September 2013

At the Heart Of Verizon-Vodafone, Differing Outlooks for the US Market

At the center of what could be a $130 billion deal between Verizon Communications and Vodafone Group are sharply different views of the US wireless market.

The companies’ joint venture, Verizon Wireless, is the largest carrier in the US, a market with only four national players and a lot less pressure on price than in the hyper-competitive European market. But that is shifting, as No. 3 carrier Sprint and No. 4 T-Mobile US get better capitalized and more aggressive, raising the question of whether the market might be at its peak. Verizon is betting the answer is no as it negotiates to buy Vodafone’s 45% stake in Verizon Wireless and effectively double down in the US. Vodafone, on the other hand, may have been motivated to sell, in part, on the consideration that the value of its stake may not have much further to rise. It remains to be seen which was right. The idea of buying Vodafone’s stake has been on the table for years. Vodafone had an option to sell its stake in 2004 for roughly $10 billion, but it didn’t exercise it. Holding out will look like a smart decision if the deal goes through now. Holding out further might not make as much sense. Even though the US market is one of the world’s strongest in both revenue growth and margins, there are more active cellphone subscribers than people in the US, and there are signs the industry may soon descend into a battle over price. Annual subscriber growth in the wireless business has shrunk to about 2%, down from around 15% nine years ago, according to Moffett Research.

US spy agencies mounted 231 offensive cyber-operations in 2011, documents show

US intelligence services carried out 231 offensive cyber-operations in 2011, the leading edge of a clandestine campaign that embraces the Internet as a theater of spying, sabotage and war. That disclosure, in a classified intelligence budget provided by National Security Agency leaker Edward Snowden, provides new evidence that the Obama Administration’s growing ranks of cyberwarriors infiltrate and disrupt foreign computer networks.

The documents provided by Snowden and interviews with former US officials describe a campaign of computer intrusions that is far broader and more aggressive than previously understood. The Obama Administration treats all such cyber-operations as clandestine and declines to acknowledge them. The scope and scale of offensive operations represent an evolution in policy, which in the past sought to preserve an international norm against acts of aggression in cyberspace, in part because US economic and military power depend so heavily on computers. Of the 231 offensive operations conducted in 2011, the budget said, nearly three-quarters were against top-priority targets, which former officials say includes adversaries such as Iran, Russia, China and North Korea and activities such as nuclear proliferation. US agencies define offensive cyber-operations as activities intended “to manipulate, disrupt, deny, degrade, or destroy information resident in computers or computer networks, or the computers and networks themselves,” according to a Presidential directive issued in October 2012.

Blocking TV ads: The new Whack-a-Mole?

Tired of that big banner ad taking up the bottom of your tiny smartphone screen? Or what about the commercial you have to sit through on videos? Well you are not alone, and startups are emerging to help you block those ads, said Chad Russell, the chief technology Officer at BluePoint Security.

BluePoint went onto Kickstarter and proposed a device to block ads. Two thousand people chipped in about $135 each, and Ad Trap was born. It’s a small, white box that plugs into your router. “It eliminates all of the inbound advertising from any device in your house,” said Russell. So when you hop onto the web from your desktop, smartphone or tablet, the sites you visit are stripped of ads. And the videos are commercial-free. Of course, websites and advertisers are fighting back. “It really is an arms race between us and the advertisers constantly,” Russell said. Right now, the ad blockers have the upper hand and it would be expensive for web publishers to change that.

Big surprise: Michael Powell defends the cable industry

[Commentary] Former Federal Communications Commission Chairman Michael Powell, who is now the chief lobbyist for the cable industry, takes issue with my Aug. 25 column about how cable monopolies such as Time Warner and Comcast have made Internet access slower and more expensive than in many countries around the world.

Powell, in a letter to The Times, grouses that I overlooked "the fact that America is among the world's leaders in broadband choice, availability and quality." He says that the U.S. is "one of two nations featuring three universally available high-speed networks" and that "85% of U.S. households can access wired networks capable of 100-megabit-per-second service." In the space of four short paragraphs, Powell thus shows how brilliantly he earns his pay as chief executive of the National Cable and Telecommunications Assn. -- and how poorly he earned it as chairman of the Federal Communications Commission, a post he held from 2001 through March 2005.

Let's unpack his assertions one by one.

Apple to Pay up to $280 Credit for Used iPhones

Apple kicked off a long-awaited iPhone trade-in program for its U.S. retail stores, the latest in its efforts to attract and retain customers for its smartphones. Apple said its “reuse and recycling” program emphasizes the value of iPhones, even after they’ve been used.

“In addition to helping support the environment, customers will be able to receive a credit for their returned phone that they can use toward the purchase of a new iPhone,” a company spokeswoman said. Apple also offers a trade-in program through its website in a partnership with PowerON, which appears to offer more money — about $400 for a high-end like-new iPhone. That exchange is for an Apple gift card, removing the requirement that customers buy a new iPhone. However, PowerON customers have to initiate the trade-in on the company’s website, and ship the phone through the mail.

Syria’s largest city dropped off the Internet

Syria’s largest city has gone dark on the Internet. Aleppo, a city in Northern Syria that has been the site of intense fighting between rebel forces and the Assad regime, and the surrounding area appear to have lost connectivity to the Internet.

Microsoft says the government’s transparency report isn’t enough. Here’s why.

A day after the Obama Administration announced it would start releasing annual reports on the government’s surveillance activity, Microsoft said it plans to continue its legal fight for permission to produce more detailed breakdowns of government information requests.

Microsoft’s top lawyer, Brad Smith, wrote in a blog post that separate negotiations with the Justice Department to allow tech companies to speak more openly about federal data requests had broken down. While Director of National Intelligence James Clapper had made a good “first step” in agreeing to release some of the data, it wasn’t enough, Smith wrote. Microsoft isn’t satisfied with the fact that Clapper’s agency intends to publish a report disclosing the total number of court orders for surveillance granted to the NSA over the previous year. The company wants to be able to discuss just the court orders that it receives, rather than a larger bucket of reports that also includes demands made of other tech companies. In accordance with the practices contained in its own transparency report, Microsoft said that the government should break down those numbers even more to distinguish requests for user metadata, such as IP addresses and e-mail header information, from demands for user content, which would expose personally identifiable information such as the actual text of e-mails to law enforcement. This is the first time Microsoft has asked for a breakdown along content-vs-metadata lines. In its initial motion to the Foreign Intelligence Surveillance Court requesting greater freedom to talk about data requests, Microsoft asked only to disclose aggregate numbers. Unless the Foreign Intelligence Surveillance Court’s top judge intervenes, however, it seems as though Silicon Valley and the administration have reached a stalemate.

NTIA Awards Additional SLIGP Grants to Assist FirstNet Planning

The U.S. Commerce Department’s National Telecommunications and Information Administration (NTIA) awarded grants under the State and Local Implementation Grant Program (SLIGP) to the following states to help in planning for the First Responder Network Authority (FirstNet): Alaska - $2 million, Idaho - $1.4 million, Montana -$1.8 million, Nevada - $1.9 million, Pennsylvania - $3.9 million, Tennessee - $2.3 million, US Virgin Islands - $515,628, Utah - $1.7 million.

All the recipients are required to provide a matching contribution of at least 20 percent. Additional grants will be awarded on a rolling basis

These are the companies alleged to have links to the NSA surveillance scandal

The global surveillance scandal involves many players in the corporate world and — thanks to Edward Snowden — details of their identities and relationships with the National Security Agency and other intelligence agencies continue to dribble out. The web firms named in the original Prism scandal are as follows: Microsoft, Apple, Facebook, Google, Paltalk, AOL. All have denied giving the NSA “direct access” to their servers, but Snowden has maintained that they do so, and the roles played by these companies are part of the focus of French prosecutors looking into the affair.

Microsoft and many other US tech firms are also alleged to disclose security flaws in their products to US intelligence services before they inform other customers around the world. This would give the NSA and other agencies a headstart on patching their own systems, but it could also give them a window of opportunity to exploit the flaws in order to attack others. The Washington Post published a scoop that gave some insight into one of the most interesting allegations that the NSA, CIA and other US intelligence agencies not only reimburse their partners in the telecommunications industry for the costs incurred in accessing data from their systems, but that some of the telcos also make a profit on the deal. It is uncertain which ones, but AT&T has been named by the Wall Street Journal as being associated with the Blarney program (2013 fiscal year budget, according to Washington Post: $65.96 million). Like AT&T, Verizon is also apparently collaborating with US intelligence on American soil.

The Sydney Morning Herald has reported that Australia’s Telstra works closely with US intelligence – a condition it had to meet in order to get a Federal Communications Commission license for its Reach business in Asia (which also involves Hong Kong-based PCCW). Such conditions appear to be a recurring theme when it comes to international firms merging or going into partnership with US operators, or operators with cables in the US as well, such as: Japan’s SoftBank, Deutsche Telekom, and Vodafone (the Verizon partnership).

Verizon ends AT&T’s JD Power winning streak

AT&T may have won the crown on J.D. Power’s first two customer surveys this summer, but Verizon won the title that probably mattered the most to it. It ranked highest in network quality.

Benton

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