A Hardware Business Opportunity: Opposing Net Neutrality

Surprise — deep packet inspection requires something more than a basic router.  Upgrades all around!  Hardware firms oppose Net neutrality laws

Some of the largest hardware makers in the world, including 3M, Cisco, Corning and Qualcomm, sent a letter to Congress on Wednesday firmly opposing new laws mandating Net neutrality–the concept that broadband providers must never favor some Web sites or Internet services over others.

[…] “It is premature to attempt to enact some sort of network neutrality principles into law now,” says the letter, which was signed by 34 companies and sent to House Majority Leader Dennis Hastert and Minority Leader Nancy Pelosi. “Legislating in the absence of real understanding of the issue risks both solving the wrong problem and hobbling the rapidly developing new technologies and business models of the Internet with rigid, potentially stultifying rules.”

The letter even goes so far as to applaud a committee vote in the House of Representatives on April 26, in which Net neutrality proponents–largely Democrats–lost by a wide margin. “We are pleased that the committee rejected attempts to add so-called ‘network neutrality’ provisions to the bill,” it says.

Ominous Pattern Continues To Be Repeated

This game of letting the executive use its power to redefine the playing  field without any Congressional reaction (much less action) is getting old.  The idea that this is a conservative administration is beyond ironic at this point.  Will the legislative branch do anything about this?  Legal loophole emerges in NSA spy program

An AT&T attorney indicated in federal court on Wednesday that the Bush administration provided legal authorization for the telecommunications company to open its network to the National Security Agency.Federal law may “authorize and in some cases require telecommunications companies to furnish information” to the executive branch, said Bradford Berenson, who was associate White House counsel when President Bush authorized the NSA surveillance program in late 2001 and is now a partner at the Sidley Austin law firm in Washington, D.C.

Far from being complicit in an illegal spying scheme, Berenson said, “AT&T is essentially an innocent bystander.”

AT&T may be referring to an obscure section of federal law, 18 U.S.C. 2511, which permits a telecommunications company to provide “information” and “facilities” to the federal government as long as the attorney general authorizes it. The authorization must come in the form of “certification in writing by…the Attorney General of the United States that no warrant or court order is required by law.”

Planting Some Rhetorical Stakes In The Ground

In what is certain to be a long fight: Software Makers Crack Down on Net Piracy – [pdf]

Software makers have long complained about pirates looting their sales. The industry estimates it loses $11 billion to $12 billion a year from the distribution of pirated software.

The industry believes 90 percent of all software sold on Internet auctions violates copyrights or licensing agreements, Kupferschmid said.

San Jose, Calif.-based eBay disagreed with those estimates. “We know (piracy) is an issue, but we don’t think it’s a big problem,” spokesman Hani Durzy said. Ebay supports the software industry’s efforts to penalize pirates, Durzy said.

Copyright holders and eBay don’t always agree on the definition of an improper sale.

Speaking of Upsetting Applecarts….

Silicon Valley backs US wireless broadband plan – [pdf]

Three Silicon Valley venture capital firms are backing a project to grab a slice of valuable U.S. wireless airwaves to offer nationwide high-speed Internet service, according to a recent regulatory filing.

Kleiner Perkins Caufield & Byers, Charles River Ventures and Redpoint Ventures, each with more than $1.5 billion under management, are financing a firm called M2Z Networks Inc. to launch the project.

Most wireless spectrum is auctioned to the highest bidder but M2Z has offered to pay the U.S. Treasury 5 percent of its gross revenues from the premium broadband service it plans to offer alongside free, but slower, Internet access.

[…] The airwaves, 2155 megahertz (Mhz) to 2175 Mhz, are being vacated and have been allocated for advanced wireless services. M2Z argued they would lay fallow for years since they are not paired with other airwaves.

M2Z’s plan could be controversial since the FCC usually sells wireless airwaves through auctions. Next month, the agency is slated to auction nearby airwaves for advanced wireless services, a sale that analysts say could raise $8 billion to $15 billion.

Skype Upsetting Apple Carts

Sounding a now-familiar plea: Skype Gives It Away [pdf]

Internet phone company Skype Technologies SA said yesterday that customers in the United States and Canada can place free phone calls from their computers to any land line or mobile phone in the two countries until the end of the year. The move comes at a time when millions of Americans are beginning to ditch traditional long-distance service and experiment with technology that allows people to talk using an Internet connection.

[…] “From a technology aspect, this stuff is game-changing. It’s fascinating. It ruins the telecom companies’ economic model as we know it,” said Maribel D. Lopez, vice president at Forrester Research Inc. in Boston. Lopez estimates that about 20 to 25 percent of Americans will adopt some kind of Internet phone service by 2010, but that doesn’t mean it will replace land lines altogether. “It takes time. Not everybody is going out overnight [to sign up]. Only people with compelling economic reasons are using Skype.”

[…] Some analysts said the offer would spur movement of legislation to regulate companies like Skype, which are not obligated to pay universal access fees or offer emergency 911 service. A bill offered by Sen. Ted Stevens (R-Alaska), chairman of the Senate Commerce, Science and Transportation Committee, proposes to levy fees on voice-over-Internet companies, and hearings on the legislation are scheduled later this week. But few expect the bill to reach a vote because it also includes several other measures on which there is wide disagreement.

Telecom consultant Rudy Baca, a former Federal Communications Commission official now at Rini Coran PC, said Skype’s offer will be a “catalyst” for older telecom firms to push harder for some kind of regulation of such upstarts. “They’re going to be a competitive force,” said Baca, whose firm represents BellSouth Corp. but not in relation to the telecom bill. “How do you compete with free? That’s really the problem for other companies.”

TV Advertising and TiVo

Bar the Door. TV Ads Want Your TiVo.

No Top 40 program has a higher percentage of its audience watching on delay [than “24”], according to numbers from Nielsen Media Research. Only “Lost” and “Survivor” come close.

It’s a perfectly pleasant way to watch a show, and it is easy to imagine that television will always be this good as long as you have a TiVo. But the odds that we have entered a post- advertising age are about as good as the odds that Jack Bauer gets killed next week.

[…] Advertisers are still smarting from their timidity back in the 1980’s, when VCR’s started catching on and Nielsen decided that its ratings would include people who taped programs rather than watching them live. The truth, of course, is that many recorded shows never end up being watched.

[…] With the stakes much larger this time around, Nielsen has started releasing three different ratings for every show. The first is the old-fashioned version, which counts the live audience (as well as the VCR audience). The second includes people who watch the show on their DVR within 24 hours, while the third adds everybody who watches within a week of a show’s broadcast. Mr. Schwartz and his firm are pushing Nielsen to go even further and calculate separate ratings for a show and for its commercials.

[…] Privately, though, the executives understand that TiVo is rapidly undercutting the economics of television. Since “24” made its debut in 2001, my wife and I have missed just one episode, yet I don’t think we have seen a commercial in three years. We are free riders, enjoying the product without paying the bills. [Editor’s note: !!!]

[…] TiVo is not going to kill advertising, and it won’t kill the networks. If anything, it may help them, by increasing the audience for top shows like “24” at the expense of shows that just happen to be on when you turn on your set.

And once they have gotten you to watch the show, the TiVo-proof ads will surely follow. The golden age of commercial-free prime time isn’t going to last long.

It’s My Party, and I’ll Sue If I Want To

Music Labels Sue XM Over Recording Device [pdf]

To stay competitive with Apple’s iPod and similar products, XM and Sirius Satellite Radio Inc. recently introduced radios with recording features. XM’s Inno and Sirius’s S50 allow subscribers to record as much as 50 hours of broadcast music, or search for songs by particular artists.

XM and Sirius pay the labels for the right to broadcast music and have argued that the right to record music for personal use is included under that.

Yesterday, however, a coalition of record labels alleged that XM’s Inno device amounts to a “new digital download subscription service” not covered by existing agreements.

[…] “These are legal devices that allow consumers to listen to and record radio just as the law has allowed for decades. The music labels are trying to stifle innovation, limit consumer choice and roll back consumers’ rights to record content for their personal use,” XM spokesman Chance Patterson said yesterday in a written statement. “XM will vigorously defend this lawsuit on behalf of consumers.”

[…] The music industry officials contend the recording capability of Sirius’s S50 and XM’s Inno goes beyond existing agreements and requires a separate license and fee.

The industry is also lobbying Congress to change copyright laws more broadly to ensure that artists and labels are paid the same when their work is distributed across different platforms.

[…] The issue is not about giving subscribers the ability to record songs for personal use, Bainwol said. Rather, he argued that XM’s technology is similar to iTunes and other online music download services.

From the Beeb: Satellite radio in recordings row