IPUrbia

It’s not very often that I get an email like this one that hit my inbox today asking me to “write an IPUrbia post vilifying AT&T’s position” on the AT&T/NSA wiretapping cases. What blogger can refuse such a clear call for hard-hitting against a large corporation conspiring with the United States government to undermine the civil liberties of American citizens?

The entire NSA/AT&T wiretapping scandal is ridiculous and any mention of the whole sham is usually enough to change me from a generally mild-mannered pragmatist to a hot-blooded conspiracy nut-job. It’s not that I don’t think that national security is important. The ultimate question at hand is this: what do we gain, security-wise, from making this a matter too secret, apparently, for the court system?

My reasoning is simple: if I was a terrorist, I’d pretty much assume that the United States government was already tapping my phone, my email, and tracking me 24/7. Hundreds of movies made since the 50’s has let us in on this “top-secret” information–the government can monitor the “bad guys”. Anyone who doesn’t think that the government can tap phones and electronic communications is probably too stupid to do much damage to the United States except as a drain on the social welfare safety net.

The big secret, then, can’t be that the government can listen in on terrorists. We know this. Which only leaves one possible secret to be hiding–that the government listens in on “potential” terrorists, namely somewhere around 300 million “potential” terrorists. The only secret is that the government, after getting a fast-track secret warrant program that all but circumvents the courts role in safeguarding the integrity of the criminal justice process, can’t even be bothered to make even the smallest of token efforts to safeguard American civil liberties.

We were founded as a country that revolted against the abuses of a government against its citizens. We were founded on the principles that some rights are too sacred to be traded for security or safety. We were founded on the fundamental ideal that some ideals were too important to be trusted to governments. Having read thousands of pages of political theory of the founding fathers, I have not ever come across a single statement that supports the need for a government to monitor its citizens. I’ve come across hundreds of admonitions for citizens to “be vigilant” on the “watchtower of democracy”, to watch our government constantly, and to safeguard our freedoms constantly from our very own government.

AT&T conspires with the NSA to spy on the American populace. For those who wonder how much American freedoms can be bought, simply look at the last 5 years of a blatantly pro-AT&T regulatory environment. Given the general obsession with capitalizing absolutely everything possible, it is not surprising that our privacy and liberty can be bought and sold on the open market. What is surprising is how cheap the going rate is.

Those who scoff and claim that the government should, nay, must be trusted might take a look back to the civil rights movement, when “terrorists” such as Martin Luther King, Jr. and other civil rights leaders were the constant targets of illegal FBI wiretapping, all in the name of national security. Or, look no further than the Patriot Act of the last five years and the repeated abuse of power by the government. Or, look at the total lack of results from over 150,000 “National Security Letters” requesting financial and business information without warrants.

AT&T’s response to the EFF lawsuits and the legal injunctions? Simple: the court system–constitutionally appointed to balance the power of the Executive branch–does not have authority to guard civil liberties of Americans. Further comments were also disheartening–to summarize, AT&T argues that despite government acknowledgement of such programs and leaks of information about secret monitoring rooms in San Francisco, the EFF’s case against AT&T is “all conjecture”. As one citizen wrote in as a comment:
“The court, for instance, relied on its own unfounded and inexpert speculation that content surveillance requires the cooperation of a telecommunications provider.”

I’m sure AT&T had no idea about the secret room built in their San Francisco switch office [adjacent to room 4ESS]. How could you possibly expect a corporation to keep track of unauthorized construction in their own high security building [extreme sarcasm]?

It also, perhaps, may just be pure conjecture on my part, but San Francisco seems a little bit of an odd location for simple “monitoring of international calls”. Last time I checked, San Francisco is not an incredibly prominent overseas peering point. Well, I suppose it still might just be conjecture–after all, the tap wasn’t found in Kansas–yet.

2,973 people died in the terrorist attacks on September 11, 2001. It’s a damn shame that those 2,973 deaths have been used as an excuse–all in the name of security–to undo the very liberties and freedoms that millions of Americans died protecting. AT&T and the NSA, you have failed America. Shame on you.

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Issues like the Vonage versus Verizon patent case illustrate an annoying problem in the Internet–at times, there is no original content. Armed with the several search engines, it still took me quite a while to find anything more substantial than repetitive copies of the same blurb simply stating that Verizon won their patent case over Vonage with little substantive analysis. Since, based on a couple of recent conversations on the matter, I wasn’t the only one frustrated with the lack of real information on this case, I did a little bit of research on the matter.

So what are these mysterious patents? What do we need to fear in the industry? Read on for more… (Note: this is purely a layman’s interpretation; for reliable legal counsel, contact an attorney.)

Patent Summary
I’m listing out all of the patents that were leveraged against Vonage; these are pulled from a copy of the filing. I’ve not been able to get my hands on a copy of the ruling, so I’m having to guess which ones actually were upheld in the verdict against Vonage. More specific information, of course, is welcome.

• Patent #6,430,275: (Upheld?) Enhanced signaling for terminating resource (issued 8/2002)
• This patent pretty much covers a generic system for VoIP/POTS handoff with real-time billing/authorization. The key point covered by this patent is the connection between “switched telephone network” (POTS) and a “packet switched network” (Internet).
• Patent #6,137,869: Network session management (issued 10/2000)
• This patent pretty much covers CDR’s and database-oriented authorization for calling.
• Patent #6,104,711: Enhanced Internet domain name server (issued 8/2000)
• Enhanced DNS service that returns different routing information based on certain criteria such as nonavailability of a given host.
• Patent #6,282,574: Method, server and telecommunications system for name translation on a conditional basis and/or to a telephone number (issued 8/2001)
• Pretty much the same as the previous patent.
• Patent #6,128,304: (Upheld?) Network presence for a communications system operating over a computer network (issued 10/2000)
• Covers a system where, when a call is placed, the system determines whether the destination is available and forwards to an alternative destination if unavailable. The wording of this patent seems to be oriented towards voice mail.
• Patent #6,298,062: System providing integrated services over a computer network (issued 10/2001)
• Selective call routing. Not too different from the previous patent in a lot of ways, but covers features such as ring-anywhere feature that is popular in VoIP where a single telephone number can ring an office, cell, and home phone.
• Patent #6,359,880: (Upheld?) Public wireless/cordless Internet gateway (issued 3/2002)
• This patent basically describes a telco switch with integrated wireless capabilities.

Analysis
Although the ruling against Vonage is a big win for Verizon, it is apparent that this case was simply an ideal test case to get Verizon a positive ruling on their patents. Vonage is ideal because:

• No patents for a counter lawsuit
• Prominent company
• Limited resources for legal defense (compared to, say, Comcast or Time Warner)

I assume that, with a positive ruling in its belt, Verizon may look to bring pressure on more major players; Vonage itself, for all of its name recognition, is struggling to even come close to breaking even and has major customer retention problems and poses little long term threat to Verizon. Likely targets would be wholesalers such as Level3 and major market threats such as the various cable MSOs. Still, these companies will generally be better armed for a patent war, so, legal precedence or not, Verizon has to tread carefully.

We know from press releases that the following patents were upheld:

• technology used to bridge Internet calls to the traditional phone system (Patent #6,430,275)
• features such as call-waiting and voice-mail (Patent #6,128,304)
• wireless Internet phone calls. (Patent #6,359,880)

It’s hard to tell the impact of the ruling. The second upheld patent (Patent #6,128,304) is an easy work-around on a technical level; the language of the patent describes a system where, if an incoming call cannot be placed to its destination, it gets routed elsewhere. The language of the patent specifically calls for a real-time attempt to place the call:

17. The method of claim 16 wherein the step of determining whether the terminal end-point is available comprises routing the incoming call to the terminal end-point and monitoring whether the terminal end-point responds to the incoming call within a preselected time period.

This detail provide a nice loophole. Most VoIP platforms use some sort of SIP registration; using the status of the SIP registration (rather than the actual call itself) to determine routing ducks this particular patent, as far as I can tell.

I’m fairly surprised that the wireless patent (Patent #6,359,880) got upheld in this instance since the patent itself seemed more applicable to something like a VoIP based cellular provider than Vonage–after all, Vonage’s offerings do not seem to have any services that are designed for wireless per-se (the language of the patent does not cover, as far as I can tell, any cordless-style phones).

The most damaging patent seems to be Patent #6,430,275, which covers the technology bridging POTS and VoIP. It is doubtful that this patent will affect the myriad of VoIP companies that do not do their own termination; since they don’t do the actual hand-off between POTS and VoIP, they shouldn’t be liable. Nevertheless, wholesalers such as Level3 and companies that do handle their own POTS termination are potentially liable under this patent, including cable companies offering voice services.

There is an interesting twist to the patents involved in this trial. Patent #6,430,275 specifically spells out a patent for interconnecting switched networks (traditional telephony) and packet-switched networks (Internet); most of the other patents also have similar language. Pure voice over IP services–including Skype, IM, VoIP peering, etc…–are immune from most of these patents. The interesting part comes as the ILECs themselves migrate to VoIP networks. While the ILECS are years away, I’m sure, from pure VoIP networks, many of them already have already begun migrating their backbones to packet-switched network. If their network is fundamentally packet-switched (on a transport layer), then the patent may become invalid. Any telecom lawyers care to comment on this?

Technical details aside, it goes without saying that this patent can be potentially disruptive and will probably be used aggressively against VoIP companies. Still, the potential threat can be–and is already–overstated. Voice over IP did not die at this trial. Most of the major players–Verizon’s true immediate threats–hold patents of their own that can be used defensively if needed. Most of the smaller players are simply below Verizon’s radar. Many other players in this market are immune by the peculiarities of their market arrangements and technical implementations. Also, as ILECS themselves start switching to packet-switch backbones and networks, these patents also lose their validity as they are written in language that specifies POTS to VoIP interconnections. Nevertheless, even if its actual impact is limited, the impact of the related FUD–encouraged, to be sure, by a few strategic legal notices by Verizon–is sure to be much larger. Of one thing I am sure–we haven’t heard the last of this one.

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AT&T just announced control of recordings via a cellphone for their Homezone customers. It’s not all that much, but, it is a good step for AT&T. As discussed yesterday, AT&T’s fiber to the node (as opposed to the home) means that the Internet portion of their offering and ability to leverage bandwidth for innovative services is very limited, a competitive liability as cable companies are looking forward to DOCSIS 3 and Verizon builds out its fiber network. As bandwidth increases towards 100Mb/s, the next generation of broadband speeds, AT&T’s 6-8Mb/s for their next-generation U-Verse will fast become a competitive liability.

Nevertheless, AT&T’s business services and mobile networks are unmatched by cable companies. It is a good step that they are looking at ways of leveraging their mobile network to add value to their wireline network beyond just the convenience of single bill.

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Om Malik wrote a piece about the the ongoing struggle that the Bells have to stem the bloodflow while trying to transition to a new revenue model. Amid reports of Comcast adding two million voice customers in a matter of months, we hear reports of AT&T getting bogged down with their IPTV rollout. As Om summarizes, “Cable is eating their lunch.” Nicely stated.

It still is too early to call, but, AT&T’s slowdown in their U-Verse (IPTV) rollout couldn’t have happened at a worse time. While it is easy to play fast and loose with someone else’s money, it’s hard to see the wisdom of a massive network upgrade that still leaves your customers with a total of 6Mb/s Internet access. With 100Mb/s DOCSIS 3.0 around the corner and Verizon laying out a fiber network, that 6Mb/s is barely competitive today and a lame horse in 2 years. Their best–and only hope–to surviving the brutal telcom brawl in the residential market is to lock their customers into triple-play packages while the 6Mbs is still respectable. In two years, they won’t be able to win anyone over to their network, so customers they lose now are lost for good.

As a side note, AT&T is signing content deals and does have some leverage to get some good content. Their lower investment does give them the ability to offer premium packages at lower price points and still have good profit margins. It is my guess that this approach is their long-term plan–it’s risky, but it’s not impossible. The main weakness is that it is based on a 90’s approach to the media market. Sooner or later, consumers are going to transition to the Internet for their premium content. That transition is already started for movies and, with Apple, Netflix, Amazon, Google, and Microsoft (an AT&T’s U-Verse partner!), and more scrambling to make that a reality, my bet is sooner than we think.

However, analysis like this does miss an important advantage of AT&T over the cable companies–their network. While the cable companies have the edge over the telco’s in the residential market over the next few years, they fall flat on their face in the business market. AT&T’s massive network with built-in support for MPLS, private and public transport, and all the other bells and whistles is not to be underestimated, and, while residential fiber gets the buzz, the business market has much better margins.

So, it definitely will be an interesting next few years. Get the popcorn and sit back and enjoy the show.

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