We just wrote about how Max Davis, who's trying to create a silly and totally pointless compulsory licensing system for MMS content was more or less laughed out of court in the lawsuit he filed against the mobile operators, claiming that they were running illegal P2P file sharing programs in the form of their MMS capabilities. It apparently took him all of a few days to come up with a new, perhaps even more ridiculous strategy: he's suing AT&T, Verizon, Sprint, T-Mobile and TracFone for supposed antitrust violations over the same basic issues. Once again, it seems clear that this is an incredibly weak (and almost certainly unproductive) attempt at getting these companies to agree to his pointless licensing scheme.
So how are these mobile operators guilty of antitrust violations? According to Davis:
Defendants purposely conspired via collusion to install themselves as the new primary gate keepers and sole beneficiaries of multimedia content sharing through their new MMS technologies.
Except, of course, that's ridiculous. These companies did agree to set up MMS systems, but that's because they're the mobile operators who run the mobile networks. That's not collusion. And it's not antitrust. The filing gets more ridiculous as it goes on. He claims that these operators do not qualify as DMCA service providers, contrary to the pretty clear language of the law and plenty of case law. The whole thing seems frivolous, and it seems likely that this lawsuit will reach a similar conclusion to the previous one.
The various mobile operators have been making tons of revenue off of premium "short code" SMS programs. These are ways to add charges for various things directly to your phone bill. For example, they've become popular with various charities, so you can support them simply by texting a message to a particular short code. Of course, in many cases, the mobile operators charge you or take a cut for allowing this. And, of course, as with anything like this, it's been left open to scammers... and those scammers have moved in. Just as we saw with phone service cramming, where charges would be added to your landline phone bill, there's been a growing set of operations cramming premium SMS offerings.
Broadband Reports highlights the saga of JAWA, a Scottsdale, Arizona-based company that's at the center of allegations of cramming. The company and a bunch of shells allegedly send text messages to people that say:
"Text back STOP if you don't want to subscribe."
Most people, of course, don't text back because they think it's a scam. What they don't realize is that even if it's a scam, it's the not replying that lets the telcos start adding fees to your bill. The big question here: why does any mobile operator allow charges to be put on your phone bill for inaction?
The blog AZDisruptors (normally about Arizona startups) has been calling attention to the company, including putting together this video explaining how the cramming works, how JAWA's CEO Jason Hope is apparently building the largest house in the US (complete with a 3-story night club), and how AT&T pretends (falsely) that it can't do anything about it:
Oh yeah, Broadband Reports also notes that Hope's former blog, which was all about the Lamborghinis and other luxury cars he was acquiring, has suddenly changed to point to a page about his philanthropic work.
The thing is, JAWA has been doing its thing for quite some time. After Texas regulators began investigating, Verizon Wireless finally realized it needed to do something and sued. Amusingly, JAWA's defense to the lawsuit appears to be that it employs lots of people and is good for Scottsdale. However, it also points out that it's made Verizon Wireless tons of money, and even complains that Verizon Wireless seems to be withholding money owed.
While it's nice that Verizon Wireless has filed suit, it appears this only happened after Texas regulators began investigating, and after they made money from JAWA for a period of nearly four years. AT&T now claims that it's investigating too, but only after AZDisruptors demonstrated company representatives blatantly lying to him about whether or not they make any money from this and whether or not they can stop it.
The big question in all of this really should be why the mobile operators allowed this to happen at all. Why would they ever allow charges to be added to an account as a result of inaction, rather than through direct acceptance?
Last summer, we wrote about an incredibly poorly thought out lawsuit, by a company named Luvdarts, developers of MMS content, suing the mobile operators, because MMS can be forwarded from a recipient to another person. The company claimed that the big mobile operators were no different than file sharing networks, like Limewire or Gnutella, because each forwarding of content was infringement. As we pointed out at the time, this made no sense. It was a silly argument that was really being put forth by a guy named Max Davis, who has an equally silly plan to add compulsory licensing to MMS content, and this lawsuit was an incredibly weak attempt to push the mobile operators into negotiating. Instead, as we predicted, it's been dismissed by the courts for failure to state a claim. The dismissal was with prejudice, meaning that the court doesn't want to see them again on this. The press release linked above is kind of amusing, because it has the folks behind the lawsuit claiming that they're happy about this result and planning to appeal. Guys, you just got laughed out of court, because this lawsuit makes no sense. Appealing isn't going to fix that.
Regular Techdirt commenter Max Davis (who I believe may be involved in this lawsuit) passed along the news that all the big US mobile operators have been sued -- including AT&T, Verizon Wireless, Sprint and T-Mobile -- under the claim that their MMS platforms are really illegal file sharing networks, and that these operators are no different than Limewire or Gnuttella. Yes, seriously -- the email Max sent repeatedly refers to MMS and Limewire as if they were the same. Here's the complaint:
Honestly, the whole lawsuit seems ridiculous. Here's the crux of it:
Defendants, and each of them, enabled the transfer/transmission and publication of this copyright protected content via mobile devices by building and implementing a peer to peer file sharing network with the dedicated purpose of enabling end users to share multimedia files via this MMS network. Defendants, and each of them, profited from these activities by charging the transmitter and receivers of this content a fee or flat rate for the transfer/transmission that resulted in the publication of said content. Despite charging the transmitter and receiver a fee for the delivery of this copyrighted content, Defendants, and each of them, failed to compensate the holder of the copyrights for this content that was necessary in generating the MMS data revenue. Furthermore, Defendants, and each of them failed or refused to provide a system where an adequate accounting of the transfer/transmission and publication of this copyrighted content could be made.
Basically, this company, Luvdarts, made MMS content, and it got distributed via MMS. Since recipients of MMS can forward the MMS data they receive, such content got forwarded around. Since the mobile operators receive revenue for MMS data, Luvdarts is effectively claiming that they are profiting off the infringement of Luvdarts content. This makes no sense. It's like saying that any email provider is infringing on the copyrights of email writers by letting recipients forward emails. You know those chain emails that get passed around? Imagine if one of the authors of those then sued all the big email providers. It would get laughed out of court. Hopefully, this lawsuit gets laughed out of court too.
The one oddity is that the lawsuit claims that the mobile operators do not qualify for DMCA safe harbor protections, because they're "not service providers" as defined in the DMCA. Specifically:
The transmission of this MMS data is not covered by the exemption for Internet Service Providers as set forth in 17 U.S.C. §512 because the wireless carriers are not Internet Service Providers as defined by §512 while providing a dedicated MMS network for multimedia file sharing.
Really? If you haven't read your §512 lately, why not go take a look and explain how a mobile operator offering MMS is not covered. It certainly seems covered by the definition:
(1) Service provider--
(A) As used in subsection (a), the term "service provider" means an entity offering the transmission, routing, or providing of connections for digital online communications, between or among points specified by a user, of material of the user's choosing, without modification to the content of the material as sent or received.
(B) As used in this section, other than subsection (a), the term "service provider" means a provider of online services or network access, or the operator of facilities therefor, and includes an entity described in subparagraph (A).
Help me out. Where are mobile operators offering MMS features excluded? Looks like yet another frivolous lawsuit. But, of course, Luvdarts is demanding the statutory maximum of $150,000 per infringement, and claims "9,999 to 100,000 counts of
infringement" (broad enough range there?). Good luck, Max.
It looks like a class action lawsuit against Apple and AT&T for the way the two companies have conducted business around the iPhone is going to finally move forward. A judge in California is consolidating a few different such cases, covering two separate issues. The first questions whether or not the lock-in that required iPhone buyers to remain with AT&T for five years is legal, and the second questions the legality of the iPhone's app store, where Apple is the gatekeeper. To be honest, even as the consolidated case moves forward, I can't see either claim getting very far. Both seem to represent reasonable business decisions, and it's difficult to see an argument that Apple should have been forced to act otherwise.
Apparently, a security vulnerability in the way AT&T set up its network allowed hackers to capture the email addresses of 114,000 iPad owners. The breach was pretty basic stuff: if you fed an iPad ID number to a script that was publicly available on AT&T's website, it returned to you the email address associated with that ID. The hackers quickly set to testing out tons of likely IDs, and got back all those email addresses, including those of top execs at a bunch of big media companies, such as the CEO of the NY Times, CEO of Time, Inc., the President of News Corp, the CEO of Dow Jones and New York City mayor Bloomberg. Oh yeah, also a bunch of government emails: "Rahm Emanuel and staffers in the Senate, House of Representatives, Department of Justice, NASA, Department of Homeland Security, FAA, FCC, and National Institute of Health, among others." AT&T issued the expected "oops" statement soon after this was exposed.
As they had previously hinted, starting June 7th, AT&T's new smartphone customers will no longer be able to opt for the $30 unlimited data plan that was previously offered. Instead, two plans will be offered, both with monthly usage caps: $15 for 200MB or $25 for 2GB. Additionally, tethering is now available for an additional $20 a month. However, tethering is only available with one of the new capped plans. Those who already have the old $30 unlimited plan will be able to keep it... but won't be able to tether. So, existing power users have to decide between $30 a month for unlimited internet data without tethering, or $45 a month for 2GB of data with tethering -- of course, with tethering, data usage would likely go up... even as the amount of data you can use goes way down.
AT&T's motive behind this switch (beyond the obvious of boosting profits) is to attempt to address the network capacity issues that it has been experiencing, of late. As anyone on AT&T can attest, performance of the AT&T data network is far from stellar. The adoption of smartphones like the iPhone have made the internet a truly useful part of the mobile experience, and as such, data use on the AT&T network has risen dramatically as a result. Clearly, AT&T was not able to properly plan to handle the increased demand on its network, and as a result, is claiming it needed to respond by throttling the usage. Of course, one might argue an alternative would be to invest more in capacity, but that gets in the way of that boosting profits thing.
"Some customers, up until now, have been hesitant to sign up for a $30 monthly data plan" for unlimited access, says Ralph de la Vega
Fair enough, but just because some people have been hesitant to sign up for the unlimited data plan doesn't mean you should do away with it altogether.
That said, there are actually a few things that AT&T has done right with this announcement. It's surprising that they are actually offering a cheaper tier for limited data -- something that they had not offered before. Also, with the limited plans, they have introduced a system of alerts that will notify users when they are near their caps. And, existing users with unlimited plans can continue as long as they want, without the tethering option, of course.
Even so, throttling usage could put a damper on the explosive growth of smartphone usage that we have seen in the past few years. There is an added cognitive transaction cost whenever a limit exists, so, by introducing these limits, AT&T has effectively made the iPhone less appealing. Recently, when asked about AT&T's capacity issues, Steve Jobs said "things, when you start to fix them, get worse before they get better. That's what I'm told. And if you believe that, things should start getting a lot better soon." It sounds like Jobs knew what was coming.
Every time we mention CSIRO, the Australian government-owned research group that claims to hold a patent on the basic concept behind WiFi, we get angry comments from people at CSIRO who claim that we've got it all wrong, and that even if they agree with us in general on patents, CSIRO's WiFi patent and the hundreds of millions of dollars it sucks from companies doing actual innovation, is perfectly reasonable. Uh huh. Of course, we still have problems with the idea that any government organization ought to be patenting anything. However, following the decision by a bunch of tech companies sued by CSIRO to pay $250 million to settle the giant patent lawsuit, CSIRO is coming back for more.
JohnForDummies was the first of a few of you to alert us to CSIRO's latest set of lawsuits against American tech companies, this time focusing on ISPs. Verizon Wireless, AT&T and T-Mobile have all been sued, even though none actually make WiFi equipment. However, since they all have WiFi-enabled devices (some of which were almost certainly made by the tech companies who already paid up) CSIRO claims they need to pay up again. Apparently patent exhaustion is not a concept CSIRO considers valid.
Oddly, the article in The Age about this lawsuit seems to side almost entirely with CSIRO, quoting people who insist that companies have "no choice but to pay up" and that CSIRO has the right to demand licenses from the "entire industry." It also quotes someone who falsely claims that the only reason companies would agree to settle is if they knew they were going to lose. That's not even close to true. Lots of companies settle patent disputes because it's often cheaper to do so. And, even if they think they can win, oftentimes their shareholders don't like the uncertainty and push for a faster settlement.
The Age article also provides some more background on the patents in question, highlighting that they're based on mathematical equations created in a 1977 paper. As JohnForDummies points out, mathematical equations are not supposed to be patentable...
On its quarterly conference call, AT&T's CFO once again talked up how the company needed to
move away from flat-rate mobile data plans because its networks are being overwhelmed by traffic from a small percentage of its users. This rhetoric -- which is really just trying to warm up the market for future price increases -- comes despite figures showing that AT&T's data revenues are increasing, while its network investment is decreasing. On some level, if an operator like AT&T wants to try to force through higher prices by increased flat rates or usage-based pricing, go right ahead; we'll see just how the market reacts. But all of their talk about their poor overwhelmed networks would go down a little bit better if they wouldn't decry flat-rate plans in situations like this, while they launch cheap flat-rate unlimited plans at the same time, as AT&T has done for the iPad 3G. If AT&T's network is already taxed and cheap data plans are to blame, why launch another one on a device that's built to consume data?
AT&T is apparently "miffed" that a recent report from a research firm said that it carries less data traffic on its mobile network than either Verizon or Sprint. Meanwhile, the rest of us are trying to figure out exactly why the company cares so much. AT&T has been much maligned for its network's inability to keep up with iPhone users' data (and sometimes, voice) demands; perhaps the company is concerned that ranking third in overall data traffic will somehow push the perception that its network is underpowered even further. AT&T's own analysis of mobile data traffic shows it carries more than half of US mobile users' data, it says -- which is great. But that figure doesn't matter much to an iPhone user who can't connect to the network or whose device doesn't live up to their expectations because of spotty coverage. And those users' stories are probably much more persuasive among consumers than some pretty meaningless stats.