Category Archives: Technology

Net Neutrality and What it Means to You

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     The use of the Internet has grown by leaps and bounds since its pubic and commercial inception in 1995. Since then, nearly 79 percent of the population in North America uses the Internet on a regular basis. Currently, the top three Internet Service Providers (ISP’s) in the United States, AT&T, Verizon, and Century Link, control nearly 40% of the overall market.

     As a result of this shrinking market-share, the Federal Communications Commission (FCC) adopted what is known as “Net Neutrality standards”, which gave the agency regulatory power to protect the free flow of information over the Internet. The possibility of regulations designed to mandate the neutrality of the Internet has been subject to fierce debate, especially in the United States. In 2005, the FCC issued a Broadband Policy Statement, which lists four principles of open Internet summarized as “any lawful content, any lawful application, any lawful device, and any provider”.

So What Exactly is Net Neutrality Again?

net-neutrality for dummies

     Essentially, Net Neutrality means that all content on the Internet must be treated equally. That is, one particular digital content provider can’t strike a deal with an ISP for its content to be loaded faster than another digital content provider. If that were to happen, sites like Amazon, with far greater resources than say TMZ, would have its content loaded lightning fast while TMZ’s content would have noticeably longer loading times.  The FCC’s goal was to prevent ISP’s from impeding or “unreasonably discriminating” against digital content providers or applications. In its attempt to regulate equal access to all digital content providers, the FCC created the Net Neutrality Standards discussed above. Many feel that in 2014, equal access to digital content over the Internet should be considered a human right and not be subject to pre-negotiated contracts between ISP’s and digital content providers.

     However, unsurprisingly, one of the nation’s largest ISP’s, Verizon, brought suit in the federal court of appeals challenging the FCC’s authority to regulate the flow of information over the net. Ultimately, in an eighty-one page ruling, the federal appeals court sided with Verizon over the way the FCC’s new rules were drafted. The court determinately pointed out that the FCC is assigned with regulating essential utilities like telecommunication services and electricity, and consequently, the Internet isn’t considered to be one of those utilities under current law. Specifically, the court found that the FCC could not regulate broadband under common carrier rules as it had argued, because it had not classified the service as a telecommunications service. The court relied on antiquated regulations that primarily regulated old modem dial-up connections as opposed to newer fiber optic backbone transmissions that are in use today.

So What Does this Mean to You and Me?

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     As of now, nothing. The major ISP players all issued statements on the court of appeals ruling saying they don’t have plans to change anything based on the court’s decision. The FCC has not ruled out appealing the court of appeals decision to the Supreme Court, or alternatively, rewriting its antiquated rules regulating Internet use.  ISP’s such as Verizon, claim the FCC’s rules are overly broad and violate free-enterprise, essentially arguing that since they provide a service to consumers, they and they alone should be able to dictate how those services are administered. Net Neutrality proponents fear that ISP’s will create two-tiers of Internet, a faster tier for paid content, versus a slower tier for all the rest. They also point out consumers will ultimately bear the brunt of the costs as digital content providers  undoubtedly pass those associated fees down to their consumers.

     The Internet, much like cable television, and air travel has increasingly seen its market-share dwindle over recent years with consolidation, take-overs, and buy-outs. Without regulation, in my opinion, it’s only a matter of time before only a few large ISP’s will remain. It’s American capitalism 101, companies will undoubtedly get larger and seek to continue to maximize profits for their shareholders. In the end, the American consumers will be left holding a bag full of commercial content bought and paid for by the highest bidder.

     Eventually, Congress will need to step in and set a standard of regulation for U.S. Internet Service Providers. Unfortunately, members of Congress understand little about advancing technology and heavily rely on the steady supply of talking points and “research” provided to them by lobbyist. Until we can rid ourselves of the current “do-nothing” Congress, expect little movement on this by our legislative branch of government. Consequently, relying on the Judiciary, armed with antiquated laws, to set standards for existing and future technology that has far surpassed the laws that govern it.  Needless to say, we’ll be keeping a close eye on this evolving contemporary issue as both technology and public sentiment grows.

Got Any [Bit]Coins to Spare?

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GOT ANY SPARE (BIT) COINS

By now, if you’re still one of those folks asking, “what the hell is a Bitcoin?” Don’t worry, you’re not alone. Introduced in 2008 by a group of programmers under the name Satoshi Nakamoto, Bitcoin is defined as peer-to-peer technology that operates outside of central authority or banks. Bitcoins, which exists solely in software, uses cryptography to control transactions and prevent the re-use of spent currency. When a payment has been validated, it becomes public record once recorded in a public ledger known as the blockchain. Payments are then processed by a network of private servers owned and operated by “miners” who benefit from transaction fees and newly minted Bitcoins. Currently, there are roughly 12 million Bitcoins in circulation trading at about $965 each as of today.

In early 2012, when Bitcoins popularity began to catch the eye of mainstream financial insiders such as The Economist, it was initially charecterised as currency for online black market traders like the infamous Silk Road.  Internet black markets, such as Silk Road were described as havens for all things illegal including; drugs, guns, pirated software, and pornography due to the untraceable nature of Bitcoins. However, that was so 1-year ago, and a lot has changed since the relatively unknown currency emerged on the scene. As of today, Bitcoins are increasingly being used as payments for legally legitimate services and products. Both online and brick & mortar merchants have begun accepting the digital currency due to its attractive low transaction fees. Typically, a credit card processing company charges up to 3% per transaction whereas Bitcoin transactions can be below 1%.

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Laws Governing the Use of Bitcoins

In a recent federal case surrounding a Bitcoin Ponzi scheme, SEC prosecutors contended that Bitcoins were considered “security,” defined as; “any note, stock, treasury stock, security future, security-based swap, bond…[or]investment contract” according to U.S statute 15 U.S.C. § 77b. Federal Judge Amos L. Mazzant agreed, ruling that it was clear that Bitcoins can be used as currency and the “only limitation of Bitcoin is that it is limited to those places that accept it as currency.”

Currently, like many other forms of technology, there is no specific law governing its use. Initially, deemed “experimental currency” in a high-risk environment, U.S. government officials sought clarification of its legal use. After extensive testimony before the U.S Senate’s Homeland Security and Governmental Affairs Committee, the U.S. Justice Department described Bitcoin currency as a “legal means of exchange.”  Bloomberg Business reported that “government agencies from the U.S. Secret Service to the Financial Crimes Enforcement Network have weighed in to say that the virtual currency that’s designed to be difficult to trace has potential benefits, as well as risks.”

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Future of Bitcoins

So what does that all mean?

Essentially, Bitcoins, as of now, are considered a legal form of currency capable of being exchanged in the U.S. and worldwide markets. So long as retailers, service providers, and online merchants who accept Bitcoins continues to grow, expect Bitcoins to remain legal. On average, there are currently about 30 Bitcoin transactions per minute, however that number is expected to grow exponentially, estimated a report published earlier this month. Bitcoin trading has increased nearly 500 times over the past year, and steadily increasing at rates predicted by industry economist. Moreover, since Bitcoins are created by miners operationg powerful servers capable of completing robust software algorithms embedded within the currency itself, expect Bitcoins volume to increase, both as miners and computing power increases.

How Can You Benefit from Bitcoins?

Bloomberg business news reports that savvy U.S investors have begun allocating more and more of their investments to Bitcoin currency in order to diversify their portfolios. Further, many Wall Street investment firms have begun offering investors options to buy Bitcoins for individual retirement accounts (IRA’s).  Bitcoin Investment trusts have also cropped up creating more than $15 million in funds. Simply put, if you’re interested in spreading your profits and losses out, Bitcoin investments may be a viable option.

Conclusion

While Bitcoins have been given the green light by U.S. treasury officials, it’s still a relatively new trading platform and should be approached with caution. Consequently, according to Bitstamp, in the time it took to compose this post, Bitcoins value increased by nearly a dollar!  However, Bitcoin trading volatility has been influx due to recent Senate inquires and the subsequent validation by U.S officials as an authentic currency. Therefore, once all the dust settles, and you get all the facts, maybe you’ll have a few (Bit)Coins to spare!

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High Stakes at High Noon, Patent Litigation Showdown

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     One gentleman in particular can arguably be credited for the way most of us use the Internet today! Michael Jones, a patent holder, and also the source of numerous legal battles which have resulted in hundreds of lawsuits and millions of dollars in settlements.  The patent Jones holds is based on an encryption algorithm invented in 1987 well before the Internet became available.

Essentially, many commerce and communication sites use what’s called Secure Sockets Layer (SSL) protocol to communicate securely over the Internet. Specifically, a SSL session encrypts data flowing between two parties, usually the end-user (yourself), and the content provider (think Amazon, GoDaddy, etc.) Internet content providers that utilize SSL protocol encryption includes everything from email providers, Internet faxing, IM’ing, to voice over IP (VoIP) vendors.

However, Mr. Jones patent, US Patent No. 5,412,730, which was originally granted in 1989, predates the internet all together. One may ask, how can a patent before the internet, control internet content providers today? Apparently his original patent application was written broadly enough to justify “suing hundreds of websites yet narrow enough that the case shouldn’t be dismissed as irrelevant over the encryption that existed at the time,” Joe Mullin reported for arteschnica.com. To date, Mr. Jones has received confidential settlements from over 120 web content providers for SSL protocol use.

One particular company however, decided it would not pay Mr. Jones licensing fees for a patent that was issued before the technology being used was created. Newegg, an online digital retailer, decided to forgo any talks of settlement and take its patent claim defense to the court of law. Specifically, New Egg’s top attorney, Lee Chang, has determinately decided not to pay any settlements to Mr. Jones or his holding company associated with the patent. Mr. Lee basically summarized Mr. Jones and his subsequent holding company as a “Patent Troll,” as he and his legal team prepares for court.

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A Patent Troll is defined as “a person or company who enforces patent rights against accused infringers in an attempt to collect licensing fees, but does not manufacture products or supply services based upon the patents in question.” Simply put, it’s loosely analogous to cyber-squatters, those who pre-purchase popular website domains in hopes of cashing in from anyone wishing to purchase that domain later. The White House conducted a study and discovered that patent-troll related lawsuits were up 400% since 2005, and victims of patent trolls paid nearly $29 billion in 2011 alone.

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The reason this court battle is so significant is because most corporations who are hit with a patent challenge simply weigh the cost of patent litigation against paying licensing fee’s then usually opt for the less expensive latter. The result of this cost benefit analysis usually leaves patent holders like Mr. Jones with a nice portfolio of royalty paying clients. Mr. Lee’s decision to fight back is being held as courageous among many industry insiders.  Principally, a court victory for Newegg, an any subsequent precedent that is set by the court’s outcome would affect all potential SSL protocol users both past and present.  Corporations currently paying licensing fees for Mr. Jone’s preexisting technology include heavyweights like; Verizon, Lowe’s, CVS, Sprint, Amway, State Farm and Aflac.

Newegg and Mr. Jones’ holding company, TQP Development, will face off in federal court in Marshall, Texas. This particular venue has long been held as a favorite among patent litigators because of its seemingly speedy litigation processing. Although TQP’s patent expired in May 2013, the law provides patent holders to seek retro-active claims up to six years prior. We’ll continue to monitor this one and report on the outcome!