Jimm Phillips

So-called patent trolls and the patent wars are high-profile indicators of problems in the way the U.S. handles its own technology patent process and resulting litigation, industry experts said Tuesday. While the experts said at an Advisory Committee to the Congressional Internet Caucus event that such problems exist, they did not agree about how severe those problems are.

The European Telecommunications Network Operators’ Association (ETNO) is likely to withdraw its controversial Internet traffic compensation proposal from consideration at the upcoming World Conference on International Telecommunications (WCIT), but is now considering another proposal the U.S. also finds problematic, said Terry Kramer, head of the U.S. WCIT delegation, Friday. ETNO’s current proposed revision to the International Telecommunication Regulations (ITRs) would, among other things, establish a “sender-party-pays” model for Internet traffic compensation that could require the sender of any Internet content to pay for its transmission.

T-Mobile USA’s proposed merger with MetroPCS is unlikely to have a significant impact on U.S. tower companies if the U.S. government approves the deal as expected (CD Oct 4 p1), industry officials told us. Any carrier consolidation is likely to lead to concerns because the tower companies end up with fewer customers -- but those concerns are mitigated by the carriers’ network build-out plans, Benchmark analyst James Dobson said. “With MetroPCS forming up with T-Mobile, it gives them a stronger parent company, more of solid capital base with which to roll out their next-generation network,” he said. “Everyone’s going to these LTE networks, and if T-Mobile’s going to compete on a national scale, they're going to have to be aggressive in building out their LTE network. That’s going to ensure that the MetroPCS will also build out."

The U.S. government and American companies shouldn’t do business with Huawei and ZTE, a House Intelligence Committee report “strongly” recommended Monday. Rather than those two China-based telecom equipment makers, it said U.S. companies should consider seeking other vendors, because there are long-term security risks associated with doing business with the companies. Huawei and ZTE failed to provide sufficient information during the course of the committee’s 11-month investigation to assuage concerns that the Chinese government could influence the companies to use their equipment to spy or start cyber attacks on U.S. entities, the report said (http://xrl.us/bns9tg). “Based on available classified and unclassified information, Huawei and ZTE cannot be trusted to be free of foreign state influence and thus pose a security threat to the United States and to our systems.” Both companies have said the Chinese government has no influence on their business, and Huawei said the report reached a “pre-determined” conclusion.

The “on-the-ground” reality of revising the International Telecommunication Regulations (ITRs) is more mundane than many press reports indicate, but there are still plenty of proposals the U.S. remains concerned about, said Kathryn O'Brien, FCC assistant International Bureau chief. ITU members are to revise the ITRs at the World Conference on International Telecommunications (WCIT), which begins Dec. 3 in Dubai. “You may have seen some references in the press to this U.N. conference in Dubai in December, and concerns about the U.N. ’taking over the Internet,'” O'Brien said Wednesday at a Federal Communications Bar Association forum. “There is no sort of U.N. takeover of Internet governance, the specific functions of [the Internet Corp. for Assigned Names and Numbers (ICANN)] at this particular conference. … But there are still huge, huge areas in this conference for the U.S., for the government and private sector, to worry about."

When Mexican President-elect Enrique Peña Nieto takes office Dec. 1, there could be an opportunity to effect change in the country’s approach to Internet connectivity and speech issues, officials said at an Aspen Institute forum. Aspen’s Communications and Society program and Grupos Salinas and Caminos de la Libertad released a report Monday detailing what the groups believe are “critical deficits” in Mexico’s current policies on those issues (http://xrl.us/bnr7x8). Alec Ross, senior innovation advisor to U.S. Secretary of State Hillary Clinton, said the challenge Mexico faces is the same one the rest of the world faces -- how to make the business and academic environments as data-rich as possible.

Research in Motion sold 7.4 million BlackBerry phones and 130,000 Playbook tablets during Q2, RIM executives said on a quarterly earnings call Thursday. RIM’s BlackBerry sales beat Wells Fargo’s estimate of 6.7 million, but was still down from the 7.8 million phones sold during Q1. RIM’s Playbook sales figure was below Wells Fargo’s estimate of 200,000 and was down from sales of 260,000 during Q1. The U.S. represented a smaller portion of RIM sales during Q2 -- 22 percent, down from 25 percent during the previous quarter, RIM Chief Financial Officer Brian Bidulka said during the investor call. RIM had more success abroad, particularly in Canada, the U.K., Indonesia, South Africa and Venezuela, he said. The company has found its free BlackBerry Messenger (BBM) program to be a selling point in developing countries, Heins said. “It’s amazing when you go into those countries and you see how BBM is just kicking it,” he said. “I mean, it’s everywhere.” The company had a Q2 net loss of $235 million, vs. profit of $329 million in the year-ago quarter. RIM’s BlackBerry 10 operating system remains on track to debut in early 2013, RIM CEO Thorsten Heins said during the call. Much of the growth in RIM’s subscriber base has developed in “entry-level” markets, where BlackBerry 7-capable devices are the norm, he said. While BlackBerry 10 will not immediately reach those customers after it goes on the market, Heins said BlackBerry 10-capable devices might reach the entry-level markets within the next year. RIM’s results were “better than feared” for the quarter, Wells Fargo analyst Jennifer Fritzsche said in a report Friday, but the company still expects a net loss in Q3. “We expect [RIM’s] business to continue to be under pressure during the rest of the year due to competitive launches and [RIM’s] lack of a competitive high-end smartphone,” she said. RIM shares closed 5 percent higher Friday to $7.50.

T-Mobile and tower operator Crown Castle International reached a deal for CCI to operate 7,200 T-Mobile towers. CCI will pay $2.4 billion for control of the 7,200 towers for the next 28 years and will have the option to buy the towers for an additional $2.4 billion at the end of that period. The accord is expected to close in Q4, T-Mobile said. The carrier sought a deal on the towers to help fund its plan to upgrade to 4G LTE, T-Mobile CEO John Legere said in a joint news release with CCI (http://xrl.us/bnrtmp). “T-Mobile USA is working aggressively to make our 4G network stronger, faster and more dependable for consumers, and this transaction will support our ongoing $4 billion network modernization initiative that is the cornerstone of this effort,” he said.

The African Telecommunications Union’s meeting to prepare for the World Conference on International Telecommunications produced a mixed set of opinions on the U.S.’s position and on a proposal the U.S. opposes as allowing Internet regulation, said Terry Kramer, the head of the America’s WCIT delegation. The U.S. has opposed a proposal by the European Telecommunications Network Operators’ Association (ETNO) that would establish a “sender-party-pays” principle for Internet traffic compensation that could require the sender of any Internet content to pay for its transmission. Kramer made the case for the U.S.’s position on the possible revisions to the International Telecommunication Regulations (ITRs) during the ATU’s meeting in Accra, Ghana, which ran Tuesday and Wednesday of last week (CD Sept 24 p5).

Restrictions on Internet freedom continue to grow -- and the threats against it are shifting, said human rights group Freedom House’s 2012 report on worldwide Internet freedom. The report said Estonia had the most Internet freedom in the past year, followed by the U.S. and Germany. Iran was found to have the least online freedom, followed by Cuba, China and Syria. The report, released Monday, assessed events and shifts in the Internet freedom situation in 47 countries between January 2011 and May 2012. Researchers evaluated the situation in each country and assigned a numerical score, with 100 being the worst possible score. Estonia scored 10, while Iran scored 90; the U.S. scored 12, according to Freedom House (http://xrl.us/bnq8xh).The more repressive governments on the list continue to use traditional censorship methods like filtering and blocking content, but they are now supplementing those with “nuanced” tactics, Sanja Kelly, the report’s lead author, said at a Freedom House event Monday. Governments are increasingly engaging in proactive manipulation of online content, including hiring pro-government bloggers to attack anti-government bloggers’ credibility and paying people to bombard anti-government blogs with false information, she said. That tactic had previously only been found in Russia and China, but has now spread into countries like Iran and Belarus, said Freedom House. The report said 19 of the 47 assessed countries had passed new laws impacting Internet freedom since January 2011. Those have included a new law in Malaysia that holds intermediaries like ISPs responsible for “seditious” comments users post online, Kelly said. “As a consequence, in some of the environments we've seen some of the intermediaries almost voluntarily taking down the content they fear will get them into trouble."