June 2010

[Commentary] Now, thanks to the ingenuity of the tech and telecom industries, there are so many people demanding so many new services that networks are straining to keep up -- and the costs of adding capacity are escalating rapidly. That's why Comcast and other cable operators are demanding that they be allowed the flexibility to manage their networks to give lower priority to services that hog large amounts of bandwidth -- or, at a minimum, to charge higher rates for customers who use such services.

And it is why AT&T announced last week that it was moving away from its unlimited pricing for Internet and data service on its wireless networks, in favor of the kind of "tiered" pricing that Eli might appreciate. Not surprisingly, those who have relied on cheap and plentiful network capacity to dramatically expand their businesses -- everyone from Google to iPhone application developers -- are concerned that charging people based on what they consume will slow the growth in Internet usage. As a general rule, the most sustainable pricing strategies are ones that avoid overcharging one group of customers to make it possible to offer bargain prices to others. The danger of such cross-subsidies is that a competitor could come along and pick off the overcharged, and highly profitable, customers by offering a better value. At the same time, you don't want to push that logic too far by charging every customer a different price.

The old challenge of providing public safety while also protecting civil liberties has found a new manifestation in the cyber age.

Cybercrime and espionage are rising rapidly, and the United States and other governments are preparing for the possibility of cyberwar. At the same time, civil libertarians worry about preserving Internet freedom. Security experts focus on the "attribution problem" — the challenge of identifying and tracking down the source of a cyberattack. Under current conditions, cybercrime, cyber-espionage, and cyberattacks can be directed remotely, with the perpetrator's identity and location a secret. Privacy advocates fear the loss of anonymity for Internet users.

For both sides, it's a conflict that needs to be resolved.

Facing intensifying scrutiny from American and foreign regulators, Google has named the prominent Internet security firm Stroz Friedberg to review the software code that triggered the collection of more than 600 gigabytes of data through unsecured Wi-Fi networks in more than 30 countries.

Stroz Friedberg, which has offices in New York, Washington, San Francisco, London and other cities, could produce a report by the end of the week on its investigation into how the code was included in the software for Google's fleet of Street View cars, a Google representative said. James M. Aquilina, executive managing director of Stroz Friedberg, confirmed the firm had been hired but declined to comment further. Google acknowledged in its official company blog May 14 that its Street View cars, which collect geographic data for Google Map products as well as the identifying codes and locations of private Wi-Fi networks, had also reached into unsecured networks and collected snippets of data traveling through them, such as e-mail, photos, Internet searches or other private information. Google said the collection of so-called "payload data" was inadvertent and that the data had never been used in any Google products. But the disclosure has angered politicians and privacy advocates in Washington and around the world, triggering three separate requests from Congress — and now, at least two states — for a detailed explanation.

Speaking at the Mid-America Regulatory Conference in Kansas City (MO), Federal Communications Commission member Mignon Clyburn focused on the National Broadband Plan goal that every American should have affordable access to robust broadband service at home. She spoke about transforming the Universal Service Fund -- which has helped the US connect 95.6% of households with telephone service -- into a broadband fund.

In order to free up current universal service money to fund a new Connect America Fund and additional Mobility Fund, the broadband plan proposes that the FCC phase out support for multiple voice providers over five years and that the Commission implement the voluntary commitments of certain wireless carriers that already have agreed to reduce their legacy support. It also proposes that current support be frozen; that the FCC consider moving rate-of-return companies to incentive regulation; and that the FCC adopt a framework for long-term intercarrier compensation reform that would create a glide path to eliminate per-minute charges over time. Intercarrier compensation revenues already are declining on their own, through market forces, and they will continue to decline as more consumers rely on IP networks. In April, the FCC began the first phase of the transition and started the process of reforming the Universal Service Fund, to connect all Americans to broadband, no matter whether they live. The FCC released a Notice of Inquiry and Notice of Proposed Rulemaking, focusing on three major topics. The FCC and Commissioner Clyburn hope to receive input from State regulators on USF transition proposals.