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

Tuesday, September 30, 2008

Norway will sue Apple to open up iTunes

Norway's top consumer advocate said Monday he is taking Apple to the government's Market Council in a test case seeking to force Apple to open its iTunes music store to digital players other than its own iPod. Norway is leading a European campaign that began two years ago to get Apple to make its iTunes online store compatible with rivals' digital music players.

"We discussed this at a meeting two weeks ago, and decided that Norway will do the test case," Consumer Ombudsman Bjoern Erik Thon said. "This could have international consequences." The council has the power under Norwegian law to order companies to change trade practices, and can also order fines if companies fail to comply. Thon said Apple has until Nov. 3 to respond to the allegations, and that the council was likely to decide on the case sometime early next year. Thon began pushing Apple to change its system and rules more than two years go, saying the restrictions violate Norwegian law.

Currently, songs purchased and downloaded through iTunes are designed to work with Apple's market-leading iPod players but not competitors' models, including those using Microsoft's Windows Media system. Likewise, iPods generally can't play copy-protected music sold through non-Apple stores.

"It's a consumer's right to transfer and play digital content bought and downloaded from the Internet to the music device he himself chooses to use. iTunes makes this impossible or at least difficult, and hence, they act in breach of Norwegian law," said Thon.

Thon said Apple agreed at a meeting in February that they wanted to sell music without the protection known as "Digital Rights Management," or DRM, and that they shared his goal of making systems interoperable. But "iTunes has now had two years to meet our demands regarding interoperability. No progress has been reported by iTunes since our meeting in February," said Thon about the decision to file a complaint. "This is a matter of great principal importance."

Finland, Denmark, France, Germany and the Netherlands all back the Norwegian drive. (info from The Associated Press)

Monday, September 29, 2008

AT&T switches from Dish to DirecTV

AT&T is switching its satellite television provider to DirecTV, ditching satellite rival Dish Network. The move means that DirecTV, the country's largest satellite operator, now has deals with all the major US phone companies.

With the loss of AT&T, Dish -- the country's second-largest satellite operator -- no longer has any phone companies as partners. AT&T's switch will likely raise concerns about Dish's prospects. The company has stumbled recently and became the first major US. satellite operator in the second quarter to report a loss of subscribers.

Analysts say that Dish's failure to move as aggressively into hi-def programming as its larger rival, and a greater focus on the lower end of the market have contributed to its problems.

In linking with a satellite operator, telecom companies can offer their customers a bundle of services that include phone, Internet and TV services. The "triple-play" plans allow phone companies to compete more effectively with cable operators, which also offer such services. The satellite operator, meanwhile, gets access to new customers and shares revenue in the service.

DirecTV already has partnerships with phone companies such as Verizon and Qwest . AT&T will provide DirecTV's service in an additional 22 states.

AT&T will continue to offer Dish's service to customers who sign up for it until February, when their deal expires and AT&T's new agreement with DirecTV starts. A spokesman for Dish said, "We look forward to a healthy competition with their U-verse product and DirecTV." U-verse is a fiber-optics-based pay television service that AT&T is building.

There were growing signs in recent months that AT&T might choose DirecTV over Dish. In July, AT&T said it would terminate its contract with Dish but would continue to evaluate the prospects of a new partnership. In June, Dish disclosed that AT&T had requested that the satellite-TV company buy back $500 million in convertible debt held by the telecoms concern, which raised questions about the future of their alliance. (info from The Wall Street Journal)

Friday, September 26, 2008

Oh well. Oh hell. Alcatel-Lucent won't get One And A Half Billion Dollars from Microsoft

A panel of federal appeals judges ruled Thursday that Microsoft does not have to pay $1.5 billion in damages to Alcatel-Lucent, in what may be the last word on a long-running digital music patent lawsuit.

In February 2007, a jury determined that Microsoft infringed on two patents that cover the encoding and decoding of audio into the digital MP3 format, a popular way to convert music from CDs into files on computers and vice versa.

Six months later, the US District Court judge who presided over the case, Rudi M. Brewster, vacated the ruling, saying Microsoft's Windows Media Player software does not infringe on one of the two patents in question.

Brewster, siding with Microsoft, also said the second patent is jointly owned by both Alcatel-Lucent and Fraunhofer Gesellschaft, a German company that Microsoft paid $16 million in exchange for use of the technology. Since Fraunhofer did not sue Microsoft, the company was in the clear.

On Thursday, Judges Alan Lourie, William Bryson and Sharon Prost of the Court of Appeals for the Federal Circuit in Washington, D.C., upheld Brewster's decision. "The Federal Circuit's ruling is a victory for consumers of digital music and a triumph for common sense in the patent system," said Tom Burt, a deputy general counsel for Microsoft.

The MP3 patent claims were just two of 15 made by Lucent Technologies Inc. in 2003 against PC makers Gateway and Dell for technology developed by Bell Labs, Lucent's research arm. Later that year, Microsoft added itself to the list of defendants, saying the patents were closely tied to its Windows operating system. France's Alcatel bought Lucent in 2006.

"We're disappointed with the court's decision on the matter. We'll review our options and see what steps we should take," said Alcatel-Lucent spokeswoman Mary Lou Ambrus. "It's too early to speculate really what those next steps might be." (info from The Associated Press)

Thursday, September 25, 2008

Verizon offers no-contract cellphone service

Verizon Wireless on Monday began offering its service without contracts as it continues its push to make its network more open.

The carrier will allow customers who pay the full price for their cellphone or bring in their own compatible device to sign up for a monthly plan that they can get out of at any time. Customer must pay an activation fee, but there are no early termination fees for canceling the service.

Verizon, once the considered the most guarded and controlling of the US wireless carriers, has changed its tune about opening itself up. In the last few months, it has vowed to make its network available to any device that meets basic requirements, and over the past few years made its early termination fee more flexible.

The new month-to-month option means a person can change service or upgrade their phone at any time, but there are trade-offs. Carriers provide subsidies for the phone in exchange for the one or two-year commitments, so a contract-less phone is much more expensive. For example, a Blackberry Curve from Verizon costs $100 with a contract, but $430 by itself. The contract option still remains for users who don't want to pay too much for their phones.

Verizon Wireless was one of several major carriers that got in legal hot water over its former early termination fee practices. In July the carrier agreed to settle all of its outstanding lawsuits for $21 million.

AT&T also offers a month-to-month option for customers who pay more for their phone, although it isn't available for people who want to use the Apple iPhone. Customers can bring in their own devices and get a SIM card from ATT that requires no contract. (info from The Wall Street Journal)

Wednesday, September 24, 2008

Nortel stock drops 49% in one day

Nortel Networks lost nearly half its stock-market value last Wednesday after the company said it would miss sales forecasts as its telecom customers cut their spending.

The Toronto-based equipment maker said it was planning a new round of layoffs and would try to sell a small but promising division to try to raise cash, throwing into doubt the ability of Chief Executive Mike Zafirovski to turn around the long-struggling company. Since taking over in 2005 after an accounting scandal, Zafirovski has pinned Nortel's future on finding new growth engines while trimming costs at its shrinking, but lucrative, business supplying gear for traditional voice networks. But Wednesday, he warned sales were deteriorating faster than expected and that Nortel would seek to divest its Metro Ethernet business, which makes equipment to handle data traffic on Internet service providers' networks. The unit accounted for 14% of revenue in the latest quarter.

The telecom-equipment industry has been hammered in recent years by sluggish spending and a price war sparked by Chinese vendors competing fiercely for emerging-market contracts. Alcatel-Lucent, for example, has lost two-thirds of its premerger value and is replacing its top brass. Even before Wednesday's slide, Nortel's shares had lost about 65% of their value this year. Nortel shares fell 49% to $2.68 last Wednesday in 4 p.m. New York Stock Exchange composite trading, giving the company a market capitalization of $1.33 billion.

George Riedel, Nortel's chief strategy officer, said the company wasn't in crisis, noting it has more than enough cash to run its business. "We have taken decisive actions to answer criticism that we were in too many businesses, and we are taking fewer bets with more resources," he said. Analysts said the company must make changes. "It's not dire, but the company needs to decide what it will eventually be," said Ping Zhao, a telecom analyst with the research firm CreditSights.

Nortel could now come under pressure to consider other deals. Earlier this year, Nortel was in talks to combine its wireless business with that of Motorola, which is trying to turn around its cellphone unit. Zafirovski, a former Motorola executive, said last month he was open to combining the wireless business with that of another company to gain scale. The decision to sell the Metro Ethernet business is likely a painful one for Nortel, which has been focusing research dollars on a few promising technologies it hopes will provide future growth. Nortel has also been cutting costs, including about 4,000 jobs, in hopes of stemming its losses. While sales of new products and services are rising, they are still small, and Nortel still derives the vast majority of its operating profit from supplying wireless-network gear to carriers like Verizon Wireless and Sprint Nextel.

In August, Nortel said it was on track to meet its targets for the year despite a challenging business environment that had contributed to a sharply wider second-quarter loss. On Wednesday, the company projected 2008 revenue will fall 2% to 4%, with a gross margin of about 42%. Its previous outlook called for revenue growth in the low single digits and a gross margin of about 43% for the year. (info from The Wall Street Journal)

Tuesday, September 23, 2008

Palin's Yahoo email hacked

Details emerged behind the break-in of Republican vice presidential candidate and moose eater Sarah Palin's e-mail account, including a first-hand account suggesting it was vulnerable because a hacker was able to impersonate her online to obtain her password.

The hacker guessed that Palin had met her husband in high school, and knew Palin's date of birth and home Zip code. Using those details, the hacker tricked Yahoo's service into assigning a new password, "popcorn," for Palin's e-mail account.

What started as a prank was cut short because of panic over the possibility the FBI might investigate, the hacker wrote. Investigators were waiting to speak with Gabriel Ramuglia of Athens, Ga., who operates an Internet anonymity service used by the hacker. Ramuglia told the AP he was reviewing his own logs and promised to turn over any helpful information to authorities because the hacker violated rules against using the anonymity service for illegal activities.

"If you're doing something illegal and causing me issues by doing this, I'm willing to cooperate," Ramuglia said. "Obviously this is the most high profile situation I've dealt with." The break-in of Palin's private account is especially significant because Palin sometimes uses non-government e-mail to conduct state business.

Previously disclosed e-mails indicate her administration embraced Yahoo accounts as an alternative to government e-mail, which could possibly be released to the public under Alaska's Open Records Act. At the time, critics of Palin's administration were poring over official e-mails they had obtained from the governor's office looking for evidence of improper political activity. Details of this break-in, if authentic, were consistent with speculation by experts who said Yahoo's "forgot-my-password" service almost certainly was exploited. The mechanism allows customers to retrieve or change their password if they can verify their identity by confirming personal information such as birthdate, zip code and the answer to a "secret question," such as a childhood pet's name or school mascot.

Palin's hacker was challenged to guess where Palin met her husband, Todd. Palin herself recounted in her speech at the Republican National Convention that the pair began dating two decades ago in high school in Wasilla, a town near Anchorage." I found out later though (sic) more research that they met at high school, so I did variations of that, high, high school, eventually hit on 'Wasilla high'," the hacker wrote. The McCain campaign issued a statement describing the hacking as an invasion of Palin's privacy. (info from The Associated Press)

Monday, September 22, 2008

Sprint promo sends people to wrong website

Sprint Nextel's chief executive is once again delivering the company's marketing message himself, appearing in a new ad campaign that first aired during Sunday's Emmy Awards. Dan Hesse is pitching ReadyNow, a service in which customers can have their cellphones configured at Sprint retail stores.

"Truth is, technology's only great when you know how to use it," he says in the commercial,. "We want to help you get the most from these amazing devices. So come by a Sprint store for a personalized setup. You'll walk out an expert."

Hesse was brought on in part to turn Sprint's brand around as the company was hemorrhaging subscribers to AT&T and Verizon. He first appeared in ad campaigns in March, pushing the Simply Everything unlimited pricing plan.

As in the other Sprint ads, the company invites viewers to contact Hesse with their thoughts. But instead of his email address (dan@sprint.com), an early press release accidentally pointed them to AskDan.com.

That non-Sprint site is the online home of Ask Dan and Associates, a team of Phoenix-area computer technicians. (info from The Wall Street Journal)

Monday, September 08, 2008

FCC may sell emergency frequencies for commercial use

The FCC is considering carving up a valuable block of airwaves designated for firefighters and police officers and selling the spectrum to commercial partners by state or region, despite objections from some big-city officials. The cities want the frequencies for free.

The proposal circulating within the FCC is the latest round in a fight that goes back to the Sept. 11, 2001, terrorist attacks, when emergency crews couldn't talk to each other. The FCC's effort earlier this year to sell the block of channels to one national licensee failed because no commercial phone companies were interested in buying the spectrum under the FCC's terms. Critics said that the sale didn't work because the reliability standards demanded by public safety were too onerous and that the FCC didn't spell out the companies' obligations to public safety.

The FCC now is expected to vote on a rule this month to set the terms for a new sale that would offer phone companies and other entities the chance to bid for chunks of spectrum on a regional basis, with the understanding that public-safety agencies would get rights to use some of the broadcast capability for emergency communications. The proposal is circulating among the five-member body now and is on the agenda for a Sept. 25 meeting.

But some public-safety entities disagree about whether the sale should take place at all. New York City has been the most vocal of several large cities, arguing the spectrum should be handed over to states and cities to build their own communications networks as they choose.

"It should be done from the local entities up," said Charles Dowd, deputy chief and commander of the New York Police Department Communications Division. "It's clear green-space spectrum across the United States."

New York City has informed the FCC that it wouldn't use a public-safety network licensed to a commercial partner. If New York City and other areas follow through on that threat, creating a nationwide public-safety network will be difficult, if not impossible, to accomplish.

The airwaves at issue could be worth close to $1 billion, and handing them over to public-safety officials for free would require an act of Congress. FCC Chairman Kevin Martin, who doesn't want to wait for Congress, will press forward with the sale to commercial partners, though he isn't wed to a particular model.

Martin said Friday that the FCC is required by law to use competitive bidding to allocate the spectrum, adding that a second sale is the best way to ensure that the freed-up airwaves won't lie fallow once they become available next year. "We need to try to make sure we're getting the spectrum into use as quickly as possible," Martin said. "The only way to ensure that certainty is to go ahead and try to conduct another auction."

Among other concerns, FCC and industry officials say, are whether lowering the public-safety standards to attract commercial bidders could open the sale to attack as a giveaway to big phone companies such as Verizon and AT&T, which could outbid smaller competitors. A regional sale also could leave gaps in the national network. (info from The Wall Street Journal)

Friday, September 05, 2008

Comcast suing FCC over Web blocking rule

Comcast filed suit against the FCC Thursday to overturn the agency's decision to sanction the company for blocking certain Internet traffic. The lawsuit involves a 3-2 decision the FCC handed down in early August that found Comcast's practices violated so-called net-neutrality principles, and ordered the company to provide more details of its network-management policies within 30 days. The FCC also ordered Comcast to stop by the end of the year blocking traffic related to specific applications, such as file-sharing software that allows users to swap videos.

It was the first time the FCC had found a company in violation of the commission's net-neutrality principles, which lay out consumers' Internet rights.

Comcast was widely expected to appeal the FCC's decision, even though the company wasn't fined. Comcast says its practice of sometimes slowing Internet traffic on file-sharing networks like BitTorrent is reasonable and necessary to prevent a few heavy bandwidth users from slowing other customers' service. The lawsuit doesn't go into details about the complaint, but company officials have argued that the FCC has authority to bring enforcement actions under formal rules, not principles. While the FCC has stated a position on net neutrality, it hasn't established formal rules.

Concern about the issue has driven efforts by congressional Democrats to pass net-neutrality legislation that would give the FCC specific authority to police Internet providers.

Despite the lawsuit, Comcast said it will fully comply with the FCC's order, including filing more information about its network-management practices. Comcast had already announced changes to its practices. It will begin slowing traffic of its heaviest residential customers for anywhere from 10 to 20 minutes during peak times by the end of the year. The company also recently announced that, beginning Oct. 1, residential customers will be limited to 250 gigabytes of traffic each month.

"We filed this appeal in order to protect our legal rights and to challenge the basis on which the [FCC] found that Comcast violated federal policy in the absence of pre-existing legally enforceable standards or rules," Comcast Executive Vice President David L. Cohen said in a written statement.

FCC Chairman Kevin Martin said he was disappointed by Comcast's decision to appeal but was pleased that the company has agreed to comply with the FCC's order for more consumer disclosure and information.

A week ago, public-interest groups filed lawsuits about the FCC's Comcast decision in three appeals courts across the country, so a lottery would be held to decide which court hears the case. Those interest groups don't oppose the FCC's decision to slap Comcast for its network-management practices, but said in their lawsuits that the agency erred by not forcing Comcast to stop blocking traffic immediately. (info from The Wall Street Journal)

Thursday, September 04, 2008

FCC may cut back on quality info supplied by telcos

On Friday, the FCC is expected to approve a request from AT&T, formerly known as Woodbury Telephone Company and a bunch of other things, to allow the company to stop filing yearly reports on service quality, customer satisfaction and infrastructure investment. Similar requests by Verizon and Qwest are also expected to be approved soon.

Consumer groups and state regulators have objected to the proposal, saying the quality data are valuable. The FCC will open up a related notice of proposed rulemaking that looks at how to improve the collection of data on complaints and other issues from phone companies, including wireless and Internet phone providers.

The decision highlights a broader issue at the FCC, where data collection from phone and cable companies hasn't kept up with changes in the marketplace, as more consumers have switched to wireless and Internet phone services. Earlier this year, the agency revamped the information it collects from broadband providers and increased its definition of high-speed broadband to speeds of 768 kilobits per second or higher -- which is at the low end of what many consumers get from local cable or phone companies.

A majority of the FCC's five commissioners, including Chairman Kevin Martin, agree it is time to stop requiring the reports and overhaul the reporting rules instead.

An AT&T spokesman said the company wants to "eliminate reporting requirements that are no longer necessary or [are] redundant." He added that customer complaint information the company must file comes from the agency itself and state regulators while other data are filed to the FCC in other reports.

It has been eight years since the FCC began looking at how to change the way it collects data from phone companies about costs and service quality, but little came from that effort. The phone companies say the annual reports are outdated and it is unfair to require the information since many of their competitors don't have to file similar reports.

States compile much of the same data, particularly on consumer complaints and service outages, and release it more quickly than the FCC, although not in a uniform fashion. The agency collects some of the same information in other reports, such as service outages, but the data aren't made available to the public.

Many state regulators and consumer groups oppose AT&T's request, saying the data collected are useful for monitoring the largest phone companies' infrastructure investments and service quality.

Smaller phone companies have complained because they relied on the data to oppose various mergers and to track costs associated with high-volume data lines.

The FCC began collecting detailed cost data in 1987 and network reliability and consumer complaint data a few years later. Back then, most Americans subscribed to traditional phone services from one of a handful of large regional phone companies. The telecom landscape has changed significantly over the past two decades, however, with more consumers dropping traditional phone service in favor of wireless or Internet phones. The FCC's rules on which companies had to report that data haven't changed, however, with the result that AT&T, Verizon and Qwest are among a handful of companies required to file the information. In June 2007, AT&T asked the FCC to get rid of the requirement and if not that, at least make all phone providers file similar information. (info from The Wall Stree Journal)

Wednesday, September 03, 2008

Price war helps Internet users

The battle between cable and phone companies to sign up new customers for high-speed Internet service is heating up, creating fresh opportunities for consumers to cut their bills.

Verizon, which last quarter became the first company ever to see a drop in DSL subscribers -- some of whom went to its faster FiOS service -- is now offering customers six months of DSL service free if they sign up for the company's phone and Internet package. That makes the bundled package $45 a month, vs. $65 prior to the offer. AT&T, meanwhile, is now guaranteeing its current prices, ranging from $20 to $55 a month, for two years.

While the most generous offers are coming from the phone companies, some analysts expect cable companies will also become more aggressive as they compete to retain customers.

Cable and phone companies have competed for broadband customers for more than a decade, but discounts have been relatively modest, mainly because the companies continued to add new customers at a healthy clip. Now the market is maturing quickly; some 60% of US households currently have a high-speed Internet connection. Cable and phone companies added 887,000 new broadband customers during the second quarter -- half the number they added a year earlier.

And while the new additions were long split roughly evenly between the two camps, the tide turned dramatically in cable's favor for the first time during the last quarter. Cable companies picked up 75% of the new customers, sending the phone companies into a scramble. As bandwidth-hungry applications like video downloads grow, customers prefer the generally faster speeds cable offers.

Winning broadband customers has enormous strategic consequences for both cable and phone companies. It gives them a foot in the door to sell other services, such as pay-TV and phone service. Broadband is the most profitable bundled service.

For now, the new deals being offered are with the phone companies' garden-variety broadband services. But the heightened anxiety over the state of the market could force the phone companies to cut prices on their higher-end products, too. In the case of Verizon, that would be its FiOS service, a connection that is almost three times as fast as its fastest DSL option. FiOS is currently available in only about 10% of US households, most of them in the Northeast. AT&T's U-Verse, the company's fastest Internet service, is available in about 10% households, mainly in the West, Midwest and Southwest. (info from The Wall Street Journal)

Tuesday, September 02, 2008

Comcast Limits Download Volume

In the latest move to rein in the heaviest users of the Internet, Comcast announced a cap on the amount of data its customers can download. Starting Oct. 1, residential high-speed Internet customers will be limited to 250 gigabytes of traffic a month. Typical customers use between two gigabytes and three gigabytes a month, a Comcast spokeswoman said.

As Internet traffic continues to surge, a number of other major US carriers are also exploring caps as a way to manage the growing traffic on the network.

In June, Time Warner Cable Inc. began testing a metered billing system that would charge customers for usage beyond a certain point. AT&T Inc., the country's largest broadband provider, has said that a move to metered billing is inevitable.

Carriers are particularly concerned about a small subset of heavy users, who they say use powerful Internet applications like peer-to-peer filesharing and clog the networks.

Heavy use by some people is problematic for cable companies. Because of the way their networks are designed, capacity is shared at a neighborhood level. That means heavy use by a handful of customers can congest and slow service within the entire area.

Comcast's cap is different from the one being tested by other companies like Time Warner Cable in that Comcast doesn't seek to charge users extra for consumption beyond the specified limit. Instead, the company calls the top users of its service who exceed the capacity limit to issue a warning. People who exceed usage limits once more within six months are cut off from the service for a year. (info from The Wall Street Journal)

Troubled Euro-American Alcatel-Lucent shuns Americans for top positions

Alcatel-Lucent's board has picked two Europeans for the top posts at the Franco-American telecom equipment company, moving to restore management unity and shore up the company's finances. Ben Verwaayen, a Dutchman and former boss of BT Group, and Frenchman Philippe Camus, a former aerospace executive, were named chief executive and non-executive chairman, respectively.

The selection of two Europeans suggests the board is determined to put an end to the trans-Atlantic tensions that have hurt the company since its creation two years ago from the merger of Alcatel of France and Lucent of the US.

After the deal, billed as a merger of equals, the company tried to balance its US and French interests by dividing up its top positions by nationality. But management infighting between the outgoing chairman, Serge Tchuruk, a Frenchman, and CEO Patricia Russo, an American, made it harder for Alcatel-Lucent to navigate in an increasingly tough market.

Now, the board is likely to charge Verwaayen and Camus with the task of healing cultural differences and effectively rooting the company more firmly in France, where it is based.

The 2006 merger was designed to give Alcatel-Lucent, which makes Internet equipment for telecom operators such as AT&T and Sprint Nextel the scale and pricing power to compete against low-cost Asian rivals. But Alcatel and Lucent proved harder than expected to integrate, and the combined company's core equipment business wilted. Alcatel-Lucent has lost nearly two-thirds of its market value since the merger and has posted six consecutive quarterly losses. Faced with business and management problems, the board decided in late July that Tchuruk and Russo should both leave. (info from The Wall Street Journal)