Lately I have been thinking a lot about the technology that has entered and exited our lives over the past 10 years.  Over the ten-year lifespan of this blog and the mailing list that preceeded it much has changed in the technologies that permeate our daily lives — when we began this journey in 1999, desktops outsold notebooks by 4:1, Apple was a novelty computer maker for uber-geeks, and no one you knew had ever ‘googled’ themselves in public.  I thought I’d run down the most disappointing aspects of our jaunty shuffle into modernity.

What makes a technology disappointing?  Many products fail in obscurity because they try to solve something irrelevant.  What you need to do to make this list, friends, is aim high and fail wildly.   While most of the FAILs described herein are products, I did also find a couple of product categories which have really disappointed.. and one entire industry.  After all, disappointment is invariably the result of a combination of promise (our hopes & goals for the product or service) and the provider’s failure to achieve that promise.  Sometimes the predisposition for failure afflicts not just one company or product team, but an entire industry.  So here we go:

Motorola ROKR

In 2005, the fact that Apple was working on a mobile device to follow-up the iPod was a very poorly-kept secret, but the specifics were the source of much speculation.  And oh, how the fan boys wept when they thought that the sum-total of this effort was the ROKR, an epic piece of crap on which Apple collaborated with Motorola to produce a re-labelled Moto E398 with an iTunes client.  Although the ROKR had 512MB of memory on-board, the device was software-limited to 100 songs — and downloading them was a painful process as the device lacked USB 2.0.  Predictably the product was a #FAIL and Jobs and co. left Zander in the dust with the iPhone, but for those who actually believed that this was Apple’s solitary foray into mobile, there were a few sleepless months.

Satellite Radio

FM radio sucks.  There’s probably a JACK-FM station in your city, where the DeeJays “play what they want”.  Only, they don’t really.. they play exclusively Top 10 hits from the past 20 years regardless of musical genre, the result of which can easily result in a computer-controlled segue from Katrina and the Waves to a Beyonce track.  That the radio business considers this format to be innovative explains why we need alternatives, and satellite radio was supposed to be that alternative.  Sirius and XM radio both got off the ground in 2001, so to speak.  In 2003 I predicted a merger between the two, which was announced February 2007.  And while Satellite radio does permit greater diversity, and thus narrower focus, in channels there are many problems.  Foremost of these is the audio compression technology, called Lucent PAC, which according to studies has lower perceptual quality than even MP3 at the same bitrate; and the rumoured limitation of stream bandwidth to 64Kbps per channel… far worse than the MP3s on your hard drive and light years from the “CD Quality” that Sirius et al used to advertise.  This makes Satellite radio a no-go for audiophiles, but OK for talk radio and sports.  We continue to wait for decent music without wires.

Nokia N-Gage

It’s likely that the N-Gage failed simply because it failed to.. uh.. engage the game development community with much enthusiasm.  Launched in 2004, the device’s total failure was predicted by a string of awful reviews stemming from substantial usability problems, such as the fact that users had to essentially disassemble the device to swap games, or the fact that one couldn’t receive calls while playing a game, or that the device was weighty and uncomfortable and impractical for use as a phone, or the fact that the screen could not display horizontally, or its $299 price tag (substantially higher than the Game Boy Advance).  Developers probably saw the writing on the wall when evaluating early test units of the N-Gage.

The PDA

Remember the iPaq?  Or the early Palm devices?  Today, the notion of a mobile address book device that isn’t coupled to a telephone seems positively stupid.  In November 2000, I asked the market to build me a mobile handheld device that married my email to my phone and tied it together via my address book — all of which synced to my PC.  In my mind at the time, PDAs were gap fillers until we could field broadband wireless IP networks that provided persistent connectivity.  The smartphone — devices like the iPhone and Droid — killed the PDA and for most of us I suspect that is good riddance.  Nobody wants to walk around looking like Batman, their belt burdened by half-a-dozen devices beeping and squawking.  How many people bought these things or received them as gifts, only to abandon them within months?  Still, credit where it’s due — the PDA begat the SmartPhone, and we’re all better for it.

Modo.NET

I’m betting you never heard of Modo.NET because it was launched exclusively in San Francisco, LA and New York in the summer of  2000, but Scout Electromedia, the company that created it, collapsed within 3 months (in fact the device was available in SF for only 1 day before the business folded dramatically).  Like Dodgeball, which launched shortly after Modo’s collapse, Modo was all about the urban hipster lifestyle.  Built around yet another PDA-like device with a hugely innovative design, the Modo leveraged the paging network to update its users with happenings in and around the city… it was like the pager you carried with you when going out on the town on Friday nights.  Two major design compromises crippled the Modo, however… it had no keyboard; and was receive-only.  Also… like Dodgeball, the Modo was an idea ahead of its time: all of Scout’s business and consumer goals are now attainable on smartphones:  no stand-alone device or clunky SMSing necessary.  Today many of these goals are embodied in Foursquare and other services.

Motorola DVR Series

Hello again, Motorola!  Let me make this crystal clear for you, Mr. Zander:  Dude, I just want to be able to watch TV and record things for playback later with a minimum of interference.  In response, Motorola created an underpowered set-top device that frequently overheats, trashes its own hard drive, and has a user interface that is akin to debating Keynesian Economics with a three-year-old.  Perhaps it’s because you have an effective duopoly, along with your buddies from Scientific Atlanta, on the cable set-top-box market even despite the FCC’s insistence on the CableCard standard.  Perhaps you simply lack the kind of employees that have any affinity for user experience design.  What is evident is that you and your cable partners are under no specific motivation to improve this product, as it has now been in circulation for nearly 5 years with zero material improvement.  In fact, your products in this category, including the DCT-6412 with which I am famously saddled (this article is the number one most visited on ianbell.com) are so crappy that the FCC believes they are discouraging people from adopting Cable Television itself.  Be ashamed.  You suck.

The AppleTV

Like Afghanistan, the set top box seems to be a graveyard of empires — so much so that even Silicon Valley’s King Midas, Steve Jobs, has been laid humble before it.  The AppleTV is, like many other set top boxes, underpowered for the task at hand.  More like an iPod than a Mac Mini, the AppleTV fails to meet user expectations as an all-rounder, lacks CODECs for popular formats and wrappers like .MKV and .AVI, and only works effectively when you pay for and download all of your content from the iTunes walled garden.  Set top boxes that do satisfy tend to allow users to get their content from wherever and sync/stream it from a media server elsewhere in the house — this is true of the iPod lineup, and that is a lesson Apple should have carried forward into this product.  Moreover, the AppleTV doesn’t even have an OFF button.

Green Cars

In 2006, when I bought my Jetta GLI, I promised myself that it would be my last gas-guzzler.  I just bought another vanilla car last month, though, after seeking and failing to find a suitable practical alternative in the diesel, hybrid, pure electric, or hydrogen vehicle.  It’s important to understand that gasoline, hydrogen, and batteries are simply storage media for energy.  Where energy is derived from — whether it’s nuclear, solar, wind, coal, crude oil, or whatever else you can come up with — determines the sustainability, not what it burns or farts out the tailpipe.  Moreover for me, like most consumers, a next-generation car needs to fulfill my usual manly requirement for sportiness or (for others) accessibility or safety, with some added convenience — such as not needing to buy gas at stations or being able to drive long distances without a refuel.  The zero tailpipe emissions is a nice benefit, but not a buying feature for most.  As I pointed out last year, mainstream auto manufacturers have consistently failed to figure this out.  And if you live in a region where all of the energy on the grid is derived from coal or natural gas then you are not doing the environment any favours by purchasing a plug-in.

Pet Robots

Since Robbie the Robot did the rounds on TV sitcoms in the 1950s, Americans have fantasized about having a jetsons-style friend rendered in metal and silicon adorning their living room.  With the launch of Sony’s AIBO in late 1999, things were looking up for us.  At a price tag of $2500 though, there was still some room for improvement, and robots began to emerge all up and down the cost and capability matrix.  The most successful by far was iRobot’s Roomba, which fulfills the robot servant role quite nicely but falls flat on the personality index.  In the latter category resides the Pleo, and I will confess I have always wanted one.  Unlike the Aibo, though, the Pleo isn’t really autonomous.  It gets an hour at the most out of its batteries, and cannot return by itself to its charging station.  The Pleo is a great demonstration of how pre-programmed behaviour can trigger emotions — not in the robot itself, but in its owner — but sadly disappoints and is not viable as a “pet” robot.  Maybe next decade, Robbie.

Music Revolution

At the end of the last decade, with the massive growth of Napster, the writing was on the wall.  People clearly voted with their feet in showing how they wanted to use music.  While this had been the case for decades, with mix tapes and pirate radio, the internet as in other industries was a key enabler.  Yet rather than embrace and extend this revolution, as tech industry companies tend to do, the music industry went on the warpath via the RIAA.  Lawyers mobilized, suing 12-year-old kids, single moms, and other obvious villains.  The only accomplishment of the RIAA has been to effectively kill internet radio, which would serve to promote their artists, while music sharing has continued unabated.  Yet, at the end of the decade came one smattering of good news, and further proof of industry executives’ failure to appreciate irony:  a lawsuit revealed that the Canadian music industry has been stealing from artists for 25+ years, and faces a $6Bn liability.  Small justice, I suppose.  So while the technologies (that’s what this post is about after all) that came from the publishers has been an abject failure, the technologies, such as BitTorrent, WebJay, Pandora, et al created by users and lovers of music has flowered.  Imagine what would happen if the innovators actually had the support of that industry?

Thanks for reading, and we’ll see you through the teens.

SMS costs in Canada are already disproportionately high versus the unrealistically high costs for SMS across the entire wireless industry. This article suggests that SMS costs are, in the aggregate, 4x higher than getting data from the Hubble space telescope. Global SMS revenues are larger than the Hollywood movie, music and video game industries combined.

The quote from the Telus spokesperson is hilarious:

“The growth in text messages has been nothing short of phenomenal,” wrote Telus spokeswoman Anne-Julie Gratton in an e-mail to The Globe and Mail, “This volume places tremendous demands on our network and we can’t afford to provide this service for free any more.”

The same article refers to the latest statistics from the Canadian Wireless Telecommunications Association that pegs the number of text messages sent in Canada at more than 45.3 million per day. According to recent reports from IEMR the number of wireless subscribers in Canada was 20.4 million in 2007, and wireless subscribers in the UK (which has roughly double the population of Canada) for the same year numbered 71.7 million. Sweden, with a third of the population of Canada’s has better than half as many subscribers. Canada is trending remarkably behind nearly every comparable western nation.

These stats are great, in that they illustrate the problem with subscriber growth that shareholders and analysts are presently appreciating. There’s clearly something wrong with the wireless business in Canada, and it’s not something that the recent spectrum auctions are likely to quickly address.

Allow me to translate Ms. Gratton’s TelecomSpeak in a way that more accurately reflects what went down in the boardroom:

“The growth in text messages has been nothing short of phenomenal,” said Telus’ Business Development Manager, “This is an unprecedented opportunity to exact greater revenue from the customer base without spending a penny on service development!”

The Canadian wireless market has been infantilised by the greed and short-sightedness of our wireless carriers and the mismanagement of our asleep-at-the-wheel regulators. Whereas (according to Wikipedia) the average user in the Philippines sends 10-12 text messages a day, doing some quick math from the stats above reveals that the average Canadian use of text messaging is far lower at 2-3 messages per day.

Still, this 45.3 million SMS messages per month business must be creating a stress on the Telus service network, you’d think. Right?

Well, if you send 45.3 million SMS messages all at the maximum size of 140 characters, you’ll get almost 6 Gigabytes in total storage volume – or, roughly the size of the hard drive I had on my IBM Thinkpad in 1999. That’s a lot of data to store (in 1972, that is). At the end of the day, this means that the entire Canadian SMS relay network has to be able to sustain about 144Kb/s of data transfer (thanks to Gersham for helping me with the math). My Mac Mini has a 1GB/s ethernet interface and is ultimately connected to a (for Canada anyway) smokin’ 30MB/s internet pipe this means that I could personally store-and-forward all of Canada’s SMS traffic myself via my Novus broadband in Yaletown, and it would have limited impact on my BitTorrenting.

SMS uses the signaling overlay path of wireless carrier networks, and from the wireless perspective SMS messages ride in the carrier byte packet. As such it costs the network exactly nothing and uses no bandwidth that isn’t already in use — traffic load is the same on the network even if no SMS messages are being transferred. The networks themselves need to invest in this infrastructure anyway, so there is perhaps an added provisioning and data processing impact created by SMS for wireless carrier network planners, but it is not substantial.

For TELUS to suggest that this traffic is in any way meaningfully impactful to their operating costs suggests that either they’re lying, or perhaps they should go back to operating mechanical switches.

This is a cash grab. Pure and simple. But then, you knew that…

But why? When you’re looking for answers, as they say, follow the money. The NYTimes (now mercifully free for you to read) reports on their blog that Apple, with their recent price cut, is effectively taking a loss on each iPhone and making it up on the fees paid to them via the Wireless Carriers. Well, duh. This should be no surprise to folks who know the wireless industry well. The only nuance here is that Apple has altered the way the money flows over traditional mobile phone handset makers, who are content to eke out slim margins selling phones directly to carriers, who then take a hit on the sale of the phone which is subsidized by your ongoing usage fees. As I’ve been trying to point out, the business model they’ve copied is that of Research in Motion.

There is some smarts there, but not much. Apple has clearly miscalculated the confrontation that it is about to face with its users. Apple has a vested interest in “locking in” your iPhone to a contract with their partner carriers: this is the Cathedral. They have also borne witness to the powerful effects of releasing their products out into the wild and benefiting from the vibrant hacking community which has grown up around some of their products, such as the Apple TV Hackers, and of course the flourishing OS X third-party development community (which could be likened to Eric S. Raymond’s notion of a Bazaar).

With all of those lessons in mind, Apple’s decision-making around the iPhone appears to be somewhat quixotic. But it is, for now, a depressing practical reality of the wireless world that even Apple cannot break the cabal and catalyze the wireless industry to flourish amid an internet-style openness. Apple is attempting to preserve the “lock” on its customers because carriers have a lock on the market. And we cannot expect Apple to lose money for the benefit of the greater community in the interests of strong-arming the carriers.

Or can we? If they don’t, then Google might. The GoogPhone has become the new source of promise for we proletariat who formerly clicked our heels together and begged for Apple to bust the wireless industry cabal. Google has the altruism, the mandate, and the heft to push the carriers around much moreso than RIM or Apple. It is also going after spectrum, as we all know. Even if it gets it, this doesn’t mean it will use it, because it’ll become a substantial bargaining chip when it approaches carriers to provide distribution and access for its devices.

So Apple might be getting a short-term spike out of its iPhone product line only to be subverted by Google, which will represent an interesting conflict-of-interest for Google CEO and Apple Board Member Eric Schmidt. If that’s the case, then Apple has forfeited a long-term future in the mobile world in an effort to work within, rather than challenge, the fundamental realities of the wireless industry.

In the meantime, el-Steve-o is talking pretty tough to the iPhone unlocking crowd (which, let’s face it, is now probably approaching the majority of iPhone users). Of course, Jobs could be borrowing a page from Yasser Arafat: talking tough when his constituency (the carriers) are listening but sliding back-handed messages of peace (and unfettered use of iPhones) under the table. If there’s a volume horizon when the cost of producing iPhones becomes less than they’re forced to sell them for sometime in Apple’s future, then this is quite possible.

The fundamental problem here is that being an open platform in an interconnected world is about more than just having an open device, like a PC. In fact, PCs have gotten a free ride of sorts because the Internet via broadband has always been more-or-less unencumbered. Wireless is just the opposite, and even devices like the OpenMoko will still be tethered within the Wireless Egosystem, until carriers stop caring about how much data you use and where you use it.

The problem is: will they ever?

Telus and Bell have confirmed they’re in merger talks, after BCE earlier announced it was mulling over its options earlier this Spring. Both companies are weakened by declining landline revenues as competition from Wireless and the Cable Guys and, to a lesser extent pure-play VoIP contenders, is heating up. This makes a lot of sense, but probably not for the reasons that your average reporter would think.

It has been known for some time that CableCos would move into the voice business, which thanks to VoIP and their co-ordinated efforts through PacketCable, was almost trivially easy to accomplish. Both of Canada’s major telecom service providers find themselves in a major uphill battle.

This slide, from Telus’ August 2006 Q2 investor conference call tells the story:

Things are not looking good on the home front. To make things worse, and while Telus contends that the wireline side is “stabilizing”, revenues are still dropping and this slide from the Q1/2007 investor call shows:

While it did indeed show that SkaterBoy is in fact Rocking it With IP (say hi Jill Schnarr!), what’s easy to see is that the base is eroding, both in terms of subscriber count and revenues. Their Broadband penetration is not so good, either. Bell Canada, with its larger service area and more densely-populated markets, appears to be doing better when compared to Telus, according to LightReading (see charts below), but they are at present weathering the storm .. not lighting the world on fire.

By comparison to Bell’s numbers here, Telus’ Broadband Internet subscriber base is a claimed 949,000 users as of the end of Q1/07.

Both companies are looking to data and wireless to grow the business. Wireless is a growth industry, of course, but I would contend that, when it comes to wireless subscription growth, we are in a bubble. Saturation has already caused wireless subscriber growth to begin to taper off, and as in the telecom bubble of the late 1990s, that drives up customer acquisition costs (since these companies would sooner pay more $$ for users than innovate in order to attract them). Perusing the Telus Investor Slides linked above reveals exactly that. Data is growing, but likely only within their existing base of wireline subscribers. And if that base continues to churn as fast as it is, that market will reach true saturation a lot sooner than wireless.

Launching broadband as a service is one thing. Broadband is, however, a commodity — as are residential and business subscriber lines. Telus, Bell, and all other ILECs are presently learning what happens when your basic services remains.. uh.. basic, and your only foils against competition are pricing and bundling. Furthermore, service innovation within the ILEC world has totally stagnated, insofar as new service development is concerned, as they’ve focused on pink elephants like IPTV (which, this author contends, won’t work) and Verizon’s IOBI (which suffers from huge capital costs for minimal incremental benefit). The fundamental problem for the Incumbents is simply making things scale on the telecom network. It wasn’t built for that, and even with IP upgrades grafted and forklifted into place, it still doesn’t have the bandwidth for compelling services. The Cable Guys have their own problems, but they get a free ride for now thanks to the fact that their delivery of TV entertainment is broadcast easily down their plain old copper wire — including High Definition.

The Incumbents need to bite the bullet and implement FTTH to get themselves out of this hole, but some analysts estimate the cost to be about $9650 per subscriber. That’s a purchase order that I would not be excited to sign, and more than a few pundits think that Verizon’s $23 Billion bet to wire up 18 million homes will kill the company.

So, while Canada’s two big incompetents incumbents are struggling with a sharpening decline in their base, the Shaw and Rogers folks are starting to kick ass, seeing growth on all fronts. Shaw, which started late in the telephony game, has been growing all of their services, with about 2M cable subscribers, 1.5M internet subscribers, and around 100,000 telephone customers. They’ve added the latter service with minimal cost impact and a very low customer acquisition cost, and the ARPU of a Shaw HD Cable customer with High-Speed Internet and one phone line is very near $200/mo. This is the holy grail of residential telecom. And while they start from a smaller base of customers, their capital cost to deliver multiple services is a lot lower.

So, what does this all mean? Current default logic in the Telecom arena is that all of the players need to be at least a Triple-Play and arguably a Quadruple-Play in order to grow their services and revenues, and defend their userbase. I think that I’ve presented a straw-man case illustrating that the Cable Companies, because their networks already do the harder thing (distributing realtime entertainment cost-effectively) with relative ease, have a decisive advantage leaping toward this, particularly because Rogers Communications already owns a wireless Service Provider.

Telus and Bell should and probably will merge in order to cost-optimize, lay off a bunch of redundant workers, and debt-finance the building of Fiber-To-The-Home. They will need to do so before they are, over the course of the next decade, eclipsed by the more nimble and more entertainment-oriented Cable companies. It will not be easy for Canada’s two incumbents to recognize their lot at the moment as dumb-pipe carriers, and the only network which it has been established can reliably and scalably deliver realtime entertainment and content is Fiber.

Cable Guys ultimately need to get there, too, as we’ll increasingly want to Time-Shift our media, but PVRs and HD are stop-gaps which are saving them from needing to make an early, costly, network upgrade. Besides, Cable Companies needed to upgrade their networks substantially for broadband, and did so during the 1990s, delivering Fiber to the neighbourhood (FTTN). Making that next leap, while costly, will not kill them.

Which leads to the following hypothesis:

Is now the time to merge Shaw and Rogers? As the only major Service Provider in Canada without a Wireless business unit, Shaw is the clumsy kid at the prom in the powder-blue suit. Definitely the smallest of the four, Shaw doesn’t have as diversified a business as any of the other three but has stuck to its knitting. It has also been busily snapping up smaller Cable Companies in the West, including my friends @ Whistler Cable. Mark Evans thinks this is a possibility, too, for the record, and the companies have a history of collaborating to achieve efficiencies. Jim Shaw and Ted Rogers, while officially rivals, often reveal a friendly candor and mutual respect. The idea is alluring.

The reality is that if Telus really wanted to cement its future, it should buy Shaw. But this would create a physical monopoly in the West, rather than the defacto monopolies which exist today, and the CRTC and Industry Canada would never allow it. But one other opportunity may lay on the horizon: If Telus and Bell merge, they will have to release some of their wireless spectrum back to the regulators. If this occurs, then the market may open up for another major wireless carrier to emerge in Canada: one funded by that quiet kid in the Powder-Blue suit. If the Quadruple-Play hypothesis is correct then this will allow Shaw to compete on a level playing field with a merged or non-merged Telus and Bell, and maintain parity with Rogers. And while it’s probably not a great idea to have wireless this consolidated over the long-term, this could allow Jim Shaw to build up some value in Shaw Communications prior to the inevitable merger with Rogers.

Convergence freaks tend to assume that all roads ultimately lead to all of your myriad services being delivered via a fibre-optic cable straight into a hub in your basement (or storage closet) regardless of whether your Service Provider came from Cable or from Telecom. I don’t disagree, but I do contend that its a twisted, heavily contentious road that’ll get us there. And fortunes will be made or destroyed in the process thereof.

Putting a lid on broadband use By John Borland Staff Writer, CNET News.com http://news.com.com/2100-1034-5079624.html

Earlier this month, a Philadelphia Comcast broadband subscriber got a letter from his service provider, telling him he’d been using the Internet too much.

Keith, who asked to keep his full name private, said he’d subscribed to the service for four years and never had a complaint before. Now he was being labeled a network “abuser.”

Worse, he said, Comcast refused to tell him how much downloading was allowed under his contract. A customer service representative had told him there was no specific cap, he said, adding that he might avoid being suspended if he cut his bandwidth usage in half. But even then, the lack of a hard number gave Keith no guarantee.

What’s new: Cable Internet service subscribers are quietly capping the volume of downloading they allow their subscribers to do. So far, it’s only affecting the heaviest users.

Bottom line: As broadband providers strive for ever-speedier and economical service–and bandwidth-hogging features such as video on demand become more popular–these caps may become more common. And they may affect digital subscriber line (DSL) providers as well.

“I don’t mind restrictions, but how can Comcast expect users to stick to a limit when they don’t say what the limit is?” he said. “If they’re going to impose limits, that’s one thing, but at least tell us what they are.”

Keith isn’t alone in his newfound position under the Internet service provider (ISP) microscope. Other high-volume Comcast subscribers have been getting letters since late summer warning them of overuse. A few others have even had their service suspended after the first warning. Comcast spokeswoman Sarah Eder said that its new enforcement policy was barely two months old.

As Keith and other frustrated users found, the company’s warnings to subscribers were not triggered by any “predetermined bandwidth usage threshold,” Eder added. Only about 1 percent of subscribers received letters, which were based on having exceeded average usage patterns rather than a specific number, she said.

For now, this quiet imposition of usage caps affects only a tiny fraction of extraordinarily high-volume users. But it goes to the heart of the competitive decisions cable and telephone companies are making as they struggle for broadband dominance . Comcast in particular is working to provide ever-increasing download speeds , and as result it is struggling to contain busy file swappers and others who are putting stress on their networks.

It is not something the broadband providers are eager to talk about. Even as Comcast sends out letters to its customers targeting high-volume users, the company bristles at the notion that the policy is a cap.

It’s easy to see why: As cable and DSL companies race to bulk up on subscribers, companies tagged as “bandwidth cappers” could be at a disadvantage. The problem is particularly awkward for cable companies, which have tried to avoid a price war with the telephone companies by promising better quality of service.

“The industry is leery of explicit caps, because even people who don’t come anywhere near the caps feel like something is being taken away from them,” Jupiter Research analyst Joe Laszlo said. As consumers grow more used to broadband services and begin understanding what to expect from their connections, companies “can’t claim their service is unlimited if there is some kind of informal limit,” Laszlo added.

Hard caps and fuzzy ones Different ISPs are taking widely different approaches to this issue, although caps seem for now to be limited to the cable companies.

Cox Communications started phasing in hard usage limits in February, and now a majority of that company’s subscribers are limited to downloading 2 gigabytes a day–the equivalent of about two compressed feature-length movies or about 400 MP3 songs. AOL Time Warner’s Road Runner cable modem service has no caps yet, although sources say the idea is being discussed internally.

Comcast’s policy has proven most controversial. The company’s terms of service say only that users cannot “represent (in the sole judgment of Comcast) an unusually large burden on the network.” According to a spokeswoman, the company began sending notes about two months ago to the top 1 percent of the heaviest users–people who collectively use about 28 percent of the company’s bandwidth–telling them they were violating their terms of service.

Eder said there was no specific line crossed by these subscribers, but she added that some of those people were downloading the equivalent of 90 movies in a given month.

Comcast customer Keith, a British immigrant, said he used his cable modem service to watch the BBC, have video conversations and trade DVD-quality home movies with his family in the United Kingdom.

Comcast defended the policy of having the unstated–but still enforceable–limitation on bandwidth use, saying that any hard cap would have to change in any case as high-bandwidth applications such as video on demand became popular.

“The Internet is growing, and there are more broadband applications every day,” Eder said. “If we were to set an arbitrary number today, we could be changing it tomorrow.”

Both Cox and Comcast have a policy of sending warning letters to subscribers before suspending or terminating service. No subscriber would be affected without substantial warning, spokespeople from both companies said.

Some smaller cable companies are imposing much lower caps. Alaska’s GCI Cable , for instance, limits its subscribers to transferring just 5 gigabytes a month.

Telephone companies offering DSL service in the United States say they have no limits in place for their users, unlike Canadian, British or Australian counterparts that routinely cap their subscribers’ usage. Verizon Communications and SBC Communications, the largest DSL providers in the United States, both said their services remain unlimited.

“The customers buy the lines,” SBC spokesman Michael Coe said. “We make whatever bandwidth they need available to them.”

There’s a limit The caps are a small but crucial part in the latest round of skirmishing among broadband companies over price and features. Cable companies have had a lead in the consumer market for years, but they’re now nervously watching telephone companies’ DSL services–particularly co-branded offerings like the SBC Yahoo service–start to close the gap.

Both sides are trying to figure out how best to attract and then support the mainstream dial-up Internet audience, which is finally starting to come to broadband in droves.

DSL companies have brought deeply discounted prices into their arsenal. It’s now rare not to see a $29.95 per month offer from the likes of SBC or Verizon, and that’s helping bring subscribers in quickly. The cable companies, on the other hand, tout faster download speeds and Web surfing than the average DSL connection provides, and they are working to make their networks even faster.

Comcast, leading the way, has promised to double the average Net surfer’s top speeds, from 1.5 megabits per second to 3 megabits per second, and to get even faster in future years. Analysts say the drive to keep very high-volume users under control is necessary if the company is to reach this goal economically.

Most broadband subscribers use their service for some music or video downloading, to send and receive digital photos or for other high-bandwidth applications. But ISPs say that a tiny percentage of people are using an enormous percentage of their total bandwidth. According to Comcast, just 6 percent of subscribers use about 78 percent of the company’s bandwidth.

Cable networks are particularly susceptible to the dangers of this imbalanced usage, because all the homes in a given neighborhood share access to the same local network. One extremely high-volume user can therefore have a Net-slowing impact on his neighbors.

Nor are DSL companies exempt from this issue, despite their rhetorical distain for caps today. Even if their subscribers don’t share their local wires, DSL uploads and downloads do wind up merging into a shared network a little farther upstream, and so heavy users can wind up having a negative impact on others’ speeds.

For this reason, some analysts think that bandwidth usage caps will ultimately be a far more common part of the Net’s daily life, particularly at the lowest tiers of service.

“It’s partly just so the economics make sense,” Jupiter’s Laszlo said. “If you’ve got someone downloading 60 gigabytes a month and paying $29.95, it’s hard to make it work.”

Related News Broadband adoption skyrockets worldwide   September 16, 2003 http://news.com.com/2100-1034-5077230.html

Comcast: Faster downloads by year’s end   September 8, 2003 http://news.com.com/2100-1034-5072641.html

Survey: Users want DSL but can’t get it   August 6, 2003 http://news.com.com/2100-1023-5060701.html

Endless summer of DSL discounts   July 7, 2003 http://news.com.com/2100-1034-1023465.html

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> Date: Fri, 12 Sep 2003 21:01:30 -0400
> Subject: Article: High-Tech Heroin
> From: Richard Forno
>
> High-Tech Heroin
> Richard Forno
>
> (c) 2003 by Author. All Rights Reserved.
> Permission granted to redistribute this article in its entirety with
> credit
> to author.
>
> Dostoevsky once wrote that “in the end they will lay their freedom at
> our
> feet and say to us, ‘Make us your slaves, but feed us.'” His prophecy
> is
> relevant when examining the modern Information Age — a dark,
> corporate-controlled society predicted by such artistic legends as
> Bruce
> Sterling, George Lucas, Ridley Scott, and William Gibson ­ and is the
> focus
> of this article.
>
> We want to be part of this information environment and feel more
> empowered
> with each new gadget, service, or digital connection in our lives. The
> concept of “information everywhere” provides instant gratification to
> satisfy our needs for books, music, porn, and digital interaction with
> others through web searches, e-commerce, wireless, instant messaging,
> e-mail, and streaming content over broadband. High-speed links enable
> organizations to operate around the world at light speed and conduct
> business on a twenty-four hour clock. The sun never sets in the
> Information
> Age; we are always plugged into the global matrix of the information
> domain.
> We’re addicted to it and constantly awash in a sea of electronic
> stimuli.
>
> Yet as we rush to embrace the latest and greatest gadgetry or high-tech
> service and satisfy our techno-craving, we become further dependent on
> these
> products and their manufacturers ­ so dependent that when something
> breaks,
> crashes, or is attacked, our ability to function is reduced or
> eliminated.
> Given the frequent problems associated with the Information Age –
> loosing
> internet connections, breaking personal digital assistants, malicious
> software incidents, or suffering any number of recurring problems with
> software or hardware products, we should take a minute to consider
> whether
> we’re really more or less independent – or empowered – today than we
> think,
> knowing that how we act during such stressful periods is similar to a
> heroin
> junkie’s actions during withdrawal.
>
> Technology, like gambling and heroin, is addictive. We’re driven or
> forced
> into buying new gadgets and constantly upgrading our technology for any
> number of reasons, both real and perceived, and feel uncomfortable
> without
> our latest “fix.” Corporations love this because once we accept and
> begin
> using their products or services, the dependency is formed and they
> essentially own our information ­ and subsequently, society and us.
> Their
> proprietary lock on our collective information means they can force us
> to
> spend money and upgrade on their schedule and not when we truly need –
> or
> can afford – to do so, regardless of whether or not we need the latest
> features, and regardless of the consequences that may haunt us down the
> road.
>
> But unlike many other industries from the Industrial Age and the heroin
> dealers, high-tech corporations are in a unique position to determine
> – and
> force – us addicts to spend money while relinquishing our rights to
> seek
> recourse for damages arising from their faulty products no matter what
> pain
> we must endure during our period of indentured servitude and addiction
> to
> their problematic technologies. In some cases, particularly in
> mainstream
> operating systems, software, and internet-based services, it’s one step
> short of blackmail. We all certainly can’t go cold turkey very easily,
> although some may try and succeed.
>
> To make things worse, government practically has outsourced the
> oversight
> and definition of technology-based expression and community
> interaction to
> for-profit corporations and secretive industry-specific cartels (e.g.,
> the
> MPAA, RIAA, SIA, BSA, ICANN) who have wasted no time in rewriting the
> rules
> for how they want our information-based society to operate according to
> their interests, not ours. At times, you might even say we’ve
> voluntarily
> imprisoned ourselves under the control of profit-seeking wardens who
> have
> little if any real oversight or accountability for their actions. Our
> high-tech heroin dealers are not only promoting and profiting from
> their
> product but developing the laws and methods to govern and regulate its
> use
> while protecting themselves from any negative side-effects and ensuring
> their revenue stream.
>
> Whether it is our ability to share available creative products
> according to
> existing laws, bring to market new creative works, establish an
> identity in
> cyberspace, or otherwise exchange digital information, these groups –
> with
> well-funded (read: purchased) government approval – have declared
> themselves
> the overlords of their industry-specific fiefdoms that comprise the
> Information Age. Each industry and vendor wants to assert their
> proprietary
> technical and legal authority over who does what, when, how, and under
> what
> conditions with their products and services, even if their profiteering
> desires are incompatible with our law-abiding ones. And if their
> efforts to
> maintain law and order according to their proprietary technical
> standards or
> legal trickery fail, they can always turn things over to the federal
> government for action as a backup plan.
>
> Combining these perverts of profit with the fickle, often-ignorant
> nature of
> our elected lawmakers has produced an Information Age where the rights
> and
> abilities of the individual don’t matter. Neither does facilitating
> society’s evolution by allowing it to take maximum advantage of
> technology’s
> capabilities for its collective benefit. Or reality. Today, what
> matters is
> only how much money and freedom people are willing (or forced) to pay
> (or
> sacrifice) to their corporate masters for the privilege of living
> within the
> various information-based fiefdoms provided for them to generate
> revenue.
>
> The Information Age will not be remembered by the fun, high-flying and
> overwhelmingly feel-good Dot Com days despite the ongoing presence of
> Dot
> Com-developed technologies. Rather, the Information Age will be
> remembered
> as a period when 12-year old girls from New York slums, senior
> citizens, and
> innovative college students are harrassed by greedy cartels seeking to
> scare
> their future customers into submission; when the profit goals of
> high-tech
> vendors determine how client businesses and people are organized and
> interact; when everyone is presumed a potential criminal until proven
> otherwise according to oppressive industry-defined criteria; when a
> once-awesome revolution in global communications became converted into
> a
> cesspool of unsolicited and offensive marketing messages; when knowing
> how
> to do something that’s illegal is just as illegal as actually doing
> something that’s illegal; when the legal protections over freedom of
> speech
> are trumped to preserve corporate secrets or marketshare while hiding
> vulnerabilities that endanger the public; when our lives are monitored
> and
> dissected by marketing firms looking for the best way to sell us
> things we
> don’t need or want; and when technology’s promise and alluring
> capabilities
> are used to surreptitiously entrap and willingly imprison members of
> the
> information-age society instead of truly empowering them.
>
> Dostoevsky was way ahead of his time.
>
> # # # #
> Richard Forno is a security technologist and author of “Weapons of
> Mass Delusion: America’s Real National Emergency.” His home in
> cyberspace
> is at http://www.infowarrior.org/.
>
>
>
>
>

By Ben Charny Staff Writer, CNET News.com January 27, 2003, 4:00 AM PT

Read more about VoIP

A group of telecommunications giants is quietly pushing a proposal that could create hang-ups for up-and-coming Internet-telephone rivals.

At stake are rules used to divvy up the 5.2 billion unassigned phone numbers set aside for use in North America, one of the biggest potential markets for Internet, or voice over IP (VoIP), telephone services.

VoIP technology allows people to make phones calls that travel over the Internet rather than solely across wires owned by long-distance phone companies. Such calls can be made from telephone systems that tap into the Internet, and from PCs.

The cost of making such calls is significantly less than that of basic long-distance service because the calls bypass the phone companies’ lines. As a result, many large corporations and tech-savvy consumers are using VoIP to make long-distance calls.

Net telephony providers such as Vonage and Net2Phone enjoy an unfettered stream of new numbers passed down from other carriers, which they can hand out to customers as they wish. Now, Verizon Communications, BellSouth and Qwest Communications International want federal regulators to tell the newcomers to heel.

Verizon and the others raised their concerns most recently at a meeting Wednesday of the North American Numbering Council (NANC). The industry group is chartered by the Federal Communications Commission and is charged with developing policies on how to distribute telephone numbers.

If successful, some observers warn, the lobbying push could dampen the market for Internet-telephone service in the United States.

“The results could choke off the industry before it really gets going,” according to a source familiar with the ongoing debate.

The looming fight over phone number allocations comes amid a supply crunch , just as VoIP services are shaping up as a significant new challenge to both local and long-distance carriers.

Once denigrated for spotty reception more similar to that of a CB radio than that of a phone, Internet calling has improved in quality to the point where analysts expect the industry to soar over the next few years. TeleGeography , a phone industry analysis firm, estimates that there were 18 billion minutes of VoIP phone calls in 2002, or about 10 percent of all the calls made.

As VoIP makes up a bigger proportion of the overall phone market, it is poised to join a growing field of competitors that are vying for an increasingly limited phone-number pool.

Your number’s up U.S. government reports estimate that the United States, Canada, Guam, Bermuda and Trinidad will run out of 10-digit numbers by the year 2025, driven by demand for cell phones, faxes and other devices. The coming crunch has led at least one industry organization to draw up a plan for a 12-digit future that could add some 640 billion new numbers to the pool.

In the meantime, the FCC composed two conservation measures, both opposed by the phone carriers. One, “number portability,” would let people keep their phone numbers even if they switch carriers. The second would force carriers to be assigned a smaller amount of telephone numbers at a time.

Against this backdrop, some carriers said they are concerned about what they see as unorthodox number allocation practices among VoIP providers.

At the Jan. 22 NANC meeting, proponents of VoIP phone number regulation said they want agencies including the FCC to examine the Internet-phone industry’s use of “designer numbers,” among other things. Because of the nature of the Web, computer phone providers can offer customers a choice of different area codes, regardless of where they live.

“The idea is not to choke this thing off, but to explore the issues and reach some agreements so we can go forward,” said Randy Sanders, BellSouth’s director of regulatory and external affairs.

NANC members were interested enough in the problems to order a subcommittee to come up with some of the possible technical problems involved with telephone numbers and VoIP.

Others, however, have dismissed the concerns as overblown for an industry that is barely getting its legs in North America.

In a white paper called “Much Ado About Nothing,” AT&T recently argued that Internet phone providers aren’t attracting enough customers now to even pose a possible problem to be addressed.

“The sky is not falling,” AT&T wrote to the NANC in a follow-up to the white paper.

Worldwide, there were around 2.93 million cable telephony subscribers in 2001, more than the 2.5 million most analysts were predicting, according to a study last year by Allied Business Intelligence, an Oyster Bay, N.Y.-based research firm. That number was expected to almost double by the end of 2002, reaching 5.2 million subscribers, the study predicted.

By contrast, only a handful of companies sell computer telephone service in the United States, with fewer than 100,000 people now using broadband connections to make phone calls. The leading computer phone provider is Vonage, which has about 10,000 customers.

NANC and the North America Numbering Plan Administrator (NANPA) distribute phone numbers in blocks to so-called incumbent local exchange carriers (ILECs), which then transfer some of those numbers to competitive local exchange carriers, or CLECs, that ride on their lines.

Vonage representative Brooke Shultz said the company gets its telephone numbers from CLECs, although she declined to name the suppliers or the terms of the transfer deals.

Shultz dismissed the lobbying effort as a competitive tactic.

“This is really the first sort of tactic to get us regulated,” said Shultz. “We’re not misusing numbers.”

Industrywide makeover Regardless of where the industry stands now, there is no doubt of the momentum behind a new way of delivering voice communications at a fraction of the cost of traditional phone networks.

VoIP providers generally require two things–a broadband connection and either an adapter for a landline phone or a microphone and speaker device for computers.

The calls travel mostly over the Web, avoiding the toll roads that are traditional phone lines. As a result, computer phone services can offer plans with unlimited dialing and no long-distance charges. The average monthly price is $40.

VoIP’s efficiencies come through its use of packet-switching technology, which breaks up communications into small bits that are dispersed to find the fastest path across the network and recombined at the end point. Traditional telephony, by contrast, is “circuit-switched,” creating a dedicated channel for the duration of the call.

Analysts have cautioned that traditional phone companies could get squeezed out of VoIP technology. Responding to the threat, big carriers, including Verizon and Qwest, have been inking billion-dollar deals with equipment makers such as Nortel Networks, to add packet-switching capabilities. Sprint began adding packet switching to its network in 2002, after a $1.1 billion deal with Nortel. Qwest has also announced that it will adopt packet-switching technology.

Norm Bogen, a communications infrastructure and services analyst with Cahners In-Stat, expects the sale of media gateways, the equipment needed to install VoIP systems, to increase from $883 million in 2003 to $2.74 billion in 2006.

Even as the big carriers race to get into this area, however, Bogen tipped the advantage to the upstart VoIP providers.

“They are replacing the local phone company,” Bogen said.

-Ian.

—– http://story.news.yahoo.com/news?tmpl=story&cid04&ncids8&e=6&u=/ washpost/20030724/tc_washpost/a32817_2003jul23 AOL Subscribers Down by 846,000 Thu Jul 24,12:23 AM ET

Add Technology – washingtonpost.com to My Yahoo!

By David A. Vise, Washington Post Staff Writer

America Online’s subscriber base plunged by 846,000 in the second quarter, as hundreds of thousands left for cheaper or faster Internet connections and a similar number were dropped because they had been mistakenly counted in the past, AOL Time Warner Inc. disclosed yesterday.

In addition, new disclosures about a federal investigation into improper accounting at Northern Virginia-based America Online Inc. showed that the division’s legal problems are hurting other parts of the AOL Time Warner media empire.

AOL Time Warner said yesterday that the Securities and Exchange Commission ( news -web sites ) would not allow it to spin off a portion of its cable television unit until it resolves a dispute over how to account for hundreds of millions of dollars in questionable revenue from a complex deal with German media firm Bertelsmann AG ( news -web sites ).

AOL Time Warner also said it may restate previously reported profits and sales linked to the Bertelsmann transaction. And the company indicated that it could not determine how long the SEC and Justice Department ( news -web sites ) investigations into its bookkeeping practices will last.

The company said its profit increased to $1.1 billion (23 cents per share) in the second quarter, from $396 million (9 cents) in the second quarter of 2002. Revenue increased about 6 percent, to $10.8 billion. The profit figure included a number of substantial one-time gains from the settlement of a lawsuit with Microsoft Corp. and the sale of various businesses.

Despite solid results in divisions other than America Online, AOL Time Warner shares fell yesterday by $1.14, or 6.8 percent, to $15.71, as analysts and major investors reacted to the continuing uncertainty caused by the SEC investigation, the threat of increasingly costly shareholder lawsuits, the deterioration in America Online’s performance, and disappointment that the strength of AOL Time Warner’s film, publishing and cable television operations did not prompt the company to substantially increase its financial projections.

“Our goal for the remainder of this year is to keep laying the foundation that will enable us to exit 2003 with more momentum than we had when we entered it, with an eye toward achieving, strong sustainable growth next year and beyond,” said Richard D. Parsons, chairman and chief executive of AOL Time Warner.

AOL, the nation’s biggest Internet service provider, has shed a total of 1.2 million subscribers over the past year and now has 25.3 million subscribers in the United States.

The company said the total includes 2.2 million high-speed subscribers, an increase of 300,000 over the past three months. During that period, AOL launched an enhanced high-speed offering and promoted it with an advertising campaign titled, “AOL for Broadband: Welcome to the World Wide Wow.”

In addition to losing dial-up subscribers faster than expected, AOL is predicting that its online advertising revenue will drop about 40 percent in 2003. The decline is occurring even though the total dollars spent on advertising online is growing nationally, a trend that can be seen in the financial results of some of America Online’s competitors, including search engines Yahoo and Google and many specialized Web sites.

AOL Time Warner had sought to persuade SEC investigators that they were mistakenly challenging the accounting for the two-part Bertelsmann deal. But the company said yesterday that the commission has refused to back down.

“The company and its auditors continue to believe the accounting for those transactions is appropriate, but it is possible that the company may learn additional information as a result of its own review, discussions with the SEC and/or the SEC’s ongoing investigation that would lead [AOL Time Warner] to reconsider its views,” the firm disclosed.

The Bertelsmann deal involved AOL’s sale of roughly $400 million in advertising to Bertelsmann in connection with the purchase of Bertelsmann’s stake in AOL Europe.

AOL Time Warner released its second-quarter results prior to the opening of stock trading yesterday morning. Although it cut its projections for America Online, the company beat Wall Street estimates as its cable television, motion picture and publishing businesses thrived.

“Our solid results in this quarter and the first half of the year give us confidence that we can deliver on all of our 2003 financial objectives,” Parsons said. He added that the company is continuing to reduce its hefty debt through the sale of businesses and the spending of billions of dollars of excess cash generated by operations.

The Warner Brothers and New Line Cinema movie units generated $572 million and $239 million, respectively, at the box office in the United States. “The Matrix Reloaded” led the way among new releases, while “Harry Potter ( news -web sites ) and the Chamber of Secrets” boosted DVD and CD sales.

“On balance,” said Deutsche Bank, “we think this report is good news.”

In a conference call with analysts, Parsons said he was no longer counting on the sale of stock in Time Warner Cable to generate cash for debt reduction this year. Instead, he said, the handling of any cable spinoff will be determined by broader issues, including the best way to help that subsidiary grow.

“The specific timetable for executing an IPO will depend on strategic considerations, not balance sheet imperatives, as well as the status of our SEC investigations,” Parsons said.

Wi-Fi’s true believers see powerful ‘grass-roots’ force

John Markoff NYT Monday, July 14, 2003

  SUN VALLEY, Idaho Is the Wi-Fi boom about to bust? Even though that has lately become the fashionable view, the answer is probably no.

Critics argue that there are too many competitors trying to deliver high-speed wireless connections to the Internet. Prices for most commercial Wi-Fi services are too high, they say, and free or subsidized operations abound, including those like the one McDonald’s started rolling out last week at its fast food restaurants in San Francisco.

All this will make it practically impossible, the skeptics insist, for anyone to build a profitable business in Wi-Fi, a short-range wireless radio technology that frees personal computers from their physical tethers to the Internet.

A surprising number of true believers in Wi-Fi were present at this famed mountain resort during an annual conference, organized by the investment banker Herbert Allen, that brings together technology, media and entertainment industry leaders.

Intel, in particular, is betting a lot of its own money on Wi-Fi. And that may be exactly what the new technology needs to succeed.

Intel’s two top executives, Craig Barrett and Andrew Grove, were here this year to preach the virtues of Wi-Fi, in the belief that it will be a powerfully disruptive force in the telecommunications industry.

It has certainly been a disruptive force at Intel. The industry and analysts have focused their attention on the current frenzy to build out wireless Internet locations known as hot spots at airports, coffee houses and hotels. But Intel has a much bolder wireless plan in the works: it wants to close the so-called “last-mile” gap between homes and the Internet backbone with cheap, super-fast connections so that businesses can deliver interactive entertainment and a host of other digital products and services right into America’s living rooms and dens.

The new Intel bet is remarkable given that the company initially backed the wrong wireless standard, putting its resources behind a competing standard known as Home RF. But Intel, the world’s biggest computer chip maker, changed its strategy after company executives realized the power and potential pervasiveness of the unregulated Wi-Fi wireless networking standard.

The Wi-Fi standard was developed and commercialized at Apple Computer as early as 1999. Ultimately, though, it gained widespread popularity on its own, Mr. Barrett acknowledged in an interview here, as a grass-roots, from-the-bottom-up movement. That success stands in striking contrast to top-down wireless data strategies, like the 3G cellular approach pushed by the telecom industry, which has so far been an expensive bust.

Barrett now says that people who predict a Wi-Fi shakeout are missing the point, as well as failing to see the deeper implications of the technology. “What is missing is the realization of how many legs this technology has,” he said.

In the three months since Intel introduced its new wireless PC chips, the company has become the dominant force in the Wi-Fi market. It is now putting Wi-Fi circuitry in all of its chip sets for portable computers, investing widely in Wi-Fi industry start-ups and spending almost its entire annual marketing budget in a $300 million advertising campaign trumpeting the virtues of its unwired Centrino brand.

“Intel has raised the level of the water and is floating all the boats,” said Glenn Fleishman, editor of Wi-Fi Networking News, a Web-based daily newsletter.

Of even greater potential import, Intel plans to start a test in Texas in a few months that will use a combination of wireless technologies, including Wi-Fi, to bring broadband Internet connections directly to homes. Last week the company quietly announced that it was teaming with a small equipment maker, Alvarion, of Tel Aviv, Israel, to back a complementary wireless standard that is intended to send data over distances of as much as 30 miles and at speeds of up to 70 megabits per second. The data rate is high enough to comfortably stream high-definition television video broadcasts, and the range makes it possible to quickly deploy a system in a large urban or suburban area.

By comparison, current Wi-Fi technology is limited to several hundred feet and speeds of 11 megabits per second. The Intel test, however, will explore using the 802.16 standard, known as WiMax, to distribute the data to Wi-Fi antennas in local neighborhoods. If Intel is able to jumpstart the market to reach millions of homes with a relatively inexpensive interactive data and video service, the technology could quickly alter the communications landscape. That is already starting to happen. There is now an explosion of Wi-Fi hot spots in hotels, coffee shops, restaurants and airports, and a new wave of handheld gadgets will soon supplement portable personal computers for a class of mobile workers that analysts are calling windshield warriors.

In a speech here, Barrett sketched a portrait of a rapidly growing market. There are now about 40 million Wi-Fi users, he said, and new access points are selling at the rate of about 15,000 a day, which makes Wi-Fi a much faster-growing technology than cellular telephony.

While prices for connection times are certain to keep falling, industry executives say they are already seeing usage patterns that suggest that Wi-Fi commercial services are working and are here to stay. Moreover, they say they believe the services will complement and not compete with free services that are emerging in urban areas around the country. “We have a good business model in hotels, said Dave Vucina, chief executive officer of Wayport, a provider of Wi-Fi hot spots in hotels, airports, restaurants and other locations that is based in Austin, Texas.

In the hotels that Wayport serves, he said, the company is seeing between 8 and 12 percent nightly usage rates for each occupied room. He said he believed that the rate could go as high as 15 to 24 percent. Those numbers are credible, industry analysts said, because out of the 40 million business travelers in the United States, 30 million now carry personal computers when they hit the road.

The central issue in the debate is whether those workers will be able to meet their data needs with next-generation cellular telephone networks, or whether the far higher data rates available on Wi-Fi networks will prove preferable.

Copyright © 2003 The International Herald Tribune

FBI seeks Internet telephony surveillance

The Justice Department and the FBI ask regulators for expanded technical capabilities to intercept Voice Over IP communications… and anything else that uses broadband. By Kevin Poulsen, SecurityFocus Mar 27 2003 1:11AM

The FBI and Justice Department are worried that Voice Over IP (VoIP) applications may become safe havens for criminals to communicate with one another, unless U.S. regulators make broadband services more vulnerable to lawful electronic eavesdropping, according to comments filed with the FCC this month.

The government filing was prompted by the efforts of telecom entrepreneur Jeffrey Pulver to win a ruling that his growing peer-to-peer Internet telephony service Free World Dialup is not subject to the regulations that govern telephone companies.

Free World Dialup has been called “Napster for Phones.” It’s a free service aimed at developing Internet telephony as a mainstream alternative to the public switched telephone network. After an initial investment of about $250 for a Cisco SIP telephone — a device that functions much like a conventional analog phone, but plugs directly into an IP network — users can “dial” each other over the Internet anywhere in the world at no cost. Free World Dialup provides a directory service that assigns each user a virtual telephone number, and sets up each phone call. Since it was launched in November, the service has gathered over 12,000 users.

If it catches on, FWD could be a nightmare for old-fashioned telephone companies. Those companies were likely agitated further when Pulver asked [pdf] the FCC in February for a “declaratory ruling” that his service is outside the commission’s jurisdiction. Pulver argues that FWD is not a telecommunications service, but is just an Internet application, no different from e-mail or instant messaging. Verizon, SBC and other phone companies filed comments in opposition to Puliver’s petition.

And on the last day of the public comment period, so did the FBI.

It turns out that one of the regulations from which FWD would be incidentally exempt is the Communications Assistance for Law Enforcement Act (CALEA), the federal law that required telecommunications carriers to modify their networks to be wiretap-friendly for the FBI. Crafted in 1994, before the Internet was a household word, it’s not entirely clear that CALEA even applies to Voice Over IP , but the government has had some success persuading companies that it does, or soon will, according to Stu Baker, a partner in the Washington law firm of Steptoe and Johnson. “Right now, I think Justice would lose a case trying to apply CALEA to VoIP,” Baker wrote in an e-mail interview. “But eventually… VoIP will be a mainstream substitute for the switched network. So a lot of companies are complying now to avoid a hassle later.”

The government worries that Free World Dialup’s petition could buck that trend: if the FCC finds that FWD is free from the plug-and-play wiretap requirements, other Internet companies handling VoIP traffic might start thinking they’re exempt as well. “The DOJ and FBI are concerned that if certain broadband telecommunications carriers fail to comply with CALEA due to a misunderstanding of their regulatory status, criminals may exploit the opportunity to evade lawful electronic surveillance,” reads the government filing.

Pulver says it’s the government that misunderstands the situation. “My hope is that the DoJ/FBI did not take the time to fully understand what Free World Dialup is and isn’t, and after some proactive education it will be clear that we don’t fall under the definitions,” says Pulver. “It is much easier to build the wiretap function into the access method, which is infrastructure based, rather than on every Internet application that comes along.”

Easier Broadband Surveillance Sought Indeed, extending CALEA to cover Free World Dialup and services like it would likely be futile, says Orif Arkin, founder of Sys-Security Group and an expert on IP telephony security. Arkin says users determined to skirt surveillance could easily set up their own ad hoc directory services on the fly. “It’s like a buddy list on instant messaging,” says Arkin. “They just have to build up such a server, and give everyone access to it.”

Arkin says the FBI’s best bet for spying on VoIP users is to eavesdrop directly on a target’s broadband connection, perhaps using the Bureau’s “Carnivore” DCS-1000 network surveillance tool. With access to the raw traffic, VoIP phones become exceedingly easy to listen in on. “Those phones don’t have a lot of CPU power, so the communication between the two ends is not encrypted,” Arkin says. “Whoever was to sniff the information on the uplink or downlink or between those two can hear whatever is said.”

That point isn’t lost on Justice and the FBI. The government is asking that, should the FCC not reject FWD’s petition outright, the commission at least delay its decision until after it’s ruled on two other broadband proceedings that the Justice Department filed comments on last year.

In those proceedings, Justice is asking the FCC to reinterpret CALEA as extending to DSL and cable modem service — not just telephone calls. It’s also asking the commission to expand the scope of the law to include raw data communication — Web surfing, e-mail, and anything else that crosses the wire. Broadband providers are already obliged to cooperate with court-ordered surveillance requests; the government’s FCC proposals would go beyond that and require companies to reengineer their networks to make Internet eavesdropping easier technically, and dirt cheap on a case-by-case basis. “It would be a major expansion of the CALEA requirements,” says David Sobel, an attorney with the Electronic Privacy Information Center. “It would really obliterate the distinction between voice and data.”

Opponents of the CALEA expansion include AT&T and the National Cable and Telecommunications Association. But the government’s argument for the additional capabilities is the same one that persuaded Congress to pass CALEA in the first place eight years ago, and it only carries more weight today. “Although we cannot describe in this forum the particular circumstances, the FBI has sought interceptions of transmissions carried by broadband technology, including cable modem technology, in terrorism-related … investigations involving potentially life-threatening situations,” the Justice Department wrote [pdf] in one of its filings last year. “Unless carriers are required to ensure such access, law enforcement surveillance capabilities will suffer a serious and dangerous gap.” If the FCC adopts the government’s position, then broadband’s last mile will be the FBI’s listening post, and Free World Dialup will be off the hook.