal Service Fund.

What did the corporate players say?

AT&T U-Verse Considered as Cable TV

In case it wasn't obvious why the telcos want local TV franchise laws repealed:

A federal judge has thrown up a roadblock in front of AT&T as it attempts to roll out its new U-Verse IPTV service in the state of Connecticut. In an opinion issued yesterday, Judge Janet Bond Arterton ruled that AT&T's U-Verse IPTV service is a cable television service like any other and is therefore subject to local franchising agreements.

— Federal judge: AT&T U-Verse == cable TV, By Eric Bangeman, ars technica, Published: July 27, 2007 - 10:44AM CT

But isn't it different from cable if it's carried over IP?

Universal Slush Fund

The regulatorium in action:

A decade-old telephone tax intended to help bring affordable service to rural areas has instead turned into something quite different: a bottomless and politically protected well of cash for cell phone companies that do big business in rural America.

Over the past four years, there’s been nearly a tenfold increase in government subsidies paid to a handful of so-called “competitive” providers — cellular phone companies paid by the fund to offer service in rural areas where an existing carrier already receives a subsidy.

The Universal Service Fund has collected $44 billion over its 10-year lifetime from a surcharge on the phone bills of nearly every American.

Regulators and lawmakers have long viewed the fund as inherently flawed. Even a member of the federalstate board that runs the program calls it “bizarre.” But efforts to change it have been derailed repeatedly by companies that benefit from the largess, and by supporters in Congress who represent sparsely populated states.

— Federal fee on phones is windfall for cell firms, By John Dunbar, ASSOCIATED PRESS, Updated: 07/29/07 6:37 AM

The article goes on to say wireless telephone companies benefit the most because they can connect rural customers at much less cost than landline telcos can. But that's not all.

Crack Google?

Cringely gets anxious over Google's floor bid for 700Mhz. After pointing out that Verizon and AT&T coming around to Kevin Martin's leaked counterproposal of watered down "open access" rules, he says:

Look who Google is up against -- all the largest Internet service providers in the U.S. Google will not win this even if they win the auction, because the telcos and cable companies are far more skilled and cunning when it comes to lobbying and controlling politicians than Google can ever hope to be. The telcos have spent more than a century at this game and Google hasn't even been in it for a decade. And Google's pockets are no deeper than those of the other potential bidders.

— Is Google on Crack?: Eric Schmidt bets the ranch on wireless spectrum, Robert X. Cringely, Pulpit, 27 July 2007

Cringely is missing the point about who Google is up against. These outfits have not been the largest ISPs for more than a century. They've been telephone companies for more than a century. And being around for a long time isn't necessarily a sure win. Look at the Vatican; it's been around for two thousand years, and it's managed to lose most of its traditional heartland of Europe. Sure, Google is fragile, in some senses even more fragile than Microsoft, as Cringely points out. But even Microsoft is losing market share from IE to an open source browser, Firefox. Google, as a proponent of open source that actually understands it, has a fair chance here. The incumbent duopoly telcos aren't really in the Internet business; Google is.

Maybe Cringely's right that Google alone couldn't win the auction. But Google and Sprint possibly could. Sure, Sprint is a phone company, too. But that doesn't mean it's going to side with the rest if it scents profit. Maybe with a little help from Apple.

Let's hope that's what Google is really up to, rather than expecting to get Martin to change the rules and then wait for AT&T to deliver another striped bass.

I also don't think Cringely is taking into account the stakes here.

Apple vs. AT&T

Apple has a reputation for "using its partners to its benefit":

Blackberry Co-CEO Jim Balsillie sees the same thing happening with the recent launch of the iPhone.

Balsillie recently criticized Apple’s seeming willingness to commoditize the iPhone as an Apple product, rather than bringing AT&T Wireless in as an equal partner.

He also has issues with the iPhone being free of AT&T’s logo and with activation having to go through Apple’s iTunes music store rather than the AT&T Mobility site.“It’s a dangerous strategy,” says Balsillie.

“It’s a tremendous amount of control. And the more control of the platform that goes out of the carrier, the more they shift into a commodity pipe.”

— Blackberry CEO Says Steve Jobs & Apple Screwing Over AT&T. CEOSmack 7 July 2007

Meanwhile, AT&T is still locking the customer into a 2 year contract, even though the customer is paying full price for the iPhone, unlike most other phones AT&T sells. So it would appear AT&T is using Apple to gain AT&T customers.

And maybe Apple didn't want AT&T as a full partner because Apple perhaps is preparing to have iPhone work on other networks, as well? That would be a good thing.

-jsq

700Mhz and Competition

Positions on future uses of the 700Mhz spectrum formerly occupied by analog TV aren't just for presidential candidates anymore. Congress is hearing arguments:

Rep. Edward J. Markey (D-Mass.), who chairs the subcommittee that handles telecommunications and Internet issues, urged the FCC to "seize this opportunity to create an open-access opportunity for wireless service in this auction." He added that wireless carriers are "exerting far too much control over the features, functions and applications that wireless gadget makers and content entrepreneurs can offer directly to consumers."

— FCC Auction Should Allow for Open Wireless Network, Say Lawmakers, By Kim Hart, Washington Post Staff Writer, Thursday, July 12, 2007; Page D08

Some search, VoIP, and computer companies say auctioning off some of that spectrum with open access requirements would promote competition, while telcos claim it would hurt their investments, stifle competition, and reduce revenues to the government from the auction. I think it may well reduce direct government auction revenues, but the economic benefits of real competition should be worth it. You'd think the nominally free market supporting telcos would agree with that.

AT&T's Striped Bass

You may recall that the FCC at the last minute in 2006, after the elections and before the electees took office, agreed to some conditions on the merger of Bellsouth with AT&T. Among them was a $10/month DSL plan.

The merger commitment specifies that the plan had to be offered. That means to me that it has to be put forth as an option!!! (If there's a fifty pound striped bass somewhere out there in the ocean, that's not an offer of fish!)

So I don't think AT&T is honoring its $10/month commitment.

— Is AT&T Honoring its Merger Commitments? David Isenberg, isen.blog, Friday, July 06, 2007

This is the same $10/month service USA Today announced AT&T was developing back in January. Maybe they'll just keep "developing" it until the 48 month time limit expires, or make it available to a few people and claim they've honored their commitment.This is what SBC used to do: claim availability if one person per ZIP code could get a service, and the FCC let them get away with that.

Isenberg asks:

Do you think the FCC will investigate?

iPhone Plus

You do want fries with that iPhone, don't you?

Following up on the launch difference between AT&T and Apple stores, we've got three separate accounts of people reporting that AT&T is forcing them to buy accessories along with their iPhone at three different AT&T stores. This was definitely not the case at Apple stores, and for AT&T to decide this on their own to cash in on the launch is pretty damn shady.

— Breaking: Several AT&T Stores Forced Customers to Buy Accessories With iPhone By Jason Chen, Gizmodo, 30 June 2007

This is even though the iPhone costs about $500 because it is not subsidized by the telco (unlike most other phones they sell, which can cost $0), yet you're still required to sign up for a two year contract. And AT&T is one of the companies we're supposed to trust to provide us Internet service without charging extra for particular services.

-jsq

Framing Net Neutrality

Here's an interesting exercise in framing net neutrality:

On the one side are traditional media - phone and cable companies, the carriers - in rare agreement. They do not want to be regulated, and they want to preserve the profitability potential that protects their network upgrades. They are therefore joined by some hardware tech firms. On the other side is what might be called the internet-industrial complex - consisting of idealistic net community folks, small start-ups, large Silicon Valley corporations pretending to be both - and Hollywood, in another strange bed fellowship.

The US Congress is in the middle; by the latest count six bills are pending, and while none is likely to be passed for now, the process itself has been a boon.

— A third way for net neutrality, By Eli Noam, Financial Times, 29 August 2006

Note "internet-industrial complex", in analogy to Eisenhower's phrase, "military-industrial complex". Yet the cablecos and telcos are said to be "in rare agreement" when actually they have long been acting on the same side on this issue; after all, it's in both their (short-term) interests to keep the number of players down. With no competition, there's no real market, and thus no real competition (which long-term means they won't be competitive with their international competitors, which are already offering speeds ten times faster for similar prices).

e911 vs. Net Neutrality

I don't usually blog the same article twice, but Cringely said something else important (the all-caps emphases are his):

Now let's look at this in the context of net neutrality. For the cable companies, at least, it probably doesn't matter. That's because while cable Internet service and cable VoIP service both use the CMTS, it is easy for the cable company to configure its VoIP product as completely separate from its Internet product. IF YOUR CABLE OPERATOR WILL SELL YOU VOIP SERVICE WITHOUT INTERNET SERVICE, THEN NET NEUTRALITY DOES NOT APPLY.

If excess Internet traffic causes problems for the VoIP services of these cable companies, they can prioritize their own VoIP packets with impunity because VoIP isn't defined as an Internet service. And for that very reason, packet prioritization can -- and will -- occur even if the broadband ISP has signed an agreement promising net neutrality.

The next level of this ploy is to validate the un-Internetiness of the VoIP system through public service interconnects like 911. "Should calling the police get priority treatment?" will be the question and most courts won't say "no."

— Beyond Net Neutrality: If at first you don't succeed, change the game. Robert X. Cringely, I, Cringely, April 6, 2007

The various VoIP companies better be worried about this trick, because it's all the incumbent duopoly really needs to say their own VoIP is an essential public service and any others are interfering with public safety.

AT&T Attacks Content

Copyright is not just for Internet radio anymore:

AT&T Inc. has joined Hollywood studios and recording companies in trying to keep pirated films, music and other content off its network — the first major carrier of Internet traffic to do so.

...

As AT&T has begun selling pay-television services, the company has realized that its interests are more closely aligned with Hollywood, Cicconi said in an interview Tuesday. The company's top leaders recently decided to help Hollywood protect the digital copyrights to that content.

"We do recognize that a lot of our future business depends on exciting and interesting content," he said.

— AT&T to target pirated content, It joins Hollywood in trying to keep bootleg material off its network. By James S. Granelli, L.A. Times, June 13, 2007

Now it's for Internet video. Which is what "James W. Cicconi, an AT&T senior vice president," meant by "exciting and interesting content." Nevermind participatory customer-generated content, or that customers might not want AT&T monitoring their content.

Big Ed Retires

"Who else they gonna listen to? The public?"

Savetheinternet.com produced a memorable satire on the policies of just-retired AT&T CEO Ed Whitacre. We've already seen that new AT&T CEO Randal Stephenson isn't steering a much different course, and Time-Warner CEO Ed Parsons seems to think the cablecos and telcos are the original natives of the Internet and will win at Little Big Horn. Meanwhile, the FCC has time to try to regulate Cher. Maybe the FCC needs to hear some different opinions.

-jsq

No Blocking, No Throttling

Big telcos have been blocking calls by conference call services that route through places such as Iowa that have low rural rates for backhaul. Now one of them, freeconferencecall.com, is declaring victory:

As most of you know, we have been engaged in a battle with several major telecom carriers over the last few months. While we continue to take every precaution to safeguard our customers, several have undoubtedly been affected by the carriers' strong-arm battle tactics. Their decision to block incoming calls to our conferencing and voicemail numbers interrupted thousands of users including small businesses, non-profits, universities and entrepreneurs alike. We have taken this issue to the courts, the government and the press, but the pivotal difference has been the outcry and support from our customers. The Federal Communications Commission, the State Attorney Generals and the telecom giants heard your collective voice and agreed to stop all call blocking. We would like to thank you for getting involved and colleague. Together we can redefine the communications industry!

—Freeconferencecall newsletter, 27 May 2007

I don't know about redefining the communications industry, but they do seem to have won this round. Even the FCC agrees.

Nickle and Dime Time

Verizon gets you for long distance you don't use:

Now some phone companies are adding a new line item to monthly bills: a charge for not making long-distance calls.

The category of customers affected by the new fee is the shrinking subset of people who have no-frills home-phone service and don't pay for a long-distance-calling plan.

Verizon last month introduced the $2 fee. It is charged to customers who could dial out for long distance, but don't subscribe to a long-distance service and don't make long-distance calls.

— Phone companies levy new fee for not making calls, John Murawski, Raleigh News & Observer, Thursday, May 3, 2007

Control to Pay for Capacity?

Save the Internet found a recent quote by new AT&T CEO Randall Stephenson

We’re going to control the video on our network. The content guys will have to make a deal with us.”

— AT&T’s New Boss Wants Your World Delivered to Him, Save the Internet, 27 April 2007

Some say this is necessary to pay for infrastructure.