December 2013

If President Barack Obama adopts the most far-reaching recommendations of the advisory group he set up to rein in the National Security Agency, much would change underneath the giant antennas that sprout over Fort Meade (MD) where America’s electronic spies and cyberwarriors have operated with an unprecedented amount of freedom since the Sept. 11, 2001, attacks. No longer would a team of two dozen or so agency analysts be able to type into a computer that there was a “reasonable, articulable suspicion” about the person behind an American telephone number and, in seconds, see every call made to and from that phone -- followed by the same records for hundreds or thousands of their contacts.

Instead, an individual court order would have to be obtained -- a far slower process that, just months ago, Obama’s intelligence team insisted would be too cumbersome in halting attacks. On the same guarded campus, military and civilian computer hackers working for the United States Cyber Command would be barred from using one of the most important building blocks of their growing arsenal of sophisticated cyberweapons. Every day they exploit previously unknown flaws in computer programs, known in the industry as “zero-days,” to conduct both surveillance and attacks. A handful of such flaws -- named for the fact that they have been known to the world for zero days, and thus cannot be defended against -- were central to attacking Iran’s nuclear plant at Natanz. Already, critics of the advisory report have called it a form of unilateral disarmament.

Target may have been an easy bull’s-eye for criminal hackers intent on stealing credit card information. Security experts say the Target hack is a reminder of security problems facing many retailers that won’t easily go away: There are weaknesses in the way payment information travels between retailers and banks. There is plenty of money to be made on the black market selling stolen credit card numbers, which can go for as little as a quarter or as much as $45 each. And American companies have been reluctant to adopt smart-chip cards, a type of credit card widely used in Europe that provides better security. Target said that from Nov. 27 to Dec. 15 hackers stole customer names, credit or debit card numbers, expiration dates and three-digit security codes for 40 million customers who had shopped in its stores. It is currently working with a forensic team from Verizon to investigate the breach, according to one person involved in the inquiry. But there was no word as to who was behind the attack, how they got in, or what the total cost to Target may be.

[Commentary] On December 19, 1913, AT&T Vice President Nathan Kingsbury sent a letter to US Attorney General George McReynolds in hopes of putting AT&T’s business practices “beyond fair criticism” of anticompetitive behavior. In the letter, AT&T promised to sell its stake in Western Union Telegraph, resolve interconnection disputes, and refrain from acquisitions if the Interstate Commerce Commission objected. The letter became known as the “Kingsbury Commitment”. One hundred years later, AT&T and other landline telephone carriers seeks to retire the copper-based phone system. But the nation cannot retire the commitment Attorney General McReynolds understood to create “full opportunity throughout the country for competition in the transmission of intelligence by wire.” Given shrinking wireline telephone subscribership, incumbent telecommunications companies and their supporters say it makes no sense for them to sink more dollars into “legacy” phone networks when the future is in Internet Protocol (IP) infrastructure. Of late, much attention has been focused on a petition filed last year by AT&T that asked the Federal Communications Commission (FCC) to move forward on what’s being called the IP transition. The FCC is now in the beginning stages of what will be a years-long process to improve the nation’s infrastructure to better suit America’s 21st century communications needs. Eventually, all telecommunications infrastructure likely will be IP-based. And few doubt that the IP infrastructure of the future is the better technology and the better path for the U.S. in the long run. But what will become of the tens of millions of Americans who already face hurdles in accessing existing telephone and broadband networks? How can we ensure them easy and affordable access to future networks?

In light of the anniversary of the Kingsbury Commitment, an agreement between AT&T and the Department of Justice, Federal Communications Commissioner Ajit Pai made the following remarks at the TechFreedom’s Forum about what a new commitment would look like. “There shouldn’t be a new Kingsbury Commitment. We don’t need a new Kingsbury Commitment for the wireless world, and we don’t need one for an all-IP world either.”

Instead, he said, the lessons from history should be:

• Government should not try to manage competition.
• Government should not confuse the goal of protecting competitors with the objective of promoting competition.
• Beware of businesses bearing commitments. Companies do not offer commitments out of the goodness of their hearts. Instead, as in the case of the Kingsbury Commitment, these commitments are generally designed to serve a company’s self-interest.

Finally, Commissioner Pai concluded, “We should view that agreement not as an inspiration for the future but rather as a warning. It is a warning that regulatory capture is a real risk.”