The big questions left are how the Obama administration will react to the proposed merger and what conditions might be placed on the merger once its terms become more concrete.  The merger would see a significant combination of internet service provision, television programming distribution, television programming production, and news gathering into one entity.  At the very least, Comcast’s position as “one of the nation’s leading providers of cable, entertainment and communications products and services” is certain to raise a lot of questions during the review process.

An interesting effect of entering the review process is how Comcast’s need to enhance its image to aid in regulatory agency approval, and how this might affect the ability of other television networks to demand better retransmission terms from Comcast.  It is entirely possible that Comcast may have to take a softer line in its negotiations and pay more for local broadcasts than it has in the past, in order to help convince regulatory agencies that the merger will not have anticompetitive effects.

New Zealand copyright protesters

New Zealand’s government announced this week that their proposed “three strikes”/”graduated response” copyright law would not go into effect, and would be rewritten from the ground up.The law, which would have required ISPs to cut off internet access to users who had been accused of copyright infringement three or more times, had already been delayed from its initial effective date in February after stalled implementation negotiations and public protests caused lawmakers some concern.

Of particular note to those interested in U.S. copyright issues, Google submitted comments arguing that Internet disconnection is a disproportionate response to unproven allegations of copyright infringement. New Zealand recording industry groups had argued that the evidence of infringement they provide to ISPs is highly reliable, but Google’s comments cite to a 2006 report (summary here) that showed up to 30% of takedown notices Google received “presented an obvious question for a court”, and over half of requests to remove links appeared to be from businesses targeting competitors. Obviously, many of the takedown requests that Google fields are not from official industry groups, but given that U.S.  industry group representatives have likened innocent infringers to dolphins inevitably caught in fishing drift-nets, New Zealand ISPs and consumers had good reason to be concerned.

Image credit – “Dare not write, dare not speak, dare not feel” CC by-nc Fertala

CEO of craiglist Jim Buckmaster said misuse of the site is extremely rare, and is not tolerated. In the past, Buckmaster has defended this section of the web site as striking a balance between allowing free speech and preventing exploitation. The craiglist blog lists 18 separate measures that the site takes to prevent illegal activity on the site.

This is not the first time the “Exotic Services” section of the site has been criticized. A year ago, the Attorney General of Connecticut Richard Blumenthal threatened a suit against the site for allowing nude pictures to be posted. In November 2008, Craiglist was able to come to an agreement with 40 states, which terms including a posting fee for advertisers to the “exotic services” section that required a valid credit card and working phone number (the idea being that law enforcement could access this information by subpoena). The website also agreed to sue 14 companies and individuals who allegedly used the site to facilitate human trafficking, child exploitation, and prostitution.

While craiglist claims that all revenue earned from the fee will be donated to charity, Dart has chided these efforts at goodwill as “dirty money”, and that the efforts have had “little practical effect”. Craiglist has countered this by showing the enormous reduction in postings to this section of the website since this November agreement, and continues to emphasize its continuing cooperation with law enforcement all around the country.

While it is perhaps too soon to see how the case will turn out, the Sheriff will face a tough battle. §230 of the Communications Decency Act provides immunity for ISPs and other service providers against actions perpetrated by 3rd party users, and craiglist will surely advance this as their defense. However, §230 is not so broad as to exclude federal criminal liability, and Dart is claiming that craiglist is more than a passive website operator, but actually an accomplice to the multiple federal crimes.

The Cook County Sheriff, Tom Dart, speaks about the suit at a press conference on March 5:

You (or your IT staff) may have been thankful to find that spam traffic has been a bit lighter in the last few weeks, after the recent shutdown of a major spam hub that, by some estimates, was responsible for as much as 75 percent of the world’s junk mail. You might have expected the company facilitating all of that spam – not to mention illegally gathered credit card information and child pornography – would have chosen to operate from the relative obscurity of an offshore hosting service. Instead, McColo Corporation set up shop in San Jose, California in a “top-level modern [...] IT center.” To be clear, McColo is merely the “virtual host” for those that are actually sending the spam; something akin to a landlord of an apartment building in which most, if not all, of the apartments are being used for illegal activity.

In an interesting twist, it wasn’t U.S. authorities that shut down the hub – instead the companies that provided internet connection for McColo decided to cut ties. This leaves open the possibility of McColo finding another internet provider – or the individual sites being hosted by McColo to disperse, making them harder to track and shut down. In fact, only two weeks after the shutdown, spam levels are reported to already be back to two-thirds of their previous levels.

Brian Krebs of the Washington Post, who is credited with the initial investigation and breaking the story, writes that “Multiple security researchers have recently published data naming McColo as the host for all of the top robot networks or "botnets," which are vast collections of hacked computers that are networked together to blast out spam or attack others online. These include SecureWorks, FireEye and ThreatExpert.” According to Mr. Krebs, “[what is] unclear is the extent to which McColo could be held legally responsible for the activities of the clients for whom it provides hosting services. There is no evidence that McColo has been charged with any crime, and these activities may not violate the law.”

So what is the law (and what should it be?) in this murky, seedy area of the internet? Below is a roundup of various links that may help to address that question:

FBI wants widespread monitoring of ‘illegal’ Internet activity
Illegal Internet Activity a Growing Concern for Enterprise Organizations
Using the Law to Address Illegal Activity on the Internet
Employer responsibility to report illegal activities established by Court
FBI Internet Crime Complaint Center

Two former Qwest customers have filed a putative class action lawsuit against Qwest seeking to end termination fees for broadband Internet subscribers. This is one of the first challenges to broadband service termination fees. Both former customers were charged 200 dollars when they canceled their broadband service. One customer, Rory Durkin, intended to cancel service but decided to continue paying for monthly broadband service when he learned of the termination fee – even though he did not have a working computer.

The other customer, Robin Vernon, allegedly called to cancel service, was told on the phone by a Qwest customer service representative that there was no fee to cancel, but later received a bill for a 200 dollar early termination fee (ETF). When Vernon demanded to see a contract, Qwest informed her that the contract was made orally on the telephone by Mrs. Vernon’s husband and that neither a written copy of a contract nor a recording of the telephone conversation was available. Shortly thereafter, she started receiving calls from a collection agency.

Qwest markets its broadband services as requiring a two-year commitment, but customers do not agree to this in a contract. Customers typically order the broadband service over the telephone. After becoming a subscriber, Qwest mails a "Subscriber Agreement" to the new customer that is not signed by Qwest or the customer. The Subscriber Agreement states "IF YOU ORDER SERVICE WITH A TERM COMMITMENT, YOU AGREE TO MAINTAIN THAT SERVICE FOR THE ENTIRE TERM COMMITMENT PERIOD." The Subscriber Agreement, however, does not mention an ETF and the only term of service mentioned is a month-to-month commitment.

The complaint alleges that the ETF is an unlawful penalty under common law contract principles because "(a) it is wholly disproportionate to the harm, if any, that early cancellation may cause Qwest; (b) it is not based on a bona fide reasonable estimate of the damages, if any, that Qwest incurs from an early cancellation; and (c) the actual damage, if any, Qwest may suffer as a result of early termination is not difficult to ascertain." The complaint also asserts an unjust enrichment claim and other state law claims.

So, what is the likelihood of success in this action and what could this mean for you as a broadband subscriber? Other recent challenges to termination fees in a cellular phone context suggest that if this action against Qwest is successful, customers will likely be able to choose monthly plans without ETFs.

Verizon Wireless agreed to a 21 million dollar settlement in a California class action suit regarding ETFs and now offers plans with month-to-month commitments. Customers can still choose to pay a lower price for the phone and enter into a long-term contract, or the customer can choose to pay full price for the phone without a long-term contract and its accompanying ETF. A California judge also ordered Sprint Communications to pay back 18 million to customers who had paid ETFs. Many phone companies (Sprint, AT&T) are now adjusting their plans by either offering prorated termination fees, so that customers pay less if they cancel later in their agreement, or offering monthly plans like Verizon.

The plaintiffs’ successes in the cell phone cases suggests that the broadband case will be successful as well. Cell phone carriers, because they offer cheaper handsets when customers enter into a long-term contract, can argue that the ETF is appropriate since customers keep their phones after cancelling service. The argument for overturning broadband termination fees is arguably stronger because former broadband customers do not keep anything from the company. The end of broadband termination fees, therefore, may be near.

Allowing customers to cancel their service at any time without an ETF and to switch providers may allow for smaller companies with competitively priced plans to more easily build a customer base and compete with the larger companies. This could result in lower prices for everyone.