Data Retention Bill Reintroduced to Congress
A bill introduced last week in Congress by Rep. Lamar Smith (R-Texas) would require ISPs to keep records on their subscribers.
The measure, called the Safety Act, is similar to a bill that was introduced last year by the Republican-led Congress but never made it to the floor. The purpose of the bill is to help law enforcement track and prosecute online child predators. No one is questioning the bill objectives, but critics say the privacy implications and the cost of compliance would be enormous. At a minimum, ISPs would be required to keep the name and address of all subscribers, which would be linked to their IP address. Currently, ISPs pool and reuse IP addresses, but under the bill IP addresses would become permanently linked to users.
Critics of the bill also claim that the wording of the legislation is so vague that ISPs could be required to store everything from the web sites people have visited to the contents of instant messages and email. Law enforcement agencies would need a subpoena to obtain such records, but these records could also be used against individuals in non-criminal cases, such as divorces. In addition, it is unclear as to how long ISPs would be required to store the records.
The European Union passed a similar data retention law last year, which is expected to go into effect in 2008. It requires that customer data be retained for six months to two years. The date, time, and location of VoIP calls and email messages must be stored, but not the content of communications.
AT&T Sues FuturePhone Over Interconnect Charges
AT&T filed a lawsuit last week against a company called FuturePhone. It turns out that FuturePhone found a loophole in the interconnect process that enabled it to give its customers free (or almost free) international calls and make money at the same time.
Filed in the U.S. District Court for the Southern District of Iowa, AT&T’s lawsuit is asking that FuturePhone, as well as the Iowa LECs that provided local infrastructure, stop their operations. AT&T is suing because it got stuck with the bill. Its termination fees to Iowa’s Superior Co-op, also named in the suit, went from approximately $2,000 to $2 million a month. FuturePhone has since discontinued its service.
How did they do it?
To get free international calls—or in some cases, to pay just long distance rates for them—all FuturePhone’s customers had to do was place a call to Iowa using the number listed on its site, and from there they could dial out to several foreign countries. FuturePhone partnered with Iowa LECs, which then rerouted the international calls using their IP networks. The LECs and FuturePhone would then share in the termination fees minus the low cost of international termination, which is generally about one-half cent.
AT&T got stuck with the termination fees, because it provided access to the state, but since it doesn’t own the lines, under current law it has to pay the termination fees. In Iowa, termination fees are higher than average to compensate for the fact that it is more expensive to build out telecom infrastructure in rural communities.
In the lawsuit, AT&T claims that since its traffic wasn’t terminated in Iowa, it shouldn’t have to pay the termination fees. AT&T also is claiming that FuturePhone’s practice violates FCC mandates and Iowa state law.
Billing World caught up with Travis Russell, a senior manager at Tekelec with extensive experience in the interconnect space, to get his thoughts this lawsuit. “This is a loophole,” says Russell. “When traffic is modified to prevent detection, it is fraudulent—but is it criminal to route your traffic through the least expensive route?” He suggests that to make sense cases like this, defining the issues of arbitrage and smart routing can help.
According to Russell, arbitrage can be defined as operators using various means to disguise their non-local traffic as local and route it over local trunk groups (phantom traffic). He believes this is fraudulent because the traffic was modified at the signaling level to make it look like something it isn’t.
However, traffic that is routed through IP PBX, or even SIM boxes in a GSM network, as a cheaper transport can be considered smart routing or least-cost routing. There is nothing illegal about this practice, Russell says, even though operators say it “cheats” them out of revenues and uses their resources to terminate the call when it comes back into the network via a local IP PBX.
“Certainly service providers that are using bypass may have questionable ethics, but they are hardly criminal,” says Russell. “They are taking advantage of technology to reduce costs. If they happen to be an operator using bypass to avoid intercarrier fees, it sounds like smart business to me.”
“I have seen many cases when the Bell operators would do the same,” he says. “In fact, I think there is a long history within the Bell System of some pretty questionable practices as well—ever heard of installing ‘interconnect protectors’ on trunks to long distance operators to protect the telephone network?”
Russell believes that the industry needs to simplify interconnect and other charges. Service providers in the wireline space need to work toward new revenue models and embrace IP. He points out that the old model is broken anyway, as evidenced by the decline in fixed-line revenue.
Texas Attorney General Sues Sprint Nextel
The Texas Attorney General filed a suit last week against Sprint Nextel Corp. for allegedly including a “deceptive” fee on cell phone bills to customers in Texas. The lawsuit is asking that Sprint Nextel immediately refrain from charging phone customers the fee and that it reimburse its customers.
The fee in question, identified as the “Texas Margin Fee Reimbursement,” appeared on bills starting January 1, 2007, to compensate for an expanded state business tax. The phrase “reimbursement” implies that Sprint has already paid the tax, but the tax does not go into effect until 2008. In addition, the lawsuit claims that Sprint violated the Truth in Billing guidelines by implying that the tax was mandated by the state, as opposed to being a discretionary fee.
The lawsuit also questions Sprint’s math. The company is charging customers 1 percent, but under the state’s new tax, Sprint should only owe 0.7 percent tax on its gross receipts.
Maryland County Fines Comcast for Poor Customer Service
Montgomery County, Md., fined Comcast $12,281.84 in February for its inability to answer customer service calls in a timely manner. The county can fine a broadband provider if it does not meet the minimum standards set forth in the franchise agreements.
Although this fine is probably not a financial setback for Comcast, it illustrates that a government entity wants to hold providers more accountable for service performance. It has not been uncommon for operator to be fined for questionable billing practices or improper tax compliance, but in this case poor customer service levels are now catching local government attention as well.
In a memorandum prepared for the county’s Management and Fiscal Policy Committee that documents broadband provider statistics, Comcast is reported to have stated that “it has made several changes designed to improve its customer service.” However, report data did not reflect the changes.
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