Can people actually ‘own’ virtual land?

by admin on May 12, 2010   |   No Comments

Can people actually ‘own’ virtual land?

It remains unclear what rights, if any, people have to virtual property, like Zed Drebin’s space-themed island in Second Life

He owns a house on the beach, which he’s styled to be part Barbie castle and part medieval lair. In addition, he is the landlord of two island colonies, both of which feature spaceships, amusement parks and all kinds of futuristic buildings. About 80 renters pay to live in themed condos at his getaway resorts.

For all of this, Drebin pays only $390 a month, he said.

But there’s one big flaw in this space-themed paradise: None of it is real. Zed Drebin is an avatar in the virtual world of Second Life. He’s controlled by Arthur, a 44-year-old who lives in New York City, and who didn’t want his full name used for fear it would hurt his business.

Despite the fact that Arthur pays U.S. dollars to “own” virtual land in Second Life, and that his renters also pay him in real money, it’s unclear whether he, or any of Second Life’s “residents,” have lasting rights to these virtual tracts.

That worries him.

“We’ve invested a great deal of money and an even greater amount of time; literally hundreds of people have contributed to creating our regions,” he said.

Now, in a sign that virtual issues increasingly are bleeding into the real world, some “residents” of Second Life are taking virtual property rights to real-world court, citing California consumer protection laws to make their case.

On April 15, four Second Life property owners filed a class-action suit against Linden Lab, the online world’s creator, alleging the company misled players into thinking they owned their virtual lands. People pay real dollars to Linden Lab for access to virtual land.

Video: Couple profits from virtual real estate boom

The civil suit, which does not directly involve Arthur, was filed in U.S. District Court in Philadelphia, Pennsylvania. Plaintiffs invoke consumer-protection laws in California, specifically, because Linden Lab is based in San Francisco.

The complaint says Second Life tried to lure people into the virtual world by promising it would be a unique place where residents actually owned their property. Then the virtual world unfairly changed its rules, the suit says. Linden Lab’s rules now say the land is a service the company controls and can cancel.

Plaintiffs seek at least $5 million in damages.

Linden Lab declined to comment on the pending litigation.

Legal experts said the case highlights the fact that our courts haven’t caught up the increasingly complex interactions that take place in online worlds.

Virtual worlds are somewhat lawless, the experts said.

The only government that controls them is the company that created the world. The only constitution that reigns is that company’s “Terms of Service” agreement, which users must sign digitally before getting access to the service.

“In these worlds, we are somewhere in like the 16th century” in terms of legal systems, said James Grimmelmann, an associate professor New York Law School who focuses on technology and the law.

“I’m quite serious. When this stuff started out we were talking pre-feudal — totally made up on the spot. They made [rules] pretty much in response to individual situations.

“But as this stuff got to be big business, the companies realized they had to start getting regular in administering justice. They couldn’t be too irregular or people would quit.”

iReport: Tell us about your Second Life experiences

In Second Life’s Terms of Service agreement, Linden Lab defines virtual land as a “service” instead of the actual property of the person who pays for it:

“Virtual Land is the graphical representation of three-dimensional virtual world space. When you acquire Virtual Land, you obtain a limited license to access and use certain features of the Service associated with Virtual Land stored on our Servers,” the agreement says.

Some Second Life users don’t see it that way.

The federal complaint says many users were led to believe that they actually owned their virtual plots of land, on which many players build digital homes and shops that they use for business purposes.

Read the full complaint (PDF)

Second Life — a 3-D environment that looks kind of like a video game — has a real economy based on “Linden Dollars,” which can be exchanged for major world currencies on a market system.

Andrea Matwyshyn, an assistant professor of legal and business ethics at the Wharton School at the University of Pennsylvania, said real courts have been slow to take up issues associated with these complicated worlds.

“The law is a slow-moving elephant, and technology is a graceful gazelle,” she said. “And it’s a mismatch.”

Matwyshyn said virtual property should be thought of like a “service” instead of something that’s actually owned. But because the issue is so new, the new lawsuit likely will be settled out of court, she said.

That happened with a similar case in 2006, she said.

Grimmelmann, the law professor, said the virtual land does have real value. It makes people feel happy and at home, the same way looking out at a front yard from a real-world porch would, he said.

But he cautioned against over-regulating virtual worlds because that would stem the high levels of creativity they inspire.

To be most fair to players, virtual-world politics need to move the way of the real world by enacting democratic systems so players can create the rules they would like to live by online, he said.

Arthur, the virtual landlord, said he doesn’t make money from his transactions. He runs a nonprofit group in Second Life called United Federation Starfleet, whose goal is to take people on “Star Trek”-themed tours for free, he said.

So he’s not as fearful of losing his digital property rights as some.

He said he knows he could be evicted from his home in Second Life, and he equates his situation to renting a house. But being evicted would be devastating to him, he said, not because he’s trying to make money in Second Life, but because he and other people involved with his space-themed group have put so much time into developing their digital land.

He trusts Second Life’s owners to honor his dedication to the virtual world.

“Our expectation is that we wouldn’t be sold down the river by Linden Labs,” he said.

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Gary McGraw on developing secure software (Q&A)

by admin on May 12, 2010   |   1 Comment

Gary McGraw on developing secure software

Gary McGraw, chief technology officer at Cigital and a co-author of the BSIMM study.

(Credit: Cigital)

For more than a decade, Gary McGraw has been pushing companies to write better code so that the software we all rely on for desktop computing, Web surfing, and Internet communications works the way it should. That includes making sure it doesn’t have defects that attackers can exploit to steal data and otherwise wreak havoc.

In 2002, Microsoft got the message, or rather got sick of hearing complaints from its customers about holes in its software that were letting high-profile viruses onto Windows desktops and corporate networks. The company launched its Trustworthy Computing initiative and is now a leader in secure software development and how to do things right, McGraw said.

As chief technology officer at consulting firm Cigital, McGraw decided to analyze Microsoft’s Security Development Lifecycle and to compare that with what other companies do. He and some cohorts got a rare look inside 30 firms, including Microsoft, Adobe, Google, Bank of America, Intel, Sallie Mae, Nokia, and Capital One. While their study, entitled “Building Security in Maturity Model” (BSIMM) and due to be released on Wednesday, ranks the companies according to their secure software development practices, it does not make the rankings public.

With start-ups flocking to the Internet and security problems hitting popular social sites and Web apps, the concern over the lack of secure software has only become heightened.

McGraw talked to CNET about what he has learned through his behind-the-scenes look inside the study participants and what that means for safe Web surfing in the future.

Q: So, tell me about the study.
McGraw: We call it “B-Simm” for short. It’s a study of 30 companies and we looked at their software security initiatives. That is how they try to figure out how to do a better job of building security into their software by training developers, getting the right kinds of tools and, most important, setting up the right kinds of activities.

What did you do for the study?
McGraw: We went out and met in person with the executives in charge of each software security initiative in all 30 firms and we gathered data and built a model that describes the data very carefully. It’s built by observation, which makes it novel from a computer science perspective. A lot of times in computer science people have an idea and then grab dribs and drabs of data to justify the data. In this case we got the data first.

“Consumers have for a long time had an implicit demand for security that hasn’t been made explicit, but I think that’s changing. People are sick of having insecure software and sick of having to have to get antivirus software because of all this broken software on their PCs.” Did you give grades?
McGraw: We observed 109 activities in all the data. We determined whether or not we observed that activity in a particular firm and then kept track of how many times we saw an activity. We ranked the activities and we know which are more popular, which were observed more often in the model.

So give me examples of the types of activities you’re talking about. <
McGraw: Some are pretty simple like training your developers in an introduction to software security development course, or use a static analysis tool to review your code and remove vulnerabilities. Some are pretty complicated. A level 3 activity of the rocket science type would be to form a science team to look for new software vulnerabilities of a type that have never before been seen on planet Earth and eradicate those. There are actually a couple firms that do that. I can’t say who they are. In order to get access to this incredibly rich data in these firms, we had to agree to keep the data on particular firms under wraps. There are 15 activities that were incredibly common and you can think of those as the core of software security activities.

What’s the most important practice?
McGraw: One that was observed 100 percent of the time was having host and network security basics in place before starting to work on software security. Don’t worry about software security if you don’t even have a firewall or network security person on your staff.

Why is all of this important? What does the average consumer have to gain or lose?
McGraw: The real problem from a consumer perspective is if you have a piece of software, there’s no way for you to tell whether or not it’s secure. Most consumers would like to have software that is secure, that can’t be hacked, and they would like to use a browser that wouldn’t allow bad guys to hack them with impunity the way things are now. In some sense, security is invisible property and we’re trying with the study to make security much more visible. But the only way to do that and retain technical accuracy is to talk about the kinds of activities firms are doing when they carry out good software development. There’s a nice history lesson we can draw from. Microsoft got started on the Trustworthy Computing Initiative about a decade ago and they’ve made a lot of progress in the way they approach security. Microsoft shares what they do with the publication of the Software Development Lifecycle and in books executives there have written.

So, how many of those 30 companies are doing a commendable job?
McGraw: A majority of them are doing a reasonable job. There are a lot of firms that aren’t doing anything for software security, and it’s better to be doing a few things than nothing at all. One thing consumers could do is ask for things like BSIMM scores from vendors and see if they will share the information about what they are or aren’t doing. To some extent, the BSIMM has become a de facto standard for measuring software security initiatives. The reason we came up with this measurement tool was so companies could improve their own software security initiatives. So it’s not for consumers. But, I bet every single reader of yours uses software that’s produced by one of these companies.

I don’t see Facebook or Twitter on the list.
McGraw: Sadly, they’re not on here.

How about Mozilla?
McGraw: We’ve talked to the Mozilla guys, but we haven’t carried out a measurement yet.

This is all voluntary, though, right? Why would a company do this if it didn’t have to?
McGraw: I think that companies are coming to realize that consumers expect security. Consumers have for a long time had an implicit demand for security that hasn’t been made explicit, but I think that’s changing. People are sick of having insecure software and sick of having to have to get antivirus software because of all this broken software on their PCs. They would prefer to have the software just built properly. Some companies that realized it a decade ago have been working hard to do a better job.

“One part that has been overemphasized is the role of social engineering and using the victim’s name to get them to click on a link. But the other half is what happens when you get them to click on the link?” What role do the computer users play? For instance, a lot of the attacks these days use social engineering to trick people into trusting a message or Web link they shouldn’t.
McGraw: It’s like crashing your car. A long time ago, before the National Transportation Safety Board got involved in analyzing car crashes, cars were a disaster from a safety perspective. Sometimes the brakes would fail or the wheels would fall off. Now, cars are pretty reasonable from a safety perspective. But they’re really safe if you wear your seat belt. We can not make sure that everything you do on the Internet will be secure just by having more secure software. If you choose to do something incredibly silly it’s going to be problematic from a security perspective. There will always be people doing high-risk activities they shouldn’t do.

Do we need a National Transportation Safety Board equivalent for software and to enforce a type of seat belt law for computer users?
McGraw: Companies in the BSIMM study would argue that we don’t need that yet because they are trying to do the right thing. The BSIMM measurements do make that seem like a reasonable statement. The interesting thing is that in order to have something like the National Transportation Safety Board we would first have to have a way for measuring software security initiatives and the BSIMM is that measurement.

So, can you tell me which are the best companies in terms of secure software development?
McGraw: I can’t tell because I want these companies to continue to share their data with us so we can report what we’re actually seeing out there. The good news is software security as a discipline is growing quickly. I think consumers can and should begin to demand more secure software, to ask for some evidence that software is more secure, and to reward with their dollars those companies that are doing a better job.

So, what about the tradeoff? If I get a really secure product can I still expect full functionality and interoperability?
McGraw: You actually can. A lot of people would argue that there’s a tradeoff between security and functionality. But the fact is, getting rid of your functionality is not what makes you more secure. The problem is if we write software sloppily or design it poorly it will be riddled with defects that will allow an attacker to take advantage of that. You can still have very high functioning software that is nicely secure. If you compare Windows 98 to Windows 7, not only does Windows 7 have way more functionality, but it’s also head and shoulders more secure than Windows 98. That shows companies can create software that is useful, that the people want to buy but which is secure at the same time.

Would good secure software development have prevented targeted attacks like those against Google and the others late last year?
McGraw: To some extent yes, because even spear phishing through social networks often exploits some software flaw. One part that has been overemphasized is the role of social engineering and using the victim’s name to get them to click on a link. But the other half is what happens when you get them to click on the link? You have to have an exploit of some sort that takes advantage of a security problem for those attacks to work. In that way, more secure software is the only way we can make progress in computer security.

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RIAA wins big in LimeWire lawsuit

by admin on May 12, 2010   |   No Comments

RIAA wins big in LimeWire lawsuit

In a decision that could mean sweeping changes to file sharing in the United States, a federal court has found the company that operates file-sharing service LimeWire liable for copyright infringement, according to court records reviewed by CNET.


(Credit: Greg Sandoval/CNET)

U.S. District Judge Kimba Wood, for the Southern District of New York, on Tuesday granted summary judgment in favor of the music industry’s claims that Lime Group, parent of LimeWire software maker Lime Wire, and founder Mark Gorton committed copyright infringement, engaged in unfair competition, and induced copyright infringement.

“The evidence demonstrates that [Lime Wire] optimized LimeWire’s features to ensure that users can download digital recordings, the majority of which are protected by copyright,” Wood said in her 59-page decision. “And that [Lime Wire] assisted users in committing infringement.”

The court decision could represent the biggest threat to online file sharing in years. According to a survey by the NPD Group, LimeWire users account for 58 percent of the people who said they downloaded music from a peer-to-peer service last year. At CNET’s Download.com, the LimeWire software has been downloaded more than 200 million times. In the last week along, the software was downloaded nearly 340,000 times.

Wood’s ruling could at the very least mean a shift in the downloading habits of millions. The logical next step by the Recording Industry Association of America, the trade group representing the four largest recording companies, is to get a preliminary injunction and force Lime Wire to cease LimeWire’s file-sharing functionality.

LimeWire responded predictably with strong opposition to the judge’s decision and said it looks forward to a scheduled June 1 status conference with Wood.

“LimeWire remains committed to developing innovative products and services for the end-user and to working with the entire music industry, including the major labels, to achieve this mission,” it said in a statement.

What may spell serious trouble for creators of music and video Web sites in the future is Wood’s decision to hold Gorton personally liable. If the ruling stands, it could set a precedent that might dissuade other entrepreneurs from challenging the entertainment sector’s copyrights when developing new technology.

The RIAA has said it is entitled to the maximum statutory damages, which is $150,000 for each registered work that was infringed. The number of infringing works they could try to claim is likely in the millions.

The RIAA first filed suit against Lime Group in August 2006 and a month later the company filed a countersuit, claiming the top labels engaged in unfair business practices designed to scare away Lime Wire’s users.

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Facebook statuses reveal happiness

by admin on May 8, 2010   |   1 Comment

Facebook to add new states to reveal happiness

(Mashable) — Facebook has extended its “Gross National Happiness” prototype app to 18 new countries. The app analyzes words in status updates like “awesome” or “tragic” to track changes in the collective emotional state of its users.

When Facebook applied the methods to its U.S. userbase last year, it found that happiness went way up on holidays and way down when celebrities like Michael Jackson or Heath Ledger passed away. While the results of the study weren’t surprising, the idea of using status updates to measure national happiness was a novel one.

After Facebook’s latest update, the list now includes the U.S., Canada, India, Great Britain, Belgium, the Netherlands, Puerto Rico, Singapore, Austria, Germany, New Zealand, Italy, Chile, Uruguay, Spain, Mexico, South Africa, Argentina, Australia, Ireland, Venezuela and Colombia. Status updates in the English, Dutch, German, Italian and Spanish languages are included in the data.

As you might have expected, residents of each country become happier on that country’s holidays and during big events ? for example, Spain is happier on Saint Jordi’s Day and U.S. residents are happier around the time of the Super Bowl. And speaking of sporting events, those can affect the results too; dips in happiness correspond with major sports defeats. Even bigger dips accompanied natural disasters like earthquakes, of course.

We noticed that in some cases small increases of negativity accompanied big leaps in positivity. Not everyone has a great Christmas thanks to travel stress or family drama, so it’s no surprise that the negative comments go up a little bit at that time of the year too. Play with the app yourself at Facebook’s website to see what insights you can conjure up.

If you find this data interesting, you’ll also appreciate this: Facebook decided a couple of months ago to find out how relationship status affects happiness. Unsurprisingly, it found that folks in relationships tended to post happy updates more frequently. Singles were better off than users who didn’t list their relationship status or were in open relationships, however.

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AOL hires Microsoft’s Alex Gounares as CTO

by admin on May 8, 2010   |   No Comments

AOL hires Microsoft Gounares Alex and the CTO

According to sources close to the situation, AOL has hired Alex Gounares (pictured here) as its chief technology officer.

Gounare’s departure was announced internally at Microsoft today, where he is corporate vice president of Advertising Research and Development and CTO for the software giant’s Online Services division.

According to his bio at Microsoft, Gounares “was the corporate vice president for Corporate Strategy, where he was responsible for helping set the overall strategic direction for the company. Before that, Gounares spent three years as the technology assistant to Microsoft Chairman Bill Gates, and he also was responsible for helping formulate and drive the technical strategy for the company.”

Sources said he will be moving back east to take on the job at AOL. He will replace Ted Cahall, who left AOL in late January.

Story Copyright (c) 2010 AllThingsD. All rights reserved.

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Google scraps plug-in refashions 3D Web plan

by admin on May 8, 2010   |   1 Comment

Google scraps plug-in renews plan Web 3D

Google has partly scrapped a browser plug-in project called O3D, instead throwing its full weight behind a 3D Web graphics technology called WebGL that got its start at Mozilla.

The move, first reported by CNET, has the potential to simplify the effort to bring hardware-accelerated 3D graphics to the Web, an idea that has appeal to those trying to refashion it as a foundation for applications such as games. However, it also means the functioning–if experimental–O3D technology is going back to the drawing board for a while.

 The overall idea of O3D, a higher-level interface than the 3D nuts and bolts provided by WebGL, will live on, though. Google is rebuilding it as a library of pre-build software others can use on top of a WebGL foundation, Engineering Director Matt Papakipos and programmer Vangelis Kokkevis announced the move on the final O3D blog post Friday.

One of the big changes with the O3D rebirth is that instead of running as a fast, compiled C++ program, the library instead will use the relatively slow JavaScript used in Web applications. Fortunately for the project, the top five browser makers–Microsoft, Mozilla, Google, Apple, and Opera–all are making significant improvements in JavaScript execution speed.

Another tricky issue is that WebGL is a variant of the 3D graphics interface called OpenGL, which is used on Mac OS X and Linux as well as the iPhone and Android phones. On Windows, though, it’s second fiddle to Microsoft’s Direct3D interface. Google hopes to bridge that gap with its ANGLE project to translate OpenGL commands into Direct3D parlance.

Said Papakipos and Kokkevis:

We did not take this decision lightly. In initial discussions we had about WebGL, we were concerned that JavaScript would be too slow to drive a low-level API like OpenGL and we were convinced that a higher level approach like the O3D scene graph would yield better results. We were also cognizant of the lack of installed OpenGL drivers on many Windows machines, and that this could hamper WebGL’s adoption.

Since then, JavaScript has become a lot faster. We’ve been very impressed by the demos that developers have created with WebGL, and with the ANGLE project, we believe that Chromium will be able to run WebGL content on Windows computers without having to rely on installed OpenGL drivers.

There’s another obstacle yet, though: Apple, Mozilla, Opera, and Google are working on WebGL support, but Microsoft, despite its IE9 browser overhaul, appears to have little enthusiasm.

Asked in an interview this week about Microsoft’s WebGL stance, Internet Explorer General Manager Dean Hachamovitch said, “I think it’s different markup,” meaning something not universally supported on browsers. “You’re telling developers, ‘Go write something else.’”

Google’s answer: Chrome Frame, a plug-in that sneaks a copy of Chrome into Internet Explorer, an idea Microsoft scorns.

Said Henry Bridge, another Google programmer involved in the effort:

As for IE, we could have gone down the route of making the O3D plug-in also ship WebGL for IE, but we realized that then developers would be lacking other APIs [application programming interfaces] that they need for their apps, like Audio or WebSockets. If we then added those APIs to the O3D plug-in also, well, it starts to look a lot like ChromeFrame: a plug-in implementation of Web APIs for IE. We’re confident that ChromeFrame will be as easy if not easier to install than O3D, so it seemed better to focus the team’s graphics expertise on making WebGL great in Chrome/ChromeFrame and on making the O3D library useful to developers.

Canceling O3D also ruffled some feathers.

“I spent a lot of time learning and developing for O3D and now I got stabbed in the back. Very disappointing,” said one O3D programmer, Angelo Franco, in a mailing list message. He did back down a bit, though, adding later, “Please keep up the good work with the JavaScript library. For sure, I’ll continue to use it, despite the WebGL.”

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Computer pioneer Palevsky was wary of Google, games, PCs

by admin on May 8, 2010   |   No Comments

The computer pioneer Palevsky beware of images, games, and computers

Max Palevsky

(Credit: University of Chicago)

Max Palevsky, the computer industry pioneer and early investor in Intel who died at age 85 on Wednesday, had, ironically, a fairly well-documented skepticism of computers, cells phones, Google, and games later in his life, according to reports.

Palevsky’s resume is impressive. Before helping to found Intel, he worked on Bendix Corp.’s first computer, the G-15, then, in 1957, joined Packard Bell in Los Angeles, and helped develop one of that company’s first computers.

In 1961, he founded Scientific Data Systems to build smaller business computers to compete with IBM. That company was acquired in 1969 by Xerox for $1 billion. Palevsky walked away with a 10 percent share of the Xerox sale.

Following the sale of Scientific Data Systems in 1968, he invested a portion of that money in a Santa Clara, Calif., chip start-up that became Intel.

Later in life, though, he became wary of the impact of computers on society. In an essay for an exhibition at the Los Angeles County Museum of Art in 2005, he expressed a dim view of the “hypnotic quality of computer games, the substitution of a Google search for genuine inquiry, the instant messaging that has replaced social discourse,” according to The New York Times.

Palevsky did not own a computer or a cell phone in 2008, according to the Los Angeles Times. “I haven’t touched a computer, watched TV or used a credit card in 15 years,” he told the paper in 2001.

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Zynga may launch social-games network

by admin on May 8, 2010   |   No Comments

Zynga has launched Games Social Network

It may owe its fortunes to Facebook, but the word is that social-gaming giant Zynga is getting ready to launch its own site in a bid to wean itself from its dependency on the popular social network.

According to TechCrunch, Zynga CEO Mark Pincus hosted a company meeting Thursday afternoon in which he asserted that hit games like Farmville, Mafia Wars, Cafe World and others might soon appear on their own social games site called Zynga Live.

 ”‘Pincus announced at a 5 p.m. meeting yesterday at Zynga that Zynga was going to launch a social game network called Zynga Live,’” TechCrunch wrote, quoting from an anonymous insider e-mail.

The theory here is that Zynga and Facebook are clashing over the percentage that the social gaming giant might have to pay to use Facebook Credits, the social network’s nascent currency platform.

“‘Facebook and Zynga [have] been negotiating on Facebook Credits and the talks turned for the worst,’” TechCrunch quoted the e-mail as saying. “‘In the negotiation process, Facebook shut off Zynga’s feeds and threatened to shut down games. Zynga, in the process, threatened to completely leave Facebook and prepared to do so in the previous upcoming weeks.”

If this is all true, I find it hard to believe that either side will actually pull the plug on a relationship that has generated most of the top-10 most popular applications on Facebook. Without Facebook, Zynga could lose easy access to millions of its most regular users, and without Zynga, Facebook would lose several of the applications that keep its users coming back to the site so often.

But as VentureBeat put it, a Zynga Live site could allow the social-gaming leader to provide users with the same games they already know and are addicted to, and easily cross-promote them. “On this site, it can use its own virtual currency,” VentureBeat wrote. “It won’t have to use Facebook Credits, and thus it won’t have to pay the 30 percent fee to Facebook. And when Zynga advertises the Zynga Live site, the money won’t go directly into Facebook’s pocket.”

Even if Zynga does decide to end its marriage with Facebook, it’s likely such a thing wouldn’t happen overnight. But it would seem that there is simply too much money and too many user hours at stake for the two companies to walk away from each other. More likely, it seems to me, is that they will make all kinds of public and not-so-public indications that they are looking to see other people, and then will kiss and make up.

Then again, that doesn’t mean that Zynga Live won’t happen or that it won’t siphon off some percentage of the users who play the company’s games on Facebook.

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Comcast: FCC opening Net neutrality door ‘scary’

by admin on May 8, 2010   |   No Comments

Comcast: FCC open the door of net neutrality ‘scary’

PALO ALTO, Calif.–A Comcast executive on Friday took aim at federal regulators’ recent Net neutrality decision, saying the move could apply the “heavy burden of regulation” designed for the analog telephone network to the Internet.

Joseph Waz, Comcast’s senior vice president for external affairs, said the Federal Communications Commission appears to be “well-intentioned” in its decision announced earlier this week. (See CNET’s FAQ on the topic.)

But, at a Stanford University conference, Waz said federal regulation “cannot be guided by good intentions alone” and “what could be applied once you’ve opened the door is scary.” A future FCC, for instance, could choose to use the precedent to impose more telephone-era rules such as price regulation.

FCC Chairman Julius Genachowski’s proposal–which will probably take the better part of a year to turn into formal regulations–”ultimately opens the door to the entire heavy burden of regulation,” Waz said. He added that he has a 16-page legal memorandum drafted by Comcast’s attorneys to read later in the day.

Genachowski’s decision effectively imports telephone-style regulations and imposes a subset of them on broadband providers. It’s designed to find a way around a recent ruling by a federal appeals court that said the FCC has no authority to levy Net neutrality regulations using a different regulatory justification, and is likely to invite future litigation.

“We do not want to stifle innovation and competition,” Sherrese Smith, a legal advisor to Genachowski who also spoke at the Legal Frontiers in Digital Media conference. “The government should stay out of this as much as possible.”

When asked why the FCC appears to be exempting wireless broadband from its Net neutrality proposal but targeting Comcast, Smith replied: “We’ll be working on that.”

Genachowski’s announcement came only hours after two senior Democratic politicians sent a letter to the FCC saying that imposing Net neutrality regulations on broadband providers such as AT&T, Comcast, and Verizon is “essential.” And Free Press, the liberal lobby group that’s led the fight to hand the FCC more Internet regulatory authority, hastily convened a conference call to warn that Genachowski would be leaving President Obama’s Net neutrality promises unfulfilled.

Earlier in the week, The Washington Post reported that Genachowski “has indicated he wants to keep broadband services deregulated,” a position favored by companies that say sweeping new regulations will deter investment and be overly burdensome.

“Google is generally pretty excited” by the FCC’s announcement this week, Daphne Keller, the company’s senior policy counsel in Mountain View, Calif., said at the conference. It will “preserve the end-to-end design principles” of the Internet, she said.

“There is a role for government touching on the Internet, but it should be a narrowly-tailored role,” Keller said.

Reclassification, however, is bitterly opposed by telecommunications companies, who predict it will harm consumers, hinder investment, and cost jobs. Net neutrality laws could endanger 65,000 jobs by 2011, with the total economy-wide impact growing to 1.5 million jobs affected by 2020 because of reduced revenue growth in the broadband sector, according to a recent report (PDF) sponsored by Mobile Future, which counts AT&T as a member. AT&T has lobbied against Net neutrality laws.

When the discussion swung to discussions of international law, Comcast’s Waz said, “It’s kind of hard to say to China, ‘Do as I say, not as I do.’” While strict Net neutrality regulations are hardly the same as censorship and surveillance, he said, “all of us have to be sensitive to the fact that other nations are waiting for the green light to get more involved.”

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Clearwire CEO sees bright 4G future

by admin on May 8, 2010   |   No Comments

Chief Executive Officer of Clearwire sees a bright future 4G

A year after taking over the CEO job from Clearwire co-founder Ben Wolff, Bill Morrow is confident the company is on the right track with its 4G wireless network despite continued financial losses.

Morrow, 50, said he is confident about Clearwire’s prospects even as competitors, such as Verizon Wireless and T-Mobile USA, begin to deploy their own faster networks. The company, which has been building a nationwide 4G wireless network using a technology called Wimax, is also considering other technology options to ensure it stays competitive in the future.


Bill Morrow, CEO of Clearwire

(Credit: Clearwire)

Even though the company lost $94.1 million in the first quarter of 2010, it still grew revenue by 72 percent and added a total of 283,000 new customers during the quarter. Service is already available in 32 markets covering 41 million people. By the end of 2010, Clearwire’s 4G mobile broadband network is expected to be available to up to 120 million people across the United States. Big markets, such as New York City, San Francisco, and Washington, D.C., are expected to come on line by the end of the year.

CNET interviewed Morrow recently and asked him about the changing 4G landscape as well as the interesting relationship the company has with some of its well-known investors, such as Sprint Nextel, Comcast, Time Warner Cable, and Intel. Excerpts from the conversation are below.

There have been news reports out this week that the terms of your agreement with Intel have changed somewhat. Can you explain what’s going on?
Morrow: When we drafted the original commercial agreement with Intel, it was about promoting the ecosystem for 4G. And part of the condition for creating a bigger ecosystem is that Clearwire wouldn’t offer a competing commercial technology on the network for three years, which would have taken us to 2011 or January of 2012. But a lot has changed in the market since that agreement. And each of us realized we needed more flexibility to deal with the evolution of technology. So we amended the agreement so that either party can terminate the technology agreement within 30 days. So we aren’t bound to using one kind of technology or another.

Have you actually given Intel notice that you are planning to deploy different technology?
No we haven’t exercised that right, and I don’t see the need for us to anytime soon. We won’t be deploying LTE anytime soon and definitely not before 2012. But it does give us greater flexibility.

You had mentioned at the CTIA trade show last month that Clearwire could eventually use LTE, a competing technology to Wimax in your network in the future. But wouldn’t switching technologies be pretty expensive?
Let me start by saying that we are a 4G company. We believe that the next generation of mobility requires a low-latency and low-cost structure. And there are only a couple of technologies that offer that, Wimax and LTE. The good news for us is that Wimax and LTE have 80 percent overlap in terms of technology when you consider modulation schemes etc. So it’s very natural to see suppliers developing equipment for LTE and Wimax. And we are working with suppliers to make sure we can easily transition from one to the other. The fact is that consumers don’t care which technology you use, they just want a fast, low-latency network at an affordable cost.

The beauty of our architecture is that we have the ability to bolt on additional technologies, like LTE. This means that we could continue offering Wimax to existing customers, while we add LTE. Furthermore, we’re seeing some chip designs that have Wimax and LTE. So in the near future there will be devices that support either. And we will use those chips on products on our network.

But the existing Wimax products that are being sold today won’t be able to use LTE if you deploy that in the future, correct?
Yes, that’s true. But we won’t be upgrading to LTE, if we do that, for a long time.

There’s been some talk about a 4G phone for Clearwire’s network. Can you provide any more details?
We will be launching phones later this year from HTC and Samsung. And there will be others in 2011. The Samsung phone will be one of first to be designed for video communications. It will leverage the benefits of our low-latency network to offer better-quality video that can be used for video conferencing and other video applications. We’re really excited about it. Both phones will be Google Android-based. So they’ll have the same easy user interface and access to the Android Market for apps.

You have several partners that are also competitors for your 4G service. Sprint Nextel, Comcast, and Time Warner Cable, all sell service in a few if not all of the markets where you offer the Clear service. I know you get to count the revenue regardless of whether it comes from Sprint or Clearwire, but why have a retail business at all if you’re reselling the service in so many different channels?
Well, we each address a different market. So there is a segment of the market that is attracted to Sprint. And another that is attracted to cable. And yet another that is attracted to a new brand. Many consumers don’t even realize that the services all use the same network.

How would you describe the different markets that you each address?
A Clear customer is often a cord-cutter. This customer has a mobile phone, but no fixed line phone in the house. He wants high-speed broadband, but he doesn’t want to be tethered to a fixed broadband service. People use Clear when they are in the house and when they are out on the go. They also probably don’t have cable TV service. Instead, they watch Hulu, YouTube, or other video sites for TV downloads.

The cable customer can’t cut his Internet connection at home. He might be sharing it with the entire family. But he wants to stay connected outside the house, so he keeps his cable subscription and bolts on the 4G wireless service onto a triple play package.

A Sprint customer really likes his smartphone. He is happy with the Sprint service. But he doesn’t want a separate bill from another carrier to upgrade to wireless broadband.

When you go into the market you see all these different customer segments and it’s easy to see that you can get more subscribers in total by marketing to different groups instead of just having one brand.

Clearwire just announced 18 new cities that will be getting the Clearwire 4G service this summer. But none of these are the really big cities, such as New York City, Boston, Washington, D.C., or San Francisco? When are these cities going to get service?
All I can say is that it will be this year. I get this question a lot. People wonder why we didn’t deploy the service in New York before Portland, Ore., for example. We’ve had some work to do. And when we hit New York City, we want all our ducks in a row. We want to know what usage patterns to expect, like how people use the service, where they use it. So it’s partly a learning exercise. I’ve been in this business for 30 years and the move to 4G is very different from anything I’ve seen before. It’s different from the move to 2G or 3G, which were voice services with data bolted on. 4G is built for data and it’s just very different. When we launch in New York and LA we want to make sure we’re ready.

I’ve talked to some satisfied Clearwire customers, but I’ve also gotten e-mails from customers who say the service is spotty in some cities. What do you think is going on for people to have such different experiences?
There are always going to be customers who are on the edge of the cell network. And they get enough of a signal to get teased with the service. But it doesn’t work great in those areas. And then there might be over-aggressive sales people who tell you that you can use it in your area, but half your house is outside the coverage area. That is very frustrating for customers. We are working to expand coverage in those areas. The good news is that people who are within our coverage areas love the service. They say they can’t believe how fast it is.

Verizon Wireless is building its 4G network using LTE. It expects to launch service in 25 to 30 cities by the end of the year. Clearwire has a good two-year head start, but you’re still not in the biggest cities. Are you nervous about missing an opportunity?
No, we aren’t worried about them getting there first. There is such pent-up demand for improved service that if there is another carrier in the same market it only helps us. It will help build more awareness of the service. People will hear 4G, 4G, 4G and that’s good for us. It’s really healthy for the industry and healthy for Clearwire. We’ve been expecting the competition, and we’ve worked that into our numbers.

But Verizon is such a powerhouse. Aren’t you worried they will win over more customers?>
We take comfort in the fact that we have far more spectrum than they do. And this is a capacity game. You want coverage, of course. But if you can’t support the capacity, then customers have a bad experience. And if you don’t have the capacity you have to bump your customers down to 3G, which limits them. We’re finding that customers are using on average 7GB of data per month on our service. The average amount of data a 3G subscriber uses a month is about 1GB to 2.5GB a month.

What about T-Mobile USA? They are building their HSPA+ network that offers comparable speeds to today’s Wimax service. Are you worried about them as a competitor?
We look at all the competition, but we feel that potential 4G customers are served best by Clearwire. T-Mobile is a good company. And we’re interested in making them a wholesale network customer. But as a competitor, we know that the HSPA+ cost structure is not sustainable for scalable mobile broadband services. So HSPA is a Band-Aid for carriers who are using it until they get to a full IP network, which will change the cost structure.

Correction 2:06 p.m. PDT: This story initially misstated how much the company lost in the first quarter of 2010. It lost $94.1 million.

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