FCC Wants New Tax on Internet Service

The Federal Communications Commission issued a request in April  for comments on a proposal to tax broadband Internet service and funnel the additional revenue  to a subsidy the agency created last year to expand Internet access. Dozens of companies and trade associations weighed in, but the issue has largely been ignored by the mainstream media.

Numerous companies, including AT&T, Sprint and even Google support the idea.

“If members of Congress understood that the FCC is contemplating a broadband tax, they’d sit up and take notice,” said Derek Turner, research director for Free Press, a consumer advocacy group that opposes the tax.

Consumers already pay a fee on their landline and cellular phone bills to support the FCC’s Universal Service Fund, which was created to ensure that everyone in the country has access to telephone service.

Last year, the FCC took$4.5 billion out of the Universal Service Fund and turned it into a broadband Internet subsidy, called the Connect America Fund. The new fund would subsidize the construction of high-speed Internet networks for Americans who currently lack access, producing new customers for broadband providers without those providers having to actually invest in building those high-speed networks themselves.

Julius Genachowski, the FCC’s chairman, has made expanding broadband access his top priority. He argues that high-speed Internet is critical for succeeding in the 21st century economy and that expanding Internet access is the country’s next great infrastructure challenge.

In recent years, with more people sending emails instead of making long-distance phone calls, less money has been flowing into the program. The Universal Service fee has had to grow to a larger and larger portion of phone bills to compensate.

In addition to the broadband fee, the commission also sought comments on taxing text messages, as well as a flat fee on each phone line, instead of the current system, which is based on a portion of the revenue from interstate phone calls.

The FCC could run into legal problems with the Internet Tax Freedom Act, a 1998 law that bans the government from taxing Internet access, but the FCC has long argued that Universal Service is a fee that the providers choose to pass on to consumers and not a tax.

According to Google, taxing broadband service is preferable to taxing the kinds of online services it offers, like email or Google Voice.

“Saddling these offerings with new, direct USF contribution obligations is likely to restrict innovative options for all communications consumers and cause immediate and lasting harm to the users, pioneers, and innovators of Internet-based services,” Google argued.

While Turner says that imposing a fee on broadband access, even a small amount, would discourage many people from buying the service—the exact opposite outcome of what the FCC is trying to achieve.

“For folks who are thinking about adopting broadband, who have much lower incomes or don’t value broadband as much—that extra dollar on the margins will cause millions of people… to not adopt,” Turner said.



Internet Providers Testing Metered Plans for Broadband

In South Texas, Time Warner Cable customers have been given “usage trackers” that tally up all a household’s internet use. Customers who sign up for a light plan of 5 gigabytes of broadband, the equivalent of two high-definition movie downloads, are rewarded with a $5 discount each month if they don’t go over. If they do, they pay $1 for every additional gigabyte.

“We’re moving away from one-size-fits-all,” said Jon Gary Herrera, a Texas spokesman for the cable company, which now tends to call itself a broadband company instead.

Some of Time Warner Cable’s competitors are moving in the same direction toward pricing tiers for higher speeds and larger amounts of broadband at home. Usage-based billing may be advantageous for a companies bottom line but it is definitely the opposite for customers watching more and more video on the Web, as well as companies like Netflix that distribute content. Some believe that as customers are made more aware of how much broadband they’re using each month, they’ll use less of it. This will in turn protect traditional forms of entertainment distribution but will also have the negative effect of discouraging  new Internet services.

Executives at cable and broadband providers say it is in their best interest to make broadband a must-have product. “The exploding growth of online video usage undercuts any argument that cable is standing in the way of this business,” said Brian Dietz, a spokesman for the National Cable and Telecommunications Association, the industry’s trade group.

But some government officials aren’t convinced. The Justice Department’s antitrust lawyers are conducting an investigation into the cable industry’s treatment of online video companies with an eye toward deterring anticompetitive behavior. Some analysts say the investigation could actually accelerate the move to usage-based billing.

Usage-based billing is seen by some as a fairer alternative to broadband caps, a term most closely associated with Comcast, which had been enforcing a limit of 250 gigabytes per Internet customer per month. Although only a small minority of customers ever exceeded the cap, it became a lightning rod for competitors like Netflix, which accused Comcast of unfairly favoring its own services.

Comcast said this spring that it would start to test usage-based billing. “Our network is not an infinite resource, and it is expensive to expand it,” David L. Cohen, a Comcast executive, said at the time.

Along with news and entertainment, the futures of entire industries — commerce, health care and transportation — are being built atop a broadband foundation. Companies big and small are coming up with ways to get faster broadband to more people; many people believe that broadband speeds will inevitably improve as time goes on, just as computer chip speeds have.

Critics say that the marketplace lacks sufficient competition, which keeps the price of broadband higher than it otherwise would be. They wonder whether strategies like usage-based billing will worsen what is already an economic barrier for some Americans. “It’s like locking the doors to the library,” said Nicholas Longo, the director of Geekdom, a new collaborative work space for small companies in San Antonio.

Time Warner Cable started testing usage-based billing in San Antonio four months ago by offering the $5 discount to lighter users. Customer service representatives at a suburban call center are now trained to ask new customers about how they use the Web; once uses (listed on a work sheet) like “Internet gaming,” “watching TV/movie clips” or “video chat” are mentioned, callers are steered toward a pricing plan with unlimited bandwidth.

The Netflixes of the world are wary of these moves, though there may be little they can do. Concerns about both caps and usage-based billing have already caused one would-be online video competitor, Sony, to rethink its plan to sell a bundle of cable channels over the Internet.

Dish Network and other companies have been preparing plans for similar bundles, which could help cause the so-called unbundling of television that consumer advocates have dreamed about for decades. But “these guys have the pipe and the bandwidth,” said a Sony Network Entertainment executive, Michael Aragon, referring to cable and broadband providers, while speaking at a meeting sponsored by Variety in April.

Still, Mr. Aragon added, “We do believe there’s a business model out there.”

Google Co-Founder Says Internet Freedom Facing Greatest Threat Ever

Google co-founder Sergey Brin said the principles of openness and universal access that underpinned the Internet’s creation are facing their greatest-ever threat, in an interview published by Britain’s Guardian newspaper.

Brin said factors such as the entertainment industry’s crack down on piracy, the rise of “restrictive” walled gardens such as Facebook and Apple and increasing efforts by governments to control access and communication by their citizens are major threats to the freedom of the Internet.

“There are very powerful forces that have lined up against the open Internet on all sides and around the world,” Brin was quoted as saying. “I am more worried than I have been in the past. It’s scary.”

He said he was concerned by the efforts of countries such as China, Saudi Arabia and Iran to censor the Internet.

Brin also believes that Facebook and Apple, which control users access to their own proprietary platforms, risk stifling innovation and balkanising the web.

Guilty Plea in Sony Pictures Hacking Case

Cody Kretsinger pleaded guilty yesterday, to the 2011 hack of Sony Pictures, admitting that he transmitted information to other members of the hacking group LulzSec.

Kretsinger, 23, was arrested in September 2011 by the F.B.I. He was charged with conspiracy and the unauthorized impairment of a protected computer.

He pled guilty to both charges, as part of a plea deal.

“I joined LulzSec, your honor, at which point we gained access to the Sony Pictures website,” Kretsinger, who went by the hacking alias “Recursion,” told the judge.

LulzSec is considered to be a spinoff of Anonymous, the hacker and activist group that operates online.

Earlier this month, the FBI arrested several members of LulzSec using intelligence gained by interrogating “Sabu”, the group’s nominal leader, but a group claiming to be LulzSec recently hacked the email database of CSS Corp.

In June, members of LulzSec allegedly hacked into SonyPictures.com and compromised the personal information of more than 1 million users. While the group did not copy the information of all 1 million people, it did gain access to thousands of records

Sony Pictures later notified 37,500 users that their personal information might be at risk.

Kretsinger was apparently not involved in a hack against the Sony PlayStation Network, which cost the company $171 million and took the service offline for 77 million PlayStation Network members for a total of six weeks. The Sony Pictures hack cost Sony Pictures $600,000 in damages.


FBI Chief Wants to Bring War on Terror to the Internet

FBI Director Robert Mueller warned US lawmakers this week that the U.S. needed to be prepared for violent extremists that may attempt cyber-attacks against the nation.

“To date, terrorists have not used the Internet to launch a full-scale cyber attack, but we cannot underestimate their intent,” Mueller told a House appropriations subcommittee.

“They may seek to train their own recruits or hire outsiders, with an eye toward pursuing cyber attacks.

“As our nation’s national security and criminal adversaries constantly adapt and evolve, so must the FBI be able to respond with new or revised strategies and operations to counter these threats,” Mueller said, presenting theFBI’s 2013 budget.

Mueller pointed to Al-Qaeda’s use of online chat rooms and websites to “recruit and radicalize followers to commit acts of terrorism.” He also said that militants have shown interest in computer hacking, making “the FBI’s counterterrorism mission that much more difficult and challenging.”

Mueller said that the terror group’s Yemen-based branch publishes an English-language online magazine, “Inspire,” while Shebab militants linked to Al-Qaeda in Somalia use Twitter to “taunt its enemies, in English, and encourage terrorist activity.”

The FBI claims that there has been an 84 percent increase in the number of computer intrusion investigations opened.

The bureau has cyber squads in each of its 56 field offices, as well as over 1,000 specially trained staff running undercover operations and examining digital evidence.

Last Tuesday, US officials charged five alleged computer hackers in Britain, Ireland and the United States in high-profile cyberattacks after a leader of the group became an FBI informant.

LulzSec, Anonymous Betrayed by Founding Member

Five of the top members of the infamous computer hacking group LulzSec have been arrested and charged by the F.B.I.

According to reports the arrests came after the group’s “senior leader”, Hector Xavier Monsegur “Sabu”, 28, pled guilty to several charges of computer hacking conspiracy and began working with prosecutors, Monsegur is facing a maximum of 124 years behind bars.

The five alleged members arrested were identified as Ryan Ackroyd aka “Kayla” and Jake Davis aka “Topiary” from London, two residents of Ireland, Darren Martyn aka “pwnsauce” and Donncha O’Cearrbhail aka “palladium”, and Jeremy Hammond aka “Anarchaos” from Chicago. According to a FBI press release, all but Davis face charges of computer hacking conspiracy and varoious other charges. Each carries a maximum 10 year prison sentence.

Jeremy Hammond, is named in the report to have been the main person behind the hack on US security company Stratfor last year which resulted in the release of 1,000s of the companies internal e-mails.

According to court papers, Sabu was an “influential member of three hacking organizations Anonymous, Internet Feds and Lulz Security, that were responsible for multiple cyber attacks on various businesses and governments in the United States and the world over.” He allegedly acted as a “rooter,” a computer hacker who identified vulnerabilities in the computer systems of potential victims.

FBI officials involved with the investigation have been quoted as saying “this is devastating to the organization”, and that these arrests are “chopping off the head of LulzSec.”

Following the reports, Anonymous posted on its Twitter feed:

We are Legion. We do not have a leader nor will we ever. LulzSec was a group, but Anonymous is a movement. Groups come and go, ideas remain”


New File-Sharing Technology is Immune to Government Attacks

The battle for internet freedom just got a little more interesting. A new file-sharing software called Tribler is immune to attacks from government or anti-piracy organizations, its creators claim.

“The only way to take it down is to take the internet down” says Dr Pouwelse of Delft University of Technology.

Tribler is a variant on the popular BitTorrent file-sharing software, but is designed specifically to stay online under any circumstances.

“Tribler is designed to keep BitTorrent alive, even when all torrent search engines, indexes and trackers are pulled offline” says file-sharing news site Torrentfreak.

Some file sharing  sites were shaken in the wake of the arrest of Megauploads founder, Kim Dotcom, along with three of his colleagues, who’ve been charged with racketeering, copyright infringement and money laundering.

Popular BitTorrent sites BTJunkie and QuickSilverScreen voluntarily shut down while Filesonic and Fileserve users are now being restricted to downloading files they’ve uploaded themselves.

Tribler, though, could be a game changer.

There is no central point to attack. Users with the software share files with each other without a “listing site” hosting the files. The technology has been under test for six years, and has never been offline, even for a second, its Dutch creators told TorrentFreak.

“Our key quest is facilitating unbounded information sharing” Dr. Pouwelse added.