December 2013

NSA Connection Creates Credibility Problems For NIST Encryption Standards

The Department of Commerce is a big place. It's home to the National Weather Service, the US Patent Office, and the Census Bureau. But following last summer's revelations about National Security Agency surveillance of American citizens, one bureau has gotten more than its usual share of the media's attention: the National Institute of Standards and Technology, which develops the encryption standards used by all public organizations and many private companies to protect their digital infrastructure.

Because of a legal requirement, NIST had help from NSA in creating these encryption recommendations, and in September, the bureau "strongly" advised that organizations stop using one part of their standard because of security concerns. While the head of NIST, Patrick Gallagher, testified that the organization is not "not deliberately, knowingly, working to undermine or weaken encryption,” outrage about NSA surveillance has put the bureau in an awkward situation: People aren't sure whether they can trust the digital security standards that NIST puts out. That's why Penny Pritzker, the Hyatt hotel chain heiress and recently confirmed Secretary of Commerce, has been getting questions about national security, including at The Atlantic's forum on small business. "There's a national security approach, as well as an economic approach, to the 'How do we restore trust?' question," Pritzker said. "I put the national security issue in what I call protecting the digital flexibility" of companies.

FTC Says Sponsored Online Ads Can Be Misleading

Advertising that portrays itself as independent, unbiased reporting is drawing increased scrutiny from the Federal Trade Commission, officials said, warning of a more vigilant campaign against a deceptive practice that dates back a century but has grown more aggressive on the Internet.

Digital advertising, which has the ability to target specific audiences and individuals, has led to a boom in the popularity of what is known online as native advertising, paid links or sponsored content. Those features have previously gone by such names as advertorials or infomercials. But that growth has led to concern among consumer protection officials, at the FTC and elsewhere, that the commerce-driven content can mislead consumers, at times even when the information is labeled advertising. “The delivery of relevant messages and cultivating user engagement are important goals, of course,” Edith Ramirez, the chairwoman of the FTC, said at a conference the agency held to discuss native advertising. FTC officials said that recent surveys on online publishers revealed that 73 percent offered native advertising opportunities on their sites, and that an additional 17 percent were considering offering them in 2013. About 41 percent of brands and one-third of advertising agencies use native, they said.

Rep. Walden: Not So Fast On Retransmission Reform

House Communications and Technology Subcommittee Chairman Greg Walden (R-OR) made clear his opposition to an effort by the pay TV industry to win quick legislative reforms to water down the broadcast industry’s retransmission consent rights.

“A real update of the law should not be hastily slapped together for the benefit of a few players in the industry,” said Rep. Walden in a speech at the Hudson Institute. “A meaningful update of the Communications Act will require a … clearer understanding of the ramifications of any changes on the businesses involved and their consumers.” Rep. Walden, a former radio broadcaster, made clear his skepticism about the urgency of any need for retransmission consent reform. “The vast majority of retransmission consent agreements are revolved quietly, calmly and without incident,” he said.

More TV Cord -Cutting In 2013

Pay-TV “cord-cutting” and “cord-thinning” climbed a bit in the third quarter -- with perhaps higher activity to come.

Among pay TV customers -- representing some 90% of U.S. TV homes -- 17% either trimmed pay TV networks/services or removed them completely in the third quarter of 2013. This number was up from 14% in the second quarter and 13.4% from the first quarter, according to Digitalsmiths, a video discovery company. The research also indicates that 34% of respondents answered “maybe” when it came to changing their pay-TV company. Nearly 7% are planning to change their cable, satellite and telecommunications company; almost 3% are planning to cut service altogether, and 2% will switch to a third-party app or service. Still, 54.2% said they would maintain their existing service.

Using Personal Devices For Work Creates A Digital Dilemma For Feds

Mobility is, well, on the move. Smartphones and tablets are defining not just how people play but increasingly how they work. In January 2013, Telework Exchange (now Mobile Work Exchange) surveyed 314 federal employees to determine how the use of mobile devices affects their work. Many respondents cited increased productivity, collaboration and customer service. The report also revealed 55 percent of employees who use laptops, tablets and smartphones bring their own devices to work.

Healthcare.Gov’s Lessons For Big Government

The troubled rollout of HealthCare.gov got a big picture treatment from historians and economists, during a hearing before the House Oversight and Government Reform Committee.

At issue was whether the government is capable of implementing large programs such as Obamacare and the website that supports it or if the inefficiencies inherent in government work make such initiatives impossible. Republican committee members and panelists from the right-leaning Cato Institute and the Mercatus Center at George Mason University outlined the challenges government faces when implementing large programs, including that federal employees are rarely fired or otherwise punished when their systems fail and are rarely rewarded for taking risks or performing above expectation. They also noted that government agencies tend to be more saddled by bureaucracy and more beholden to special interests than the private sector. Democratic members and Karen Kruse Thomas, a historian with the Johns Hopkins Bloomberg School of Public Health, argued that government is capable of taking on large projects to fix market failures in the private sector and to bring comfort and security to the disenfranchised. They cited social security, Medicare and other social programs as evidence.

Judge throws out Google privacy policy case, notes “users are the real product”

A federal court in California has again dismissed a class action lawsuit brought by Google users who claim the search giant broke the law when it combined the privacy policies of Gmail, YouTube and a variety of other services.

In a decision in San Jose, US Magistrate Judge Paul Grewal used frank language to shoot down the lawsuit: “[He] must do more than point to the dollars in a defendant’s pocket; he must sufficiently allege that in the process he lost dollars of his own,” wrote, Judge Grewal, explaining that the users had failed to show that Google had harmed them in any meaningful way. Judge Grewal also noted that users in the Google case, and in a stack of similar cases over data privacy, faced a legal hurdle called “injury-in-fact” that the judge said could “reasonably be described as Kilimanjaro.” In Europe, however, it has not been smooth sailing for Google and the new combined privacy policy. In November 2013, a German court slammed the policy as too vague while Dutch authorities warned that “Google spins an invisible web of our personal data, without our consent.”

Keeping Teens ‘Private’ on Facebook Won’t Protect Them

[Commentary] We’re afraid of and afraid for teenagers. And nothing brings out this dualism more than discussions of how and when teens should be allowed to participate in public life.

Facebook made changes to teens’ content-sharing options. They introduced the opportunity for those ages 13 to 17 to share their updates and images with everyone and not just with their friends. Until this change, teens could not post their content publicly even though adults could. When minors select to make their content public, they are given a notice and a reminder in order to make it very clear to them that this material will be shared publicly. “Public” is never the default for teens; they must choose to make their content public, and they must affirm that this is what they intended at the point in which they choose to publish. Representatives of parenting organizations have responded to this change negatively, arguing that this puts children more at risk. And even though the Pew Internet & American Life Project has found that teens are quite attentive to their privacy, and many other popular sites allow teens to post publicly (e.g. Twitter, YouTube, Tumblr), privacy advocates are arguing that Facebook’s decision to give teens choices suggests that the company is undermining teens’ privacy.

[Boyd is a principal researcher at Microsoft Research]

FCC Bureaus Grant Verizon Petition For Declaratory Ruling On Foreign Ownership And Verizon-Vodafone Pro Forma Transfers Of Control

In the first action applying new foreign ownership rules meant to reduce red tape and facilitate international investment in US wireless networks, the Federal Communications Commission issued a foreign ownership ruling and approved the transfer of control to Verizon Communications of Vodafone’s stake in Verizon Wireless.

The actions by the International Bureau, Wireless Telecommunications Bureau, and Office of Engineering and Technology came just over one month after the public comment period closed on the petition. In the planned transaction, Verizon, currently the controlling, 55% parent of Verizon Wireless, will acquire, for approximately $130 billion, Vodafone’s U.S. group with the principal asset of the remaining non-controlling 45% interest currently held by Vodafone in Verizon Wireless. As part of the transaction, Verizon will distribute Verizon stock to Vodafone’s shareholders. The declaratory ruling issued by the International Bureau permits Verizon, post-transaction, to have aggregate foreign ownership in excess of the 25% benchmark. None of the non-US shareholders will hold a greater than 5% interest, or a controlling interest, in the outstanding Verizon shares.

Earlier this year, the FCC modified the policies and procedures applied to the review of transactions involving foreign ownership of U.S. wireless networks in order to encourage investment while reducing delay, uncertainty and expense. The rules became effective in August.

Competitive Carriers Association Asks FCC to Create a Wireless Competition Task Force

Competitive Carriers Association (CCA) filed a whitepaper with the Federal Communications Commission entitled, “A Framework for Sustainable Competition in the Digital Age: Fostering Connectivity, Innovation and Consumer Choice.” Over the past several years competition in the U.S. wireless industry has diminished, and earlier this year the FCC released a sobering report stating that -- for the third year in a row -- the FCC could not conclude that the industry is effectively competitive. To restore competition in the marketplace and bring numerous benefits to consumers and the US economy, CCA proposed the creation of a Wireless Competition Task Force at the FCC, charged with analyzing, developing and implementing plans for promoting wireless competition.

Specifically, the Task Force should begin its focus on six initiatives:

overhauling the FCC’s spectrum screen,
designing pro-competitive auction rules,
ensuring commercially reasonable data roaming agreements,
promoting access to devices,
maintaining connectivity as the industry moves to an all Internet Protocol world, and
ensuring competitive neutrality for universal service mechanisms.

Benton

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