Dial Zero
A look at what's surprising, silly, scary or stupid in telecommunications and data

Wednesday, December 31, 2008

Internet providers want to take advantage of Obama's broadband push

President-elect Barack Obama's call to improve the nation's broadband infrastructure has cable and phone company lobbyists maneuvering for prime positions to cash in.

Congress wants a plan that will create jobs over the next two to three years while also tackling the longer-term goal of improving the availability and quality of high-speed Web access. The US has slipped to 15th from fourth place since 2001 in broadband penetration. Advocates say broadband deployment is critical to the competitiveness of the US economy.

Among the issues are what speed Congress should define as broadband and whether government money should be funneled only to areas that have no broadband access, or if it should also subsidize upgrades to existing networks.

Policies under serious consideration are corporate tax credits to build new wireless or landline infrastructure, government-backed broadband "bonds" and grants to companies or local governments, legislative aides and lobbyists close to the process say. There also is strong agreement that low-income consumers need to be encouraged to sign up for broadband -- for example, through vouchers to purchase computers or discounts on monthly service.

Large cable operators are seeking to increase the FCC's definition of broadband download speed to about five megabits per second, about 6½ times as fast as the current definition. Internet service providers building out "unserved" regions, where service of that speed isn't available, would be given the full benefit of tax incentives or grants.

The big cable providers also want to target "underserved" areas, where there is only one broadband provider or the service isn't widely available. In those markets, companies would get incentives to build out next-generation services. The download speed that would qualify as next-generation would likely be in the range of 40 to 50 megabits per second.

The cable plan would disadvantage phone companies, especially smaller ones whose DSL services are slower than cable. The Independent Telephone and Telecommunications Alliance, which represents midsize phone companies, is pushing for a slower broadband standard, in the range of 1.5 to 3 megabits per second. Curt Stamp, the group's president, says the federal largesse should be used to subsidize carrier investments in rural areas rather than to finance upgrades to their existing networks.

Wireless services will likely be able to qualify as broadband at a slower download speed than landline services. But if the mark is set above 2 megabits per second it could be a boost for Clearwire Corp., a start-up operator that is rolling out a WiMax network capable of download speeds of 2 to 4 megabits per second. Other carriers weren't planning major wireless upgrades until at least 2010.

Equipment makers such as Cisco and Motorola stand to benefit if carriers undertake massive upgrades. Carl Russo, CEO of Calix, which supplies equipment to phone and cable providers, says Congress should define broadband as 10 megabits per second so the networks it builds now will be able to support bandwidth-hogging applications of the future, such as high-definition video.

"Remember, you only get to do this once, so you want to build the widest highway possible," Russo said. The Telecommunications Industry Association, which represents equipment makers, is pushing for a $25 billion grant program for Internet service providers. Under another proposal, grants could go to state and municipal authorities, which would build high-speed networks and then open them up to competing service providers. That would likely meet with considerable resistance from large carriers like Verizon, which have challenged attempts by local governments to build and operate their own wireless or high-speed fiber networks.

Steve Davis, senior vice president of policy for Qwest Communications, says the big phone company wouldn't object to public broadband projects in areas that currently have no high-speed Internet service, provided private operators have a right of first refusal in building the networks. "The first place the government should look is to the industry," Davis says.

Meanwhile, outside groups are offering various proposals to Congress. Consumer advocacy group Free Press released a broadband stimulus proposal that calls for a $44 billion investment in Internet services over three years, much of which would be funneled through the FCC's existing Universal Service Fund, which subsidizes telephone services in rural areas and for low-income people.

Public-interest groups are clamoring for conditions to be imposed on carriers that receive tax credits, such "net neutrality." (info from The Wall Street Journal)

Tuesday, December 30, 2008

Blackberry maker sues Motorola over hiring restriction

BlackBerry maker Research In Motion is hiring, Motorola is laying off thousands, and the two mobile and wireless rivals are going to court because RIM claims Motorola is unfairly blocking former employees from working for RIM.

RIM is seeking a court order preventing Motorola from blocking its former workers from working for RIM. In a complaint filed last week, RIM claims Motorola is engaging in improper competitive practices by unfairly enforcing a nondisclosure and nonsolicitation agreement signed by the two rival cellphone makers in February.

RIM claims in the Dec. 23 complaint filed in a Chicago court that the agreement expired in August and it is free to hire former Motorola employees. In September, Motorola sued RIM to bar it from hiring any Motorola employees under the terms of the February agreement.

Since May 2007, Motorola has laid off approximately 10,000 workers and plans to cut another 3,000 employees in 2009. Most of the fired employees worked in Motorola's financially bleeding handset unit.

"Motorola's position shamelessly ignores the fact that Motorola's massive layoffs, and not the RIM entities, have caused hundreds of Motorola employees to date to seek employment with the RIM entities," states the RIM complaint.

The complaint adds the claim that Motorola's actions are preventing RIM "from hiring any Motorola employees, including the thousands of employees Motorola has already fired or will soon fire, without regard for [RIM's] rights or for the damage this tactic will unfairly inflict on Motorola's own employees and ex-employees who will be prevented from finding new employment" with RIM.

The filing also notes that RIM "continue[s] to grow and hire new employees" while Motorola is making "massive layoffs of thousands of its employees in an effort to cut costs within its faltering wireless communication devices businesses." (info from eweek.com)

Monday, December 29, 2008

Now there are thousands more places
to buy an iPhone

In a confirmation of swirling rumors, Apple's iPhone 3G went on sale yesterday at about 2,500 Walmart stores and at Walmart.com.

Walmart is the second independent retail chain after Best Buy to sell iPhones. They are also sold at Apple and AT&T stores.

Walmart sells the black 8 GB iPhone 3G model with the every day price of $197 and the 16 GB black or white model for $297, with a new two-year AT&T service agreement or a qualified upgrade. Walmart's price match policy allows stores to match the price of any local competitor's advertised store price on the same item within the same promotional period.

The new iPhone 3G combines the features of the original iPhone plus 3G networking that can be twice as fast, built-in GPS for expanded location-based mobile services, and iPhone 2.2 software which includes support for Microsoft Exchange ActiveSync and runs over 10,000 third party applications available through the new App Store.

There are Apple iPhone kiosks in the Home Entertainment departments at Walmart stores. Employees have been trained to assist customers with questions, demonstrations and activation.

Friday, December 26, 2008

Cybersquatting company lost $33.2 million judgement to Verizon, but skipped the trial

Verizon has been awarded $33.2 million in a "cybersquatting" case against a San Francisco company that registered Internet domain names purposely similar to the telecommunications giant's trademarks. Verizon, however, may not see any money, as the registrar, OnlineNIC, never appeared in federal court to defend itself.

The default ruling said the company "unlawfully registered at least 663 domain names that were either identical to or confusingly similar to Verizon trademarks.," Verizon was awarded $50,000 per name for OnlineNIC's "bad-faith registrations" that were intended to steer traffic away from Verizon's sites.

"This case should send a clear message and serve to deter cybersquatters who continue to run businesses for the primary purpose of misleading consumers," said Sarah Deutsch, Verizon associate general counsel. "Verizon intends to continue to take all steps necessary to protect our brand and consumers from Internet frauds and abuses." The company has won several similar cases.

Complaints about cybersquatting -- setting up a Website using a trademarked name and then profiting by selling the name to the trademark owner -- surged to a record in 2007, according to World Intellectual Property Organization.

Anyone can register domain names for a few dollars per year, but cybersquatters claim popular domain names with the intention of selling them at a profit when the real owners of the names come calling. More recently, Internet entrepreneurs have set up Websites using famous names -- or even versions with typos in them -- and setting up per-click ads leading to the entity's official site.

The practice was barred in the US. in 1999. After declining for several years, incidents began to rise in 2004 and have been climbing in recent years. (info from The Wall Street Journal)

Wednesday, December 24, 2008

Estonians will vote by phone

The Estonian Parliament has approved a law making Estonia the first country to allow voting by cellphone, in the next parliamentary elections in 2011.

Estonians were allowed to cast Internet ballots in last year's parliamentary vote. Government officials said the Internet voting system proved secure despite worries about hacker attacks, identity fraud and vote count manipulation.

The mobile-voting system, which has already been tested, requires that voters obtain free, authorized chips for their phones. The chip will verify the voter's identity and authorize participation in the electronic voting system.

The system and software have proven effective and reliable in an independent security audit. A spokesman said the system "is the most secure way to authenticate digital signatures."

Finland and Sweden possess the software and technical capabilities to conduct a similar cellular election. (info from The Associated Press)

Tuesday, December 23, 2008

Maybe satellites are safer.
Undersea cable cut hurts mideast Web access
& phone calls

Yesterday the Middle East spent its first workday coping with slow and spotty Internet access after key communication cables were cut. Telecommunication providers from Cairo to Dubai continued to scramble to reroute voice and data traffic through potentially costly detours in Asia and North America after the lines running under the Mediterranean Sea were damaged Friday. The cause of the cuts wasn't yet known.

It is the second time this year that trans-Mediterranean cables to Europe have been cut, knocking out Web and telephone access for many in the Middle East. The earlier cut, in late January, was apparently caused by a ship's anchor.

On Sunday afternoon, a ship operated by France Telecom's marine division arrived at what it believes is the accident site south of Sicily.

The crew released a robotic submarine to search for two of the three damaged cables, which are owned by a consortium that includes France Telecom. Once found, the cable ends will be pulled to the surface and repaired on deck -- a process that could take several days. The company hopes to have the first line fixed by Thursday. (info from The Wall Street Journal)

Monday, December 22, 2008

Television questions caused phone system to crash

Two years ago, Congress set 2/17/09 as the date requiring the US to switch to digital TV. Digital signals don't take up as much air space as analog signals, and Congress wanted to auction off some of the airwaves left vacant by the switch to make money. It also set aside some of those airwaves for a future network for police and firefighters, who have complained about communications problems during disasters.

Households with satellite or cable TV won't be affected by the switch to digital, but others need converter boxes. Broadcasters and cable operators across the country are in the midst of a campaign to raise viewers' awareness about the transition. But problems have arisen with a government coupon program that helps consumers buy digital-converter boxes needed to keep old TVs operational, suggesting that some viewers may not be prepared.

Almost 20 million homes rely on free, over-the-air television. An additional 15 million households have cable or satellite TV but also own some TVs that may require converter boxes. Nearly 17 million of the $40 government coupons have been redeemed to buy converter boxes. The boxes, which cost about $40 to $60 each, allow analog TVs to pick up digital signals.

The government doesn't know how many TVs need converter boxes. Nielsen Media Research estimated Friday that 7% of U.S. households remain unprepared for the digital transition.

Last week, 40 stations in Ohio shut off their analog signals for five minutes to show viewers what their analog TVs would look like without converter boxes: a blank screen.

Viewers flooded a broadcasters' hot line with calls to ask how to get the government coupons and how to operate converter boxes, among other questions, said Christine Merritt, executive vice president of the Ohio Association of Broadcasters. She added that the hot line got so many calls -- about 7,500 -- that the phone system overloaded and crashed. (info from The Wall Street Journal)

Friday, December 19, 2008

Give or get a Batphone for Chanukah, Kwanzaa, Christmas

Now everyone can have a flashing red phone like Batman

When there’s trouble in Gotham City, Police Commissioner Gordon calls caped crusader Batman, the secret alter ego of millionaire Bruce Wayne.

At Wayne Manor, the flashing red Batphone is answered by Alfred the butler, who tells Wayne about the trouble. Then Wayne and his young ward Dick Grayson put on their superhero costumes. As Batman and Robin, they race from the Batcave in the Batmobile to battle evil-doers, or rescue citizens in distress.

Now everyone can have a bright red flashing Batphone just like a superhero. When an emergency call - or even an ordinary call - comes in, a bright red light centered in a shiny chrome ring starts flashing to attract attention.

The Batphone has classic sixties styling, with heavy-duty construction, a two-year warranty, and is made in the USA. It gets all of its power from the phone line, and doesn’t require a power cord or batteries. It can work on an ordinary home phone line, or on an "analog extension port" in a business phone system.

The phone rings when the light flashes, unless a purchaser prefers the bell to be disconnected for silent signaling, or an optional high-pitched "BatSignal" or buzzer to be installed instead of the bell. Price with the bell is $122, including "ground" shipping to all 50 states. Fast shipping for delivery before Christmas is available at an extra charge.

Order online at www.GetABatPhone.com, or call toll-free 1-888-225-3999.

Thursday, December 18, 2008

French iPhone monopoly deal is illegal

French antitrust authorities ruled that Apple's deal to sell the iPhone in France exclusively through France Télécom posed an unfair barrier to consumer choice. This move could pave the way for other operators to sell the iPhone.

The decision from France's Competition Council suspends a five-year contract that the companies signed last year. The ruling came in response to a complaint filed by one of France Télécom's competitors, Bouygues Telecom. France Télécom said it would appeal the decision.

The decision is a blow to France Télécom, which has bet that the iPhone would help attract high-tech savvy customers who tend to spend more on their monthly communication bills. It also complicates Apple's marketing plans in one of Europe's biggest markets, but the decision isn't likely to have immediate repercussions outside France.

There is a patchwork of different situations in Europe. In Belgium, for example, consumers can buy an iPhone and use it with any operator. In Germany, a similar legal challenge filed in 2007 by Vodafone to derail Deutsche Telekom's exclusive contract with Apple failed.

The Competition Council said France Télécom's deal with Apple was "clearly excessive" and risked "serious and immediate damage to competition on the mobile market and to consumers."

France Télécom said the decision would have the unwanted effect of stifling innovative services for consumers, such as mobile video, by causing operators to think twice before investing in network upgrades. The operator said it had "heavily invested" to upgrade its network to handle and optimize the iPhone. It has sold about 600,000 iPhones. (info from The Wall Street Journal)

Wednesday, December 17, 2008

Texas prison cancels cellphone jamming test, but FCC wants them to go ahead

An Austin, Texas prison, citing legal concerns, canceled plans to test cellphone-jamming technology that a South Carolina jail demonstrated last month. However, an FCC spokesman says: “We would encourage Texas authorities to move forward with their test.”

Smuggled cellphones are an ongoing problem in prisons, where they facilitate crime both behind bars and in the outside world. In Texas, officers have found hundreds of contraband phones this year, and State Sen. John Whitmire even received a call from a death-row inmate using one.

Michelle Lyons, a spokeswoman for the Texas Department of Criminal Justice, said the state’s attorney general recommended the cancellation because jamming wireless signals remains illegal in the US, with the exception of some uses by federal agencies.

“At every turn, we have attempted to identify a legal way to perform this test so that we could move forward,” Oliver Bell, chairman of the Texas Board of Criminal Justice, said in a statement. “I cannot, in good faith, violate the law in front of our nearly 38,000 employees and then demand they violate no law under threat of prosecution.”

The jamming technology is made by CellAntenna. At the Ridgefield, SC demonstration, the Associated Press reported that it successfully blocked cellphones in the auditorium, but didn’t affect reception outside the room, a key concern of wireless-industry advocates who oppose the technology on the grounds that it could interrupt calls in too broad an area.

To date, that demo hasn’t resulted in legal action, and the FCC said prior to it that it is willing to work with state and local law enforcement officials on the issue.

Lyons said that Texas is still restricted by the law, regardless of the South Carolina demo. “We support the technology. That’s not the issue,” she said. “But until it’s legal for us to use or even demonstrate, we’re just not going to go down that path.” (info from The Wall Street Jiournal)

Tuesday, December 16, 2008

More heads to roll at Alcatel-Lucent

Alcatel-Lucent said it will eliminate another 1,000 white-collar jobs as part of its new chief's plan to return the company to profitability, but shares slumped as investors were hoping for a bolder shift in business strategy. Investors dumped the stock on the news. Shares sank 14 percent and the company was the biggest percentage loser in the CAC 40 index.

The Paris-based maker of telecom networking equipment also intends to get rid of half of the 10,000 contractors it employs in measures aimed at nearly a billion dollars by the fourth quarter of 2009.

Investors were disappointed that Alcatel-Lucent's strategy appeared to consist of rooting out duplication rather than making major spin-offs of businesses, said Roland Pitz, a Munich-based telecoms industry analyst for Unicredit. "It looks like more restructuring but not the substantial change in the business model" that investors were hoping for, Pitz said.

Alcatel-Lucent said the cuts could help it break even at the operating level next year. It hasn't made a profit since the company was formed through Alcatel's purchase of Lucent for $11.4 billion in 2006. The company's shares have fallen around 85 percent since the company was formed, as it has struggled to integrate its two halves and compete with emerging Asian rivals. The Alcatel-Lucent merger aimed to boost margins through savings on expenses and research and development, but intense competition has forced the company to pass many of those savings to customers in the form of discounts.

CEO Ben Verwaayen, who took over in September following the removal of Patricia Russo, said the cuts would make Alcatel-Lucent a "more agile" company by stripping out layers of management. Verwaayen, who is credited with transforming British telecommunications operator BT Group into a broadband Internet powerhouse earlier this decade, was brought in to pull off similar results at Alcatel-Lucent.

The 1,000 new job cuts will come out of Alcatel-Lucent's total white collar work force of 15,000, and come on top of a previous plan to cut 16,500 jobs by the end of next year. The company employed a total of 76,410 as of the end of 2007.

Verwaayen said Alcatel-Lucent will shift investment to technologies in which it is either already a leader or which it has targeted for development, such as LTE, W-CDMA, and enhanced packet core. The company will also cut investment in aging technologies such as CDMA, GSM and ADSL and seek to sell "non-core" businesses that Verwaayen declined to identify. (info from The Associated Press)

Monday, December 15, 2008

Google wants to speed past network neutrality

The celebrated openness of the Internet -- network providers are not supposed to give preferential treatment to any traffic -- is quietly losing powerful defenders. Google has approached major cable and phone companies that carry Internet traffic with a proposal to create a fast lane for its own content. Google has traditionally been one of the loudest advocates of equal network access for all content providers.

At risk is a principle known as network neutrality: Cable and phone companies that operate the data pipelines are supposed to treat all traffic the same -- nobody is supposed to jump the line. But phone and cable companies argue that Internet content providers should share in their network costs, particularly with Internet traffic growing by more than 50% annually. Carriers say that to keep up with surging traffic, driven mainly by the proliferation of online video, they need to boost revenue to upgrade their networks. Charging companies for fast lanes is one option.

One major cable operator in talks with Google says it has been reluctant so far to strike a deal because of concern it might violate FCC guidelines on network neutrality.

Separately, Microsoft and Yahoo have withdrawn quietly from a coalition formed two years ago to protect network neutrality. Each company has forged partnerships with the phone and cable companies. In addition, prominent Internet scholars, some of whom have advised President-elect Barack Obama on technology issues, have softened their views on the subject.

The contentious issue has wide ramifications for the Internet as a platform for new businesses. If companies like Google succeed in negotiating preferential treatment, the Internet could become a place where wealthy companies get faster and easier access to the Web than less affluent ones and could choke off competition. For computer users, it could mean that Websites by companies not able to strike fast-lane deals will respond more slowly than those by companies able to pay. In the worst-case scenario, large companies would control both distribution and content -- and much of what users can access.

Lawrence Lessig, an Internet law professor at Stanford University and an influential proponent of network neutrality, recently shifted gears by saying at a conference that content providers should be able to pay for faster service. The shifting positions concern some purists. "What they're talking about is selling you the right to skip ahead in the line," says Ben Scott, policy director of Free Press, an advocacy group. Advocates of network neutrality believe it has helped the Internet drive the technology revolution of the past two decades, creating hundreds of thousands of jobs.

The concept of network neutrality originated with the phone business. The nation's longtime telephone monopoly, nicknamed Ma Bell, and its regional successors were prohibited from giving any public phone call preference in how quickly it was connected. When the Internet first boomed in the 1990s, content largely traveled via telephone line, and the rule survived by default.

In August 2005, amid a deregulatory environment, the FCC weakened network neutrality to a set of four "guiding principles." The step had the effect of making the FCC's power to enforce network neutrality subject to interpretation, emboldening those looking for ways around it. Major phone companies including AT&T and Verizon announced they intended to create new fast lanes on the Internet -- and would charge content companies a toll to use it. They claimed Internet companies had been getting a free ride. That unleashed a firestorm of criticism. A diverse group including Internet companies Google, Microsoft and Amazon joined the likes of the Christian Coalition, the National Rifle Association and singer Moby in what they characterized as a fight to "save the Internet."

Advocates of network neutrality also claimed that dismantling the rule would be the first step toward distributors gaining control over content, since they could dictate traffic according to fees charged to content providers. The fortunes of a certain Website might depend on how much it could pay network providers, rather than on its popularity. That concern would grow if the carriers themselves offer content, which some have tried.

Some telecom experts say that broadband is the most profitable service offered by phone and cable companies, and they are simply trying to offset declining revenue from their traditional phone business.

In the two years since Google, Microsoft, Amazon and other Internet companies lined up in favor of network neutrality, the landscape has changed. The Internet companies have formed partnerships with phone and cable companies, making them more dependent on one another.

Microsoft, which appealed to Congress to save network neutrality just two years ago, has changed its position completely. The company now favors legislation to allow network operators to offer different tiers of service to content companies. Microsoft has a deal to provide software for AT&T's Internet television service. A Microsoft spokesman declined to comment whether this arrangement affected the company's position on network neutrality.

Amazon's Kindle digital-reading device offers a dedicated, faster download service, an arrangement Amazon has with Sprint. That has prompted questions in the blogosphere about whether the service violates network neutrality. Amazon had withdrawn from the coalition of companies supporting net neutrality, but it recently was listed once again on the group's Website. Yahoo now has a digital subscriber-line partnership with AT&T. Some have speculated that the deal has caused Yahoo to go silent on the network-neutrality issue.

An AT&T spokesman said the company should be able to strike any deal it sees fit with content companies. Yahoo said in a statement that carriers and content companies "should find a consensus on how best to ensure that Americans have access to a world-class Internet."

Google, with its dominant market position and its perceived ties to the Obama team, may hold the most sway. One of Obama's most visible supporters during the campaign was Eric Schmidt, Google's chief executive officer, who is an adviser during the transition.

Google's proposed arrangement with network providers, internally called OpenEdge, would place Google servers directly within the network of the service providers. The setup would accelerate Google's service for users. Asked about OpenEdge, Google said only that other companies such as Yahoo and Microsoft could strike similar deals if they desired. But Google's move, if successful, would give it an advantage available to very few.

The matter could come to a head quickly. In approving AT&T's 2006 acquisition of Bell South, the FCC made AT&T agree to shelve plans for a fast lane for 30 months. That moratorium expires in the middle of next year. A Democratic lawmaker has already promised new network-neutrality legislation early in 2009. And a new chairman of the FCC could take a stricter position on forcing companies to comply with network neutrality. (info from The Wall Street Journal)

Friday, December 12, 2008

Australia wants to censor the Web

The Australian government plans to test a nationwide Web filtering system that would force Internet service providers to block access to thousands of sites containing questionable or illegal content, prompting cries of censorship from advocacy groups.

The proposed filter is part of a “cybersafety plan” started in May with the goals of protecting children online and stopping adults from downloading content that is illegal to possess in Australia, like child pornography or materials related to terrorism. But the plan has ignited opposition from online advocacy groups and industry specialists who say it would slow browsing speeds and do little to block undesirable content.

Last month, the minister of communications, Stephen Conroy, invited Internet service providers and mobile phone operators to participate in a live trial of the program, which is set to begin this year.

The proposed system consists of two tiers. Under the first, all Australian service providers must block access to around 10,000 Websites on a list maintained by the Australian Communications and Media Authority, the federal monitor that oversees film classifications. The second tier would require service providers to provide an optional filter that individuals could use to block material deemed unsuitable for children.

The government says the list, which is not available to the public, includes only illegal content, mostly child pornography. But critics worry about the lack of transparency and say the filter could be used to block a range of morally hazy topics, like gambling or euthanasia.

“Even if the scheme is introduced with the best of intentions, there will be enormous political pressure on the government to expand the list,” said Colin Jacobs, the vice chairman of Electronic Frontiers Australia, a technology advocacy group. “We worry that the scope of the list would expand at a very rapid rate.” “Our view is there are some serious shortfalls in what is being proposed,” said Mark White, the chief operating officer at iiNet, Australia’s third-largest service provider, which has applied to take part in the trial.

White said the mandatory filter was unlikely to work because it would not monitor illegal activity on peer-to-peer or file-sharing networks, where most child pornography and other illegal content is exchanged. The filter would also slow Internet browsing speeds for all regardless of whether they were trying to access forbidden sites, he said.

This concern has been affirmed by the government’s own research. According to a July report by the communications and media authority, the best filter in tests of six unidentified Internet filtering programs slowed browsing speeds by 2 percent; the other five made the Internet run between 22 and 87 percent slower.

The study found that filtering programs were effective at blocking illicit material around 92 percent of the time, but around 3 percent of legitimate sites were mistakenly caught up in the filters.

Australia’s largest service provider, Telstra, has also expressed doubts about the plan. The firm’s chief operating officer, Greg Winn, said last week that using service provider filters to stop illicit content was “like trying to boil the ocean.” As soon as the filter was applied, he said, someone would find a way to break it.

The children’s welfare group, ChildWise, has defended the plan, saying filtering of child pornography would be “a victory for common sense.” (info from The New York Times)

Thursday, December 11, 2008

Bell Canada buyout deal falls apart

A year and a half after it was struck, then the largest private-equity deal in history, the $41 billion leveraged buyout of BCE, the Canadian telephone company collapsed Wednesday when a valuation expert at auditing firm KPMG issued a final opinion that the transaction would create an insolvent entity.

The takeover had been teetering since last month, when KPMG delivered a preliminary opinion that it couldn't provide a certificate of solvency. That assurance was an express condition needed to complete the deal. KPMG issued a final opinion that the BCE buyout would create an insolvent entity.

As the merger agreement expired Thursday at 12:01 a.m., buying group Ontario Teachers' Pension Plan, Providence Equity Partners LLC, Madison Dearborn Partners LLC and Merrill Lynch Global Private Equity issued a joint announcement that the deal was terminated, citing the failure to fulfill the contract's terms. The four private-equity firms said they aren't responsible for a $1.2 billion breakup fee.

BCE is expected to take issue and sue the private-equity group over the breakup fee. Such a lawsuit would add to the litigation wave resulting from boom-era deals that have since fallen apart.

While BCE and the private-equity firms will likely head to court, four financing banks are in position to walk away with an early Christmas present. Citigroup, Deutsche Bank, Royal Bank of Scotland and Toronto Dominion Bank won't have to provide $34 billion in debt to fund the deal. Had the buyout deal closed, the banks would have absorbed as much as $12 billion in losses from selling the debt package at steep markdowns or by holding the debt on their books.

While the buyers have maintained that they want to own BCE, private-equity watchers suspect that they also will take some measure of relief from the deal's collapse. The economic climate and valuation of telecom companies has changed since the agreement was struck in July 2007.

The biggest losers are BCE holders, who were expecting to be bought out at about $34 a share. In 4 p.m. New York Stock Exchange trading Wednesday, BCE's shares rose 48 cents, or 2.7%, to $18.29.

KPMG's analysis surprised Wall Street. Unlike the targets in many other failed buyouts, BCE has seen its operating performance remain solid. The company also has an investment-grade credit rating and almost $3 billion of cash on its balance sheet. KPMG expressed concern over BCE's financial condition, partly because falling telecom valuations in recent months have raised doubts about whether BCE's assets would cover its liabilities after the deal's closing. In addition, the market's declines likely increased the company's pension liabilities, creating a further strain on its balance sheet.

Ironically, it was BCE which pushed to insert the solvency-certificate condition in the merger agreement. It is unusual for a merger pact to require a solvency certificate as a condition of closing, but BCE wanted the condition in order to protect itself from lawsuits by existing BCE bondholders over the companys new, debt-laden capital structure.

"BCE has hoisted itself on its own petard," said an executive involved in the deal.

After KPMG issued its preliminary view, BCE executives tried in vain to persuade the auditing firm to change its opinion. BCE engaged PricewaterhouseCoopers, which delivered a positive solvency opinion, countering KPMG's view. The four private-equity buyers also scrambled for a solution, last week floating a restructured deal in which they would've acquired a minority stake in BCE. The banks rejected that proposal. (info from The Wall Street Journal)

Wednesday, December 10, 2008

Nortel seeking bankruptcy advice

Nortel Networks Corp has sought legal counsel to explore bankruptcy-court protection from creditors in the event that its restructuring plan fails. The move comes as the company grapples with plummeting sales for its wireless gear and as the credit crunch hobbles the sale of key assets.

Ronald Alepian, a spokesman for Nortel, said that "no bankruptcy filing is imminent," but added that the company has engaged several advisers to help it chart a way forward. "We remain focused on carrying out the restructuring we outlined on Nov. 10 to cut costs," he said. Alepian said Standard & Poor's in November reaffirmed Nortel's ratings, saying the company "should be able to sustain adequate levels of liquidity in the next 12-18 months" despite difficult market conditions.

Nortel also has been exploring potential assistance from the Canadian government, but the disarray within the government is clouding those prospects. Last week, Prime Minister Stephen Harper shut down Parliament until late January to avoid attempts by opposition legislators to topple his government.

Nortel was once Canada's largest company. Its market value topped $250 billion in 2000, but has since shriveled to $275 million. The company's stock has been trading below the $1 minimum on the New York Stock Exchange for a month.

Chief Executive Mike Zafirovski joined Nortel three years ago after helping to revive the cellphone division of Motorola. He swelled profits from selling Nortel's wireless equipment to US carriers and used the money to fund new businesses. But a sudden drop in contracts by US carriers, themselves seeking to cut spending, choked the company. Nortel burned through $478 million during the first nine months of this year, as sales of the company's CDMA technology atrophied.

In September, Zafirovski decided Nortel should sell assets to cut expenses and raise cash. It said it would sell an unprofitable new business called Metro Ethernet, which makes gear to transmit Internet and video feeds.

Until the announcement, many Wall Street analysts believed that Nortel still had time: It had an estimated $2.6 billion in cash and no payment on its $4.5 billion in debt until July 2011. But $500 million of Nortel's cash was tied up in overseas joint ventures and it needed $1 billion cash for daily working capital.

Nearly a dozen companies and investment firms looked at the Metro Ethernet business, and bankers encouraged suitors to consider buying the entire company. But no deal to sell the business has emerged. In hopes of finding better prices, Nortel recently hired new investment bankers. Suitors for all of Nortel have been waiting on the sidelines, betting that its assets can be picked up without at least $6 billion in liabilities if the company seeks protection from creditors.

Uncertainty surrounding Nortel's finances has limited its ability to find new business, as its customers seek safety in contracts with better-financed rivals. (info from The Wall Street Journal)

Monday, December 08, 2008

Send a money order from your cellphone

Vodafone plans to announce a partnership today with Western Union to allow international money transfers via cellphones. The companies are initially launching a pilot program that will allow residents of Reading in the United Kingdom to send money to family members and friends in Kenya, where Vodafone is the 40% owner of local wireless operator Safaricom. If that program is successful, the companies will expand it to other countries.

There is growing interest in using cellphones as a conduit for money transfers, with financial institutions such as Citigroup and Visa taking steps into the business, along with Silicon Valley start-up Obopay Inc. Wireless carriers in the US and in emerging markets such as India and the Philippines are having some success with programs that let users transfer money domestically via cellphones.

Now UK-based Vodafone and other wireless operators have set their sights on cross-border remittances. Research firm Aite Group expects that by 2010 global workers' remittances will amount to $465 billion, up from $369 billion last year. Remittances are a big contributor to gross domestic product in many emerging markets as workers migrate around the globe, maintaining ties to family in their native countries. Most of these transfers are in the range of $300 to $350 and happen a few times a month, but Vodafone wants to encourage much smaller and more frequent money transfers via cellphone.

Vodafone, which owns or has stakes in wireless operators in Africa, the Middle East and India, sees mobile money transfers as an attractive add-on service in markets where users generally just buy prepaid phone minutes.

The company's international remittance service builds on its domestic money-transfer business, which it started in Kenya last year and has since expanded to Tanzania and Afghanistan. That service, known as M-Pesa ("cash" in Swahili), has signed up more than four million customers -- often urban workers who use it to ship money to relatives in rural areas. Senders can visit any of 4,000 locations, including Safaricom retail outlets and gas stations, to hand over cash that gets deposited into their phone accounts, and then send it via text message. Recipients go to another M-Pesa location to pick up the cash.

Expanding the service to allow cross-border transfers through Western Union agents allows Vodafone to not only increase the volume of cash it is handling, but also move into a higher-margin business: It charges only 18 US cents for domestic money transfers in Kenya, but the charge for international remittances from the UK will be $7.22 or more.

Western Union, which processed $64 billion in cross-border remittances last year and has 365,000 agent locations in 200 countries, is hoping to expand its reach through cellphones. Western Union is partnering with other carriers for international money transfers, including Globe Telecom and Smart Communications in the Philippines, Cairo-based Orascom Telecom Holding, and Bharti Airtel of India.

Obopay, based in Redwood City, Calif., offers domestic money-transfer services in the US and India. Users set up a PayPal-like account online, and then send money via text message, mobile Web browser or specialized software applications they download onto their phone. They can withdraw money from their cellphone accounts using special Obopay debit cards at automatic-teller machines. Obopay is trying out a service with Citibank that allows users to link their existing bank accounts directly to their cellphones, so it is easier to send and withdraw money.

In India, Obopay plans to link mobile money transfers to electronic-payment services, so consumers can refill their prepaid phone minutes or pay their utility bills. (info from The Wall Street Journal)

Friday, December 05, 2008

AT&T disconnecting 12,000 employees

AT&T said it will cut about 12,000 jobs, or 4% of its work force, as it deals with a slowing economy and increased competition in the residential market from cable companies. The layoffs will begin in December and run through next year. The company will take a charge of approximately $600 million in the fourth quarter to pay severance for affected employees. The company cut 4,600 jobs earlier this year.

Though AT&T did not specify which business units would lose jobs, the side of the company that provides landline service has been most impacted by the economic downturn.

That trend has exacerbated the ongoing challenges AT&T and rival Verizon face as consumers drop landline service in favor of wireless or switch to competing services from cable providers. Other companies in the telecom industry are feeling the pinch, including Sprint Nextel, which recently began offering voluntary buyouts to employees in non-customer facing jobs.

AT&T said it would also continue to hire in areas that are seeing faster growth, such as wireless and TV service. AT&T also said it plans to reduce its capital expenditures next year.

Telecom Italia said Thursday it would cut 4,000 more jobs, on top of 5,000 cuts it announced in June. Nortel said last month it would cut 1,300 jobs. Nokia Siemens Network, a joint venture between Nokia and Siemens, said last month it is nearly finished cutting between 10% and 15% of its global workforce. (info from The Wall Street Journal)

Thursday, December 04, 2008

Less lobster fra diavolo, more pasta.
Telecom Italia fires 4,000 more

Facing falling margins and stiffening competition at home and abroad, Telecom Italia Wednesday unveiled a business plan that would allow the company to reduce its debt and trim costs through an additional 4,000 job cuts and disposal of noncore assets valued at as much as $3.8 billion.

The 4,000 job cuts come on top of the 5,000 announced in June. Together, the moves will reduce Telecom Italia's work force by 14%, to 55,000 from 64,000. "The conditions that have emerged on the market and in the real economy mean it is necessary to be even more incisive in our priority of debt reduction," Chief Executive Franco Bernabè said.

Telecom Italia. the former telecommunications monopoly, pledged to reduce its ratio of debt to earnings before interest, taxes, depreciation and amortization to 2.9 times by the end of next year and to 2.3 times by the end of 2011, from about three times at the end of 2008.

Bernabè said the company's growth will come from Italy and Brazil. German broadband unit HanseNet is among the assets earmarked for a possible sale, he said. Telecom Italia said it has received expressions of interests in some of its assets but said it was too early to talk about prices.

The company also said it intends to expand its presence in Argentina by exercising its call option to increase its shareholding in Sofora SA, with the support of a local partner.

The new business plan has been anticipated for months, as Telecom Italia shares have halved in value from a year earlier. At the same time, the Italian communications regulator wants the company to open further its fixed-line network to rivals. Its recent third-quarter results, however, beat expectations and the company confirmed its forecasts in a sign that the new management's cost-cutting strategy has started to pay off. (info from The Wall Street Journal)

Wednesday, December 03, 2008

More bullshitting at Broadcom:
exec lied about college degrees

Broadcom is a big American supplier of integrated circuits for broadband communications, founded in 1991 by Henry Samueli and Henry Nicholas III.

Last Spring the Securities and Exchange Commission charged Samueli and Nicholas with falsifying the company's reported income, leading to what is believed to be the largest accounting restatement yet because of backdating stock options. Broadcom previously agreed to pay $12 million to settle similar charges without admitting or denying the allegations.

Backdating stock options involves retroactively setting the exercise price to a low point in the stock's value to increase profits for an executive or employee when shares are sold. If companies backdate options without properly disclosing and accounting for the move, it can cause profits to be overstated and taxes to be underpaid.

Broadcom's proxy statements say Vahid Manian, senior vice president of global manufacturing operations, earned a bachelor of science in electrical engineering and a master's degree in business administration from the University of California, Irvine.

However, the university says Manian didn't earn the degrees. UCal says Manian studied electrical engineering between 1979 and 1983, but never graduated.

Manian is at least the 11th senior executive or director to surface recently in a search for business leaders with inflated academic credentials, by San Diego fraud investigator and short seller Barry Minkow. (info from The Wall Sttreet Journal & Wikipedia)

Tuesday, December 02, 2008

Trouble in paradise: Hawaiian telco goes bust

Hawaiian Telcom Communications Inc. filed for bankruptcy protection Monday, a black eye for buyout firm Carlyle Group and for private-equity investing.

Carlyle bought Hawaii's largest telephone carrier from Verizon in 2005 for $1.6 billion. Before it was absorbed by Verizon, the phone company was part of GTE.

Carlyle put up $425 million in equity and used debt to finance the rest. Carlyle filled the board with telecom experts, but Carlyle faced problems from the start. State utility regulators delayed the deal's closing. Billing and customer-service issues plagued Hawaiian Telcom as it created back-office systems from scratch. That spurred customers to drop service for wireless and cable providers.

In the third quarter, Hawaiian Telcom's revenue declined 6.7% to $112.3 million, and its loss widened to $34.7 million, the company's third consecutive quarterly loss.

Of the 109 U.S. companies that have filed for bankruptcy this year with assets of $1 million or more, 67 have been owned by buyout shops or been spun off by them.
From 2005 through the third quarter of 2008, private-equity firms added $741 billion of debt on company balance sheets. In stable economic times, that debt load may have been manageable. But in the midst of a brutal economic downturn, many firms can't withstand the added expense.

Such was the case of Hawaiian Telecom, which in the nine months ended in September paid $68.2 million in interest expenses, on top of a $35.7 million operating loss. (info from The Wall Street Journal)

Monday, December 01, 2008

Overwhelmed retail websites crashed on Black Friday

Several retail websites experienced technical problems Friday, the latest reminder of one of the Internet’s oldest rules: If you encourage people to visit your site, make sure it can handle the extra traffic.

While the spotlight was on the hassles experienced by shoppers taking advantage of post-Thanksgiving sales at stores, those who decided to shop from home ran into troubles too. Several sites, including Amazon.com, and Saksfifthavenue.com, experienced some slowdowns, and Sears.com was down for large chunks of the day.

What’s happening to these websites is the online version of the gridlock that happens at many malls: So many people are trying to get through the sites’ front doors at the same time that the lines back up, slow down, and stop altogether in some cases.

It shouldn’t come as a surprise that people are shopping online Friday. This year, retailers have been promoting online sales more heavily than in the past. In the case of Sears.com, the promotions seem to have worked too well: The site was unavailable for many visitors. A spokesman for Sears said that traffic was “higher than anticipated” and that the company was taking steps to ensure the site would be available today (Cyber Monday) —- another popular online-shopping day.

The history of the commercial Web is filled with examples of companies that have promoted an online event only to have the sites crash from the increase in traffic the promotion generated. Often, these incidents involve scantily-clad women -— a Victoria’s Secret online fashion show that almost crashed the entire Internet in 1999 is the iconic example; and New York Magazine crashed its Web site in February when it published pictures of actress Lindsey Lohan sans clothes. But that’s not always the case: Oprah’s Web site experienced technical problems in March after Oprah promoted a video interview posted there. (info from The Wall Street Journal)

Friday, November 28, 2008

Bell Canada purchase deal in doubt

The $42 billion takeover of BCE Inc., Canada's largest phone company, was thrown into doubt Wednesday when the company warned that it might not be able to meet the conditions of the merger agreement.

BCE, the parent of Bell Canada, said that accounting and valuation firm KPMG has notified the company and its purchasers that based on its preliminary analysis, current market conditions and the amount of debt being used to fund the deal, it won't be able to deliver them a solvency opinion -- an express condition to closing the merger.

BCE stock fell 34% on Wednesday. The deal, on the cusp of becoming one of the largest leveraged buyouts, was scheduled to close Dec. 11.

The company said it disagrees with KPMG's conclusion and will review the methodology used by the valuation firm. Since the conclusion is preliminary, KPMG could reach a different conclusion by the deal's closing date.

"BCE today enjoys solid investment-grade credit ratings, has $2.8 billion of cash on hand, a low level of midterm debt maturities and continues to deliver solid operating results," BCE Chief Executive George Cope said. "The company disagrees that the addition of the LBO debt would result in BCE not meeting the technical solvency definition."

Struck in June 2007 at the apex of the buyout boom, the BCE transaction capped a yearlong flurry of deals during which nine of the 10 largest leveraged buyouts were struck. Led by Providence Equity Partners and Ontario Teachers' Pension Plan, the deal would place the Canadian telecom company in private hands.

This is just the latest snafu for a BCE deal that has already survived several challenges. Aspects of the company's corporate governance had to be changed to win approval by Canadian regulators. Existing BCE bondholders also filed a lawsuit to block the deal and took the case all the way to the Supreme Court of Canada, which ultimately sided with the company.

In July, BCE, the buyers and the banks renegotiated the deal, effectively reducing the purchase price and delaying the closing date until December. As part of this new deal, Bell Canada suspended its dividend until year-end, a move that has led to a shareholder lawsuit against the company.

It is unusual for a merger pact to require a solvency certificate as a condition of closing. Banks typically require such certificates to finance a transaction, but BCE had put this condition in place because it wanted to protect itself from complaints by existing BCE bondholders about the company's new, debt-heavy capital structure.

A collapse would likely benefit the financing banks, led by Citigroup, Deutsche Bank, the Royal Bank of Scotland and Toronto Dominion. The lenders, which have agreed to provide roughly $34 billion in debt to fund the LBO, stand to have billions of dollars in losses if they back the deal. That's because they would have to try to resell the bonds and loans into a debt market trading near record lows, or else hold them on their balance sheets. If the deal closed, Citigroup, which was bailed out by the federal government this week, would be on the hook for $11 billion in financing.

Less clear are the sentiments of the buyers' group, which also includes Merrill Lynch & Co.'s private-equity unit and Madison Dearborn Partners. Although the buyers have maintained publicly that they want to complete the transaction and have lined up the capital to fund it, the world has changed drastically since they originally struck the deal and renegotiated it in July.

Over the past week, as Citigroup's stock cratered, BCE investors grew nervous over the likelihood of the deal closing, and the stock had traded about 25% below the takeover price of $34.90 a share. But news of the US government bailout of Citigroup had boosted shares of BCE, which closed Tuesday in 4 p.m. New York Stock Exchange trading at $31.28, a roughly 10% discount to the deal price. In trading Wednesday, BCE shares tumbled $10.65, or 34%, to $20.63. (info from The Wall Street Journal)

Wednesday, November 26, 2008

NYC cops feuding with feds over wiretaps

A long-running rivalry between New York City police and Justice Department officials over how to keep the nation's largest city safe from terrorist attack has devolved into a feud over the use of national security surveillance wiretaps, with both sides accusing each other of endangering national security.

A letter from New York City Police Commissioner Raymond Kelly to Attorney General Michael Mukasey expresses frustration at what he describes as the Justice Department's slow and cautious handling of national security wiretapping requests in terrorism cases and says the delays could put the city in danger.

A letter from Attorney General Michael Mukasey to New York City Police Commissioner Raymond Kelly says Kelly's accusations are incorrect and alarming and says the Justice Department is trying to stay within the law while protecting New York City from terrorism.

In letters exchanged last month Kelly and Mukasey jousted over how officials from the Justice Department and Federal Bureau of Investigation handle requests made by New York City police for warrants to conduct national security surveillance. The Justice Department is the clearinghouse for the requests, which must be approved by the court that administers the Foreign Intelligence Surveillance Act, the federal law that oversees government national-security eavesdropping.

Kelly complained that Justice officials are overly cautious about submitting requests to the FISA court, that there is poor communication between Justice and FBI officials in New York and Washington, and that there are unacceptable time lags in handling NYPD's requests.

Despite Mukasey and Kelly discussing the matter on the phone in July and a subsequent visit to New York by top officials from Justice's National Security Division, Kelly's letter on Oct. 27 expresses frustration about continuing problems. "Consequently the federal government is doing less than it is lawfully entitled to do to protect New York City, and the City is less safe as a result," Mr. Kelly wrote.

Mukasey, a former federal judge in New York City, responded with a letter Oct. 31 defending the Justice Department's handling of New York's wiretapping requests and accusing Kelly of leveling inaccurate and alarming charges. "In effect, what you ask is that we disregard FISA'S legal requirements, which are rooted in the Constitution. Not only would your approach violate the law, it would also in short order make New York City and the rest of the country less safe."

The dispute has gotten the attention of members of Congress from New York. Rep. Peter King, a Republican, said "the Justice Department is being too cautious here and is putting New York at risk." The accusation from the NYPD runs counter to the reputation the Bush administration has developed among civil-liberties groups, which say the administration is too willing to allow eavesdropping that threaten Americans' civil liberties. Mr. Mukasey has spent much of his time since taking over as attorney general a year ago defending the Justice Department from such charges. (info from The Wall Street Journal)

Tuesday, November 25, 2008

Samsung avoids cellphone ban with last-minute patent deal


InterDigital and Samsung settled two long-running patent-infringement lawsuits Monday, just before a US International Trade Commission decision on whether to recommend banning imports of Samsung's high-speed cellphones.

InterDigital has received $1.5 billion from its wireless patents, mostly from licensing fees and royalties. It has issued licenses covering technology in iPhones and BlackBerrys.

But the company has struggled to sign up other makers such as Samsung and Nokia, which it has also sued.

The case before the ITC covered a high-speed broadband technology called 3G used in Samsung's Blackjack II and Instinct phones.

Engineers who went on to found Qualcomm developed InterDigital's patents in the 1980s, when InterDigital set out to offer wireless telephony in rural areas. InterDigital never became a major player in telecom equipment but holds an array of patents for wireless technologies, and now makes semiconductors.

According to a statement issued late Monday, the Samsung settlement, which runs through 2012, also covers an earlier technology known as 2G, for which Samsung last year posted a $167 million bond. The companies didn't release the value of the settlement, which requires Samsung to choose one of two payment options within the next 45 days. Both companies have agreed to drop all litigation and arbitration once InterDigital receives its first payment.

InterDigital last year filed a similar infringement case against Nokia, the largest maker of 3G phones. A judge is set to hear evidence in May 2009 and rule in August, with the full ITC ruling due by mid-December. InterDigital won a $253 million payment from Nokia in 2006. (info from The Wall Street Journal)

Monday, November 24, 2008

Kodak sues cellphone makers

Eastman Kodak, which has increasingly turned to its patent portfolio in search of profit, said it sued Samsung and LG for infringing Kodak patents in camera phones.

Kodak has reached licensing deals with most rival makers of digital cameras as well as most makers of camera phones. Earlier this year it announced an agreement with Nokia.

Kodak said the patents cover technology related to capturing images, data compression and storage, and a method for previewing motion images. A Kodak spokesman said the company had negotiated with Samsung and LG, but hadn't been able to reach an agreement.

"Our digital-camera technology is different from the one used by Kodak. We haven't infringed upon Kodak's related patents," said LG spokesman Choi Jun-hyuk. "We'll actively deal with the case."

Samsung spokeswoman Hae Won Choi said: "Samsung is committed to protecting and respecting intellectual-property rights. The company forbids infringement and unauthorized use of such intellectual property. Samsung plans to respond actively to this litigation and will remain committed to serving our customers by ensuring that accurate and reliable delivery of our products is not compromised in any way."

Kodak said it filed suit in US District Court in Rochester and filed a complaint with the US International Trade Commission. Kodak is seeking undisclosed damages and an injunction prohibiting Samsung and LG from importing and selling any infringing products.

Kodak receives between $250 million and $350 million a year in revenue from its intellectual-property portfolio. That contributes a significant portion of Kodak's income. (info from The Wall Street Journal)

Friday, November 21, 2008

Verizon employees peeked at Obama's cellphone records

Verizon Wireless disclosed Thursday that several of its employees accessed and viewed President-elect Barack Obama's personal cellphone account, and said it will discipline workers for the privacy breach. The company discovered the unauthorized account access this week and said it related to an account that has been inactive for several months. The device on the account was a standard feature phone, rather than a smartphone with advanced email and data capabilities.

"We apologize to President-Elect Obama and will work to keep the trust our customers place in us every day," said company chief exec Lowell McAdam.

The company said it has put all employees with access to the account on leave, with pay, as it sorts out which of those workers accessed the account without a justifiable business purpose. Those who did not have a good reason to view the account will be punished.

Cellphone companies have had other challenges protecting customer records in recent years. They have had to contend, for example, with third-party data brokers who illegally obtain customer records – sometimes by posing as employees of the cellphone company – and then sell them. They are sensitive to such privacy breaches, mindful that their subscribers could easily switch to rivals if they feel their personal information isn't secure. (info from The Wall Street Journal)

Thursday, November 20, 2008

More about the clueless idiots at AT&T

On Tuesday I talked about how AT&T had tortured my elderly parents with DSL installation delays, and when the technician finally showed up, he disconnected their alarm dialer causing my mother to have to endure hours of alarm shrieking. I also mentioned how back in 1985, I was told that AT&T would take a long time to become adept at operating in a marketing-based world, without gorvernment protection against competitors.

Yesterday I talked about how the Yellow Pages publishers are losing advertisers for the printed books, and not making up for it with online directories.

The two tales of woe come together nicely.

A few days ago I got a call from an AT&T Yellow Pages salesperson.

I said that my company (which sells phone systems and a wide variety of telecom products) stopped using printed YPs over a decade ago, because the Internet provides a much more powerful, and much less expensive, way for prospective customers to find us.

Quickly jumping ahead in her script, the saleslady was pleased to point out that AT&T has an online yellow pages, conveniently called YellowPages.com.

I said that I knew all about it, and wasn't interested.

She insisted an continuing her well-rehearsed spiel, explaining that people use the YPs when they're ready to buy, not just read.

I responded that I buy tons of stuff online, and that if I wanted to buy "James Bond movie posters" or "GE refrigerator water filters," I'd just type those words into Google and I'd instantly have many potential vendors to choose from. I told her that I have no trouble using Google to spend my money, and have NEVER used the online YPs for shopping.

I also told her that my customers similarly have no trouble in finding my company's 30-plus websites with Google, which costs me nothing.

She then responded with some forgettable statistic about the sales volume generated by the YPs and repeated her mantra about YPs are for shoppers and Google is for readers.

I could have hung up on the annoying clueless woman right then, but I was willing to play along for a few moments longer, and perhaps teach her something.

While she was on the phone, I went to her YP website and mimicked the action of a prospective customer for a phone system. I entered "Panasonic phone system" (one of our specialties) in the FIND window. But to make the system work, I would be forced to enter a location.

This is one of the fundamental flaws of both print and online YPs -- they're LOCATION-BASED instead of PRODUCT-BASED. The YP system wants to recommend LOCAL businesses, even to people who don't care about the location of a potential supplier. My customers are all over the US, and even in other countries. It doesn't matter where they are or where we are, because we're all connected by FedEx, UPS and USPS.

In the interconnected Internet 21st century world, AT&T's YPs are still structured for the days when people's shopping radius was limited to the distance they could drive in 30 minutes.

When I tried to make the point that my customers don't care where I am, and if some people want a local supplier, a FREE Google search can provide that, too, she again tried to convince me that the YPs are for buyers and Google is for readers.

And to deal with my insistence that our customers are national and not local, while their system insists on shoppers specifying a location, the idiot suggested that we purchase listings for EVERY FUCKING ZIPCODE IN THE COUNTRY.

That's when I hung up.

Wednesday, November 19, 2008

Yellow Pages may have reached the last page

As its customers migrated to the Web search sites like Google, the telephone-directory business followed, hoping the Internet would be its salvation. However, the audience for online yellow pages remains relatively small, and traffic growth is slowing.

So many directory services are vying for local business advertising that no single site dominates. Meanwhile, ad dollars are drying up as small businesses -- the industry's foundation -- find it harder to pay bills or have cut their spending sharply.

Print and online ad spending on yellow pages will plummet 6.3% next year, more than double the rate of decline expected for broadcast TV, according to forecasts. Within the next four years, ad spending will fall 39% in print directories alone -- the steepest projected decline across all local-media categories, according to research.

Facing the real prospect of extinction, the publishers, many with considerable debt, have been slashing jobs, scrapping dividends and exiting unprofitable markets. Shares of two of the biggest publishers, R.H. Donnelley and Idearc, have plummeted 99% in the past year.

Yellow-pages publishers have spent the past several years attempting to reinvent themselves, launching many digital offerings for advertisers, and retraining their sales forces to sell digital ads alongside print ads. But Internet revenues remain anemic. At less than 10%, online-ad dollars make up only a modest portion of total revenues and aren't growing fast enough to offset steep declines on the print side.

Analysts say yellow-pages sales teams face an inherent conflict. While they are pressured to sell both print and online ads, Internet ads are often a third of the price of the print product. The top priority for the sales teams often is to sell the print book first, then sell the digital products.

Even if online revenues were growing at a faster clip, analysts are cautious about the prospects of online-only directories. Yellow-pages ads are the only form of advertising many small businesses buy, and the online ads are typically sold in conjunction with print listings. That means that if businesses aren't buying the print ad, then the online ad disappears too.

In a last-ditch attempt to succeed online, some publishers have struck ad-sale partnerships with Internet companies like Google. White Directory Publishers, which publishes directories in 90 small to medium-size markets, says it is often more effective for small businesses to have a presence on Google than on a directory Web site. But many small- to medium-size businesses don't have the expertise or time to create effective Websites or buy and track search ads, so White Directory is offering to do it for them. (info from The Wall Street Journal)

Tuesday, November 18, 2008

AT&T is still a bunch of clueless idiots

Around 1985, I was selling phone systems to help people save money by owning rather than renting equipment from AT&T. Then AT&T announced that they would start selling instead of just renting, and I was terrified. I thought their immense marketing power would soon put me out of business.

Harry Newton, a telecom maven who had observed AT&T for a long time, tried to make me feel better. He said, "Don't worry, it will take AT&T ten years to find the men's room."

I can now report to you that after more than two decades trying to compete in an unprotected marketing-based environment, AT&T is still wandering through the hallway searching for a place to pee.

The latest evidence:

My parents are in their mid-80s. They live in Florida in a condominium community with other old farts. A few years ago they switched their long distance service from AT&T (through BellSouth) to MCI to save money with the "friends & family" plan.

MCI eventually started offering local service. They didn't have their own wires running around the streets -- they just resold BellSouth services. My parents became full-time MCI customers.

Over the years, the MCI price kept rising, and my folks were paying nearly $100 per month for unlimited local and long distance service and taxes. My father was also paying AOL $20 per month for pokey dial-up internet service. Their condominium has a master antenna system, so there was no option of using a cable TV company for TV, phone and Internet access in a "bundle" like I have at home.

Last month my mother received a promotional mailing from AT&T (which includes the former BellSouth) that made her aware of substantial savings. My folks could dump MCI and AOL, and have fast DSL service and unlimited phone service. The cost from AT&T would be about $50 less than they had been paying to MCI and AOL. AT&T was offering a $100 cash-back deal that would offset the cost of the installation of the DSL equipment.

On 10/30 she called AT&T and scheduled the change from MCI and installation of a DSL modem.

AT&T missed scheduled appointments on 11/4, 11/5 and 11/7. Each time they failed to show up, my parents wasted time waiting around for the technician, and wasted more time on hold trying to re-schedule the appointment. AT&T never called. Apparently no one at AT&T has a telephone.

Ooops. I made a mistake. On 11/9 someone from AT&T called my mother to cancel a non-existent 11/11 appointment.

My mother was getting desperate, and asked me to try to help. I called AT&T on 11/11.

At 12:04PM I heard "Welcome to AT&T." I also heard a U-Verse commercial. The automated system asked for the phone number I was calling about. I inputted Mom's number, and tapped a digit to indicate the reason for my call was a "service appointment."

The robot said it couldn't find any pending service order and asked me to re-enter the phone number and the reason for my call. Again I was told that there was no record of pending service.

I entered the info again and after a few minutes spent in the irritating loop, I started tapping zero and yelling "HELP!"

The robot said, "Just a moment while I connect you to someone" and "Your call may be recorded" and I heard some music.

At 12:08PM I was told that "All representatives are busy assisting other customers," and I was encouraged to pay my bill online. Other announcement themes included help wanted, bundles, a cash-back offer, "Join the new AT&T" and award-winning customer service. Yeah, right.

At 12:19 I reached Mr. Ryan. He saw the pending order, unlike the automated system.

At 12:21 he said he needed to connect me to a DSL specialist.

I heard a few minutes of hold music and at 12:23 he told me that a rep should be with me in a few more minutes.

I was eventually answered by Jennifer. She said that the DSL service was supposed to be active on 11/13, but the brilliant AT&T computer system canceled three service calls because it knew that DSL had not been turned on yet.

She said she'd try to try to expedite the installation. She also said that someone moved the due-date, but there were no notes in the system to indicate who or why. She thought the date was changed online by my parents. (Impossible!)

At 12:32 she said she should have date today, and would call me. She did call back, and made an appointment for 11/14. She told me that my parents would get the installation for free to compensate them for the torture.

The AT&T techie did show up on the morning of Friday 11/14 and the DSL installation seemed to be successful.

Unfortunately, at about 7PM Friday, my parents' alarm started its piercing signal, and my mother could not find any combination of button-pushing to silence the shriek. She called the alarm company and was told that her contract did not include evening or weekend emergency service, and they would not send someone to turn off the noise until Monday morning. My mother hid in the only quiet room -- the master bathroom -- and called my brother to see if he could get some help.

He was able to get the alarm company to send someone Friday night.

My mother paid $150 to find that the fucking idiot from AT&T had disconnected the alarm dialer when he set up the DSL.

Wednesday, November 12, 2008

Pay for parking with your cellphone

Decatur, Georgia is an Atlanta suburb that has launched one of the nation's first pay-by-phone parking systems, part of a strategy designed to encourage more turnover and ultimately more revenue.

For the last year, Decatur has used a system from StreetSmart Technology that uses sensors to detect whether a car has moved. This blocks drivers from plopping in more coins when the two-hour time limit runs out. It also connects parking attendants to a database that alerts them when meters expire -- or points them toward drivers parked in spaces without paying.

Decatur just got even techier with the pay-by-cell system, which let drivers call a local number shown on each meter. After entering the parking space number, they get a text message with a Website address to create an account using a credit card. Once an account is created, drivers can just call the number each time to draw down their account.

A handful of other cities around the nation employ similar systems. But Decatur is the first that uses technology that flashes the time bought on a meter instead of, say, a printed ticket.

To entice drivers to use the system, the city is offering the first two hours of pay-by-cell parking for free. After that, it will charge cellphone users an additional 25-cent transaction fee.

About 50 of Decatur's 385 meters are outfitted with the pay-by-cell equipment, which costs an estimated $200 per meter. Each is outfitted with radios that can transmit data and sensors for detecting cars. It also lets drivers pay the old-fashioned way using change.

Parking monitors seem especially focused on the way the system helps them rest their legs. "We walk around the city all day," said Janice Monroe, a Decatur parking liaison. "This lets us know where meters expire so we can walk directly to them - and cut down on our walking." (info from The Associated Press)

Microsoft may beat Google as Verizon searcher

Microsoft is moving closer to an agreement with Verizon Wireless to become the default search provider on the Verizon's cellphones, a deal rival Google has been striving for.

Under the terms now being considered, Microsoft would share revenue with Verizon from ads shown in response to cellphone Web searches, with guaranteed payments to the carrier of approximately $550 million to $650 million over five years, or roughly twice what Google offered.

Verizon is still in discussions with Google and the situation is fluid with both companies. Verizon CEO Ivan Seidenberg said in a CNBC interview Friday that the company plans to make a decision soon.

Microsoft and Google have been competing over a variety of distribution deals and partnerships recently, with Microsoft showing that it is willing to outbid Google. Microsoft beat out Google for an investment in Facebook last year, and more recently the two have jockeyed over different deals with Yahoo.

Now the companies are both aiming for the rights to be the default search provider on cellphones. While a user can visit any search engine through their web browser, carriers and Internet companies believe usage will increase when they put search services in prominent places on phones.

Web searching on cellphones is still new to most consumers. Only about 7.7% of cellphone users accessed Web search engines through their mobile phone browsers in September, according to one study. Google is an early leader, with about 60% of users opting for its engine, while only 36% use Yahoo and 10% use Microsoft.

Google already has a search and advertising partnership with Sprint Nextel, while T-Mobile USA is selling the G1, a smartphone that runs on Google's Android software and has Google's search bar on its home screen.

AT&T plans to make Yahoo the default search engine for its MEdia Net Web portal, accessible on most high-end phones. Foreign carriers such as Deutsche Telekom AG's T-Mobile unit in Europe and KDDI in Japan already have partnerships in place with Google and Yahoo. Skeptics say these partnerships ultimately won't matter much, as surfing the Web becomes easier on phones and consumers gravitate to whatever search engine they are most comfortable with. (info from The Wall Street Journal)

Tuesday, November 11, 2008

Nortel losing more money and more people

Canadian telecommunications equipment maker Nortel posted a third-quarter loss Monday, reversing a year-ago profit as the economic turmoil and a large goodwill impairment charge hurt results. The struggling company also announced a new round of job cuts, saying it plans to eliminate about 1,300 positions starting this year and ending in 2009.

Nortel's US stock shares fell 16 cents, or about 14 percent, to $1.01 in afternoon trading. The company's shares have lost 93 percent of their value since the beginning of the year, and last month they hit their lowest level since the early 1980s. For the three months that ended Sept. 30, Nortel lost $3.41 billion, or $6.85 per share, down from a profit of $27 million, or 5 cents per share, in the same period a year earlier. Revenue fell 14 percent to $2.32 billion.

"In September, we signaled our view that a slowdown in the market was taking place," said Mike Zafirovski, Nortel's chief executive, in a statement. Since then, he added, "we have seen worsening economic conditions, together with extreme volatility in the financial, foreign exchange and credit markets globally, further impacting the industry, Nortel and its customers."

In a report titled "I would like to refill my Prozac prescription," RBC Capital Markets analyst Mark Sue said Nortel's "marginalized industry position," combined with the bad economy, means the company's outlook may deteriorate before stabilizing. Sue rates Nortel "Underperform" with a target price of $1.50, down from an earlier $2.

Nortel said its priorities are cutting costs and preserving cash. Along with the job cuts, the company is generally freezing salaries and hiring, re-evaluating its real estate holdings and cutting discretionary spending. The company is also suspending its dividends on certain preferred shares, saying while it is in a position to pay them, "it would be prudent to maintain liquidity and preserve cash."

In addition, several executives, including Nortel's chief marketing officer, its chief technology officer and its global services president, will be leaving the company.

The job cuts disclosed Monday are in addition to 1,200 positions that are being eliminated as part of a previous restructuring plan. Nortel has about 31,200 employees. (info from The Associated Press)

Monday, November 10, 2008

FCC says too much of T-Mobile is owned by foreigners

The pending merger of Verizon Wireless and Alltel prompted the FCC to take a renewed look at foreign-controlled assets in other wireless phone companies, a development that could impact T-Mobile USA. The FCC on Oct. 17 sent a letter to T-Mobile, which is owned by Deutsche Telekom, advising the company that regulators should have evaluated its 2001 acquisition by the German telephone giant under a 20% voting stock threshold. The merger was evaluated under a more lax standard.

The letter said, "T-Mobile USA's level of foreign ownership through the existing ownership structure appears to be in violation" of the 20% limit. "The Commission strictly applies the 20% statutory benchmark of [the law], and has no discretion to waive it," the letter said. "Based on this ownership structure it appears that Deutsche Telekom, a foreign corporation, has a 30%, non-controlling interest in a common carrier license." The letter asked T-Mobile to respond within 30 days about how it can come into compliance.

T-Mobile officials said they are still mulling their response to the FCC's letter, but added they are open to simple restructuring to solve the problem. They also said they believe T-Mobile's current corporate structure passes legal muster. The inquiry could result in little more than paper reshuffling for US wireless companies with foreign partners. In 2001, the FCC explicitly stated that the Deutsche Telekom acquisition fell outside the scope of the 20% stock rule because the German company is a non-controlling owner.

The FCC's earlier analysis of T-Mobile and Verizon Wireless, a joint venture of Verizon and British Vodafone, was done under a separate, waivable 25% ownership threshold. T-Mobile officials said the FCC's new thinking on foreign ownership could be complicated by a 1996 World Trade Organization agreement that allows 100% indirect ownership of US spectrum licensees by foreign entities. Deutsche Telekom has 100% indirect controlling interest in T-Mobile. FCC officials said the commission has no intention of violating the WTO or other trade agreements.

The officials added the T-Mobile inquiry arose when FCC staffers posed foreign ownership questions to Verizon Wireless during a review of its pending merger with Alltel. The Justice Department has already approved the proposed Verizon-Alltel merger on the condition that Verizon divest from 100 markets to ease antitrust concerns.

Verizon has already figured out a solution to the 20% foreign stock ownership problem. Verizon told the FCC that it would place into a trust the voting rights associated with some of Alltel's holdings, precluding Vodafone's interests in those partnerships. That transaction will occur once the Verizon-Alltel merger is completed.

T-Mobile, meanwhile, has submitted multiple filings with the FCC since it was acquired by Deutsche Telekom, and such questions about its foreign ownership structure haven't emerged until now, company officials said. (info from The Wall Street Journal)

Friday, November 07, 2008

AT&T buying Wi-Fi company

AT&T, formerly known as Woodbury Telephone Company and a bunch of other things, agreed Thursday to acquire Wayport Inc. for $275 million, extending its Wi-Fi reach amid growing demand from customers for wireless Internet access.

The deal expands AT&T's hot spots to 20,000 in the US. That includes the networks Wayport operates at Wyndham, Marriott and Four Seasons hotels as well as McDonald's restaurants.

AT&T is seeing big gains in wireless-data revenue and strong sales of Internet-enabled devices such as the iPhone. AT&T broadband and some wireless customers, as well as holders of LaptopConnect wireless-broadband cards, will be able to access the hot spots for free. Others will be charged about $20 a month for the service. (info from The Wall Street Journal)

Thursday, November 06, 2008

FCC probing cableco & Verizon pricing

The FCC has opened an investigation into the pricing policies of major cable operators and Verizon. The agency wants to ensure the companies' customers are getting treated fairly, FCC Chairman Kevin Martin said in an interview with The Associated Press. "I'm certainly concerned with the increasing cable prices that consumers are facing," Martin said. "They are getting less and being charged the same or more."

The FCC wrote on Oct. 30 to cable operators including Comcast, Time Warner, Cox, Charter, Cablevision, Bright House, Suddenlink, Bend Cable, GCI, Harron and RCN.
Verizon, which offers pay-TV services with FiOS, also was included in the probe.

The agency's letter questioned the companies' practice of moving analog channels into digital tiers to free up bandwidth for other uses, such as high-definition channels. Analog customers will have to get a digital set-top box from the operator or buy the digital TV tier to watch those channels.

Cable is competing with satellite TV and phone companies.

Most cable customers are analog customers, and those who do not wish to upgrade to digital cannot watch the channels that are moved to the digital tier.

The agency also will look into whether cable operators and Verizon are confusing customers by linking the shift of the analog channel to the digital tier to the nation's transition to digital broadcasts, Martin said. The two moves are unrelated.

Linking the two in customers' minds could prompt more people to opt for digital video and cable services because the February digital TV transition is mandated by the federal government. The FCC has asked companies being probed to submit information about their pricing practices within two weeks.

Martin said it appears consumers weren't given "appropriate notice" about the channel changes. He said the FCC has received a "significant" number of consumer complaints about the practice of moving analog channels to digital, which has accelerated this year.

The FCC's letter was sent out a day after Consumers Union sent a letter to the Senate Committee on Commerce, Science and Transportation asking for an investigation into the practice of moving analog channels to the digital tier.

"Consumers are left paying the same monthly rate for significantly less service, or must rent more expensive set-top boxes for each television set they own," said Consumers Union, a nonprofit advocacy group. (info from The Associated Press)

Wednesday, November 05, 2008

AT&T will try web traffic limits

AT&T, the country's largest Internet service provider, is testing the idea of limiting the amount of data that subscribers can use each month. The company will initially apply the limits in Reno, Nevada, and consider extending the policy elsewhere.

Other Internet providers are placing such limits on the amount of data users can upload and download each month, as a way to curb a small number of "bandwidth hogs" who use a lot of the network capacity. For instance, 5 percent of AT&T's subscribers take up 50 percent of the capacity.

But the restrictions that Internet providers are setting are tentative. And the companies differ on what limits to set and whether to charge users for going beyond the caps.

Starting in November, AT&T will limit downloads to 20 gigabytes per month for users of their slowest DSL service, at 768 kilobits per second. The limit increases with the speed of the plan, up to 150 gigabytes per month at the 10 megabits-per-second level.

To exceed the limits, subscribers would need to download constantly at maximum speeds for more than 42 hours, depending on the tier. In practice, use of e-mail and the Web wouldn't take a subscriber anywhere near the limit, but streaming video services like the one Netflix offers could. For example, subscribers who get downloads of 3 megabits per second have a monthly cap of 60 gigabytes, which allows for the download of about 30 DVD-quality movies.

Customers will be able to track their usage on an AT&T Website. The company will also contact people who reach 80 percent of their limit. After a grace period to get subscribers acquainted with the system, those who exceed their allotment will pay $1 per gigabyte.

Comcast, the nation's second-largest Internet service provider and AT&T's competitor in Reno, last month officially began a nationwide traffic limit of 250 gigabytes per subscriber. Comcast doesn't charge people extra for going over the limit, but will cancel service after repeated warnings. Previously, it had a secret limit.

Two other ISPs, Time Warner Cable and FairPoint Communications, are planning or testing traffic limits as low as 5 gigabytes per month, which is easily exceeded by watchers of DVD-quality online video. Among the largest ISPs, Verizon is a holdout, and has said it does not plan to limit downloads. (info from The Associated Press)

Tuesday, November 04, 2008

FCC members outvote boss on planned vote

Four FCC commissioners blocked a proposal by Chairman Kevin Martin to revamp the multibillion-dollar system under which phone companies pay each other to transfer calls, causing a Tuesday vote on the item to be canceled. The proposal was pulled from the agenda ahead of Tuesday's meeting after Martin refused to grant a compromise proposal from the four other commissioners on the five-member body.

In a rare move, commissioners Michael Copps, Jonathan Adelstein, Deborah Tate and Robert McDowell issued a joint statement saying they are disappointed that Martin pulled the item and hope he will consider their offer.

"Four Commissioners provided the Chairman bipartisan, constructive and substantive suggestions," the statement said. The commissioners had volunteered to vote in December on a renegotiated overhaul of the payment system and asked that it be put out for public comment this month.

Analysts say the proposal was worth millions to large phone companies such as AT&T, Verizon and Qwest. Small and midsize carriers like Embarq and CenturyTel would have been hurt. The overhaul likely won't see action, even though the four commissioners said they are willing to negotiate with Martin.

The FCC faces a court-mandated deadline Wednesday, when it must justify a small part of the payment system on dial-up Internet traffic. Martin's broad proposal governing both phone rates and subsidies for carriers serving rural areas was intended to be the FCC's response to the court.

While the broader item was yanked from Tuesday's agenda, Martin is hopeful that the FCC can address the court's concerns about dial-up fees at the meeting. Martin's proposed overhaul of the phone-rate system drew protests from smaller phone companies, state regulators and consumer groups. Lawmakers also asked him to delay the vote.

The FCC could vote later this month on a new subsidy proposal Martin circulated to the other commissioners. (info fro mThe Wall Street Journal)

Monday, November 03, 2008

Palin pranked with phone call from fake French president

Moosemama Sarah Palin unwittingly took a prank call Saturday from a Canadian comedian posing as French President Nicolas Sarkozy.

The Republican vice presidential nominee discusses politics, the perils of hunting with Vice President Dick Cheney, and Sarkozy's "beautiful wife," in a recording of the six-minute call.

The call was made by a well-known Montreal comedy duo Marc-Antoine Audette and Sebastien Trudel. Known as the Masked Avengers, the two are notorious for prank calls to celebrities and heads of state.

Audette, posing as Sarkozy, speaks in an exaggerated French accent and drops ample hints that the conversation is a joke. But Palin seemingly does not pick up on them. He tells Palin one of his favorite pastimes is hunting, also a passion of Palin. "I just love killing those animals. Mmm, mmm, take away life, that is so fun," the fake Sarkozy says. He proposes they go hunting together by helicopter, something he says he has never done.

"Well, I think we could have a lot of fun together while we're getting work done," Palin counters. "We can kill two birds with one stone that way."

The comedian jokes that they shouldn't bring Cheney along on the hunt, referring to the 2006 incident in which the vice-president shot and injured a friend while hunting quail. "I'll be a careful shot," responds Palin.

Playing off the governor's much-mocked comment that she had insights into foreign policy because "you can actually see Russia from land here in Alaska," the caller tells her: "You know we have a lot in common also, because ... from my house I can see Belgium." She replies: "Well, see, we're right next door to different countries that we all need to be working with, yes."

When Audette refers to Canadian singer Steph Carse as Canada's prime minister, Palin replies: "Well, he's doing fine and yeah, when you come into a position underestimated it gives you an opportunity to prove the pundits and the critics wrong. You work that much harder." Canada's prime minister is Stephen Harper.

Palin praises Sarkozy throughout the call and also mentions his wife Carla Bruni, a model-turned-songwriter. "You know, I look forward to working with you and getting to meet you personally and your beautiful wife," Palin says.

The Sarkozy impersonator tells Palin his wife is "so hot in bed" and then informs her that Bruni has written a song for her about Joe the Plumber entitled "Du rouge a levres sur une cochonne" - which translates as "Lipstick on a Pig."

The caller asks Palin if Joe the Plumber is her husband and adds: "We have the equivalent of Joe the Plumber in France. It's called Marcel, the guy with bread under his armpit."

He also tells Palin that he loved the "documentary" made about her and referred to a pornographic film with a Palin look-alike made by Hustler founder Larry Flynt. She answers tentatively, "Ohh, good, thank you, yes."

The callers then reveal the prank and identify themselves and their radio station. "Ohhh, have we been pranked?" Palin asks before handing the phone to an aide who ends the call. Obama's campaign spokesman said: "I'm glad we check out our calls before we hand the phone to Barack Obama." (info from The Associated Press)

Friday, October 31, 2008

With no buyers, Sprint will keep Nextel

After failing to find a buyer for its Nextel cellphone unit, Sprint Nextel said Thursday it will hold on to it and renew a partnership with Motorola to provide networking and phones for Nextel.

Earlier this year, Sprint began searching for potential buyers for Nextel, which has struggled since the two companies merged in 2005, losing millions of customers in the face of stiff competition from AT&T and Verizon Wireless. In the second quarter, Sprint lost 901,000 customers, largely because of Nextel defections, and ended with a total of 51.9 million subscribers.

Sprint attracted interest from several parties during the process, including private-equity firm Cerberus Capital Management and Latin American cellular provider NII Holdings. But the credit markets made it difficult for any player to raise the cash for a deal at the valuation Sprint would have liked -- more than the $5.4 billion in debt Nextel carries. In some cases, potential buyers wanted to pay Sprint less than that amount, essentially asking Sprint to compensate them to take on Nextel.

The logistics of such a deal would have been complicated. Sprint and Nextel employees have spent time and resources integrating back-end systems like billing and customer service that would have to be untangled. And Nextel bondholders opposed letting Sprint walk away from its commitment to guarantee Nextel's debt -- a provision of the companies' merger.

Sprint Chief Exec Dan Hesse said that Nextel's walkie-talkie technology is a differentiator for the company against rivals. The carrier plans to launch a new Motorola device for Nextel users in coming days, plus nine new handsets next year.

The news comes as Motorola reported that its share of the global handset market slipped to about 8% from more than 20% two years ago, and reported declining sales in its iDen business, which services and makes gear for Nextel's networks. (info from The Wall Street Journal)