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Old 17-07-13, 07:49 AM   #1
JackSpratts
 
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Default Peer-To-Peer News - The Week In Review - July 20th, '13

Since 2002


































"If you're collecting information about my telephone when you shouldn't be doing that, that is an abuse, even if you file it and never use it." – Rep. Jerrold Nadler (D-New York)


"I have a feeling that the administration is getting concerned about the bulk phone records collection, and that they are thinking about whether to move administratively to stop it." – Sen. Ron Wyden (D-Oregon)


"Yes, the encryption will invite groups to use BitTorrent Sync to share files they don't have the right to distribute or copy, safe from the prying eyes of copyright enforcers. But it could just as easily be used by dissidents to avoid government censors and teams of workers to protect trade secrets. Again, it's a technology, not a behavior." – Jon Healy






































July 20th, 2013




Piracy in Norway Plunges

Film and music industry can with the law in hand monitor Norwegians file portion illegal. But even without a stringent intellectual property, piracy has fallen sharply.
Arild Færaas

In 2012, counterfeit Norwegians less than a fifth music compared to 2008. The download of the TV series was less than half of what it was in 2008, and illegal downloading of movies is almost halved in the same years.

This despite the fact that it is only now that the law allows for it to be possible to block pirate sites. All that from 1 July has become much easier to monitor the pirates.

These figures come from an annual survey Norwaco, one copyright organization behind, conducted by Ipsos MMI.

The figures show that it was copied about 210 million songs illegally last year, around 65 million movies and about 55 million TV shows. In 2008 the corresponding figures were nearly 1.2 billion songs, about 125 million movies and about 135 million TV shows, that a marked decline.

Read the report here: Report on kopiering.pdf (PDF)

The figures include both illegal downloading and illegal copying of physical formats and hard drives.

Lighter available

While there has been a decline in illegal music copying every year, it is only in 2011 that there was a big drop for movies, and only last year for the TV series.

Olav Torvund's former law professor at the University of Oslo. Now he is partner and attorney in Bing Hodneland and expert on copyright.

- The most obvious explanation is that in recent years has come pouring services for music Wimp and Spotify, and a little later video services like Netflix, says says.

In addition, also services such as Itunes and so-called Video-on-Demand have had an impact on reduced piracy.

- When you get a good legitimate offer, the people using it. There is no excuse for illegal copying, but when you get an offer that does not cost too much, and that is easy to use, it is less interesting to download illegally, he said.

- Blocking helps

The survey also shows that 47 percent of respondents use flow services for music Wimp or Spotify. 54 percent of these in turn pay for at least one of the services.

In a report by IFPI, an organization for the international record companies, it also appears that in countries where it is introduced legislation that will block sites like Pirate Bay, the number of users of Pirate Bay has more than halved in 2012. This includes countries such as Denmark, Finland, the Netherlands and the United Kingdom. While in other countries that have blocked Pirate Bay, the number of users increased by over a third.
Staples anti-piracy alliance from August

But the Norwegians still downloading illegally, you do not feel safe when a new organization starting up.

Willy Johansen is Secretary General of the Norwegian Videograms Association, which represents those who distribute Blu-ray and DVD.

He has invited other industry associations for cinema, music and book industry to join Rights Alliance. The new organization will be using the new Copyright Act to find out who download illegal material.

- We have had an initial meeting, and during August we hope to have a formal foundation, says Johansen told Aftenposten.

The law firm Simonsen VogtWiig, which a few years ago, the only concession to run the pirate surveillance are also likely to join our team.

Will take more pirates

Johansen says that they have not yet sent a message to the Inspectorate for permission to store IP addresses, so far is Norwegian pirates relatively safe.

- Who we are primarily looking for are those who upload movies and the larger pirates. If we find one man who has downloaded one movie, it's not them we want to take.

- We will also work towards blocking some sites, including Pirate Bay, he confirms.

Law professor and lawyer Olav Torvund think that the new copyright law that applies increased opportunities for monitoring and blocking, will lead to an even greater decline in illegal file downloads than it has been in recent years.

- There will probably always be illegally downloading a certain extent. But the risk of being caught has enough significance to anyone who tries. And the Pirate Bay is blocked, enough threshold higher than the usual, relatively innocent users think says.
http://translate.google.com/translat...23.UeW5mY3ksYc





Is File-Sharing Still An Issue For The Music Industry?
Marcela De Vivo

File-sharing was on the tip of everybody’s tongue in the early to mid-2000s. While file-sharing might not be the hot-button topic it was in 2005, the concept is still around and it doesn’t seem like the file-sharing sites in existence are going to be going anywhere anytime soon.

But, how do file-sharing websites really affect the artists that make the music and the people behind the scenes? There may not be a clear-cut answer to that question.

Are Illegal Downloads Costing The Music Business Money?

When it comes to file-sharing for artists and people behind the scenes in the music industry, the biggest issue they face it the potential loss of revenue. While people that use file-sharing sites don’t pay for music that they’re downloading, there’s some evidence that people who use file sharing sites may actually buy more music than those who don’t.

In fact, individuals that use file-sharing sites may buy about 30-percent more music than people who don’t. Many people who use file-sharing sites claim that they use them to sample music in order to avoid paying for songs they don’t really want.

However, many large recording companies are suffering due to an overall decrease in recorded music sales. Many believe that this is simply a transition period for most major labels though, as they work to figure out new ways to recoup the costs of recording music and producing albums without selling as many.

Who Is Going to Fill All Those Seats?

In 2013, the revenue that comes from selling recorded music is a considerably smaller percentage of their overall income than it was 20 years ago. Today, artists are making most of their money from touring, merchandise and, in some cases, endorsements.

In some respects, file-sharing may be increasing the amount of ticket sales a particular artist can make. A person that downloads an album without paying for it very well might pay for the concert experience – something they’ll never be able to download for free.

Many people behind the scenes are struggling to catch up with this business model, however. In the past, record labels generally paid for recordings and recouped the money spent, plus a profit on the album sales – leaving the touring and merchandise revenue to the artist.

In 2013, the smartest record companies are getting involved in touring and merchandise as well. Some are even building percentages of tour revenue into their contract with an artist because of generally low record sales.

What About Streaming Music?

Another reason we haven’t been hearing as much about file-sharing this year is because of the rise of streaming music. Services like Pandora and Spotify are offering free music to consumers, relying on ad-revenue or a monthly membership fee.

Spotify even allows users to put music in their library to listen to it anytime they want. Free users face short ads every few songs, but subscribers can stream unlimited music 24 hours per day for about $10 a month.

Many musicians and people in the music business believe streaming is really the wave of the future. However, recent issues with royalty rates paid to artists and labels have raised concerns.

While many think streaming services, like Spotify, are beneficial for the industry because they will help boost some record sales, ticket sales and create ad-revenue for a struggling music business, it’s true that most musicians only get less than a tenth of cent royalty payments for each play on a site like Pandora or Spotify.

Most within the industry believe that royalty issue must be fixed sooner or later so that artists can earn an appropriate amount for their creations, and there are those who are making a move to do so. For example, Arena is a new streaming site based on a model that gives an unprecedented $.21 cents to each artist per play, as well as 100% of all purchase proceeds.

Almost everybody agrees that the music business is in a very strange state right now. Small labels are growing; big labels are shutting down. Free music is all over the place, and we continue to gain access to it more easily each day.

Only time will tell how the industry finds a way to monetize an important asset – the art of music. However, for now, attempting to take down the file-sharing sites, which don’t seem to be doing much to hurt the business, likely shouldn’t be the top priority.
http://www.themusicvoid.com/2013/07/...usic-industry/





BitTorrent Releases Sync Beta for Direct File Sharing Between Devices
Jon Healey

San Francisco-based BitTorrent released the beta version Wednesday of a new application for its digital distribution software: syncing files across multiple devices. The company says its Sync software will share files faster than cloud-based file synchronization programs (e.g., Dropbox or SugarSync) because it doesn't use the cloud -- it shares files directly from device to device.

Oh, and yes, the file transfers are encrypted to deter them from being monitored or intercepted.

I can imagine how poorly the news will go over among recording artists and Hollywood executives who see BitTorrent as the tool of choice for many online music and movie pirates. It's also the software that delivers the bootlegged files that people find through such sites as The Pirate Bay and Isohunt.

But BitTorrent is just a technology, one that happens to make it easy to send and receive very large files. Yes, there are lots of people using it to violate copyright law. There's also a slowly growing number of artists using it to deliver their work, in whole or in part, to attract a larger audience or promote new material.

Sync works a bit differently from conventional BitTorrent, which breaks files into segments so that people can download them from multiple sources simultaneously. With Sync, files are shared directly from device to device through the Internet (unless they're on the same local network, in which case they don't have to be online). It's similar to the way devices on a home network share files.

Unlike Dropbox, Sync doesn't save a back-up copy in an online locker, so if you're looking for that sort of reassurance, it's the wrong app. On the other hand, it imposes no limits on file size, charges no fees, and places no brakes on transfer speeds. Aside from online congestion, the only limiting factors are the upstream bandwidth of the sending device and the downstream bandwidth of the receiver.

The company released an alpha version of Sync in April, which has been used to share more than 8 petabytes of data. Early users have used Sync to collaborate on projects, create a private distribution network for blogs, and set up a personal data storage system, among other things.

The beta adds mobile file synchronization for Android users (support for Apple products is in the pipeline).

Yes, the encryption will invite groups to use BitTorrent Sync to share files they don't have the right to distribute or copy, safe from the prying eyes of copyright enforcers. But it could just as easily be used by dissidents to avoid government censors and teams of workers to protect trade secrets. Again, it's a technology, not a behavior.
http://www.latimes.com/business/tech...,1147304.story





MPAA Demands Source Code of isoHunt’s “Failing” Piracy Filter
Ernesto

The major hollywood movie studios have filed a motion for contempt against the popular torrent site isoHunt, arguing that a court-ordered piracy filter is not working properly. The MPAA informs the court that isoHunt has “deliberately engineered the filter to ensure that it is ineffective” and wants the site to turn over its source code to prove their claims. In addition, the MPAA wants millions of dollars in compensation for the damages the studios have suffered through the isoHunt site.

Almost three years ago the U.S. District Court of California ordered BitTorrent search engine isoHunt to start filtering its search results.

The injunction was the result of isoHunt’s protracted court battle with the MPAA that began back in 2006. The Court ordered the owner of isoHunt to censor the site’s search engine based on a list of thousands of keywords provided by the MPAA, or cease its operations entirely in the U.S.

isoHunt implemented the filter for U.S. visitors which allowed it to remain online, but at the same time owner Gary Fung took his case to the Court of Appeals. Through the appeal, isoHunt hoped to reverse the permanent injunction, but this didn’t come to pass.

With the appeal concluded the movie studios are now asking for a summary judgment, hoping that the court awards them compensation for the many pirated movies that were downloaded via the isoHunt site. In addition, the MPAA has filed a motion for contempt claiming that the current keyword filter on the isoHunt Lite site is not doing its job.

“The Isohunt Lite filtering problems are too serious and consistent to be mere matters of innocent ‘mistake’ or unavoidable filtering ‘leakage’ as Defendants have variously claimed,” the MPAA tells the court, suggesting that isoHunt is making these mistakes intentionally to keep up its profits.

“The record to date supports the inference that Defendants have deliberately engineered the filter to ensure that it is ineffective in preventing access to Plaintiffs’ copyrighted works. As the Court found, because Defendants profit from infringement, they have a powerful economic incentive to continue providing users with access to Plaintiffs’ popular movies and television programs.”

Backed up by screenshots, the MPAA cites several examples of popular movies whose titles are on the ban list, but are still available thought the site.

“One work on Plaintiffs’ title list is the popular film ‘Zero Dark Thirty’ for which Plaintiffs provided Defendants the movie title, release date and media type. Yet, the movie is available to any Isohunt Lite user who looks for it. Typing the term ‘Zero Dark Thirty’ into Isohunt Lite’s search box returns innumerable dot torrent files for the movie.”

The movie studios argue that nearly all movies are still accessible through the site, which would mean that isoHunt is not in compliance with the injunction. While isoHunt has claimed that these are mere mistakes, the MPAA believes that it supports their motion for contempt.

“These are not isolated instances. Virtually every movie Plaintiffs looked for using Isohunt Lite returned innumerable dot torrent files for Plaintiffs’ copyrighted works. Defendants’ so-called filter does not even appear to block access to dot torrent files that match a movie’s exact title,” MPAA writes.

“Facially, such a filter is wholly ineffective and cannot be the basis of compliance with an injunction that enjoins Defendants from ‘hosting, indexing, linking to, or otherwise providing access to any Dot-torrent or similar files that correspond, point or lead to any of the Copyrighted Works.’”

The MPAA asks the court to order isoHunt to hand over all filter-related source code and databases, so the movie studios can show that the filtering failures are not “innocent mistakes” or “mere unavoidable leakage.”

TorrentFreak asked isoHunt owner Gary Fung for a comment on the allegations put forward by the MPAA, but he chose not to respond at this time.

It is clear that the MPAA is not letting the isoHunt case rest just yet. In addition to the motion for contempt there is also a motion for summary judgment pending. The movie studios are currently in the process of calculating the damages they have suffered as a result of isoHunt’s operations, which is expected to be in the millions.

The MPAA previously won a $110 million judgment against the TorrentSpy site, and it’s expected the damages claimed against isoHunt will be in the same range, or perhaps even higher.
http://torrentfreak.com/mpaa-demands...filter-130720/





How Intellectual Property Reinforces Inequality
Joseph E. Stiglitz

In the war against inequality, we’ve become so used to bad news that we’re almost taken aback when something positive happens. And with the Supreme Court having affirmed that wealthy people and corporations have a constitutional right to buy American elections, who would have expected it to bring good news? But a decision in the term that just ended gave ordinary Americans something that is more precious than money alone — the right to live.

At first glance, the case, Association for Molecular Pathology v. Myriad Genetics, might seem like scientific arcana: the court ruled, unanimously, that human genes cannot be patented, though synthetic DNA, created in the laboratory, can be. But the real stakes were much higher, and the issues much more fundamental, than is commonly understood. The case was a battle between those who would privatize good health, making it a privilege to be enjoyed in proportion to wealth, and those who see it as a right for all — and a central component of a fair society and well-functioning economy. Even more deeply, it was about the way inequality is shaping our politics, legal institutions and the health of our population.

Unlike the bitter battles between Samsung and Apple, in which the referees (American courts), while making a pretense at balance, seem to consistently favor the home team, this was a case that was more than just a battle between corporate giants. It is a lens through which we can see the pernicious and far-reaching effects of inequality, what a victory over self-serving corporate behavior looks like and — just as important — how much we still risk losing in such fights.

Of course, the court and the parties didn’t frame the issues that way in their arguments and decision. A Utah firm, Myriad Genetics, had isolated two human genes, BRCA1 and BRCA2, that can contain mutations that predispose women who carry them to breast cancer — crucial knowledge for early detection and prevention. The company had successfully obtained patents for the genes. “Owning” the genes gave it the right to prevent others from testing for them. The core question of the case was seemingly technical: Are isolated, naturally occurring genes something that can be patented?

But the patents had devastating real-world implications, because they kept the prices for the diagnostics artificially high. Gene tests can actually be administered at low cost — a person can in fact have all 20,000 of her genes sequenced for about $1,000, to say nothing of much cheaper tests for a variety of specific pathologies. Myriad, however, charged about $4,000 for comprehensive testing on just two genes. Scientists have argued that there was nothing inherently special or superior about Myriad’s methods — it simply tested for genes that the company claimed to own, and did so by relying on data that was not available to others because of the patents.

Hours after the Supreme Court’s ruling in favor of the plaintiffs — a group of universities, researchers and patient advocates, represented by the American Civil Liberties Union and the Public Patent Foundation — other laboratories quickly announced that they would also begin offering tests for the breast cancer genes, underlining the fact that Myriad’s “innovation” was identifying existing genes, not developing the test for them. (Myriad is not done fighting, though, having filed two new lawsuits this month that seek to block the companies Ambry Genetics and Gene by Gene from administering their own BRCA tests, on the grounds that they violate other patents that Myriad holds.)

It should not be very surprising that Myriad has done everything it can to prevent its tests’ revenue stream from facing competition — indeed, after recovering somewhat from a 30 percent drop in the wake of the court ruling, its share price is still nearly 20 percent below what it was beforehand. It owned the genes, and didn’t want anybody trespassing on its property. In obtaining the patent, Myriad, like most corporations, seemed motivated more by maximizing profits than by saving lives — if it really cared about the latter, it could and would have done better at providing tests at lower costs and encourage others to develop better, more accurate and cheaper tests. Not surprisingly, it made labored arguments that its patents, which allowed monopolistic prices and exclusionary practices, were essential to incentivize future research. But when the devastating effects of its patents became apparent, and it remained adamant in exerting its full monopoly rights, these pretensions of interest in the greater good were woefully unconvincing.

The drug industry, as always, claimed that without patent protection, there would be no incentives for research and all would suffer. I filed an expert declaration with the court (pro bono), explaining why the industry’s arguments were wrong, and why this and similar patents actually impeded rather than fostered innovation. Other groups that filed amicus briefs supporting the plaintiffs, like AARP, pointed out that Myriad’s patents prevented patients from obtaining second opinions and confirmatory tests. Recently, Myriad pledged it would not block such tests — a pledge it made even as it filed the lawsuits against Ambry Genetics, and Gene by Gene.

Myriad denied the test to two women in the case by rejecting their Medicaid insurance — according to the plaintiffs, because the reimbursement was too low. Other women, after one round of Myriad’s testing, had to make agonizing decisions about whether to have a single or double mastectomy, or whether to have their ovaries removed, with severely incomplete information — either Myriad’s testing for additional BRCA mutations was unaffordable (Myriad charges $700 extra for information that national guidelines say should be provided to patients), or second opinions were unattainable because of Myriad’s patents.

The drug industry, as always, claimed that without patent protection, there would be no incentives for research and all would suffer. I filed an amicus brief with the court, explaining why the industry’s arguments were wrong, and why this and similar patents actually impeded, rather than fostered, innovation. Through my participation in the case, I heard heart-rending stories of women who didn’t take the actions they should have, because they believed the false-negative results of Myriad’s inferior tests. The better tests would have told them they did in fact have a gene associated with cancer.The good news coming from the Supreme Court was that in the United States, genes could not be patented. In a sense, the court gave back to women something they thought they already owned. This had two enormous practical implications: one is it meant that there could now be competition to develop better, more accurate, less expensive tests for the gene. We could once again have competitive markets driving innovation. And the second is that poor women would have a more equal chance to live — in this case, to conquer breast cancer.

But as important a victory as this is, it is ultimately only one corner of a global intellectual property landscape that is heavily shaped by corporate interests — usually American. And America has attempted to foist its intellectual property regime on others, through the World Trade Organization and bilateral and other multilateral trade regimes. It is doing so now in negotiations as part of the so-called trans-Pacific Partnership. Trade agreements are supposed to be an important instrument of diplomacy: closer trade integration brings closer ties in other dimensions. But attempts by the office of the United States Trade Representative to persuade others that, in effect, corporate profits are more important than human lives undermines America’s international standing: if anything, it reinforces the stereotype of the crass American.

Economic power often speaks louder, though, than moral values; and in the many instances in which American corporate interests prevail in intellectual property rights, our policies help increase inequality abroad. In most countries, it’s much the same as in the United States: the lives of the poor are sacrificed at the altar of corporate profits. But even in those where, say, the government would provide a test like Myriad’s at affordable prices for all, there is a cost: when a government pays monopoly prices for a medical test, it takes money away that could be spent for other lifesaving health expenditures.

The Myriad case was an embodiment of three key messages in my book “The Price of Inequality.” First, I argued that societal inequality was a result not just of the laws of economics, but also of how we shape the economy — through politics, including through almost every aspect of our legal system. Here, it’s our intellectual property regime that contributes needlessly to the gravest form of inequality. The right to life should not be contingent on the ability to pay.

The second is that some of the most iniquitous aspects of inequality creation within our economic system are a result of “rent-seeking”: profits, and inequality, generated by manipulating social or political conditions to get a larger share of the economic pie, rather than increasing the size of that pie. And the most iniquitous aspect of this wealth appropriation arises when the wealth that goes to the top comes at the expense of the bottom. Myriad’s efforts satisfied both these conditions: the profits the company gained from charging for its test added nothing to the size and dynamism of the economy, and simultaneously decreased the welfare of those who could not afford it.

While all of the insured contributed to Myriad’s profits — premiums had to go up to offset its fees, and millions of uninsured middle-income Americans who had to pay Myriad’s monopoly prices were on the hook for even more if they chose to get the test — it was the uninsured at the bottom who paid the highest price. With the test unaffordable, they faced a higher risk of early death.

Advocates of tough intellectual property rights say that this is simply the price we have to pay to get the innovation that, in the long run, will save lives. It’s a trade-off: the lives of a relatively few poor women today, versus the lives of many more women sometime in the future. But this claim is wrong in many ways. In this particular case, it is especially wrong, because the two genes would likely have been isolated (“discovered,” in Myriad’s terminology) soon anyway, as part of the global Human Genome Project. But it is wrong on other counts, as well. Genetic researchers have argued that the patent actually prevented the development of better tests, and so interfered with the advancement of science. All knowledge is based on prior knowledge, and by making prior knowledge less available, innovation is impeded. Myriad’s own discovery — like any in science — used technologies and ideas that were developed by others. Had that prior knowledge not been publicly available, Myriad could not have done what it did.

And that’s the third major theme. I titled my book to emphasize that inequality is not just morally repugnant but also has material costs. When the legal regime governing intellectual property rights is designed poorly, it facilitates rent-seeking — and ours is poorly designed, though this and other recent Supreme Court decisions have led to one that is better than it otherwise would have been. And the result is that there is actually less innovation and more inequality.

Indeed, one of the important insights of Robert W. Fogel, a Nobel Prize-winning economic historian who died last month, was that a synergy between improved health and technology accounts for a good part of the explosive economic growth since the 19th century. So it stands to reason that intellectual property regimes that create monopoly rents that impede access to health both create inequality and hamper growth more generally.

There are alternatives. Advocates of intellectual property rights have overemphasized their role in promoting innovation. Most of the key innovations — from the basic ideas underlying the computer, to transistors, to lasers, to the discovery of DNA — were not motivated by pecuniary gain. They were motivated by the quest for knowledge. Of course, resources have to be made available. But the patent system is only one way, and often not the best way, of providing these resources. Government-financed research, foundations, and the prize system (which offers a prize to whoever makes a discovery, and then makes the knowledge widely available, using the power of the market to reap the benefits) are alternatives, with major advantages, and without the inequality-increasing disadvantages of the current intellectual property rights system.

Myriad’s effort to patent human DNA was one of the worst manifestations of the inequality in access to health, which in turn is one of the worst manifestations of the country’s economic inequality. That the court decision has upheld our cherished rights and values is a cause for a sigh of relief. But it is only one victory in the bigger struggle for a more egalitarian society and economy.
http://opinionator.blogs.nytimes.com...es-inequality/





Has Patent, Will Sue: An Alert to Corporate America

Erich Spangenberg’s firm, IPNav, wants to “turn idle patents into cash cows.”
David Segal

If you’re a corporate executive, this may be one of the last sentences you want to hear: “Erich Spangenberg is on the line.” Invariably, Mr. Spangenberg, the 53-year-old owner of IPNav, is calling to discuss a patent held by one of his clients, which he says your company is infringing — and what are you going to do about it?

Mr. Spangenberg is likely to open the conversation on a diplomatic note, but if you put up enough resistance, or try to shrug him off, he can also, as he put it, “go thug.”

He demonstrated what that sounds like in a brief bit of role-play recently, sitting in the apartment he is renting for the summer in Paris near the Arc de Triomphe. His voice dropped, the curse words flowed, and he spoke with carefully modulated menace.

“Once you go thug, though, you can’t unthug,” he explained, returning to his warm and normal tone. “Actually, you can unthug, but if you do that, you can’t rethug. Then you just seem crazy.”

Mr. Spangenberg’s company, based in Dallas, helps “turn idle patents into cash cows,” as it says on its Web site. A typical client is an inventor or corporation, with a batch of patents, demanding a license fee from what it contends is an infringer, usually a titan in the tech realm. His weapon of choice in this business — the brass knuckles of his trade, so to speak — is the lawsuit.

In the last five years, IPNav has sued 1,638 companies, according to a recent report by RPX, a patent risk management provider, more than any other entity in the patent field. “To get companies to pay attention, in some percent of the market, you need to whack them over the head,” Mr. Spangenberg said. “In our system, you can’t duel, you can’t offer to fight in the street, which would be fine with me.”

This combat readiness has made Mr. Spangenberg, a high-school dropout raised in Buffalo, very rich. He earns about $25 million a year, he says, which is at least a couple of million more than the country’s top bank executives. Until recently, he lived in a 14,000-square-foot home in Dallas; it is now on the market for $19.5 million. He often flies on a company jet, and at one point he owned 16 cars, six of them Lamborghinis.

His clients, who pay IPNav a percentage of any recovery, contend that he earns every dollar and praise him as a hero.

“Erich saved our bacon,” said Steve Dodd, a patent holder with a client company called Parallel Iron. “We were more than $1 million in debt and I was getting ready to file for bankruptcy.”

Mr. Spangenberg’s opponents use less flattering terms to describe his work. Like shakedown artist. Or patent troll.

There is debate about the definition of patent trolls, but the term broadly refers to people who sue companies for infringement, often using patents of dubious value or questionable relevance, and then hold on like a terrier until they get license fees. In recent years, patent trolls — they prefer “patent assertion entities,” or P.A.E.’s — have gone from low-profile corporate migraine to mainstream scourge.

This is partly because the number of patent infringement suits has more than doubled in recent years, to 4,731 cases in 2012 from 2,304 in 2009, according to that RPX report. The cost to businesses, which pass along the expense to consumers, is immense. One study found that United States companies — most of them small or medium-sized — spent $29 billion in 2011 on patent assertion cases.

“And only about $6 billion of that money wound up in the hands of inventors,” said James Bessen, a co-author of the study and a professor at the Boston University School of Law. “As for the other $23 billion, most of it goes to legal expenses, both for defendants and patent troll companies, with the rest going to operating expenses of the trolls — overhead and marketing — and finally, patent troll company profits. That’s why we call this type of litigation a tax on innovation. It discourages innovation much more than it encourages it.”

The notoriety of trolls also arises from legal claims that, at minimum, sound absurd. Like the P.A.E. that last year mailed letters to companies contending it had a patent on e-mailing scanned documents and asking for a license fee of $1,000 per employee. Or the company that has sued for license fees from podcasters through a patent originally filed in 1996, long before podcasts were conceived.

The inevitable counterattack on patent asserters has begun. In June, President Obama announced a handful of executive orders “to protect innovators from frivolous litigation.” Companies, large and small, are starting to vent and fight back, and figures as varied as Judge Richard A. Posner, of the United States Court of Appeals for the Seventh Circuit, and Marc Maron, the stand-up comedian and podcast host, have denounced trolling. Mark Cuban recently gave the Electronic Frontier Foundation $250,000 to help finance “The Mark Cuban Chair to Eliminate Stupid Patents.”

Mr. Spangenberg has been called “a costly nuisance,” “one of the most notorious patent trolls in America” and many unprintable names in the comments sections of Web sites like Techdirt. He has achieved a certain infamy.

In his telling, he is protecting put-upon inventors. But he may simply be profiteering from a flawed and creaky legal system.

Mr. Spangenberg speaks in rapid-fire clumps of words, usually while looking down and grimacing slightly, as though trying to lift a barbell. When we met, he was wearing what he calls “my uniform”: a pair of jeans and one of his 40 identical black, short-sleeve, mock-turtleneck Nike T-shirts.

He doesn’t mind his public reputation as an ogre, and by all means, he says, call him a troll — though he thinks the name is a bogus effort to taint his profession.

When it comes to work, he is focused to the point of being obsessive. As an associate at a corporate law firm — after taking the ACT test, he attended the University of Delaware and eventually earned a law degree from Case Western University — he once worked four days straight without sleep, and was taken to the hospital in an ambulance.

“I had a mild seizure,” he said. “There’s only so much coffee and caffeine tablets you can take.”

He stands about 5-foot-6 and was bullied as a child because of his height. He always fought back, he says, and he usually lost; his nose has been broken by an assortment of fists. This has given him a lifelong hatred of bullies, which explains, he says, why he wound up in a job where he often stands with a small company assailing a larger one.

But IPNav doesn’t exactly fight using the Marquess of Queensberry rules. In a 2008 ruling, Judge Barbara B. Crabb of Federal District Court in Wisconsin, concluded that Mr. Spangenberg was involved in witness tampering — specifically, inducing a lawyer to “intimidate a witness on the eve of trial.” The eviscerating 62-page ruling was in a case brought by DaimlerChrysler against a company owned by Mr. Spangenberg called Taurus IP. The carmaker accused Mr. Spangenberg of breaking a 2006 we-won’t-sue-you-again agreement over certain tech patents.

It was a complex case, but here’s a quick summary: one company controlled by Mr. Spangenberg (Orion IP) was accused of having signed a settlement with DaimlerChrysler. Later, a different Spangenberg-owned company (Taurus IP) sued DaimlerChrysler with related patents. Mr. Spangenberg seemed to be trying a double dip — angling for two settlements from the same defendant. Tsk, tsk, said Judge Crabb, though she used tougher language and painstakingly enumerated the maze of companies in the Spangenberg empire. She ordered Taurus IP to pay DaimlerChrysler $3.8 million to cover its legal fees and succinctly described Mr. Spangenberg’s business model this way: “to license patents through litigation: first file a lawsuit, then negotiate a licensing agreement as part of a settlement.”

“It was a mauling,” Mr. Spangenberg said of Judge Crabb’s takedown, now under appeal. But weirdly enough, the ruling turned out to be terrific public relations.

Soon after Judge Crabb’s decision, IPNav’s phone was ringing with new business. RadioShack, Bridgestone and other companies wanted to strike a variety of deals to monetize their patents. The mauling had laid bare Mr. Spangenberg’s aggressive business techniques. IPNav soon grew from five employees to 80, most of whom are patent specialists; it currently manages about 10,000 patents. (One of its many relationships, as it turns out, is as licensing agent for a company suing The New York Times Company for patent infringement.) It has offices in Shanghai, Tel Aviv, Dallas and Dublin.

He calls the apartment he now rents “the Paris office” and says he spends summers there because the time zone is convenient for conversations with employees around the world. Mostly, though, he just loves Paris, as does his wife, Audrey, and their son, Christian, 20. Mr. Spangenberg is particularly fond of the architecture, the food and the Impressionist art, which he and his wife collect. He doesn’t speak much to the locals, because he can’t.

“I tried learning French with a tutor,” he said, “but after a few lessons she told me my accent made me sound retarded and that was the end of that.”

In the patent world, Mr. Spangenberg says he has cultivated a reputation as a bit of carnivorous monster, but even his opponents say he can be perfectly reasonable. One, a lawyer named David Tsai, says IPNav’s lawyers dropped a case against his clients — Hulu, Amazon and Twitter — after he demonstrated that they were not infringing.

“They agreed they had no standing,” Mr. Tsai recalled.

But such comity may be the exception among companies in Mr. Spangenberg’s sights. Not long ago, Rackspace, a cloud storage company based in San Antonio, became an IPNav target, and Alan Schoenbaum, Rackspace’s general counsel, became Mr. Spangenberg’s most vocal critic.

Mr. Spangenberg contends that Rackspace is infringing a patent held by his client Parallel Iron. Steve Dodd started Parallel Iron in 2001 with three friends in the tech and telecom world. Together, they began to draft patent applications for a data storage and retrieval system.

“I worked on this in my basement for two years,” Mr. Dodd said. “We didn’t get into this to enforce patent rights. We got into it to build a storage system. But this was the end of the tech bubble. We couldn’t have timed it worse.”

Mr. Dodd and his group were $1.3 million in debt when a consultant introduced him to Mr. Spangenberg. After sizing up the patents, IPNav agreed to pay Parallel Iron $250,000 for exclusive rights to monetize the patents for a fixed time, and to finance any litigation. Parallel Iron would keep 42.5 percent of any settlement revenue and verdicts, with the rest split between IPNav and the lawyers it hired.

As usual, Mr. Spangenberg would handle overtures to companies and negotiations. He considers this one of his specialties.

“Love, fear or greed,” he says, citing the key human motivations that are his leverage when he approaches any company. “I always start with love.”

That usually means an assertion letter, which may not sound very loving to recipients. In 2011, a judge in Wisconsin — not the one who mauled him — quoted from an IPNav assertion letter that included this sentence: “We are focused on addressing these issues without the need for costly and protracted litigation.”

“The implied ‘or else!’ oozes from this letter like lye from lutefisk,” wrote Judge Stephen L. Crocker of Federal District Court, referring to a gelatinous dish popular in Nordic countries. And Wisconsin, apparently.

Neither love nor fear worked on Rackspace, and the two companies were soon filing suits against each other. Going to court will cost Rackspace somewhere between $1 million and $5 million, Mr. Schoenbaum estimated. A license would have probably been a bargain by comparison, and he said Rackspace might have acquired one if it were infringing Parallel Iron’s patents. But the company’s lawyers decided it was not, and Rackspace became one of a handful trying to turn the tables on patent asserters.

“The game is to extort license fees out of companies for less than defense costs,” Mr. Schoenbaum said in a recent phone interview, referring to IPNav. “We don’t want to encourage that behavior. We’ll just continue to be sued until we demonstrate that we can’t be pushed into a settlement.”

The dispute in this instance revolves around Rackspace’s use of open-source software called the Hadoop Distributed File System. It stores, processes and analyzes vast amounts of data. Facebook and LinkedIn — both sued by Parallel Iron — are among its many users.

So, the key question: Does the Hadoop Distributed File System infringe Parallel Iron’s patents?

David Pratt, the president of a company called M-CAM, agreed to weigh in. M-CAM is based in Charlottesville, Va., and performs what it calls “stress tests” on patents on behalf of banks that are making loans to companies with intellectual property. Mr. Pratt described himself as “patent-agnostic,” which is to say he came to this task without any particular bias.

His conclusion was that Parallel Iron has a very weak case.

“The problem is, these patents are severely challenged by what we call precedent innovation,” he said, using a fancy term for ideas that are in the public domain before a patent is granted. “What’s described in Patent No. 7197662,” referring to Parallel Iron’s patent, “has been done a thousand times. I.B.M. has been doing it since the beginning of computers.”

Mr. Pratt followed up by e-mailing a patent that predates Parallel Iron’s and which, he suggested, was quite similar. As Mr. Pratt put it, “There’s virtually no chance that ’662 and its family could survive a full-scale re-examination by the Patent Office, because there are a lot of things that could disable or destroy it.”

Mr. Spangenberg was unimpressed by this analysis. Before he signs up clients, he spends $100,000 to $250,000 on experts who take a month or more to study both the validity of a patent and whether anyone is infringing it. The findings of these experts, he said, were highly encouraging.

“Steve and his partners patented a very specific and very effective way to store and retrieve data,” he said. “It’s not the only way to do it. It just so happens that if you look at Hadoop and you look at Parallel Iron’s patents, they’re practically identical.”

It’s hard to say whether Mr. Spangenberg in this case is sticking up for outgunned inventors or wheedling a settlement that he and those inventors don’t deserve. And it’s the fuzziness of such issues that leads to the sort of knotty legal morass that companies pay to avoid. If nothing else, here, as with many other cases, Mr. Spangenberg has found the opening he needs.

Given the time and money it takes to sort out patent claims, there is something a little insane about the American way of resolving these disputes. Germany has a specialized patent court, which streamlines the process. In the United States, there is talk of setting up patent markets, so that start-up companies could quickly find out what patents they need and whom to pay, rather than putting out their product and waiting to be sued.

Mr. Spangenberg agrees that the United States system is deeply flawed. “We’re using the courts as a marketplace, and the courts are horribly inefficient and horribly expensive as a market,” he said.

But as long as the system exists, Mr. Spangenberg is going to exploit its ambiguities and pokiness for all it’s worth.

Ambiguity is written into many patents. In the 1990s, court decisions pushed the Patent and Trademark Office to become more lenient about filings, according to legal experts. Soon, software concepts were being patented, and you didn’t need to build an example of the concept in question. A broad draft and description would suffice.

“If you’re an inventor, you want patents that are flexible and broad,” said Daniel Ravicher, president and executive director of the Public Patent Foundation, a nonprofit group that monitors abuses in the patent system. “You want language like ‘systems to do things with processes with widgets.’ ”

Moreover, patent holders in recent years have become more brazen about asserting claims on inventions that haven’t yet been conceived, according to Professor Bessen at Boston University. A patent granted in 1985, for example, and titled a “system for reproducing information in material objects at a point of sale location” was originally intended for retail kiosks to sell cassettes. But a company called E-Data acquired the patent and argued that “point of sale” could include a buyer with an Internet connection. Which meant that E-Data could sue companies selling products online, which it did.

“E-Data collected about $100 million,” Professor Bessen said. “And that’s only a modestly successful troll.”

Mr. Spangenberg learned just how potent such patents could be the hard way. In 1996, he was chief executive of a telecom company, SmarTalk, that was accused of patent infringement.

“This guy sues us,” he recalled. “I brought in a law firm and they do a presentation about how we’d litigate, which will cost us something like $3 million to $5 million. I know it’ll be way more than that.”

So he called his adversary, who invited him to his office on Wilshire Boulevard in Los Angeles.

“It’s like walking into Versailles,” Mr. Spangenberg recalled. “This enormous space, and these puffy chairs you sit in and your feet don’t touch the floor. I said: ‘I get it. I love the setup. I took a psychology course. What do you want?’ ”

In minutes, they shook hands on a deal in which SmarTalk would pay $500,000 for a license.

The experience provoked an epiphany: Patents, which are often considered a cost for companies, can also be a hugely valuable asset.

Mr. Spangenberg started IPNav in 2003. He and his wife subsequently acquired a portfolio of 14 patents from a company called Firepond. As money poured in, he went through an acquisitive phase that he characterized as a combination of “nouveau riche on steroids” and midlife crisis, which is how he ended up with 16 cars and a mansion with a gold leaf ceiling and a Baccarat chandelier. He snapped out of it a few years ago, after he bought so much wine at a Christie’s auction that it was delivered in an 18-wheel truck. His son said he’d need to live to 200 to consume all of it.

He and his wife have since moved into an apartment, a 2,000-square-foot two-bedroom in Dallas, and he sold off all but one of his cars, a Ferrari. But he’s hardly depriving himself; he’s currently in the market for a Monet.

The constant in his life has been incessant work, and you need a few spreadsheets to chart the 50 or so companies that he either owns or co-owns as a patent asserter. One of those spreadsheets is for Parallel Iron, which, with an assist from IPNav, has won just under $10 million in settlements, according to Mr. Dodd, the inventor. Whether these companies believed that they were infringing, or were merely avoiding a drawn-out and costly lawsuit, is hard to say. The settlements all come with confidentiality agreements.

Still in progress for Parallel Iron are suits against Google, EMC, Hitachi, Adobe and others. Which is just a sliver of Mr. Spangenberg’s work. Some 100 other patent campaigns on behalf of other patent-holding companies partnered with IPNav are under way.

That means a lot of phone calls from a guy who might go thug, and enough litigation to keep a battalion of lawyers busy for years.
http://www.nytimes.com/2013/07/14/bu...e-america.html





How a Typical Patent Battle Took an Unexpected Turn

Peter Braxton, creator of the Jump Rope app, found a most unexpected ally in fighting a patent lawsuit.
David Segal

WHAT would the country’s “most notorious patent troll” advise a guy under attack from a patent troll? Or, put more judiciously, a company that bears the outward appearance of a patent troll?

I posed this question to the man with the notoriety, Erich Spangenberg, who runs IPNav, asking if he had any words of advice for a Chicago entrepreneur named Peter Braxton. Mr. Braxton, a former Air Force pilot, was in desperate shape when we first spoke about a month ago — so desperate that he was borrowing money from his mother and brother for living expenses. To understand how he got there, and to set up what turned out to be a rather surprising conversation with Mr. Spangenberg, let’s rewind Mr. Braxton’s story.

Three years ago, Mr. Braxton was stuck with about 200 people, waiting to get into a nightclub at the Encore Hotel in Las Vegas. A few days later, he conceived an app called Jump Rope. It would give users the opportunity to pay some fee to get to the front of a line — at a club, a restaurant, a museum or any place where a premium for entry could be charged.

Mr. Braxton, who at the time worked at Credit Suisse in Chicago, raised about $250,000 from friends and family to make his idea come to life, with more promised as the company grew. He hired code writers and two employees.

The app started in November 2011. In December, Mr. Braxton received a phone call from Geoff Baker, a lawyer for a company, also based in Chicago, called Smart Options.

“He said, ‘We have reason to believe you’re infringing on our patent, and we’d like to find a reasonable solution that involves some kind of license agreement,’ ” Mr. Braxton recalled. “I said, ‘Slow down.’ ”

Mr. Braxton hired a lawyer, who told him that Jump Rope did not infringe what is officially known as Patent No. 7,313,539, a k a a “method and system for reserving future purchases of goods or services.” When Mr. Braxton declined to pay a license fee, and rebuffed a variety of other arrangements, Smart Options sued.

Mr. Braxton returned all the money he’d raised — “Nobody wants to buy a lawsuit,” he explained — and paid for the case out of his own pocket. The ensuing dispute, by the standards of patent brawls, was brief and lopsided. Judge Amy J. St. Eve of Federal District Court in the Northern District of Illinois found for Jump Rope on summary judgment, which is another way of saying that the judge didn’t think the matter even worthy of a trial.

Judge St. Eve also ordered Smart Options to pay Jump Rope’s legal fees. She called the lawsuit “frivolous.”

This might have seemed like an obvious moment for Smart Options to cease hostilities. Instead, it reloaded. In addition to filing an appeal, in May, Mr. Braxton says Mr. Baker told him that Smart Options would sue Jump Rope using a different patent in its portfolio.

Mr. Baker, in an interview, said the judge got it wrong.

LAST month, when Mr. Braxton told me about his predicament by telephone, he sounded cornered. He was out of money, so he couldn’t afford to fight an appeal. At 35, Mr. Braxton was considering a return to the military, as a reservist. (He had already served in both Iraq and Afghanistan.)

“I have about the same amount of money in my bank account as I did when I was 15 years old,” he said in June. “I’m practically bankrupt. If you’re a start-up, you have no chance with this kind of litigation.”

What should he do? I asked Mr. Spangenberg if he would be willing to share ideas. I hoped only that the conversation would yield intriguing fodder for a profile of Mr. Spangenberg.

That night, Mr. Spangenberg read the rulings in the case and he decided that he liked what he saw. Loved it, in fact. So much, that by the time he and Mr. Braxton were chatting the next day, via speakerphone, he wanted to make a deal.

“If we came in and helped you on this, would you start your business back up?” he asked.

“One hundred million percent yes,” Mr. Braxton said.

A free consultation quickly became the beginnings of a negotiation. Mr. Spangenberg offered to take an equity position worth $500,000, in exchange for solving all of Jump Rope’s legal problems.

“I’m going to invest as well,” Mr. Spangenberg said. “Peter, what do you need to get this back up while we raise money from people with lots of money?”

“About half a million bucks,” he said.

“That’s what I figured,” Mr. Spangenberg replied. “So we’d fund that.”

The conversation went on for another minute, with Mr. Spangenberg asking for biographical information so that a background check could be conducted. When the call ended, Mr. Braxton sounded as if he’d just won the Showcase Showdown on “The Price Is Right.”

I asked Mr. Spangenberg the obvious question: Was this a publicity stunt?

Yes, he said, the deal would produce good publicity, though oddly enough, it was news to him that any of this repartee would appear in this article. (“Well, you need to wait until we get in touch with Smart Options,” he said.) But primarily, this was neither charity nor public relations. It was a great deal for IPNav.

“Look, I’ll get $500,000 in equity for taking the legal piece off his plate,” he said. “It’ll cost me $100,000 to make the lawsuit go away.” He promised to locate “pressure points” on either Smart Options or Hugh McNally, its C.E.O.

“I get to make a great investment on great terms,” he said. “Then I let Citadel” — a large hedge fund that had expressed interest in funding Jump Rope — “put a big chunk of money into it and I go off and do something else.”

Mr. Spangenberg is spending more of his time and money on venture capital. He now owns equity in roughly 25 companies, most of them, like Jump Rope, in distress.

In the days after the conference call, employees at IPNav did due diligence on Mr. Braxton. Soon, an associate of Mr. Spangenberg’s named Billy Carter flew to Chicago for a meeting. (Mr. Carter owns and manages a firm that is suing The New York Times Company for patent infringement.) The two discussed possible terms of a deal, then headed to a nightclub for a celebratory drink.

Here, the story takes its most improbable turn. At some point in the evening, Mr. Braxton realized that he was standing next to Mr. McNally, the Smart Options C.E.O. When Mr. Braxton pointed out the man, Mr. Carter bought Mr. McNally and his friends a round of drinks. Mr. Carter then explained to Mr. McNally that he was now working with Mr. Braxton to help him resolve the dispute with Smart Options.

The conversation quickly turned ugly. “He stood behind me and tried to intimidate me,” Mr. McNally said of Mr. Carter. “He said, ‘I’m coming after you.’ ”

Actually, Mr. Carter says he said much more than that.

“I told him,” Mr. Carter recalls, “that before this is over you’ll have to apologize to Peter for the things you’ve said and done to him in the past, and you’re going to have to get down on your hands and knees and beg me for your job.”

Mr. Baker, the Smart Options lawyer, had a different take on the litigation against Jump Rope. He said in e-mails and a phone interview that Smart Options had tried, in good faith, for months to negotiate any number of deals with Peter Braxton, including an outright purchase, or an investment in exchange for equity.

“We like his app,” he explained. “We just have to make sure we’re protecting our intellectual property rights.”

But why should Mr. Braxton strike any deal with Smart Options, given that a judge had found that his software didn’t infringe its patent? Because, Mr. Baker said, the company disagreed with the judge, which is why the case is under appeal.

“It’s not clear-cut whether our patents cover what Peter Braxton is doing,” he said. “What’s clear-cut is that he chose to say ‘no’ to more than half a dozen reasonable relationships we laid out for him.”

ON Monday, Mr. Braxton flew to Dallas for additional meetings with IPNav, and on Wednesday, a deal between Jump Rope and IPNav was signed. It was not as generous as the original terms. IP Nav put up $200,000 in capital, agreed to handle any litigation and would own 40 percent of the company.

For his part, Mr. Spangenberg seems delighted to be confounding expectations and playing the role of patent-troll slayer. But Peter Braxton’s story suggests that there is really only one way to deal with a patent bully: team up with a bigger bully.
http://www.nytimes.com/2013/07/14/bu...cted-turn.html





Miracle Material Graphene Could Deliver Internet One Hundred Times Faster

The use of graphene in telecommunications could dramatically accelerate internet speeds by up to a hundred times, according to new research by scientists in our Department of Physics.

In a paper published in Physical Review Letters, researchers from the Centre for Graphene Science at the Universities of Bath and Exeter have demonstrated for the first time incredibly short optical response rates using graphene, which could pave the way for a revolution in telecommunications.

Every day large amounts of information is transmitted and processed through optoelectronic devices such as optical fibres, photodetectors and lasers. Signals are sent by photons at infrared wavelengths and processed using optical switches, which convert signals into a series of light pulses.

Ordinarily optical switches respond at rate of a few picoseconds – around a trillionth of a second. Through this study physicists have observed the response rate of an optical switch using ‘few layer graphene’ to be around one hundred femtoseconds – nearly a hundred times quicker than current materials.

Graphene is just one atom thick, but remarkably strong. Scientists have suggested that it would take an elephant, balanced on a pencil to break through a single sheet. Already dubbed a miracle material due to its strength, lightness, flexibility, conductivity and low cost, it could now enter the market to dramatically improve telecommunications.

Commenting on the report’s main findings, lead researcher Dr Enrico Da Como said: “We’ve seen an ultrafast optical response rate, using ‘few-layer graphene’, which has exciting applications for the development of high speed optoelectronic components based on graphene. This fast response is in the infrared part of the electromagnetic spectrum, where many applications in telecommunications, security and also medicine are currently developing and affecting our society.”

Co-Director of the Centre for Graphene Science at Bath, Professor Simon Bending added: “The more we find out about graphene the more remarkable its properties seem to be. This research shows that it also has unique optical properties which could find important new applications.”

In the long term this research could also lead to the development of quantum cascade lasers based on graphene. Quantum cascade lasers are semiconductor lasers used in pollution monitoring, security and spectroscopy. Few-layer graphene could emerge as a unique platform for this interesting application.
http://www.bath.ac.uk/news/2013/07/1...nternet-speed/





Small Alberta Town Gets Massive 1,000 Mbps Broadband Boost

Rural community of Olds builds its own fibre network and starts its own ISP
Emily Chung

Ultrafast internet speeds that most Canadian city dwellers can only dream of will soon be available to all 8,500 residents in a rural Alberta community for as little as $57 a month, thanks to a project by the town's non-profit economic development foundation.

"We'll be the first 'gig town' in Canada," said Nathan Kusiek, director of marketing for O-Net, the community-owned internet service provider that runs the fibre optic network being built by the non-profit Olds Institute for Community and Regional Development in Olds, Alta., about 90 kilometres north of Calgary.

On Thursday, the board of O-Net gave approval for residents to get access to a full gigabit (or 1,000 megabits) per second of bandwidth for the same price that they currently pay for a guaranteed download speed of 100 megabits per second — $57 to $90 a month, depending on whether they have bundled their internet with TV and phone service.

"Essentially, we have the capacity. It will actually be a really good experiment to see what people use," Kusiek said.

O-Net had been thinking about making all the bandwidth fully available to residents for some time, he added.

"Because we're a community-owned project we get to balance out profitability versus what's best for the community."

One gigabit per second is the same speed offered by Google Fiber, as a pilot project, in Kansas City, Mo., and Kansas City, Kans., for $70 a month — a service that is envied by residents of many other U.S. cities, if the internet buzz is any indication.

With that kind of bandwidth, Google says you can stream at least five high-definition videos at the same time (allowing multiple people to watch and download different things in different rooms of a house), among other things.

A gigabit of bandwidth is considerably higher than the high-speed 175 to 250 megabits per second typically offered by fibre internet packages in big cities from internet providers such as Bell, Rogers or Shaw, typically for $115 to $226 per month. And it's blazingly fast compared to the average Canadian internet download speed of just 16.6 megabits per second for an average of about $54 a month, according to a recent report from internet metrics company Ookla.

Rural internet typically slow, expensive

The Olds project is a rarity. Most rural communities across Canada have to make do with internet service — often delivered by dial-up or satellite — that is slow or expensive, or both.
Broadband costs Compare internet services across Canada

Not too long ago, Olds was in that boat. Some businesses were even threatening to leave town because of the challenges posed by the sluggish internet.

"We had engineering companies here who were sending memory chips by courier because there wasn't enough bandwidth to deal with their stuff," recalls Joe Gustafson, who spearheaded the project to bring a fibre network to Olds.

Gustafson is head of the technology committee for the Olds Institute, which was started a decade ago as a partnership among the Town of Olds, Olds College, the Olds and District Chamber of Commerce and the Olds Agricultural Society.

At that time, the town realized that it couldn't attract technology-based businesses and that bandwidth was a challenge even to ordinary businesses. It came up with a plan — it would install a fibre network throughout the town that would connect to the larger inter-community network being built by the government at that time — the Alberta Supernet.

The Olds Institute managed to secure a $2.5 million grant from the Alberta government to plan its network and build a community facility at the library, making use of the network. That facility included a video conference centre and 15 terminals for residents without their own access to computers.

The institute also managed to get a $6 million loan from the town of Olds to build the network itself.

Established providers refused to use town's network

There were some speed bumps along the way. The town had trouble finding skilled labour to install the fibre cables between people's property lines and their homes, putting the project behind schedule.

But eventually installation progressed and the Olds Institute began inviting large, commercial internet providers to offer their services via the new network. All of them refused to use a network they had not installed themselves, Gustafson said.

The community was undeterred. It came up with a new plan.

"We said, 'Well I guess if we're going to do this, we have to do our own services,'" Gustafson recalled.

The Olds Institute spent $3.5 million to buy the necessary electronic equipment to run internet and other services on the network and to build a central office to house it all. Last July, it launched O-Net.

The community-owned service offers not just internet, but also phone and IPTV services — TV signals carried on the network that includes dozens of SD and HD channels, and movies on demand that can be paused and later resumed.

All told, the project will probably have cost $13 million to $14 million when it's complete, Gustafson said.

"It's a very gutsy thing on behalf of council here in Olds to approve something like that," he added.

100 per cent coverage expected in 2014

About 60 per cent of homes and businesses in Olds, located almost midway between Calgary and Red Deer to the north, already have access to the town's fibre network, which is still under construction.

"Over the next year, we'll have the whole town covered," Kusiek said.

At that point, while everyone should be able to subscribe to O-Net's services if they want to, they will also have the option of choosing lower-speed internet service with other telecommunications companies.

Under O-Net's new plans, residential users will share the gigabit of bandwidth among all the households on the same network access point. However, Kusiek estimates there would "never be more than four of five people on a connection that would be fighting over a gig."

Businesses in town can buy access to a dedicated, guaranteed gigabit per second of bandwidth for $5,000 a month. Gustafson said the network's launch last fall has helped stabilized local businesses.

"Now there's no talk about people leaving because of bandwidth challenges."

The engineering firm that used to send thumb drives by courier now sends "massive amounts of data just over the internet."
College transformation

The network is also transforming Olds College. The agricultural-based college, which emphasizes hands-on learning, had previously been limping along with 40 megabits of bandwidth for its 4,000 full- and part-time students.

Jason Dewling, the vice-president for academic and research at the college, said the number of devices connected to the campus's WiFi network had doubled in each of the past three Septembers compared to the one before, and connectivity was spotty.

"You couldn't have a whole class on WiFi at the same time."

That made it impossible to push any kind of mobile learning — something that the college was starting to get into with initiatives such as an entrepreneurship course that required students to play an online game as part of its requirements.

Now, every space on campus allows each student to connect two devices at the same time. This September, every new student will receive an iPad and all textbooks will be web-based.

Dewling said the college is projecting a 10 per cent increase in the number of first year students this September, although it's hard to say how much of that is the result of the improved internet availability or the iPad program.

Olds is also hoping its network will attract new businesses in the future.

"We certainly have companies that are looking at us," Gustafson said. But he added that the fibre network only started operating last fall. "It's taking a while for people to understand, of course, what we have here."

Kusiek said the original goal of the project, to connect the entire town with a fibre network, was to attract new businesses and residents.

"I really think that now it is enough that [for] anyone looking to resettle, this is definitely a selling feature for Olds."
http://www.cbc.ca/news/technology/st...rnet-olds.html





Australia Election Threatens Shape of $34 Billion Broadband Plan
Jane Wardell

The future of an ambitious project to connect almost all Australia's far-flung inhabitants to high-speed internet, the largest infrastructure enterprise in the country's history, is hanging on the outcome of an upcoming federal election.

The Labor government and conservative Liberal-led opposition have vastly differing plans for the A$37.4 billion ($34.2 billion) National Broadband Network (NBN), potentially hurting some business stakeholders and opening the door to others, including China's Huawei Technologies Co Ltd.

"It will be a significant shift, we are talking about completely changing the idea of the rollout," Melbourne-based RMIT University electrical engineering expert Mark Gregory said about a possible Liberal-led coalition election victory.

"There will still be activity, but there will definitely be winners and losers."

A national high-speed network is central to Australia's plans to become one of the world's leading "digital economies" as it seeks alternative drivers of growth to replace a fading mining investment boom.

Prime Minister Kevin Rudd's Labor government has promised to deliver Internet speeds of up to 100 megabits per second (Mbps) to 93 percent of premises by 2021 using fiber-optic cables, with the remaining remote locations served by satellite and fixed wireless.

The planned network, which takes the fiber-optic cable direct to households and businesses, would be one of the most advanced in the world.

But just three years in, the 10-year project is plagued by problems, including delays that led the government-owned NBN Co to seize back control of construction in the Northern Territory from Syntheo, a joint venture of Lend Lease Corp Ltd and specialist construction firm Service Stream Ltd.

NBN Co's chief executive Mike Quigley quit last week after the interim targets for the number of premises connected in the rollout were lowered three times.

The government has promised to connect 8.5 million premises to the network by 2021. By June this year, just 163,500 had been hooked up, less than half the downwardly revised interim target.

The delays have opened the door for Rudd's challenger, Liberal Party leader Tony Abbott, to lambast the project as too expensive and unnecessarily complex.

Abbott instead promises a A$30 billion fiber-to-the-node network. Under this plan, high-speed fiber would be laid to streetside "nodes" but the final connection to homes and businesses would rely on Telstra Corp Ltd's ageing copper wires, with much slower download speeds than fiber.

The Liberal Party says this would provide 25 Mbps minimum by 2016 and 50 Mbps for the "vast majority of households" by 2019.

Abbott argues that is "more than enough for the average household", dismissing critics' warnings it would leave Australia with an outdated network that would only be as good as its weakest, copper links. The opposition would also use satellite and fixed wireless for remote locations.

WINNERS AND LOSERS

Rudd has until the end of November to hold an election and the NBN is shaping up as a key battleground. Opinion polls show Labor and the Liberal-led coalition running neck-and-neck.

Should the coalition win office, Shenzhen-based Huawei, which Labor has banned from bidding on any NBN contracts because of cyber security concerns, could be one of the big winners.

Coalition communications spokesman Malcolm Turnbull has said a coalition government would take another look at advice from spy agency ASIO that led to the ban on the private Chinese company.

"Huawei has a fiber-to-the-node solution and I imagine they are in there giving Turnbull as much guidance as possible," Gregory said.

Huawei declined requests for comment.

Any entry by Huawei into the bidding for future work could take business from current lead contractor, France's Alcatel-Lucent SA.

Another potential winner from the coalition's plan is leading telecommunications firm Telstra, as the speedier rollout would mean quicker payments for the switchover of customers from its copper network.

Deutsche Bank analysis suggests Telstra will retain its broadband market share of around 47 percent, instead of a slide to 35 percent under Labor's project.

Telstra would also keep its hybrid fiber coaxial cable for Pay TV delivery as a competitor to the NBN, a scenario that does not sit well with Singapore Telecommunications Ltd's Australian unit, Optus.

The coalition plan could also marginally reduce business for Silcar, the 50:50 venture between Germany's Siemens AG and Leighton Holdings Ltd's Thiess, which is focused on fiber optics.

But if Rudd pulls off a victory, it will be business as usual to a certain extent for current contractors.

Still, Service Stream is likely to exit after confirming its foray into the project had left it with "material losses."

(Editing by Stephen Coates)
http://www.reuters.com/article/2013/...96E0VX20130715





Leaked Letter Shows ISPs and Government at War
Rory

I've written before on the dialogue of the deaf between politicians and the internet industry over child internet safety - and now the relationship seems to be getting even worse. A letter sent to the UK's four leading ISPs from the government has made them very cross indeed. So cross that someone in the industry has passed it to me - you can read it in full below.

The letter comes from the Department for Education but it sets out a list of demands from Downing Street, with the stated aim of allowing the prime minister to make an announcement shortly. The companies are asked, among other things, for a commitment to fund an "awareness campaign" for parents. They're not particularly happy about promising cash for what the letter concedes is an "unknown campaign" but it's the next item on the menu which is the source of most of their anger.

This asks them to change the language they are using to describe the net safety filters they will be offering to internet users. Instead of talking of "active choice +", they are urged to use the term default-on. The letter says this can be done "without changing what you're offering".

A person at one ISP told me the request was "staggering - asking us to market active choice as default-on is both misleading and potentially harmful".

A little background on this issue might be helpful. For a long time, certain politicians and newspapers have been campaigning for default-on filters. They would like to see harmful and offensive - if legal - material blocked by the internet service providers unless customers choose to have the filters switched off.

"It sounds like a good idea until you think it through," said one industry source. "There are three reasons why it doesn't work. First it may be illegal under the Regulation of Investigatory Powers. Then there's the fact that no filter is perfect, and finally kids are smart enough to find their way around them."

A source at another company saw another reason why "default on" might be a bad idea: "It makes parents complacent - if you tell them the filter is switched on by default, they get a false sense of security. We want parents to make informed choices about the way their children use the internet."

And the companies point out that the man the government chose to examine this issue, Reg Bailey of the Mothers' Union, was also dubious about the use of default-on filters, wanting parents to be more active in understanding online dangers.

So the ISPs are instead offering something they call Active Choice, where customers are asked to make informed decisions about the level of filtering. Critics may say they are just quibbling about language, but the companies believe the precise wording is important - and they're angry at what they see as the government urging them to mislead their customers.

"What this is about is allowing the government and certain papers to declare a victory," said one industry source. "This country has led the world in blocking child abuse images, but they just want to keep the story bubbling on."

When I sought a response, Downing Street told me it never commented on leaks, but a spokesman said "the government continues to work with internet service providers to help keep children safe online."

At lunchtime today the internet providers will be meeting Claire Perry, the Prime Minister's special advisor on child safety issues, to give their response to the letter. Both sides appear to mistrust each others' motives, so finding an outcome that enhances child safety while producing an acceptable headline will prove tricky.

Here's the letter sent to the ISPs by the Department for Education, in full:

Dear All,

I am emailing to ask for some specific action which the prime minister plans to announce shortly. This follows a meeting yesterday at No 10 yesterday to discuss a range of child internet safety issues including parental controls and filters. The prime minister would like to make some further specific requests of industry and his office have asked us to ask you when you could deliver the following actions.

1. Implementing browser intercept

I understand that Talk Talk will be trialling a "browser intercept" to force existing customers to choose either to proceed with parental controls (pre-ticked), choose their own settings or turn them off completely. The prime minister wants to announce that by the end of the year, every household with a broadband internet connection will have had to make a decision to "opt-out" of installing filters. Will the other three ISPs consider making a commitment to adopting this approach - even before it has been trialled?

2. Age-verification systems/closed-loop

The prime minister expects customers to be required to prove their age/identity before any changes to the filters are made. I understand that you will all be implementing "closed-loop" systems which will notify account holders of any changes that are made to the filters and that you have robust systems in place but please could you all confirm the precise information that is required to enable customer to access, set-up and change their filters?

3. Awareness campaign for parents

I understand that it was agreed at Claire Perry's meeting a few weeks ago that Talk Talk, BT and others would undertake some further research to establish what the focus of the campaign should be. The prime minister would like to be able to announce a collective financial commitment from industry to fund this campaign. I know that it will be challenging for you to commit to an unknown campaign but please can you indicate what sum you will pledge to this work that the PM can announce.

4. Using the phrase "default-on" instead of "active-choice +"

The prime minister believes that there is much more that we can all do to improve how we communicate the current position on parental internet controls and that there is a need for a simplified message to reassure parents and the public more generally. Without changing what you will be offering (ie active-choice +), the prime minister would like to be able to refer to your solutions [as] "default-on" as people will have to make a choice not to have the filters (by unticking the box). Can you consider how to include this language (or similar) in the screens that begin the set-up process? For example, "this connection includes family-friendly filters as default [or as standard] - if you do not want to install this protection please un-tick the box" (obviously not intended to be drafting). Would you be able to commit to including "default-on" or similar language both in the set-up screen and public messaging?

We are all aware of the really excellent work that you are doing and but there are a number of specific areas that the prime minister thinks need further immediate action. You are likely to receive a further message from colleagues in DCMS and the Home Office regarding tackling illegal images but given the short deadline for this work we thought it better to give you some time to work on these issues in the meantime. I need to report back to No 10 by the end of the week on these points so I would be grateful if you could consider this request as a matter of urgency and respond by midday Friday.

Apologies for the very tight deadline and grateful for your help with this work.

http://www.bbc.co.uk/news/technology-23312579





Tortilla Tool Anonymously Routes TCP, DNS Traffic Through Tor
Michael Mimoso

Update: Malware analysts are in a constant cat-and-mouse game with hackers when it comes to studying malicious code behaviors. Researchers handle malware samples gingerly, in a test network away from production machines and away from the Internet. Samples are opened in virtual machines and analysts observe not only malicious payloads, but communication with third-party servers.

In the past year, there have been reports of concerted attempts by hackers to avoid detection and analysis. Hackers have built routines into their code that can detect when a sample is executed in a VM or remote desktop protocol connections, and consequently prevent it from executing, or in the case of peer-to-peer botnets, domain generation algorithms are used that generate lists of potential new peer hosts to stem botnet shutdowns.

In addition to virtual machines, researchers rely on the Tor network to observe communication between advanced malware and command and control servers. There are limitations to Tor for this purpose, however, especially for Windows users. Researchers can rely on the Tor Browser Bundle, which includes its own version of Firefox to preserve anonymity. But plug-ins such as Flash don’t work with the bundle, neither does other networking software necessary for malware research.

One of the biggest networking limitations is the fact that Tor listens on ports with the SOCKS proxy, yet most networking applications don’t support SOCKS natively, requiring a researcher to buy additional hardware or virtual machines, or learn an unfamiliar operating system.

A researcher with startup Crowdstrike may have bridged those gaps with a tool called Tortilla. Expected to be unveiled at the upcoming Black Hat Briefings in Las Vegas in two weeks, senior security researcher Jason Geffner will not only deliver a presentation on the tool, but will release it as open source.

“Oftentimes, security researchers need to communicate with rogue servers for monitoring and we don’t want to leak our own IP addresses, especially if we’re working from home or working from our company’s IP address,” Geffner said. “Anonymity is valuable to us while doing research.”

In addition to having the ability to securely communicate with attack servers, it’s also important, whether over a browser or another Net-based tool, not to leak network traffic onto Tor, Geffner said. Tortilla, he said, provides a secure, anonymous means of routing TCP and DNS traffic through Tor regardless of client software and without the need for a VPN or secure tunnel.

“The Tor client does all of the work,” Geffner said. “Tortialla redirects TCP and DNS traffic through Tor ensuring nothing else gets out. I wouldn’t call it a plug in; it does communicate with the Tor client over the SOCKS port Tor opens up, but it’s not a plug in.”

Tor is extensively used by privacy conscious individuals who want to browse the Web anonymously. Tor provides location anonymity by routing traffic through a network of voluntary users that act as proxies for Web traffic. The Tor client contacts a Tor directory server for a list of nodes and selects a path to the destination on which to route traffic. No proxy along the chain knows the entire path, only the next stop in the chain. Tor is not just for censorship opponents, but is a vital tool for activists living in oppressed parts of the world to communicate with followers they otherwise would not be able to reach, or journalists communicating with sources.

Tortilla is pretty lightweight and doesn’t boast a lot of extra features, Geffner said. He hopes the security community will take the beta and run with it, delivering feedback on areas of improvement.

“I’m hoping the talk will be well received and the tool will be used,” Geffner said. “As with any software, improvements can be made in terms of optimization, processing network traffic, or interface improvements. What we’re releasing is a fully functioning beta, but not a beautiful UI.”
http://threatpost.com/tortilla-tool-...ugh-tor/101290





Yahoo Wins Court Order to Release Records of its Fight Against PRISM
Kevin Collier

Yahoo, initially vilified for being part of the PRISM program, which allows the National Security Agency (NSA) to tap it and other companies for users' information, is about to be vindicated.

A court ruled Monday that the Department of Justice must reveal classified documents from 2008 that Yahoo says will demonstrate that the company fought back against a secret court order to reveal their users' data.

"The Government shall conduct a declassification review of this Court's Memorandum Opinion of [Yahoo's case] and the legal briefs submitted by the parties to this Court," the ruling read. The Department of Justice has two weeks to estimate how long it'll take to declassify the documents and can still redact the parts it finds contains classified information.

Ironically, it's the Foreign Intelligence Surveillance Act (FISA) Court that ruled for Yahoo. It was the FISC, often referred to as a "secret court," that signed off on an order for Yahoo to hand over users’ information in the first place.

That demand came with a gag order, something that's been particularly stressful to Yahoo, considering the beating its reputation took after former NSA contractor Edward Snowden leaked files that prove that through PRISM, the NSA can apparently easily get Yahoo users' data.

Yahoo, like all the companies named as part of PRISM, issued a denial that it knowingly aided in such a program. Other companies that denied willfully participating—like Google and Facebook—included the caveat that they do, in fact, comply with court orders.

As the FBI has said, PRISM is legal through the FISA system. Yahoo's was perhaps the shortest of the major companies' denials and didn't address the legality of PRISM at all: "Yahoo! takes users’ privacy very seriously. We do not provide the government with direct access to our servers, systems, or network,” the company wrote.

Also on Monday, the Electronic Frontier Foundation praised Yahoo for putting up a legal fight against FISA in the first place, awarding it a "gold star" in its Who's Got Your Back survey, which tracks how well major companies stand up for Internet freedom

As the EFF noted, Yahoo's fight was classified, and other companies might have acted similarly:

"Of course, it's possible more companies have challenged this secret surveillance, but we just don't know about it yet. We encourage every company that has opposed a FISA order or directive to move to unseal their oppositions so the public will have a better understanding of how they've fought for their users."

This is only the second known civilian victory in a FISA court. Earlier this month, the EFF itself won a case compelling the FISA court to release some of its previous rulings, and to admit that FISC proceedings are classified by the executive branch, not by the rules of the court itself.
http://www.dailydot.com/news/yahoo-p...-declassified/





The NSA Admits It Analyzes More People's Data Than Previously Revealed
Philip Bump

As an aside during testimony on Capitol Hill today, a National Security Agency representative rather casually indicated that the government looks at data from a universe of far, far more people than previously indicated.

Chris Inglis, the agency's deputy director, was one of several government representatives—including from the FBI and the office of the Director of National Intelligence—testifying before the House Judiciary Committee this morning. Most of the testimony largely echoed previous testimony by the agencies on the topic of the government's surveillance, including a retread of the same offered examples for how the Patriot Act and Foreign Intelligence Surveillance Act had stopped terror events.

But Inglis' statement was new. Analysts look "two or three hops" from terror suspects when evaluating terror activity, Inglis revealed. Previously, the limit of how surveillance was extended had been described as two hops. This meant that if the NSA were following a phone metadata or web trail from a terror suspect, it could also look at the calls from the people that suspect has spoken with—one hop. And then, the calls that second person had also spoken with—two hops. Terror suspect to person two to person three. Two hops. And now: A third hop.

Think of it this way. Let's say the government suspects you are a terrorist and it has access to your Facebook account. If you're an American citizen, it can't do that currently (with certain exceptions)—but for the sake of argument. So all of your friends, that's one hop. Your friends' friends, whether you know them or not—two hops. Your friends' friends' friends, whoever they happen to be, are that third hop. That's a massive group of people that the NSA apparently considers fair game.

For a sense of scale, researchers at the University of Milan found in 2011 that everyone on the Internet was, on average, 4.74 steps away from anyone else. The NSA explores relationships up to three of those steps. (See our conversation with the ACLU's Alex Abdo on this.)

Inglis' admission didn't register among the members of Congress present, but immediately resonated with privacy advocates online.

3 hops! That's a LOT OF DATA as my FISA/surveillance people know. A LOT.
— Spencer Ackerman (@attackerman) July 17, 2013

Do the math: Your whole contact list. All their contact lists. All THOSE people's contact lists. That's a LOOOT of people. #FISAOvesight
— Julian Sanchez (@normative) July 17, 2013

@normative If you don't want to share your contact lists with the government, maybe you just shouldn't know people.
— Jon Henke (@JonHenke) July 17, 2013

The hearing was far more critical of the government than previous hearings have been. Members of the House from both political parties had strong words for the agency representatives, often focused on how the letter of the law had been exploited.

Ranking Minority Member John Conyers (MI): "You've already violated the law in my opinion."

Rep. Jerry Nadler (NY): "I believe it's totally unprecedented and goes way beyond the statute."

Rep. Ted Poe (TX): "Do you see a national security exemption in the Fourth Amendment? … We've abused the concept of rights in the name of national security."

The author of the Patriot Act, Jim Sensenbrenner of Wisconsin, reminded the government that the act was up for renewal in 2015. The provisions for phone metadata collection, he warned, have "got to be changed … otherwise in a year or year and a half you're not going to have it any more."

Inglis' admission isn't likely to help the effort to convince members of the House that the surveillance programs should be kept as is. Neither will a response offered by DNI counsel Robert Litt. Asked by committee chairman Bob Goodlatte if the government really thought the massive collection of phone records could be kept from the American people, Litt replied, "Well, um, we tried."

The audience chuckled.
http://www.theatlanticwire.com/polit...evealed/67287/





NSA Spying Under Fire: 'You've Got a Problem'
Pete Yost

In a heated confrontation over domestic spying, members of Congress said Wednesday they never intended to allow the National Security Agency to build a database of every phone call in America. And they threatened to curtail the government's surveillance authority.

Top Obama administration officials countered that the once-secret program was legal and necessary to keep America safe. And they left open the possibility that they could build similar databases of people's credit card transactions, hotel records and Internet searches.

The clash on Capitol Hill undercut President Barack Obama's assurances that Congress had fully understood the dramatic expansion of government power it authorized repeatedly over the past decade.

The House Judiciary Committee hearing also represented perhaps the most public, substantive congressional debate on surveillance powers since the 9/11 terrorist attacks. Previous debates have been largely theoretical and legalistic, with officials in the Bush and Obama administrations keeping the details hidden behind the cloak of classified information.

That changed last month when former government contractor Edward Snowden leaked documents to the Guardian newspaper revealing that the NSA collects every American's phone records, knowing that the overwhelming majority of people have no ties to terrorism.

Civil rights groups have warned for years that the government would use the USA Patriot Act to conduct such wholesale data collection. The government denied it.

The Obama administration says it needs a library of everyone's phone records so that when it finds a suspected terrorist, it can search its archives for the suspect's calling habits. The administration says the database was authorized under a provision in the Patriot Act that Congress hurriedly passed after 9/11 and reauthorized in 2005 and 2010.

The sponsor of that bill, Rep. James Sensenbrenner, R-Wis., said Wednesday that Congress meant only to allow seizures directly relevant to national security investigations. No one expected the government to obtain every phone record and store them in a huge database to search later.

As Deputy Attorney General James Cole explained why that was necessary, Sensenbrenner cut him off and reminded him that his surveillance authority expires in 2015.

"And unless you realize you've got a problem," Sensenbrenner said, "that is not going to be renewed."

He was followed by Rep. Jerry Nadler, D-N.Y., who picked up where his colleague left off. The problem, he said, is that the administration considers "everything in the world" relevant to fighting terrorism.

Later, Rep. Blake Farenthold, R-Texas, asked whether the NSA could build similar databases of everyone's Internet searches, hotel records and credit card transactions.

Robert S. Litt, general counsel in the Office of Director of National Intelligence, didn't directly answer, saying it would depend on whether the government believed those records — like phone records — to be relevant to terrorism investigations.

After the phone surveillance became public, Obama assured Americans that Congress was well aware of what was going on.

"When it comes to telephone calls, every member of Congress has been briefed on this program," he said.

Whether lawmakers willingly kept themselves in the dark or were misled, it was apparent Wednesday that one of the key oversight bodies in Congress remained unclear about the scope of surveillance, more than a decade after it was authorized.

The Judiciary Committee's senior Democrat, Rep. John Conyers of Michigan, noted that the panel had "primary jurisdiction" over the surveillance laws that were the foundation for the NSA programs. Yet one lawmaker, Rep. Ted Poe, R-Texas, said some members of Congress wouldn't have known about the NSA surveillance without the sensational leaks: "Snowden, I don't like him at all, but we would never have known what happened if he hadn't told us."

The NSA says it only looks at numbers as part of narrow terrorism investigations, but that doesn't tell the whole story.

For the first time, NSA deputy director John C. Inglis disclosed Wednesday that the agency sometimes conducts what's known as three-hop analysis. That means the government can look at the phone data of a suspect terrorist, plus the data of all of his contacts, then all of those people's contacts, and finally, all of those people's contacts.

If the average person calls 40 unique people, three-hop analysis could allow the government to mine the records of 2.5 million Americans when investigating one suspected terrorist.

Rep Randy Forbes, R-Va., said such a huge database was ripe for government abuse. When Inglis said there was no evidence of that, Forbes interrupted:

"I said I wasn't going to yell at you and I'm going to try not to. That's exactly what the American people are worried about," he said. "That's what's infuriating the American people. They're understanding that if you collect that amount of data, people can get access to it in ways that can harm them."

The government says it stores everybody's phone records for five years. Cole explained that because the phone companies don't keep records that long, the NSA had to build its own database.

Rep. Steve King, R-Iowa, asked why the government didn't simply ask the phone companies to keep their data longer. That way, the government could ask for specific information, rather than collecting information on millions of innocent people.

Inglis said it would be challenging, but the government was looking into it.

Near the end of the hearing, Litt struck a compromising tone. He said national security officials had tried to balance privacy and security.

"If the people in Congress decide that we've struck that balance in the wrong place, that's a discussion we need to have," he said.

Obama, too, has said he welcomes the debate over surveillance. But his administration never wanted the debate to be quite so specific.

That was obvious when Rep. Bob Goodlatte, R-Va., asked Litt whether he really believed the government could keep such a vast surveillance program a secret forever.

"Well," Litt replied, "we tried."
http://news.yahoo.com/nsa-spying-und...164530431.html





U.S. Lawmakers Say Little Political Support for Phone Surveillance
David Ingram

U.S. spy agencies went too far when they built a massive database of all daily telephone call records and may have jeopardized political support for the very law they relied on to create it, members of Congress said on Wednesday.

Lawmakers said at a hearing of the House Judiciary Committee that they doubted the legal provision had the votes to win renewal before it is set to expire in June 2015.

The warning was the latest evidence of a backlash against U.S. surveillance programs disclosed in the Guardian and the Washington Post last month from information the newspapers were given by former U.S. spy agency contractor Edward Snowden.

One of those programs is a database of telephone "metadata," including numbers called and the length and time of calls, going back seven years. U.S. officials said they had used the database only in limited circumstances and that it had proven essential to stopping attacks against civilians.

The database included records about every phone call in the United States, not just those calls involving surveillance targets, lawmakers said.

A surveillance court allowed the data collection based on a legal provision known as Section 215 of the Patriot Act, which was first enacted in October 2001 and authorizes the FBI, with court approval, to seize tangible business records that are relevant to a terrorism investigation.

Representative Jim Sensenbrenner, a Republican from Wisconsin who was an author of the Patriot Act, said government lawyers had stretched the meaning of the legal provision beyond what he and other lawmakers had supported.

CALL TO STOP

"You have to change how you operate," Sensenbrenner told government officials who were testifying at the hearing. He added that otherwise, "you're not going to have it any more."

Other lawmakers said they agreed the law as written did not support the bulk collection of Americans' phone data.

"If the government cannot provide a clear, public explanation for how its program is consistent with the statute, then it must stop collecting this information immediately," said Representative John Conyers, a Michigan Democrat.

Democratic Representative Zoe Lofgren of California said, "This will not be maintained."

Deputy Attorney General James Cole said the data collection was lawful because the government ignores the vast majority of phone records it has, looking only at those that it can prove to a court are tied directly to a terrorism suspect.

"The collection is only there and it is only valuable if it is used," Cole said.

Without the government database, he added, some records would disappear in as few as 15 months because telephone companies do not save the records.

The U.S. Supreme Court ruled in 1979 that call records in the possession of a telephone company are not entitled to privacy protection, although the case related to a single criminal investigation and not bulk records.

In 2012, analysts scrutinized fewer than 300 specific phone numbers among the millions of raw records collected by the National Security Agency, the government said last month.

Representative Jerrold Nadler, a New York Democrat, said he believed the mere collection was illegal.

"If you're collecting information about my telephone when you shouldn't be doing that, that is an abuse, even if you file it and never use it," he said.

(Reporting by David Ingram; Editing by Howard Goller and Jackie Frank)
http://www.reuters.com/article/2013/...96G10F20130717





‘America Has No Functioning Democracy’ – Jimmy Carter on NSA

Former US President Jimmy Carter lambasted US intelligence methods as undemocratic and described Edward Snowden’s NSA leak as “beneficial” for the country.

Carter lashed out at the US political system when the issue of the previously top-secret NSA surveillance program was touched upon at the Atlantic Bridge meeting on Tuesday in Atlanta, Georgia.

"America has no functioning democracy at this moment," Carter said, according to Der Spiegel.

He also believes the spying-scandal is undermining democracy around the world, as people become increasingly suspicious of US internet platforms, such as Google and Facebook. While such mediums have normally been associated with freedom of speech and have recently become a major driving force behind emerging democratic movements, fallout from the NSA spying scandal has dented their credibility.

It’s not the first time Carter has criticized US intelligence policies. In a previous interview with CNN, he said the NSA leaks signified that “the invasion of human rights and American privacy has gone too far." He added that although Snowden violated US law, he may have ultimately done good for the country.

"I think that the secrecy that has been surrounding this invasion of privacy has been excessive, so I think that the bringing of it to the public notice has probably been, in the long term, beneficial."

Jimmy Carter was President of the United States from 1977 to 1981. After leaving office, he founded the Carter Center, an NGO advocating human rights. The ex-president’s human rights credentials won him Nobel Peace Prize in 2002.

Carter has frequently criticized his successors in the White House. Last year, he condemned the Obama administration for the use of drone attacks in his article "A Cruel and Unusual Record" published in the New York Times.
http://rt.com/usa/carter-comment-nsa-snowden-261/





Obama Considers Ending NSA Surveillance Programs, Democratic Senator Says

In the wake of NSA leaker Edward Snowden’s recent revelations, the Obama administration may be willing to backtrack on some of its more notorious surveillance policies, Sen. Ron Wyden (D-Oregon) told reporters.

The long-time member of the Senate Intelligence Committee said Thursday that privacy and civil liberties advocates could be on the verge of “making a comeback” due to the blowback caused by recent leaked national security documents.

Speaking to the New York Times this week on the effect leaked documents attributed to former National Security Agency contractor Edward Snowden have had on the United States, Sen. Wyden said he imagines the White House is willing to reconsider the current surveillance policies in place that have sparked widespread protest and criticism in recent weeks.

Snowden, a 30-year-old former employee of NSA contractor Booz Allen Hamilton, has been leaking classified documents to the media detailing how the US government under President George W. Bush, then Barack Obama, has collected the phone and Internet communications and relevant records pertaining to millions of Americans on a daily basis.

President Obama and members of his cabinet have stood by the spy programs, but Sen. Wyden told the Times that the response in the weeks since the leaks began could be a turning point in the war against privacy.

“I have a feeling that the administration is getting concerned about the bulk phone records collection, and that they are thinking about whether to move administratively to stop it,” Sen. Wyden told the paper.

“I think we are making a comeback,” he said.

Since the Guardian and Washington Post newspapers first began publishing documents provided by Snowden on June 6, NSA files credited to the since-fired Booz Allen worker have exposed a number of arguably legal surveillance practices that have put the residents of not just the US but most other countries around the globe under the microscope of Uncle Sam.

As recently as Thursday morning, the Guardian published a new report citing memos obtained by Snowden that show how Microsoft worked hand-in-hand with the Federal Bureau of Investigation in order to ensure that law enforcement could bypass encryption mechanisms and easily listen-in and watch conversations conducted over Silicon Valley giant’s Outlook.com chat portal and Skype messaging platform.

“In the past, Skype made affirmative promises to users about their inability to perform wiretaps," Chris Soghoian of the American Civil Liberties Union told The Guardian upon publishing of that report. "It's hard to square Microsoft's secret collaboration with the NSA with its high-profile efforts to compete on privacy with Google."

But even if Snowden’s leaks have only begun to expose a relationship between Silicon Valley and Washington’s intelligence community, it doesn’t change the fact that a number of big names in the tech industry have condemned the government’s surveillance powers as documents continue to be published. Yahoo, Google and Microsoft have all asked the Foreign Intelligence Surveillance Court to reconsider its policies that allow it to collect data on Internet users without obtaining a warrant, and services that tout heavy encryption and anonymity have seen a surge in use in recent weeks.

Although the White House has yet to add on to Sen. Wyden’s remarks, the lawmaker said that he thinks the president is on the verge of turning around.

Throughout his 12-year tenure on the Senate Intelligence Committee, Wyden has made repeated pleas directed at the American public warning them of vast surveillance powers bestowed on the federal government with the ability to be abused.

"When the public finds out that these secret interpretations are so dramatically different than what the public law says, I think there's going to be extraordinary anger in the country," Wyden told HuffPost Live earlier this year. "Because it's one thing to have debates about laws... but we assume that the law itself is public."

Last month, Sen. Wyden and co-committee member Sen. Mark Udall (D-Colorado) wrote a letter to NSA Director Keith Alexander urging him to be more truthful in disclosing his agency’s policies. The NSA has only begun to address the programs exposed by Mr. Snowden through testimony and occasional statements, but the lawmakers said a “fact sheet” released by the agency in the wake of the leaks meant to address the programs was “inaccurate” and “misleading.”

"We were disappointed to see that this fact sheet contains an inaccurate statement about how the Section 702 authority has been interpreted by the US government," they wrote Alexander, a four-star Army general who also heads the US Cyber Command. "In our judgment this inaccuracy is significant, as it portrays protections for Americans' privacy as being significantly stronger than they actually are."
http://rt.com/usa/nsa-surveillance-wyden-snowden-021/





NSA Phone Snooping Cannot Be Challenged in Court, Feds Say
David Kravets

The Obama administration for the first time responded to a Spygate lawsuit, telling a federal judge the wholesale vacuuming up of all phone-call metadata in the United States is in the “public interest,” does not breach the constitutional rights of Americans and cannot be challenged in a court of law.

Thursday’s response marks the first time the administration has officially answered one of at least four lawsuits challenging the constitutionality of a secret U.S. snooping program the Guardian newspaper disclosed last month. The administration’s filing sets the stage for what is to be a lengthy legal odyssey — one likely to outlive the Obama presidency — that will define the privacy rights of Americans for years to come.

The New York federal district court lawsuit, brought by the American Civil Liberties Union, demands a federal judge immediately halt the spy program the civil rights group labeled as “one of the largest surveillance efforts ever launched by a democratic government.”

The Guardian last month posted a leaked copy of a top secret Foreign Intelligence Surveillance Court opinion requiring Verizon Business to provide the National Security Agency the phone numbers of both parties involved in all calls, the International Mobile Subscriber Identity (IMSI) number for mobile callers, calling card numbers used in the call, and the time and duration of the calls.

The suit, brought on behalf of the ACLU’s employees, alleges breaches of the First Amendment and the Fourth Amendment and names Director of National Intelligence James Clapper, NSA Director Keith Alexander and FBI Director Robert Mueller, among others.

“… the alleged metadata program is fully consistent with the Fourth Amendment. Most fundamentally, the program does not involve “searches” of plaintiffs’ persons or effects, because the collection of telephony metadata from the business records of a third-party telephone service provider, without collecting the contents of plaintiffs’ communications, implicates no ‘legitimate expectation of privacy’ that is protected by the Constitution,” (.pdf) David S. Jones, an assistant United States attorney, wrote U.S. District Judge William H. Pauley in a Thursday filing.

Because the Fourth Amendment is not breached, it follows that the First Amendment is not violated either, Jones wrote.

The government said that, despite it scooping up telephony metadata from “certain telecommunication service providers,” it only queried the database using “300 unique identifiers” searching for terrorist activity last year under a standard of “reasonable, articulable suspicion.” Because the ACLU cannot prove that any of its employees were surveilled under the program, they have no right to sue under a legal concept known as standing.

“Indeed, the chances that their metadata will be used or reviewed in a query are so speculative that they lack Article III standing to seek the injunctive relief requested in their July 2 letter,” the government wrote.

The law that has been authorizing the surveillance is the Patriot Act — adopted six weeks after the 2001 terror attacks — and greatly expanded the government’s power to intrude into the private lives of Americans.

The suit challenges one of the most controversial provisions of the Patriot Act — Section 215 — that allows the secret Foreign Intelligence Surveillance Court to authorize broad warrants for most any type of records, including those held by banks, doctors and phone companies. Lawmakers have repeatedly voted to prevent the act from expiring. The government only needs to show that the information is “relevant” to an authorized investigation. No connection to a terrorist or spy is required.

The government’s filing urged Judge Pauley to allow the spying to continue. “The requested injunction is irreconcilable with the public interest, and should be denied.”

The suit says the spying as outlined by the Guardian and confirmed by the government breaches the constitutional rights of ACLU employees. Among other things, it chills their First Amendment speech rights and breaches the Fourth Amendment because the secret court is authorizing the surveillance against Americans without particularized suspicion that they have engaged in any criminal, terrorist activity.

The government has publicly maintained that Americans have no constitutional privacy rights connected to their business records with the phone company.

The Obama administration’s filing comes days after a broad coalition of groups supporting everything from religion, drugs, and digital rights to guns and the environment sued the NSA in a San Francisco federal court on virtually the same allegations.

Other pending Spygate cases include one from the Electronic Privacy Information Center, which has petitioned the Supreme Court to stop the surveillance program. Larry Klayman, the former chairman of Judicial Watch, has lodged a suit challenging the surveillance in a District of Columbia federal court.
http://www.wired.com/threatlevel/201...ping-standing/





Study: When You're at the Wheel, a Growing Network of Police Cameras Are On Your Tail
Anne Flaherty

You can drive, but you can't hide.

A rapidly growing network of police cameras is capturing, storing and sharing data on license plates, making it possible to stitch together people's movements whether they are stuck in a commute, making tracks to the beach or up to no good.

For the first time, the number of license tag captures has reached the millions, according to a study published Wednesday by the American Civil Liberties Union based on information from hundreds of law enforcement agencies. Departments keep the records for weeks or years, sometimes indefinitely, saying they can be crucial in tracking suspicious cars, aiding drug busts, finding abducted children and more.

Attached to police cars, bridges or buildings — and sometimes merely as an app on a police officer's smartphone — scanners capture images of passing or parked vehicles and pinpoint their locations, uploading that information into police databases.

Over time, it's unlikely many vehicles in a covered area escape notice. And with some of the information going into regional databases encompassing multiple jurisdictions, it's becoming easier to build a record of where someone has been and when, over a large area.

While the Supreme Court ruled in 2012 that a judge's approval is needed to use GPS to track a car, networks of plate scanners allow police effectively to track a driver's location, sometimes several times every day, with few legal restrictions. The ACLU says the scanners are assembling a "single, high-resolution image of our lives."

"There's just a fundamental question of whether we're going to live in a society where these dragnet surveillance systems become routine," said Catherine Crump, a staff attorney with the organization. The group is proposing that police departments immediately delete any records of cars not linked to any crime.

Although less thorough than GPS tracking, plate readers can produce some of the same information, the group says, revealing whether someone is frequenting a bar, joining a protest, getting medical or mental help, being unfaithful to a spouse and much more.

In Minneapolis, for example, eight mobile and two fixed cameras captured data on 4.9 million license plates from January to August 2012, the Star Tribune reported. Among those whose movements were recorded: Mayor R.T. Rybak, whose city-owned cars were tracked at 41 locations in a year.

A Star Tribune reporter's vehicle was tracked seven times in a year, placing him at a friend's house three times late at night, other times going to and from work — forming a picture of the dates, times and coordinates of his daily routine. Until the city temporarily classified such data late last year, anyone could ask police for a list of when and where a car had been spotted.

As the technology becomes cheaper and more widespread, even small police agencies are able to deploy more sophisticated surveillance systems. The federal government has been a willing partner, offering grants to help equip departments, in part as a tool against terrorism.

Law enforcement officials say the scanners are strikingly efficient. The state of Maryland told the ACLU that troopers could "maintain a normal patrol stance" while capturing up to 7,000 license plate images in a single eight-hour shift.

"At a time of fiscal and budget constraints, we need better assistance for law enforcement," said Harvey Eisenberg, assistant U.S. attorney in Maryland.

Law enforcement officials say the technology automates a practice that's been around for years. The ACLU found that only five states have laws governing license plate readers. New Hampshire, for example, bans the technology except in narrow circumstances, while Maine and Arkansas limit how long plate information can be stored.

"There's no expectation of privacy" for a vehicle driving on a public road or parked in a public place, said Lt. Bill Hedgpeth, a spokesman for the Mesquite Police Department in Texas. The department has records stretching back to 2008, although the city plans next month to begin deleting files older than two years.

In Yonkers, N.Y., just north of New York City's Bronx, police said retaining the information indefinitely helps detectives solve future crimes. In a statement, the department said it uses license plate readers as a "reactive investigative tool" that is only accessed if detectives are looking for a particular vehicle in connection with a crime.

"These plate readers are not intended nor used to follow the movements of members of the public," the department said.

Even so, the records add up quickly. In Jersey City, N.J., for example, the population is 250,000, but the city collected more than 2 million plate images in a year. Because the city keeps records for five years, the ACLU estimates that it has some 10 million on file, making it possible for police to plot the movements of most residents, depending upon the number and location of the scanners.

The ACLU study, based on 26,000 pages of responses from 293 police departments and state agencies across the country, found that license plate scanners produced a small fraction of "hits," or alerts to police that a suspicious vehicle had been found.

In Maryland, for example, the state reported reading about 29 million plates between January and May of last year. Of that number, about 60,000 — or roughly 1 in every 500 license plates — were suspicious. The main offenses: a suspended or revoked registration, or a violation of the state's emissions inspection program, altogether accounting for 97 percent of alerts.

Even so, Eisenberg, the assistant U.S. attorney, said the program has helped authorities track 132 wanted suspects and can make a critical difference in keeping an area safe.

Also, he said, Maryland has rules in place restricting access. Most records are retained for one year, and the state's privacy policies are reviewed by an independent board, Eisenberg noted.

At least in Maryland, "there are checks, and there are balances," he said.
http://www.startribune.com/nation/215826221.html





The Creepy, Long-Standing Practice of Undersea Cable Tapping

The newest NSA leaks reveal that governments are probing "the Internet's backbone." How does that work?
Olga Khazan

In the early 1970's, the U.S. government learned that an undersea cable ran parallel to the Kuril Islands off the eastern coast of Russia, providing a vital communications link between two major Soviet naval bases. The problem? The Soviet Navy had completely blocked foreign ships from entering the region.

Not to be deterred, the National Security Agency launched Operation Ivy Bells, deploying fast-attack submarines and combat divers to drop waterproof recording pods on the lines. Every few weeks, the divers would return to gather the tapes and deliver them to the NSA, which would then binge-listen to their juicy disclosures.

The project ended in 1981, when NSA employee Ronald Pelton sold information about the program to the KGB for $35,000. He's still serving his life prison term.

The operation might have ended, but for the NSA, this underwater strategy clearly stuck around.

In addition to gaining access to web companies' servers and asking for phone metadata, we've now learned that both the U.S. and the U.K. spy agencies are tapping directly into the Internet's backbone -- the undersea fiber optic cables that shuttle online communications between countries and servers. For some privacy activists, this process is even more worrisome than monitoring call metadata because it allows governments to make copies of everything that transverses these cables, if they wanted to.

The British surveillance programs have fittingly sinister titles: "Mastering the Internet" and "Global Telecoms Exploitation," according to The Guardian.

A subsidiary program for these operations -- Tempora -- sucks up around 21 million gigabytes per day and stores the data for a month. The data is shared with NSA, and there are reportedly 550 NSA and GCHQ analysts poring over the information they've gathered from at least 200 fiber optic cables so far.

The scale of the resulting data harvest is tremendous. From The Guardian:

This includes recordings of phone calls, the content of email messages, entries on Facebook and the history of any internet user's access to websites -- all of which is deemed legal, even though the warrant system was supposed to limit interception to a specified range of targets.

In an interview with online security analyst Jacob Appelbaum, NSA leaker Edward Snowden called the British spy agency GCHQ "worse than" the NSA, saying it represents the first "full take" system, in which surveillance networks catch all Internet traffic regardless of its content. Appelbaum asked Snowden if "anyone could escape" Tempora:

"Well, if you had the choice, you should never send information over British lines or British servers," Snowden said. "Even the Queen's selfies with her lifeguards would be recorded, if they existed."

The U.S.'s own cable-tapping program, known by the names OAKSTAR, STORMBREW, BLARNEY and FAIRVIEW, as revealed in an NSA PowerPoint slide, apparently functions similarly to Tempora, accessing "communications on fiber cables and infrastructure as data flows past," according to The Washington Post. The slide indicates that Prism and these so-called "upstream" programs work together somehow, with an arrow saying "You Should Use Both" pointing to the two operations.

So how does one tap into an underwater cable?

The process is extremely secretive, but it seems similar to tapping an old-fashioned, pre-digital telephone line -- the eavesdropper gathers up all the data that flows past, then deciphers it later.

More than 550,000 miles of flexible undersea cables about the size of garden watering hoses carry all the world's emails, searches, and tweets. Together, they shoot the equivalent of several hundred Libraries of Congress worth of information back and forth every day.

In 2005, the Associated Press reported that a submarine called the USS Jimmy Carter had been repurposed to carry crews of technicians to the bottom of the sea so they could tap fiber optic lines. The easiest place to get into the cables is at the regeneration points -- spots where their signals are amplified and pushed forward on their long, circuitous journeys. "At these spots, the fiber optics can be more easily tapped, because they are no longer bundled together, rather laid out individually," Deutsche Welle reported.

But such aquatic endeavors may no longer even be necessary. The cables make landfall at coastal stations in various countries, where their data is sent on to domestic networks, and it's easier to tap them on land than underwater. Britain is, geographically, in an ideal position to access to cables as they emerge from the Atlantic, so the cooperation between the NSA and GCHQ has been key. Beyond that partnership, there are the other members of the "Five Eyes" -- the Australians, the New Zealanders, and the Canadians -- that also collaborate with the U.S., Snowden said.

The tapping process apparently involves using so-called "intercept probes." According to two analysts I spoke to, the intelligence agencies likely gain access to the landing stations, usually with the permission of the host countries or operating companies, and use these small devices to capture the light being sent across the cable. The probe bounces the light through a prism, makes a copy of it, and turns it into binary data without disrupting the flow of the original Internet traffic.

"We believe our 3D MEMS technology -- as used by governments and various agencies -- is involved in the collection of intelligence from ... undersea fibers," said a director of business development at Glimmerglass, a government contractor that appeared, at least according to a 2010 Aviation Week article, to conduct similar types of interceptions, though it's unclear whether they took part in the British Tempora or the U.S. upstream programs. In a PowerPoint presentation, Glimmerglass once boasted that it provided "optical cyber solutions" to the intelligence community, offering the ability to monitor everything from Gmail to Facebook. "We are deployed in several countries that are using it for lawful interception. They've passed laws, publicly known, that they will monitor all international traffic for interdiction of any kind of terrorist activity."

The British publication PC Pro presented another theory: that slightly bending the cables could allow a receiver to capture their contents.

One method is to bend the cable and extract enough light to sniff out the data. "You can get these little cylindrical devices off eBay for about $1,000. You run the cable around the cylinder, causing a slight bend in cable. It will emit a certain amount of light, one or two decibels. That goes into the receiver and all that data is stolen in one or two decibels of light. Without interrupting transfer flow, you can read everything going on on an optical network," said Everett.

The loss is so small, said Everett, that anyone who notices it might attribute it to a loose connection somewhere along the line. "They wouldn't even register someone's tapping into their network," he added.

Once it's gathered, the data gets sifted. Most of it is discarded, but the filters pull out material that touches on one of the 40,000 search terms chosen by the NSA and GCHQ -- that's the content the two agencies inspect more closely.


The British anti-surveillance group Privacy International has filed a lawsuit against the U.K. government, arguing that such practices amount to "blanked surveillance" and saying that British courts do "not provide sufficiently specific or clear authorization for such wide-ranging and universal interception of communications." Their argument is that the existing surveillance laws are from the phone-tapping days and can't be applied to modern, large-scale electronic data collection.

"If their motivation is to catch terrorists, then are there less intrusive methods than spying on everyone whose traffic happens to transverse the U.K.?" said Eric King, head of research at Privacy International.

Meanwhile, the British agency, the GCHQ, has defended their practices by saying that they are merely looking for a few suspicious "needles" in a giant haystack of data, and that the techniques have allowed them to uncover terrorist plots.

If groups like Privacy International are successful, it may put an end to the capture of domestic Internet data within the U.K., but as NSA expert Matthew Aid recently told me, since 80 percent of the fiber optic data flows through the U.S., it wouldn't stop the massive surveillance operations here or in other countries -- even if the person on the sending end was British.

It's also worth noting that this type of tapping has been going on for years -- it's just that we're now newly getting worked up about it. In 2007, the New York Times thus described President Bush's expansion of electronic surveillance: "the new law allows the government to eavesdrop on those conversations without warrants -- latching on to those giant switches -- as long as the target of the government's surveillance is 'reasonably believed' to be overseas."

Want to avoid being a "target" of this "switch-latching"? A site called "Prism-break" recently released a smorgasbord of encrypted browsing, chat, and email services that supposedly allow the user to evade government scrutiny.

The only platform for which there is no encrypted alternative is Apple's iOS, a proprietary software, for which the site had this warning:

"You should not entrust neither your communications nor your data to a closed source device."
http://www.theatlantic.com/internati...apping/277855/





Snowden Has ‘Blueprints’ to NSA, Journalist Says
AP

Edward Snowden has highly sensitive documents on how the National Security Agency is structured and operates that could harm the U.S. government, but has insisted that they not be made public, a journalist close to the NSA leaker said.

Glenn Greenwald, a columnist with The Guardian newspaper who first reported on the intelligence leaks, told The Associated Press that disclosure of the information in the documents "would allow somebody who read them to know exactly how the NSA does what it does, which would in turn allow them to evade that surveillance or replicate it."

He said the "literally thousands of documents" taken by Snowden constitute "basically the instruction manual for how the NSA is built."

"In order to take documents with him that proved that what he was saying was true he had to take ones that included very sensitive, detailed blueprints of how the NSA does what they do," the journalist said Sunday in a Rio de Janeiro hotel room. He said the interview was taking place about four hours after his last interaction with Snowden.

Greenwald said he believes the disclosure of the information in the documents would not prove harmful to Americans or their national security, but that Snowden has insisted they not be made public.

"I think it would be harmful to the U.S. government, as they perceive their own interests, if the details of those programs were revealed," he said.

He has previously said the documents have been encrypted to help ensure their safekeeping.

Snowden emerged from weeks of hiding in a Moscow airport Friday, and said he was willing to meet President Vladimir Putin's condition that he stop leaking U.S. secrets if it means Russia would give him asylum until he can move on to Latin America.

Greenwald told The AP that he deliberately avoids talking to Snowden about issues related to where the former analyst might seek asylum in order to avoid possible legal problems for himself.

Snowden is believed to be stuck in the transit area of Moscow's main international airport, where he arrived from Hong Kong on June 23. He's had offers of asylum from Venezuela, Nicaragua and Bolivia, but because his U.S. passport has been revoked, the logistics of reaching whichever country he chooses are complicated.

Still, Greenwald said that Snowden remains "calm and tranquil," despite his predicament.

"I haven't sensed an iota of remorse or regret or anxiety over the situation that he's in," said Greenwald, who has lived in Brazil for the past eight years. "He's of course tense and focused on his security and his short-term well-being to the best extent that he can, but he's very resigned to the fact that things might go terribly wrong and he's at peace with that."

Greenwald said he worried that interest in Snowden's personal saga had detracted from the impact of his revelations, adding that Snowden deliberately turned down nearly all requests for interviews to avoid the media spotlight.

Asked whether Snowden seemed worried about his personal safety, Greenwald responded, "he's concerned."

He said the U.S. has shown it's "willing to take even the most extreme steps if they think doing so is necessary to neutralize a national security threat," Greenwald said. "He's aware of all those things, he's concerned about them but he's not going to be in any way paralyzed or constrained in what he thinks he can do as a result of that."

Asked about a so-called dead man's pact, which Greenwald has said would allow several people to access Snowden's trove of documents were anything to happen to him, Greenwald replied that "media descriptions of it have been overly simplistic.

"It's not just a matter of, if he dies, things get released, it's more nuanced than that," he said. "It's really just a way to protect himself against extremely rogue behavior on the part of the United States, by which I mean violent actions toward him, designed to end his life, and it's just a way to ensure that nobody feels incentivized to do that."

He declined to provide any more details about the pact or how it would work.

Greenwald said he himself has beefed up his own security, particularly since a laptop went missing from his Rio home.

"I don't really feel comfortable discussing the specific measures, but one would be really irrational and foolish to have thousands of top-secret documents from the most secretive agency of the world's most powerful government and not be thoughtful about added security," said the 46-year-old former constitutional and civil rights lawyer who has written three books contending the government has violated personal rights in the name of protecting national security.

Greenwald has also co-authored a series of articles in Rio de Janeiro's O Globo newspaper focusing on NSA actions in Latin America. He said he expected to continue publishing further stories based on other Snowden documents over the next four months.

Upcoming stories would likely include details on "other domestic spying programs that have yet to be revealed," but which are similar in scope to those he has been reporting on. He did not provide further details on the nature of those programs.

It was not immediately clear whether Russia would take Snowden up on his latest request for asylum, which could further test U.S.-Russia relations.

Following Friday's meeting between Snowden and human rights activists, U.S. officials criticized Russia for allowing a "propaganda platform" for the NSA leader.

White House spokesman Jay Carney said Russia should instead send Snowden back to the U.S. to face the felony charges that are pending against him.

Carney said Snowden is not a human rights activist or a dissident. "He is accused of leaking classified information, has been charged with three felony counts and should be returned to the United States," the spokesman said.
http://www.nytimes.com/aponline/2013...greenwald.html





About the Reuters Article

The latest effort to distract attention from the NSA revelations is more absurd than most
Glenn Greenwald

When you give many interviews in different countries and say essentially the same thing over and over, as I do, media outlets often attempt to re-package what you've said to make their interview seem new and newsworthy, even when it isn't. Such is the case with this Reuters article today, that purports to summarize an interview I gave to the daily newspaper La Nacion of Argentina.

Like everything in the matter of these NSA leaks, this interview is being wildly distorted to attract attention away from the revelations themselves. It's particularly being seized on to attack Edward Snowden and, secondarily, me, for supposedly "blackmailing" and "threatening" the US government. That is just absurd.

That Snowden has created some sort of "dead man's switch" - whereby documents get released in the event that he is killed by the US government - was previously reported weeks ago, and Snowden himself has strongly implied much the same thing. That doesn't mean he thinks the US government is attempting to kill him - he doesn't - just that he's taken precautions against all eventualities, including that one (just incidentally, the notion that a government that has spent the last decade invading, bombing, torturing, rendering, kidnapping, imprisoning without charges, droning, partnering with the worst dictators and murderers, and targeting its own citizens for assassination would be above such conduct is charmingly quaint).

I made three points in this La Nacion interview, all of which are true and none of which has anything remotely to do with threats:

1) The oft-repeated claim that Snowden's intent is to harm the US is completely negated by the reality that he has all sorts of documents that could quickly and seriously harm the US if disclosed, yet he has published none of those. When he gave us the documents he provided, he repeatedly insisted that we exercise rigorous journalistic judgment in deciding which documents should be published in the public interest and which ones should be concealed on the ground that the harm of publication outweighs the public value. If his intent were to harm the US, he could have sold all the documents he had for a great deal of money, or indiscriminately published them, or passed them to a foreign adversary. He did none of that.

He carefully vetted every document he gave us, and then on top of that, asked that we only publish those which ought to be disclosed and would not cause gratuitous harm: the same analytical judgment that all media outlets and whistleblowers make all the time. The overwhelming majority of his disclosures were to blow the whistle on US government deceit and radical, hidden domestic surveillance.

My point in this interview was clear, one I've repeated over and over: had he wanted to harm the US government, he easily could have, but hasn't, as evidenced by the fact that - as I said - he has all sorts of documents that could inflict serious harm to the US government's programs. That demonstrates how irrational is the claim that his intent is to harm the US. His intent is to shine a light on these programs so they can be democratically debated. That's why none of the disclosures we've published can be remotely described as harming US national security: all they've harmed are the reputation and credibility of US officials who did these things and then lied about them.

2) The US government has acted with wild irrationality. The current criticism of Snowden is that he's in Russia. But the reason he's in Russia isn't that he chose to be there. It's because the US blocked him from leaving: first by revoking his passport (with no due process or trial), then by pressuring its allies to deny airspace rights to any plane they thought might be carrying him to asylum (even one carrying the democratically elected president of a sovereign state), then by bullying small countries out of letting him land for re-fueling.

Given the extraordinary amount of documents he has and their sensitivity, I pointed out in the interview that it is incredibly foolish for the US government to force him to remain in Russia. From the perspective of the US government and the purported concerns about him being in Russia, that makes zero sense given the documents he has.

3) I was asked whether I thought the US government would take physical action against him if he tried to go to Latin America or even force his plane down. That's when I said that doing so would be completely counter-productive given that - as has been reported before - such an attack could easily result in far more disclosures than allowing us as journalists to vet and responsibly report them, as we've doing. As a result of the documents he has, I said in the interview, the US government should be praying for his safety, not threatening or harming it.

That has nothing to do with me: I don't have access to those "insurance" documents and have no role in whatever dead man switch he's arranged. I'm reporting what documents he says he has and what precautions he says he has taken to protect himself from what he perceives to be the threat to his well-being. That's not a threat. Those are facts. I'm sorry if some people find them to be unpleasant. But they're still facts.

Before Snowden's identity was revealed as the whistleblower here, I wrote:

"Ever since the Nixon administration broke into the office of Daniel Ellsberg's psychoanalyst's office, the tactic of the US government has been to attack and demonize whistleblowers as a means of distracting attention from their own exposed wrongdoing and destroying the credibility of the messenger so that everyone tunes out the message. That attempt will undoubtedly be made here."

That's what all of this is. And it's all it is: an ongoing effort to distract attention away from the substance of the revelations. (This morning, MSNBC show host Melissa Harris-Parry blamed Snowden for the fact that there is so much media attention on him and so little on the NSA revelations: as though she doesn't have a twice-weekly TV show where she's free to focus as much as she wants on the NSA revelations she claims to find so important).

Compare the attention paid to Snowden's asylum drama and alleged personality traits to the attention paid to the disclosures about mass, indiscriminate NSA spying. Or compare the media calls that Snowden (and others who worked to expose mass NSA surveillance) be treated like a criminal to the virtually non-existent calls that Director of National Intelligence James Clapper be treated like a criminal for lying to Congress.

This "threat" fiction is just today's concoction to focus on anything but the revelations about US government lying to Congress and constitutionally and legally dubious NSA spying. Yesterday, it was something else, and tomorrow it will be something else again. As I said in an interview with Falguni Sheth published today by Salon, this only happens in the US: everywhere else, the media attention and political focus is on NSA surveillance, while US media figures are singularly obsessed with focusing on everything but that.

There are all sorts of ways that Snowden could have chosen to make these documents be public. He chose the most responsible way possible: coming to media outlets and journalists he trusted and asking that they be reported on responsibly. The effort to depict him as some sort of malicious traitor is completely negated by the facts. That was the point of the interview. If you're looking for people who have actually harmed the US with criminal behavior, look here and here and here - not to those who took risks to blow the whistle on all of that. As always, none of this will detain us even for a moment in continuing to report on the many NSA stories that remain.

UPDATE

The original La Nacion interview which Reuters claimed to summarize is now online; the rough English translation is here. Here's the context for my quote about what documents he possesses:

"Q: Beyond the revelations about the spying system performance in general, what extra information has Snowden?

"A: Snowden has enough information to cause more damage to the US government in a minute alone than anyone else has ever had in the history of the United States. But that's not his goal. [His] objective is to expose software that people around the world use without knowing what they are exposing themselves without consciously agreeing to surrender their rights to privacy. [He] has a huge number of documents that would be very harmful to the US government if they were made public."

And exactly as I said, the answer about the dead man's switch came in response to my being asked: "Are you afraid that someone will try to kill him?" That's when I explained that I thought it was so unlikely because his claimed dead man's switch meant that it would produce more harm than good from the perspective of the US government. The only people who would claim any of this was a "threat" or "blackmail" are people with serious problems of reading comprehension or honesty, or both.

UPDATE II

For those who say that they wish there was more attention paid to the substance of the NSA stories than Snowden: here is the list of the NSA revelations we've published over the last month. Feel free to focus on them any time.
http://www.guardian.co.uk/commentisf...d-man-s-switch





Bush-Cheney Began Illegal NSA Spying Before 9/11, Says Telcom CEO
Ralph Lopez

Contradicting a statement by ex-vice president Dick Cheney on Sunday that warrantless domestic surveillance might have prevented 9/11, 2007 court records indicate that the Bush-Cheney administration began such surveillance at least 7 months prior to 9/11.

The Bush administration bypassed the law requiring such actions to be authorized by FISA court warrants, the body set up in the Seventies to oversee Executive Branch spying powers after abuses by Richard Nixon. Former QWest CEO John Nacchios said that at a meeting with the NSA on February 27, 2001, he and other QWest officials declined to participate. AT&T, Verizon and Bellsouth all agreed to shunt customer communications records to an NSA database.
In 2007 the Denver Post reported:

""Nacchio suggested that the NSA sought phone, Internet and other customer records from Qwest in early 2001. When he refused to hand over the information, the agency retaliated by not granting lucrative contracts to the Denver-based company, he claimed.""

Other sources corroborate the former CEO's allegations, which were made in the course of his legal defense against insider trading charges. Both Slate.com and National Journal have published reports in which sources are quoted which support the former CEO's claims.
Speaking on “FOX News Sunday" this weekend in defense of the Obama administration's NSA PRISM program, which has caused a national uproar over the sweeping intrusion by the government into American citizens' emails, live chats, and other electronic communications, Cheney said:
"
“Now, as everybody has been associated with the program said if we had this before 9/11, when there were two terrorists in San Diego, two hijackers, able to use that program, that capability against the target, we might have been able to prevent 9/11,”"
However, the presence of such powers in the hands of the present administration did not succeed in preventing the Boston Marathon attacks, even though the suspects were already well-known to the FBI, and one allegedly told law enforcement, while in the hospital, that they were able to "download plans for pressure cooker bombs from the Internet.

In the same interview on "Fox news Sunday" Cheney called NSA whistleblower Edward Snowden a "traitor."

In 2004, an AT&T technician filed a class action lawsuit against AT&T for engaging in an illegal domestic-surveillance program at the behest of the government. The Bush administration accessed major routers owned by telecommunications companies, in cities such as San Francisco, to divert traffic onto NSA mirror sites in order to capture vast volumes of data.

The Bush-Cheney administration fought fiercely to pass legislation which granted telecommunications companies immunity from prosecution for violating Americans' Fourth Amendment rights under the Constitution. The legislation was passed in 2008. UK Guardian journalist Glenn Greenwald argued that the unprecedented "retroactive" immunity would also give the Bush administration immunity as well, by preventing lawsuits from moving forward into the discovery phase, where wrongdoing was likely to be uncovered.

Nevertheless, political accountability activists continue to press for action against the Bush, and now the Obama, administrations for violations of the Constitution and settled law. On April 19th of this year a California attorney, Inder Comar, filed two lawsuits in the Northern District of California against George W. Bush, Richard Cheney, Colin Powell, Donald Rumsfeld, Condoleezza Rice and Paul Wolfowitz for planning and waging a “war of aggression” against Iraq, in violation of laws set down at the Nuremberg Trials in 1946. A radio interview of Comar can be heard on peace activist Cindy Sheehan's radio show HERE.
http://digitaljournal.com/article/352455





Swedish Professor Nominates Edward Snowden for the Nobel Peace Prize

· Stefan Svallfors, sociology professor at Umeå University, nominated Edward Snowden for the Nobel Peace Prize
· Snowden will not be eligible for this year's prize, which will be awarded in December 2013 - but could be considered for 2014
· The NSA whistleblower would have a hard time accepting the award, as he has already unsuccessfully applied for asylum in Norway

Ashley Collman

A sociology professor in Sweden has recommended NSA whistleblower Edward Snowden for the Nobel Peace Prize.

In a letter addressed to the Norwegian Nobel Committee and published in Swedish newspaper Västerbottens-Kuriren, Professor Stefan Svallfors nominated Snowden for his 'heroic effort at great personal cost' shedding light on the expansive cyber-spying conducted by the U.S. National Security Agency.

Because of his bravery, Snowden 'helped to make the world a little bit better and safer,' Svallfors wrote.

Svallfors compares Snowden's act to the rulings in the Nuremberg trials of 1945 because 'I was just following orders' was not held as a viable excuse for the Nazis who carried out human rights atrocities.

Svallfors also believes this will help the Peace Prize regain some of respect it lost after prematurely awarding Barack Obama the award in 2009.

'It would show its willingness to stand up in defense of civil liberties and human rights, even when such a defense [could] be viewed with disfavor by the world's dominant military power.'

But it may be too late for Snowden to receive the award this year.

Nominations for laureates must be postmarked no later than February 1 for consideration in the following December's prizes.

Between the months of March and August the advisers review the short list of candidates.

However, Svallfors' nomination should be taken seriously by the committee for next year's prize.

As a sociology professor at Umeå University, he counts as one of the 'qualified' people who can send their nominations to the committee.

These qualified people include: members of national assemblies and governments of states; members of international courts; university rectors; professors of social sciences, history, philosophy, law and theology; directors of peace research institutes and foreign policy institutes; recipients of the prize; board members of organizations that have been awarded the prize; active members of the Norwegian Nobel Committee; former advisers of the Norwegian Nobel Committee.

It was the last prize described in Alfred Nobel's will, which left most of his fortune to the creation of the prizes. Other Nobel Prizes are awarded in the areas of physics, chemistry, medicine and literature.

The peace prize is awarded each year to 'the person who shall have done the most or the best work for fraternity between nations, for the abolition or reduction of standing armies and for the holding and promotion of peace congresses.'

Though Snowden is eligible for nomination for the December 2014 prize, it's unlikely he'd be able to travel to Oslo for the award ceremony.

Snowden applied for asylum in Norway on July 2, but the country then planned to reject it according to their national law.

'According to Norwegian law, one can't seek asylum abroad and the normal procedures stipulate that the asylum application from Edward Snowden will be rejected,' Paal Loenseth, Northwegian state secretary told news agency NTB.

If Snowden is awarded the prize in 2014, he would be the youngest Nobel Peace Laureate in the history of the prize.
http://www.dailymail.co.uk/news/arti...Professor.html





Spy-Spotter: Joke About Scary Visit Came True
Hannah Cleaver

A German man who called on Facebook friends concerned about American secret service operations to join him in a walk around a US army spy centre near his home, found secret service men at his door checking his political leanings.

"I was still very sleepy when the phone rang - it was 7.17 in the morning - and a police officer started asking questions about what I was planning," he said.

"Then the doorbell rang and I saw out the window that a police van was parked outside. The officer on the phone said I should open the door to the others."

He put on a "Team Edward" T-shirt with a picture of NSA whistle-blower Edward Snowden, and answered scores of questions about his plans.

Bangert, a veteran of the Blockupy protests in Frankfurt, had set up a group calling itself "NSA spy protection league" (NSA Spion Schutzbund), as if the US spies were an endangered species of birds.

He wanted, he said, to take a walk with some friends to "observe them in their natural habitat" - the Dagger Complex in Griesheim near Darmstadt. This is one base where the NSA (US National Security Agency) is said to operate from. The authority stands accused of monitoring much of Germany's internet traffic.

The uniformed police seemed satisfied with his answers about the expected number of people on the walk - 32 had shown an interest, Bangert told The Local. But despite there being no specific agenda, and no plans for a rally or speeches, he was told he had to register the event.

"I asked them why, but they could not really explain it to me. They couldn't help me understand what the difference was between going for a walk and meeting up to play football - which you don't have to register," he said.

A few hours later, his phone rang again, and one of the police officers who had been at his house that morning, told him the state security wanted to talk with him.

"She said I should call them, that it was important that I did. So I did, and they asked me again about the Facebook entry, and how many people were expected and so on. Then they asked if I would go to see them or if they could come to see me for a personal conversation."

He said a state security agent arrived with a local police officer, and asked him a load of questions about his political activities and his opinions, and whether he had any connection to activists willing to use violence. They suggested his Facebook entry could be interpreted in different ways, but he said he was really just organizing a walk.

"Then they told me I should not put the meeting on the internet, that I should not write about it," he added.

They seemed to be concerned that the walk could get out of control if lots of people showed up - like the Facebook parties which are hijacked by hoodlums. "But I was not offering anything for free like at the parties," he said.

"And in any case, all there is, is a fence, with nothing behind it - everything is underground. No-one is interested."

In the end around 80 people showed up on Saturday to take a walk, have a talk and look at the US base.

The "NSA spy protection league" Facebook page says of the day: "A group of people young and old gathered at the Griesheim market square and walked to the NSA spy complex, in the most fabulous weather. On the way there, surveillance methods were discussed ... and possible behaviour of the NSA spies was the subject of consideration."

It said some of the group had tried with various calls to tempt the NSA spies from the building, but none showed themselves. "Taking part in the walk was not enough, just to know that NSA spies are there - everyone agreed they wanted to see NSA spies with their own eyes. We will see what we can do."
http://www.thelocal.de/national/20130715-50859.html





Could NSA Spying Hurt California Economy?
Joe Mathews

California and its businesses have a problem. It’s called the National Security Agency.

That may sound provincial. The debate over the massive NSA surveillance programs disclosed by Edward Snowden is a national and global matter, not just a California concern.

But the disclosures — and the U.S. government’s reaction to them — hit at the heart of California’s economic life. Whether you believe the massive collection of phone and electronic records is a scary invasion of privacy or a necessary defense against terrorism, you should worry about our state’s exposure to the fallout.

The problem for California is not that the feds are collecting all of our communications. It is that the feds are (totally unapologetically) doing the same to foreigners, especially in communications with the U.S. California depends for its livelihood on people overseas — as customers, trade partners, as sources of talent. Our leading industries — shipping, tourism, technology, and entertainment — could not survive, much less prosper, without the trust and goodwill of foreigners. We are home to two of the world’s busiest container ports, and we are a leading exporter of engineering, architectural, design, financial, insurance, legal, and educational services. All of our signature companies — Apple, Google, Facebook, Oracle, Intel, Hewlett-Packard, Chevron, Disney — rely on sales and growth overseas. And our families and workplaces are full of foreigners; more than one in four of us were born abroad, and more than 50 countries have diaspora populations in California of more than 10,000.

Hollywood and Silicon Valley are as important as Washington’s politicians and foreign policy wonks, if not more so, in shaping the image of the United States overseas. But news that our government is collecting our foreign friends’ phone records, emails, video chats, online conversations, photos, and even stored data, tarnishes the California and American brands.

The response from America’s leaders? “With respect to the Internet and emails, this does not apply to U.S. citizens and it does not apply to people living in the United States,” said President Obama, as if the privacy and trust of foreigners were of no consequence. Similarly, James Clapper, the director of national intelligence, said that the Prism program, which taps into online communications, “could not be used to intentionally target any U.S. citizen.”

Such statements should be chilling to Californians.

Will tourists balk at visiting us because they fear U.S. monitoring? Will overseas business owners think twice about trading with us because they fear that their communications might be intercepted and used for commercial gain by American competitors? Most chilling of all: Will foreigners stop using the products and services of California technology and media companies — Facebook, Google, Skype, and Apple among them — that have been accomplices (they say unwillingly) to the federal surveillance?

The answer to that last question: Yes. It’s already happening. Asian governments and businesses are now moving their employees and systems off Google’s Gmail and other U.S.-based systems, according to Asian news reports. German prosecutors are investigating some of the American surveillance. The issue is becoming a stumbling block in negotiations with the European Union over a new trade agreement. Technology experts are warning of a big loss of foreign business.

John Dvorak, the PCMag.com (http://PCMag.com) columnist, wrote recently, “Our companies have billions and billions of dollars in overseas sales and none of the American companies can guarantee security from American spies. Does anyone but me think this is a problem for commerce?”

Unfortunately, California is in a poor position to do anything about all of this, since we are part of the United States. As USC’s Abraham F. Lowenthal observed in his indispensable book, Global California, “California has the power as well as the global links and interests of a nation” but “it lacks the legal attributes and policy instruments of a sovereign country.”

Being an American state is an enormous headache at times like these — when the U.S. government is violating the privacy of foreigners who do business with us, when coal-producing states block renewable energy legislation, and when Congress, in the name of immigration reform, wants to further militarize the border between California and its most important export market, Mexico. It doesn’t help when our own U.S. Sen. Dianne Feinstein is backing the surveillance without acknowledgment of the huge potential costs to her state.

It’s time for her and House Minority Leader Nancy Pelosi, who has been nearly as tone-deaf on this issue, to be forcefully reminded that protecting California industry, and the culture of openness and trust that is so vital to it, is at least as important as protecting massive government data-mining. Such reminders should take the force not merely of public statements but of law.

California has a robust history of going its own way — on vehicle standards, energy efficiency, immigration, marijuana. Now is the time for another departure — this one on the privacy of communications.

I’m not a big fan of ballot measures, since they often only add more complexity to California’s complicated system. But on this issue, we need laws, perhaps even a state constitutional amendment, to make plain that California considers the personal data and communications of all people, be they American or foreign, to be private and worthy of protection.

Such a measure wouldn’t stop NSA surveillance, nor should it. But it would give California-based companies some leverage to resist the most invasive surveillance demands of federal agencies. And it would send an unmistakable message to California’s friends that we care about protecting their privacy — and keeping their business.
http://www.utsandiego.com/news/2013/...ornia-economy/





U.S. Government Can No Longer Be Trusted To Protect The Internet From International Power Grabs
Jeff Jarvis

Editor’s note: Jeff Jarvis is the author of “What Would Google Do?,” “Public Parts,” and the Kindle Single “Gutenberg the Geek” and is cohost of This Week in Google. He directs the Tow-Knight Center for Entrepreneurial Journalism at the City University of New York. Follow him on Twitter @jeffjarvis.

In the wake of Edward Snowden’s whistleblowing, the United States government can no longer be seen as a beneficent or even merely benign actor on the Internet. That could have disastrous consequences, first in reducing trust in the cloud and its American hosts and second in potentially upending Internet governance.

Many governments have been chomping at the bit to gain greater control of the net:

· Two years ago at the eG8 meeting in Paris, I faced then-President Nicolas Sarkozy of France and urged him to take a Hippocratic oath for the net: First, do no harm. He mocked the question and visibly warmed to the idea of the net as an eighth continent onto which he could plant his flag.

· After reports of U.S. surveillance of Brazilian companies and citizens, their government has asked the United Nations to step in to protect privacy on the net.

· And at last year’s Internet Governance Forum and International Telecommunications Union meetings, such stalwarts of free speech as Russia, China, Saudi Arabia, the United Arab Emirates, Algeria, and Sudan tried to claim ”equal rights to manage the internet.” They were blocked when the U.S. gathered other Western nations to walk out of treaty negotiations.

But now that Snowden and the Guardian have revealed the U.S. to be the Big Ear listening to more and more raw communication – to “collect it all,” in the words of NSA Director Gen. Keith Alexander — can America still be seen as both the mother and the protector of the Internet?

The revelations are “likely to be severely setting back the cause of Internet freedom in the international community,” wrote Zachary Keck in The Diplomat. “States and inter-governmental organizations are likely to gain even more control over what has long been thought of as a stateless entity.”

In stronger words yet, John Naughton, a tech columnist for the Observer in London, warned that Snowden’s leaks demonstrate “that the US is an unsavoury regime too. And that it isn’t a power that can be trusted not to abuse its privileged position. They also undermine heady U.S. rhetoric about the importance of a free and open Internet. Nobody will ever again take seriously US Presidential or State Department posturing on Internet freedom. So, in the end, the NSA has made it more difficult to resist the clamour for different – and possibly even more sinister – arrangements for governing the Net.”

But the net’s own sovereignty depends on no one having sovereignty over it. I wrote that a few years ago when I came to the conclusion that no company and no government can protect the freedom of the net. So who will? We, the citizens of the net — and many of you, its builders — must engage in a discussion of the principles of a free net and open society that we wish to protect.

Those principles include the ideas that we have a right to privacy no matter the medium and a right to speak, assemble and act. We have a right to connect, and if that connection is cut or compromised, that must be seen as a violation of our human rights. All bits are created equal and if any bit is stopped or detoured — or spied upon — on its way to its destination, then no bit can be presumed to be free and secure. And the net must remain open and distributed under the thumb of no authority.

Let’s be clear that the net is enabling disruptive forces to organize and act against governments from Tunisia and Egypt to Turkey and Brazil — not to mention the United States. It is in the interests of these institutions to control the net and its redistribution of power.

Our net is in danger — not because of Edward Snowden, but because of what we now know about the actions of the U.S. government. The threat is bigger than SOPA or PIPA or ACTA. It is a threat to the nature of the net.
http://techcrunch.com/2013/07/16/u-s...l-power-grabs/





N.S.A. Leaks Revive Push in Russia to Control Net
Andrew E. Kramer

Edward J. Snowden, the former National Security Agency contractor, fled the United States saying he did not want to live in a surveillance state.

But now the Russians are using his very presence here — on Friday Mr. Snowden said he intended to remain in Russia for some time while seeking asylum elsewhere — to push for tighter controls over the Internet.

Two members of Russia’s Parliament have cited Mr. Snowden’s leaks about N.S.A. spying as arguments to compel global Internet companies like Google and Microsoft to comply more closely with Russian rules on personal data storage.

These rules, rights groups say, might help safeguard personal data but also would open a back door for Russian law enforcement into services like Gmail.

“We need to quickly put these huge transnational companies like Google, Microsoft and Facebook under national controls,” Ruslan Gattarov, a member of the upper chamber of the Russian Parliament, or Federation Council, said in an interview. “This is the lesson Snowden taught us.”

In the United States, the documents leaked by Mr. Snowden highlighted the increasingly close ties between the N.S.A. and the biggest high-tech companies. His documents revealed how Microsoft, Facebook, Google and other companies have cooperated with the agency.

If anything, requests by law enforcement agencies in Russia, with its long history of people bugging, informing and spying on one another, poses an even more stark quandary for companies like Google and Facebook.

American information technology companies operating in Russia routinely face demands from law enforcement to reveal user data, and have less recourse than in the United States to resist in the courts.

The Russian reaction may surprise Mr. Snowden most of all. In an interview with The Guardian, he said he unveiled details of N.S.A. surveillance because “I don’t want to live in a world where there is no privacy and therefore no room for intellectual exploration and creativity.”

In a series of leaks to The Guardian, The Washington Post and other newspapers, Mr. Snowden provided documents showing the N.S.A. collected logs of Americans’ phone calls and intercepted foreigners’ Internet communications, with help from American companies, through a program called Prism.

The Russians, who with only minimal success, had for years sought to make these companies provide law enforcement access to data within Russia, reacted angrily. Mr. Gattarov formed an ad hoc committee in response to Mr. Snowden’s leaks.

Ostensibly with the goal of safeguarding Russian citizens’ private lives and letters from spying, the committee revived a long-simmering Russian initiative to transfer control of Internet technical standards and domain name assignments from two nongovernmental groups that control them today to an arm of the United Nations, the International Telecommunications Union.

The committee also recommended that Russia require foreign companies to comply with its law on personal data, which can require using encryption programs that are licensed by the Federal Security Service, the successor agency to the K.G.B.

Sergei Zheleznyak, a deputy speaker of the Russian Parliament in President Vladimir V. Putin’s United Russia party, has suggested legislation requiring e-mail and social networking companies retain the data of Russian clients on servers inside Russia, where they would be subject to domestic law enforcement search warrants.

The Russian Senate is also proposing the creation of a United Nations agency to monitor collection and use of personal data, akin to the International Atomic Energy Agency, which oversees nuclear materials, to keep tabs on firms like Facebook and Google that harvest personal data.

Many independent advocates for Internet freedom have for years, however, characterized the Russian policy proposals as deeply worrying, for their potential to hamper free communication across borders and expose political dissidents inside authoritarian states to persecution.

Even before Mr. Snowden arrived in the transit zone of Moscow’s Sheremetyevo Airport, Russia had been pressing for such controls. Its proposals had found some support among other governments that wanted greater access to social networking and e-mail data, but which did not ban such services outright, as China does.

In this light, Mr. Snowden’s arrival here and his decision to extend his stay, announced Friday, seemed to have aided their cause.Brazil’s foreign minister, Antonio Patriota, for example, a week ago endorsed the Russian proposal to transfer some control over Internet technical standards to the United Nations telecommunications agency.

In Russia, a cottage industry already exists of companies licensed by the F.S.B. to make software applications that replace Microsoft’s built-in encryption on Windows. A Russian law requires this for government employees and several other categories of users. About two million Windows machines have had this change made in Russia, according to CryptoPro, one of the companies that makes the security agency’s licensed encryption key.

For Russian-based technology companies, the pressure is even more intense. In an updated version of the K.G.B.’s using steam to open letters in the mail, the security agency ordered Yandex, Russia’s largest search engine, to reveal the identities of people who had made online donations to an opposition leader, Aleksei A. Navalny. Yandex complied; later, these people received harassing phone calls from a Kremlin youth group.

Google, in response to Mr. Gattarov’s criticism of the company, said in a statement that its privacy policies were now in compliance with Russian laws but did not comment on the proposal to require the company to shift its servers to Russian territory.

Facebook issued a statement saying, “We think it would be better for people if the result of all of this debate is greater transparency and accountability for governments seeking private data, rather than more government secrecy and access to this personal information.”
http://www.nytimes.com/2013/07/15/bu...ntrol-net.html





Travellers' Mobile Phone Data Seized by Police at Border

Thousands of innocent holidaymakers and travellers are having their phones seized and personal data downloaded and stored by the police, The Telegraph can disclose.
Tom Whitehead, and David Barrett

Officers use counter-terrorism laws to remove a mobile phone from any passenger they wish coming through UK air, sea and international rail ports and then scour their data.

The blanket power is so broad they do not even have to show reasonable suspicion for seizing the device and can retain the information for “as long as is necessary”.

Data can include call history, contact books, photos and who the person is texting or emailing, although not the contents of messages.

David Anderson QC, the independent reviewer of terrorism laws, is expected to raise concerns over the power in his annual report this week.

He will call for proper checks and balances to ensure it is not being abused.

It echoes concerns surrounding an almost identical power police can use on the streets of the UK, which is being reviewed by the Information Commissioner.

However, in those circumstances police must have grounds for suspicion and the phone can only be seized if the individual is arrested.

Mr Anderson said: “Information downloaded from mobile phones seized at ports has been very useful in disrupting terrorists and bringing them to justice.

“But ordinary travellers need to know that their private information will not be taken without good reason, or retained by the police for any longer than is necessary.”

Up to 60,000 people a year are “stopped and examined” as they enter or return to the UK under powers contained in the Terrorism Act 2000.

It is not known how many of those have their phone data taken.

Dr Gus Hosein, of the campaign group Privacy International, said: “We are extremely concerned by these intrusive tactics that have been highlighted by the independent terrorism reviewer.

“These practices have been taking place under the radar for far too long and if Mr Anderson calls for reform and new safeguards we would be very supportive of that.”

He added: “Seizing and downloading your phone data is the modern equivalent of searching your home and office, searching through family albums and business records alike, and identifying all your friends and family, then keeping this information for years.

“If you were on the other side of the border, the police would rightly have to apply for warrants and follow strict guidelines. But nowhere in Britain do you have less rights than at the border.

“Under law, seizing a mobile phone should be only when the phone is essential to an investigation, and then even certain rules should apply. Without these rules, everyone should be worried.”

Under the Act, police or border staff can question and even hold someone while they ascertain whether the individual poses a terrorism risk.

But no prior authorization is needed for the person to be stopped and there does not have to be any suspicion.

It means a police officer can stop any passenger at random, scour their phone and download and retain data, even of the individual is then immediately allowed to proceed.

It has been a grey area as to whether the act specifically allowed for phone data to be downloaded and recorded.

But last month, Damian Green, the policing minister, laid an amendment to the anti-social behaviour, crime and policing bill, which is currently going through Parliament.

It makes the express provision for the copying and retention of information from a seized item.

The ability to potentially retain the data indefinitely could also spark a fresh row over civil liberties similar to the controversy around DNA sample.

Laws had to be changed to end the retention of the DNA of innocent people after the European Court of Human Rights ruled in 2008 that keeping them was unlawful.

Mr Anderson is expected to stress he is not against the power and that it is a useful tool in the fight against terrorism but that it must be used appropriately.

In his report last year Mr Anderson said the general power to stop people under the terror laws were “formidable” and “among the strongest of all police powers”.

Christopher Graham, the Information Commissioner, is already investigating whether the use of similar powers by police who arrest people are appropriate.

It emerged last year that seven police forces had installed technology that allowed officers to download data from suspects’ phones but one industry expert suggested at least half of forces in England and Wales could be extracting mobile phone data in police stations.

A spokesman for Scotland Yard, which has national responsibilities for counter-terrorism, said: “Under the Terrorism Act 2000 a person may be detained and questioned for up to nine hours to determine if that individual is a person concerned in the commission, preparation or instigation of acts of terrorism as outlined in the Act.

“As with any power to detain an individual it is used appropriately and proportionally and is always subject to scrutiny by an independent reviewer of UK anti-terror laws.

“Holding and properly using intelligence gained from such stops is a key part of fighting crime, pursuing offenders and protecting the public.”
http://www.telegraph.co.uk/technolog...at-border.html





New Jersey Supreme Court Restricts Police Searches of Phone Data
Kate Zernike

Staking out new ground in the noisy debate about technology and privacy in law enforcement, the New Jersey Supreme Court on Thursday ordered that the police will now have to get a search warrant before obtaining tracking information from cellphone providers.

The ruling puts the state at the forefront of efforts to define the boundaries around a law enforcement practice that a national survey last year showed was routine, and typically done without court oversight or public awareness. With lower courts divided on the use of cellphone tracking data, legal experts say, the issue is likely to end up before the United States Supreme Court.

The New Jersey decision also underscores the extent of the battles over government intrusion into personal data in a quickly advancing digital age, from small town police departments to the National Security Agency’s surveillance of e-mail and cellphone conversations.

Several states and Congress are considering legislation to require that warrants based on probable cause be obtained before investigators can get cellphone data. Montana recently became the first state to pass such a measure into law. The California Legislature approved a similar bill in 2012, but Gov. Jerry Brown vetoed it, saying it did not “strike the right balance” between the needs of law enforcement and the rights of citizens.

The Florida Supreme Court ruled in May that the police could seize a cellphone without a warrant, but needed a warrant to search it. And a case before the United States Court of Appeals for the Fourth Circuit, in Richmond, Va., is weighing whether investigators acted legally when they got a court order, but not a warrant, to obtain 221 days of cellphone location data for suspects in an armed robbery case in Maryland.

“This type of issue will play out in many jurisdictions for the simple reason that cellphones are so prevalent in daily life,” said Peter G. Verniero, a former New Jersey attorney general and State Supreme Court justice. “The decision affects just about everybody.”

“Law enforcement is trying to keep up with technology, as well they should,” he added. “It’s very legitimate for law enforcement to use technology, but this court decision is a strong reminder that constitutional standards still apply. The courts have to adapt, and law enforcement has to adapt.”

The ruling involved a case that began with a string of burglaries in homes in Middletown, N.J. A court ordered the tracing of a cellphone that had been stolen from one home, which led to a man in a bar in nearby Asbury Park, who said his cousin had sold him the phone, and had been involved in burglaries. The police then used data they got from T-Mobile to locate the suspect, Thomas W. Earls, at three points on a subsequent evening, tracking him to a motel room where he was found with a television and suitcases full of stolen goods.

In a unanimous decision, the State Supreme Court said that when people entered cellphone contracts, “they can reasonably expect that their personal information will remain private.”

The justices recognized that this departed somewhat from federal case law. But they relied in part on a United States Supreme Court decision last year that the police could not attach a Global Positioning System to a suspect’s car without a warrant. A cellphone, the New Jersey justices said, was like a GPS device.

“Using a cellphone to determine the location of its owner can be far more revealing than acquiring toll billing, bank, or Internet subscriber records,” said the opinion, written by Chief Justice Stuart Rabner. “Details about the location of a cellphone can provide an intimate picture of one’s daily life and reveal not just where people go — which doctors, religious services and stores they visit — but also the people and groups they choose to affiliate with. That information cuts across a broad range of personal ties with family, friends, political groups, health care providers and others.”

Besides establishing a firmer legal bar for the police to obtain cellphone data, the Supreme Court also remanded the case to the appeals court to determine whether the evidence collected using the cellphone records could be admitted in court under an “emergency aid exception” to the requirement for a warrant.

Last year, the American Civil Liberties Union reviewed records from more than 200 local police departments, large and small, and found that they were aggressively using cellphone tracking data, so much so that some cellphone companies were marketing a catalog of “surveillance fees” to police departments, to track suspects or even to download text messages sent to a phone that had been turned off. Departments were using the information for emergency and nonemergency cases.

Some departments had manuals advising officers not to reveal the practice to the public. Others defended its use. The police in Grand Rapids, Mich., for example, had used a cellphone locator to find a stabbing victim who was in a basement hiding from his attacker.

The law has been slow to keep up. The Florida decision in May rejected the reasoning of a lower court that had based its approval of cellphone tracking on a 1973 United States Supreme Court case that allowed heroin found in a suspect’s cigarette pack to be introduced as evidence. “Attempting to correlate a crumpled package of cigarettes to the cellphones of today is like comparing a one-cell organism to a human being,” the decision said.

Nationally, court decisions about cellphone tracking have considered whether it comports with the Fourth Amendment, which guards against unreasonable searches and seizures. But the justices in New Jersey based their decision on the State Constitution, which affords greater privacy protection. The state court has previously ruled in favor of electronic privacy. In 2008, it said that police had to obtain a subpoena from a grand jury to obtain Internet provider records.

“The inescapable logic of this decision should be influential beyond New Jersey because it makes complete sense as to an individual’s reasonable expectation of privacy,” said Rubin Sinins, who filed a friend of the court brief on behalf of the American Civil Liberties Union and the New Jersey Association of Criminal Defense Lawyers.
http://www.nytimes.com/2013/07/19/ny...hone-data.html





Inside The Massive Global Black Market For Smartphones
Gerry Smith

This article is part of a Huffington Post series exploring the global underground trade in stolen smartphones. Previous stories in the series can be found here.

Before a federal SWAT team descended last summer, one storefront in a Detroit suburb attracted so many people bearing shopping bags stuffed with iPhones and iPads that managers installed a port-a-potty on the sidewalk.

Once inside, people deposited their electronic wares into a rotating drawer below a bulletproof glass window and waited for the cashier to deliver stacks of cash.

So much money changed hands in this fashion at the Ace Wholesale storefront in Taylor, Mich., that an armored truck arrived each morning to deliver fresh bundles of cash, according to an undercover investigator for the wireless company Sprint and an employee at the Mattress World outlet next door.

"It was like Fort Knox over there," said the Mattress World employee, who asked not to be named for fear of making enemies inside what police say was a locus of criminal activity.

Many of the mobile devices swapped for cash at Ace Wholesale had been stolen at gunpoint in an escalating wave of gadget-related robberies, police say. Ace Wholesale had become a key broker in the underground trade of stolen phones, a global enterprise that often connects violent street thieves in American cities with buyers as far away as Hong Kong, according to law enforcement and the wireless industry.

"These companies fence the stolen phones for them, no questions asked," said Jerry Deaven, an agent with the Department of Homeland Security, which is tasked with preventing the trafficking of stolen goods. "You can walk right into one of these storefronts and sell all the phones at once and walk out with $20,000."

Deaven told The Huffington Post that such traffickers are responsible for "a tremendous amount of phones being shipped out of the country," adding that "some organizations are shipping a couple million dollars worth of phones per month."

Deaven declined to comment specifically about Ace Wholesale, which he said is now under federal investigation. Last August, federal agents armed with search warrants raided the company's locations in suburban Detroit, Atlanta and Chicago, and the owner's home in Taylor, Mich., according to a DHS spokesman.

Ace Wholesale's owner, Jason Floarea, has not been charged with a crime. He did not respond to requests for comment. His attorney, Jim Thomas, who has represented high-profile clients including former Detroit Mayor Kwame Kilpatrick, declined to comment.

The case against Ace Wholesale sheds light on what law enforcement and wireless providers portray as a shadowy world of smartphone trafficking. At the center of this trade is a crucial layer of middlemen: bulk purchasers who buy devices from thieves and con artists before exporting them to customers around the world.

In 2009, federal agents charged Hezbollah operatives in Philadelphia with attempting to buy thousands of stolen cell phones and ship them to Hong Kong and the United Arab Emirates to finance the Shiite militant organization, which the United States considers a terrorist group.

Earlier this year, a woman's iPhone stolen at a bar in San Francisco turned up a few days later in Lima, Peru, according to San Francisco police.

Last fall, American and Mexican wireless carriers began collaborating to address the cross-border trade in stolen phones after learning that Mexican drug cartels were using them to communicate with kidnapping victims' relatives without being traced. But American wireless companies lack similar arrangements with other countries, allowing international phone trafficking to flourish.

Phones stolen in the United States have been located "on all continents except Antarctica," said Marci Carris, vice president of customer finance services at Sprint.

The global nature of the trade stems in part from measures that law enforcement and wireless carriers have imposed to make it harder to resell stolen phones in the United States, prompting criminals to forge new markets abroad.

"Once it gets overseas, it's virtually impossible to track a phone back here to the person who committed the crime," Deaven said.

But phone trafficking is driven largely by the massive profits made by exploiting the price difference between smartphones sold in the U.S. and overseas. Americans who agree to two-year service contracts with their cell phone company can buy the latest iPhones for about $200 -- a price subsidized by the carrier. In Hong Kong, an iPhone can be sold for as much as $2,000.

This equation helps explain why more than 1.6 million Americans were victims of smartphone theft last year and why thefts of mobile devices now make up 40 percent of all robberies in major American cities. The rising street crime is exacting a heavy toll on consumers who spend an estimated $30 billion each year replacing lost and stolen devices, according to Lookout, a San Francisco-based mobile security firm.

Smartphone-related crime has also turned increasingly violent. Last month, a 24-year-old man was shot in Philadelphia after police say he would not give up his cell phone to a thief. Last year, 26-year-old Hwangbum Yang of New York City and 23-year-old Megan Boken of suburban Chicago were shot and killed during separate iPhone robberies, police say.

In response to the crime wave, state and city law enforcement officials are investigating smartphone makers for their failure to adopt measures that would render their devices inoperable when stolen. New York Attorney General Eric Schneiderman pressed smartphone manufacturers in May to create "kill switch" technology to undercut the black market, noting that "foreign trafficking of stolen devices has proliferated."

Phone trafficking also costs the wireless industry "hundreds of millions of dollars a year," said James Baldinger, an attorney for Sprint. One alleged phone trafficker, Hassan Essayli, admitted in 2008 that his company, Platform Enterprises, shipped 30,000 phones from California to other countries in just two months, according to his testimony in a lawsuit filed by TracFone Wireless.

"I'm seeing thousands and thousands of phones being resold overseas," Baldinger said. "The numbers are so big, but a lot of time it flies under the radar."

Over the last eight years, wireless companies have filed more than 200 lawsuits against alleged phone traffickers, but no case has bigger stakes than the federal lawsuit Sprint filed last summer against Ace Wholesale, Baldinger said. Sprint has accused Ace of buying thousands of Sprint phones and reselling them overseas, thereby depriving the wireless company of revenue from monthly phone bills.

"As far as we know," Baldinger said, "Ace is the biggest phone trafficker in the country."

Founded four years ago, Ace Wholesale was the brainchild of Jason Floarea, a Detroit area entrepreneur who opened his first wireless retail outlet when he was only 16, according to the company's website. He says on the site that he started the company to help consumers purchase top quality smartphones at discount prices.

Now 27, Floarea is a married father of three and an ordained minister. He aims to open his own church focused on outreach to convicts, alcoholics and the homeless, the site says.

Local law enforcement, however, accuse him of less savory activities: acting as a well-known buyer of smartphones and tablets stolen in burglaries and armed robberies.

In January 2010, Dearborn, Mich., police pulled over Floarea in his wife's silver Lexus and found two handguns, more than 30 cell phones, marijuana, a bottle of prescription drugs and more than $40,000 in cash, according to a local police report obtained by The Huffington Post through the Freedom of Information Act. He was arrested on charges of possession of marijuana, possession with intent to distribute narcotics and possession of a firearm in commission of a crime, the report says. Police later returned the phones and all but $4,200 in cash to Floarea per a court judgment.

A search of court records found no evidence of the case and both prosecutors and Floarea's attorney declined to comment on it. In Michigan, some defendants have been sentenced under statutes that prevent their cases from being disclosed publicly, according to a Michigan Department of Corrections spokesman.

While it remains unclear how profitable Floarea's business has become, he appears to be making a comfortable living. Early last year, he purchased a five-bedroom house in West Bloomfield, Mich., for $1.4 million, according to the town assessor's office. Even Ace Wholesale's low-level associates say they are well-compensated. One person who buys and sells phones for the company told Sprint's investigator that he makes $3,000 per week, court documents show.

Deaven said he recently interviewed a man who claimed to supply phones to traffickers and boasted about how his work supported his lavish lifestyle.

"He said, ‘I drink nothing but top-shelf liquor and get all the girls,'" Deaven recalled. "‘I make more money than the dope man, but have none of the risk.'"

‘A VERY LUCRATIVE CRIME'

The underground market transporting iPhones and other gadgets around the world began with a different form of theft.

For years, traffickers have hired teams of so-called "runners" or "credit mules" to buy discounted phones in bulk from retailers by agreeing to long-term service contracts. These runners simply stop paying the bills and sell the devices to traffickers who export them overseas.

In March, the California Attorney General charged two people -- Shoulin Wen, 38, and Yuting Tan, 27 -- with recruiting runners from homeless shelters to buy iPhones and Samsung Galaxy phones. The pair shipped the phones to Hong Kong -- a scheme that the attorney general says netted them nearly $4 million in less than a year.

But recently, thefts have become bolder and more violent: Traffickers have been acquiring phones through a growing number of cell phone store robberies, according to local and federal law enforcement officials.

"A guy can go into a cell phone store and steal 30 or 40 phones and get a lot more than if he hit a bank," said Deaven, the Homeland Security agent. "It's just a very lucrative crime."

In Houston's Harris County last year, thieves robbed at least a dozen cell phone stores -- sometimes at gunpoint -- during a two-month period, prompting the police department to establish a special task force to investigate the burglaries.

At one store in Houston, three men crashed a truck through the front window and stole dozens of cell phones before speeding away. At another store last year, a thief lowered himself through the ceiling, grabbed as many handsets as he could, then climbed back through the ceiling to escape.

Last July, Anthony Riopelle, 22, was working at a Meijer department store in Taylor, Mich., when two men approached and started asking about iPads. Suddenly, one man punched Riopelle in the face, knocking him to the ground, while the other grabbed more than a dozen tablets and fled the store, according to police.

"They said, ‘If you move, we're going to kill you,'" Riopelle told HuffPost.

Police said they later found the stolen iPads behind the bulletproof glass window at Ace Wholesale. The two thieves were never caught.

It was not the only time police tracked stolen mobile devices to Ace Wholesale. In August, Taylor police arrested a man in the company's parking lot shortly after he had stolen iPhones from several victims at gunpoint in Detroit.

"Ace Wholesale made it very easy for people who were obtaining phones through robberies and retail fraud to go there and sell them," Taylor police Chief Mary Sclabassi told HuffPost. "It brought a large crime element to the city."

Dozens of other companies around the country have played a similar role, Sprint says.

Sprint's investigators discovered hundreds of stolen iPhones stored in a suburban Baltimore warehouse owned by a company called Wireless Buybacks, according to a lawsuit Sprint filed against the company in February. Wireless Buybacks says it buys used phones and resells them to large retailers, which in turn issue them to customers who have insurance policies and need a replacement phone.

In its lawsuit, Sprint claims that a company associated with Wireless Buybacks tried to sell 800 iPhones to its undercover investigator for more than $400,000. A sample of serial numbers revealed that "the vast majority" of phones were stolen or obtained through fraud, the suit says.

In February, agents from the FBI, the Secret Service and the Bureau of Alcohol, Tobacco and Firearms raided Wireless Buybacks' warehouse in Elkridge, Md., and found the facility was being used to store stolen phones, according to Sprint. Law enforcement declined to comment about the raid, citing an ongoing investigation.

In court documents, Wireless Buybacks said it "does not knowingly transact business with anyone involved in burglaries or armed robberies" and conducts "a rigorous screening process" to ensure it doesn't buy stolen phones.

Kevin Lowe, co-founder of Wireless Buybacks, has said that his company supplies phones to "some of the largest retailers in the country." The company generates most of its revenue from a contract to supply cell phones to Best Buy worth about $45 million each year, the company said in court documents.

Best Buy has no plans to cut ties with Wireless Buybacks. "At this point, these are accusations that haven't been substantiated," a company spokesman said.

But Baldinger, Sprint's attorney, said the lawsuit reveals how many U.S. consumers are unwittingly buying stolen phones.

"There are lots of consumers walking around with phones they think they got legitimately from a national retailer," he said, "when in fact the phones were stolen during armed robberies."

‘TONY BUY iPHONE'

The middlemen at the center of the global trade in stolen smartphones organize themselves into distinct roles.

Many hire hackers who use special software to "unlock" the devices, enabling them to connect with wireless networks around the world, according to Lt. Ed Santos of the San Francisco Police Department, which has created a special task force focused on combating smartphone thefts. Then, they erase the data on the handsets, often within an hour after the device is stolen.

"They completely erase them so the phones can't be identified by who they belong to," Santos told HuffPost. "They want to sell a clean phone that can't be traced."

Traffickers later repackage phones in boxes with the manufacturer's logo, power chargers and instruction manuals in the native language of their destinations, according to Sprint.

Finally, they ship them overseas, mostly to Hong Kong, where they are distributed across Southeast Asia, said Baldinger, Sprint's attorney. Many phones are also shipped to Dubai, Israel and Latin America.

In 2011, Ace Wholesale shipped dozens of iPhones and Samsung Nexus phones to Go Telecom HK and Mobile Planet HK, according to invoices obtained by Sprint. These two companies listed addresses in Kowloon, a district of Hong Kong that is thick with electronics merchants.

Most traffickers ship phones in large cardboard boxes via FedEx and UPS, according to Deaven, the Homeland Security agent. The destination of stolen phones often depends on the provenance of the traffickers.

"Here in San Francisco, a lot of people have ties to Mexico," San Francisco police Sgt. Josh Kumli said. "A lot of phones are going to Mexico because that is where they have contacts."

Until December of last year, two brothers, Henry and Victor Gamboa, drove thousands of stolen phones and other electronics by truck from the Bay Area to Mexico every two weeks, Santos said. The two brothers are now in jail after being convicted of running a massive stolen electronics fencing ring.

Thuc Ngo told Sprint's lawyers that he smuggled iPhones from California to his native Vietnam, where his siblings helped him find buyers, according to a deposition from a Sprint lawsuit against him.

Ngo said he obtained phones through his business, which he called "Tony Buy iPhone." He drove a white Dodge Ram 3500 van emblazoned with an advertisement -- "We Buy Used Iphone" -- listing his phone number and website, the lawsuit claims. He met customers at Starbucks coffee shops around the Bay Area and paid between $220 and $330 for each iPhone. Some of the iPhones had been reported stolen, he confessed, according to his deposition.

He regularly flew to Vietnam to sell his inventory, stuffing the phones in his pockets and strapping them to his waist beneath his clothing with plastic wrap -- a technique he used to bypass Vietnamese customs at the airport and avoid paying taxes, the deposition says. In this way, he carried 11 iPhones at a time.

"That's the most I can hide on my body," he said, the deposition notes.

And yet it was never enough.

"Every time I was there, people would tell me, ‘Oh, next time, I want such and such phone and if you come back, you know, sell it to me,'" he said.

Earlier this year, a judge in San Francisco barred Ngo from buying and selling phones manufactured for use on Sprint's network. Ngo could not be reached for comment.

Thuc Ngo drove this van to meet people and buy iPhones that he smuggled to Vietnam, according to Sprint.

A 'SECRETIVE' STOREFRONT

Ace Wholesale acquired phones by advertising on Craigslist and websites like thewirelessbuzz.com and wirelessdealers.com. One ad read: "Buying Apple iPhone 4S!! Must Be Brand New!!..Will Buy any Quantity!!" Another read: "Ace Will Buy Your Smartphone For Top Dollar!!!!!!!"

The company listed the price it paid for each model on the walls of its stores. The latest iPhones still sealed in their original packaging commanded the highest prices. One employee told Sprint's undercover investigator that he was buying the iPhone 4S for $430.

At the Ace storefront in Taylor, Mich., the Mattress World employee next door said he saw "the same people every day" arriving with bags full of iPhones and other high-end phones and tablets. Mirrored windows prevented passersby from seeing inside. The company hired a security guard to sit in a car in the parking lot. Sometimes, people bought phones from others in the parking lot, then resold them inside Ace.

At another Ace Wholesale location in Troy, Mich., the company replaced the glass front door with a metal door featuring a peephole and buzzer, according to Scott Zochowski, an attorney who works in the building.

"They were very secretive and kept very strange hours," Zochowski told HuffPost. "I've always been very suspicious about what the heck was going on in there."

With so much valuable inventory moving through its operation, Ace Wholesale itself became a target for robberies, police say. In February 2011, Floarea, the store's owner, told police that four masked men broke into his store and stole 258 cell phones worth about $140,000. One month later, police say six men wearing masks broke into Ace Wholesale again and stole smartphones and tablets worth $173,000.

Last July, a man reported to police that he was robbed at gunpoint in the parking lot of Ace Wholesale after he sold 25 iPads for $15,000. The gunman grabbed the cash, which was in a black duffel bag, and ran away, according to a police report.

Some Ace Wholesale associates have criminal records. At the Atlanta location, the company paid $800 to Barney Gunn for two iPhones, Sprint says. Gunn, 46, who goes by the streetname "Spook," has served multiple prison sentences since the early 1990s for drug and weapons charges, Georgia court records show.

One morning last August, a SWAT team and agents from the Department of Homeland Security busted through the front window at Ace Wholesale's location in Taylor, leaving behind piles of shattered glass. The storefront is now occupied by a company that sells outdoor pools and jacuzzis. Federal agents spent six hours removing boxes and surveillance cameras from inside Ace Wholesale's location in Troy, Zochowski said.

In court documents, Ace Wholesale said the raids forced the company to shut down its business. Its website says its inventory is now "entirely online" and being carried by its sister company, Electronics Direct, which is also owned by Floarea.

Baldinger, of Sprint, said the raid against Ace Wholesale caused "a short-lived drop" in the number of phones being shipped overseas.

But in the increasingly competitive underground smartphone trade, shutting down one operation -- even a major one -- left plenty of others waiting in the wings, Baldinger added.

"There are so many other players out there," he said. "The raid provided an opportunity for a lot of other traffickers to step up and fill the void."
http://www.huffingtonpost.com/2013/0...n_3510341.html





Apple to Probe Death of Chinese Woman Who Used iPhone When it Was Charging

Apple Inc is investigating an accident in which a Chinese woman was killed by an electric shock when answering a call on her iPhone 5 while it was charging, the U.S. technology company said on Monday.

Last Thursday, Ma Ailun, a 23-year-old woman from China's western Xinjiang region and a flight attendant with China Southern Airlines, was electrocuted when she took a call on the charging mobile telephone, the official Xinhua news agency quoted police as saying on Sunday.

"We are deeply saddened to learn of this tragic incident and offer our condolences to the Ma family. We will fully investigate and cooperate with authorities in this matter," Apple said in an e-mail.

Apple declined to comment on details, such as whether this was an isolated case.

Ma's sister tweeted on Sina's microblog saying that Ma collapsed and died after using her charging iPhone 5 and urged users to be careful, a message that went viral on the site.

In April, Apple apologized to Chinese consumers and altered iPhone warranty policies in its second-biggest market after its after-sales service suffered more more than two weeks of condemnation by the state-run media.

(Reporting by Lee Chyen Yee; Editing by Clarence Fernandez)
http://www.reuters.com/article/2013/...96E08P20130715





Researchers Hack Verizon Device, Turn it Into Mobile Spy Station
Jim Finkle

Two security experts said they have figured out how to spy on Verizon Wireless mobile phone customers by hacking into devices the U.S. carrier sells to boost wireless signals indoors.

The finding, which the experts demonstrated to Reuters and will further detail at two hacking conferences this summer, comes at a time of intense global debate about electronic privacy, after top-secret U.S. surveillance programs were leaked by a former National Security Agency contractor, Edward Snowden, last month.

"This is not about how the NSA would attack ordinary people. This is about how ordinary people would attack ordinary people," said Tom Ritter, a senior consultant with the security firm iSEC Partners.

Verizon said it has updated the software on its signal-boosting devices, known as femtocells or network extenders, to prevent hackers from copying the technique of the two experts.

But Ritter said motivated hackers can still find other ways to hack the femtocells of Verizon, as well as those offered by some 30 carriers worldwide to their customers.

Femtocells, which act as tiny cellphone towers, can be purchased directly from Verizon for $250. Used models can be obtained online for about $150.

Ritter and his colleague, Doug DePerry, demonstrated for Reuters how they can eavesdrop on text messages, photos and phone calls made with an Android phone and an iPhone by using a Verizon femtocell that they had previously hacked.

(Reuters video showing part of demonstration: reut.rs/12AeGbG)

They declined to disclose how they had modified the software on the device, saying they do not want to make it any easier for criminals to figure out similar ways to hack femtocells.

The two said they plan to give more elaborate demonstrations two weeks from now at the Black Hat and Def Con hacking conferences in Las Vegas. More than 15,000 security professionals and hackers are expected to attend those conferences, which feature talks on newly found bugs in communications systems, smart TVs, mobile devices and computers that run facilities from factories to oil rigs.

Verizon Wireless released a Linux software update in March that prevents its network extenders from being compromised in the manner reported by Ritter and DePerry, according to company spokesman David Samberg.

"The Verizon Wireless Network Extender remains a very secure and effective solution for our customers," Samberg said in a statement. He said there have been no reports of customers being impacted by the bug that the researchers had identified. The company is a joint venture between Verizon Communications Inc and Vodafone Group Plc.

Samberg said his company uses an internal security team as well as outside firms to look for vulnerabilities in the devices it sells, before and after they are released.

Still, the two researchers said they are able to use the hacked femtocell to spy on Verizon phones even after Verizon released that update because they had modified the device before the company pushed out the software fix.

The researchers built their "proof of concept" system that they will demonstrate in Las Vegas with femtocells manufactured by Samsung Electronics Co and a $50 antenna from Wilson Electronics Inc.

They said that with a little more work, they could have weaponized it for stealth attacks by packaging all equipment needed for a surveillance operation into a backpack that could be dropped near a target they wanted to monitor.

For example, a group interested in potential mergers might place such a backpack in Manhattan restaurants frequented by investment bankers. Verizon's website said the device has a 40-foot range, but the researchers believe that could be expanded by adding specialized antennas.

The iSEC researchers are not the first to warn of vulnerabilities in femtocells, but claim to be the first to hack the femtocells of a U.S. carrier and also the first running on a wireless standard known as CDMA.

Other hacking experts have previously uncovered security bugs in femtocells used by carriers in Europe.

CTIA, a wireless industry group based in Washington, in February released a report that identified femtocells as a potential point of attack.

John Marinho, CTIA's vice president for cyber security and Technology, said that the group is more concerned about other potential cyber threats, such as malicious apps. He is not aware of any case where attacks were launched via femtocells.

Still, he said, the industry is monitoring the issue: "Threats change every day."

(Reporting by Jim Finkle; Editing by Richard Valdmanis, Tiffany Wu and Phil Berlowitz)
http://www.reuters.com/article/2013/...96E06X20130715





Ransomeware is Targeting Apple Mac OS X Users Via Safari

Demands users pay $300 to unlock systems
Lee Bell

SECURITY FIRM Malwarebytes has discovered that a piece of well-known Windows ransomware that pretends to be an FBI webpage is targeting Apple Mac OS X users.

The malware, which apparently has been bedeviling Windows users for years, has been found on the Apple Mac computers of unsuspecting users browsing regular websites, but in particular when searching for popular keywords.

When viewing certain websites, the ransomware will take over Safari and appear to be a message from the FBI claiming that the user has been "looking at indecent images on the internet" and demanding payment of $300 for full use of their system again.

"You have been viewing or distributing prohibited Pornographic content. To unlock your computer and to avoid other legal consequences, you are obligated to pay a release fee of $300," the fake FBI warning reads.

"The bad guys know there is a growing market of Apple consumers who for the most part feel pretty safe browsing the internet on a Mac without the need for any security product," Malwarebytes said in a blog post.

If you choose to ignore the message you cannot get rid of the webpage and repeated attempts to close the webpage will only lead to frustration, as even the "Leave Page" web browser trick does not work.

"If you 'force quit' the application, the same ransomware page will come back the next time to restart Safari because of the 'restore from crash' feature which loads backs the last URL visited before the browser was quit unexpectedly," Malwarebytes added.

However, the company said that there is a way to get rid of the webpage without paying the $300 ransom if you are one of the unlucky Mac users to come across it. This can be done by clicking on the Safari menu and then choosing "Reset Safari", ensuring all the items are ticked before hitting the Reset button.

Malwarebyte expects that "many people" are going to fall for the scam, either paying the ransom money or taking their laptop to a shop, in both cases spending money needlessly.

"This scam is unfortunately all too efficient and is not going away anytime soon," the firm warned, so watch out.
http://www.theinquirer.net/inquirer/...ers-via-safari





Nations Buying as Hackers Sell Flaws in Computer Code
Nicole Perlroth and David E. Sanger

On the tiny Mediterranean island of Malta, two Italian hackers have been searching for bugs — not the island’s many beetle varieties, but secret flaws in computer code that governments pay hundreds of thousands of dollars to learn about and exploit.

The hackers, Luigi Auriemma, 32, and Donato Ferrante, 28, sell technical details of such vulnerabilities to countries that want to break into the computer systems of foreign adversaries. The two will not reveal the clients of their company, ReVuln, but big buyers of services like theirs include the National Security Agency — which seeks the flaws for America’s growing arsenal of cyberweapons — and American adversaries like the Revolutionary Guards of Iran.

All over the world, from South Africa to South Korea, business is booming in what hackers call “zero days,” the coding flaws in software like Microsoft Windows that can give a buyer unfettered access to a computer and any business, agency or individual dependent on one.

Just a few years ago, hackers like Mr. Auriemma and Mr. Ferrante would have sold the knowledge of coding flaws to companies like Microsoft and Apple, which would fix them. Last month, Microsoft sharply increased the amount it was willing to pay for such flaws, raising its top offer to $150,000.

But increasingly the businesses are being outbid by countries with the goal of exploiting the flaws in pursuit of the kind of success, albeit temporary, that the United States and Israel achieved three summers ago when they attacked Iran’s nuclear enrichment program with a computer worm that became known as “Stuxnet.”

The flaws get their name from the fact that once discovered, “zero days” exist for the user of the computer system to fix them before hackers can take advantage of the vulnerability. A “zero-day exploit” occurs when hackers or governments strike by using the flaw before anyone else knows it exists, like a burglar who finds, after months of probing, that there is a previously undiscovered way to break into a house without sounding an alarm.

“Governments are starting to say, ‘In order to best protect my country, I need to find vulnerabilities in other countries,’ ” said Howard Schmidt, a former White House cybersecurity coordinator. “The problem is that we all fundamentally become less secure.”

A zero-day bug could be as simple as a hacker’s discovering an online account that asks for a password but does not actually require typing one to get in. Bypassing the system by hitting the “Enter” key becomes a zero-day exploit. The average attack persists for almost a year — 312 days — before it is detected, according to Symantec, the maker of antivirus software. Until then it can be exploited or “weaponized” by both criminals and governments to spy on, steal from or attack their target.

Ten years ago, hackers would hand knowledge of such flaws to Microsoft and Google free, in exchange for a T-shirt or perhaps for an honorable mention on a company’s Web site. Even today, so-called patriotic hackers in China regularly hand over the information to the government.

Now, the market for information about computer vulnerabilities has turned into a gold rush. Disclosures by Edward J. Snowden, the former N.S.A. consultant who leaked classified documents, made it clear that the United States is among the buyers of programming flaws. But it is hardly alone.

Israel, Britain, Russia, India and Brazil are some of the biggest spenders. North Korea is in the market, as are some Middle Eastern intelligence services. Countries in the Asian Pacific, including Malaysia and Singapore, are buying, too, according to the Center for Strategic and International Studies in Washington.

To connect sellers and buyers, dozens of well-connected brokers now market information on the flaws in exchange for a 15 percent cut. Some hackers get a deal collecting royalty fees for every month their flaw is not discovered, according to several people involved in the market.

Some individual brokers, like one in Bangkok who goes by “the Grugq” on Twitter, are well known. But after the Grugq spoke to Forbes last year, his business took a hit from the publicity, according to a person familiar with the impact, primarily because buyers demand confidentiality.

A broker’s approach need not be subtle. “Need code execution exploit urgent,” read the subject line of an e-mail sent from one contractor’s intermediary last year to Billy Rios, a former security engineer at Microsoft and Google who is now a director at Cylance, a security start-up.

“Dear Friend,” the e-mail began. “Do you have any code execution exploit for Windows 7, Mac, for applications like Browser, Office, Adobe, SWF any.”

“If yes,” the e-mail continued, “payment is not an issue.”

For start-ups eager to displace more established military contractors, selling vulnerabilities — and expertise about how to use them — has become a lucrative opportunity. Firms like Vupen in Montpellier, France; Netragard in Acton, Mass.; Exodus Intelligence in Austin, Tex.; and ReVuln, Mr. Auriemma’s and Mr. Ferrante’s Maltese firm, freely advertise that they sell knowledge of the flaws for cyberespionage and in some cases for cyberweapons.

Outside Washington, a Virginia start-up named Endgame — in which a former director of the N.S.A. is playing a major role — is more elusive about its abilities. But it has developed a number of tools that it sells primarily to the United States government to discover vulnerabilities, which can be used for fighting cyberespionage and for offensive purposes.

Like ReVuln, none of the companies will disclose the names of their customers. But Adriel Desautels, the founder of Netragard, said that his clients were “strictly U.S. based” and that Netragard’s “exploit acquisition program” had doubled in size in the past three years. The average flaw now sells from around $35,000 to $160,000.

Chaouki Bekrar, the founder of Vupen, said his company did not sell to countries that are “subject to European Union, United States or United Nations restrictions or embargoes.” He also said revenue was doubling every year as demand surged. Vupen charges customers an annual $100,000 subscription fee to shop through its catalog, and then charges per sale. Costs depend on the sophistication of the vulnerability and the pervasiveness of the operating system.

ReVuln specializes in finding remote vulnerabilities in industrial control systems that can be used to access — or disrupt — water treatment facilities, oil and gas pipelines and power plants. “They are engaging in willful blindness,” said Christopher Soghoian, a senior policy analyst at the American Civil Liberties Union.

Many technology companies have started “bug bounty” programs in which they pay hackers to tell them about bugs in their systems rather than have the hackers keep the flaws to themselves — or worse, sell them on the black market. Nearly a decade ago the Mozilla Foundation started one of the first bounty programs to pay for bugs in its Firefox browser. Since then, Google, Facebook and PayPal have all followed suit. In recent months, bounties have soared.

In 2010, Google started paying hackers up to $3,133.70 — the number is hacker code for “elite” — for bugs in its Web browser Chrome. Last month, Google increased its cash prize to $20,000 for flaws found in some of its widely used products. Facebook began a similar program in 2011 and has since paid out $1 million. (One payout included $2,500 to a 13-year-old. The most it has paid for a single bug is $20,000.)

“The program undermines the incentive to hold on to a bug that might be worth nothing in a day,” said Joe Sullivan, Facebook’s chief security officer. It had also had the unintended effect of encouraging ethical hackers to turn in others who planned to use its bugs for malicious use. “We’ve seen people back-stab other hackers by ratting out a bug that another person planned to use maliciously,” he said.

Microsoft, which had long resisted such a program, did an about-face last month when it announced that it would pay hackers as much as $150,000 for information about a single flaw, if they also provided a way to defend against it.

Apple still has no such program, but its vulnerabilities are some of the most coveted. In one case, a zero-day exploit in Apple’s iOS operating system sold for $500,000, according to two people briefed on the sale.

Still, said Mr. Soghoian of the A.C.L.U., “The bounties pale in comparison to what the government pays.” The military establishment, he said, “created Frankenstein by feeding the market.”

In many ways, the United States government created the market. When the United States and Israel used a series of flaws — including one in a Windows font program — to unleash what became known as the Stuxnet worm, a sophisticated cyberweapon used to temporarily cripple Iran’s ability to enrich uranium, it showed the world what was possible. It also became a catalyst for a cyberarms race.

When the Stuxnet code leaked out of the Natanz nuclear enrichment plant in Iran in the summer of 2010, the flaws suddenly took on new value. Subsequent discoveries of sophisticated state-sponsored computer viruses named Flame and Duqu that used flaws to spy on computers in Iran have only fueled interest.

“I think it is fair to say that no one anticipated where this was going,” said one person who was involved in the early American and Israeli strategy. “And today, no one is sure where it is going to end up.”

In a prescient paper in 2007, Charlie Miller, a former N.S.A. employee, described the profitable alternatives for hackers who may have otherwise turned their information about flaws over to the vendor free, or sold it for a few thousand dollars to programs like Tipping Point’s Zero Day Initiative, now run by Hewlett-Packard, which used them to enhance their security research.

He described how one American government agency offered him $10,000 for a Linux bug. He asked another for $80,000, which agreed “too quickly,” Mr. Miller wrote. “I had probably not asked for enough.”

Because the bug did not work with a particular flavor of Linux, Mr. Miller eventually sold it for $50,000. But the take-away for him and his fellow hackers was clear: There was serious money to be made selling the flaws.

At their conventions, hackers started flashing signs that read, “No more free bugs.”

Hackers like Mr. Auriemma, who once gave away their bugs to software vendors and antivirus makers, now sound like union organizers declaring their rights.

“Providing professional work for free to a vendor is unethical,” Mr. Auriemma said. “Providing professional work almost for free to security companies that make their business with your research is even more unethical.”

Experts say there is limited incentive to regulate a market in which government agencies are some of the biggest participants.

“If you try to limit who you do business with, there’s the possibility you will get shut out,” Mr. Schmidt said. “If someone comes to you with a bug that could affect millions of devices and says, ‘You would be the only one to have this if you pay my fee,’ there will always be someone inclined to pay it.”

“Unfortunately,” he said, “dancing with the devil in cyberspace has been pretty common.”
http://www.nytimes.com/2013/07/14/wo...ter-flaws.html





Military to Deploy Units Devoted to Cyber Operations
David E. Sanger

The Defense Department’s second-ranking official said on Thursday that the military is about to deploy roughly 4,000 people in the Pentagon’s first units devoted to conducting cyberoffense and defense operations, a new mission that formalizes America’s use of a class of weapons that the Obama administration has rarely discussed in public.

“I wanted to start this fast,” the official, Ashton B. Carter, the deputy secretary of defense, said at the opening of the Aspen Security Forum, an annual meeting on domestic security. Even at a time of budget cutbacks, he said, “We’re spending everything we think we can spend wisely” on developing the skills to conduct and defend against cyberattacks from abroad.

The New York Times is a media sponsor of the forum.

In a wide-ranging interview, Mr. Carter also said that after examining how Edward J. Snowden, a former contractor for the National Security Agency, downloaded top-secret material about American surveillance programs, the Defense Department had already ordered new protections against what he called “the insider threat.”

First among the new procedures is a “two-man rule,” based on the model of how nuclear weapons are handled, which requires two computer systems administrators to be working simultaneously when they are inside systems that contain highly classified material. No individual, he said, would be able to download the material without the other one signing off, much as two technicians must sign off on work on warheads.

“This was a failure to defend our own networks," Mr. Carter said of the Snowden case. “It was not an outsider hacking in, but an insider.” The lesson, he said, was that even systems administrators, who have wide-ranging access, must not be able to operate “all by themselves.”

Mr. Carter, a physicist and former Harvard professor who has worked at the Pentagon since the beginning of the Obama administration, blamed the problem largely on decisions made after the investigations into the intelligence failures surrounding the Sept. 11, 2001, terrorist attacks. Those attacks were blamed in large part on the reluctance of intelligence agencies and the Federal Bureau of Investigation to share information. Now, he said, the sharing had gone too far, because the United States puts “enormous amounts of information” in one place, a practice that may be accelerated as agencies put more data into cloud systems.

That enabled Mr. Snowden, working largely from an N.S.A. outpost in Hawaii, to download everything from details of the PRISM surveillance system to the text of a secret order from the Foreign Intelligence Surveillance Court, whose rulings are supposed to remain classified.

The question of whether intelligence-sharing had gone too far — away from traditional compartmentalization — was debated in 2010 after the revelations by WikiLeaks, based on huge databases that were downloaded by Pfc. Bradley Manning. At the time, the Defense Department promised changes, including putting in alarm systems that would be activated when large amounts of data were downloaded by an individual.

Mr. Carter strongly suggested that those changes, which also included Pentagon videos and 250,000 State Department cables, were insufficient. But his call to recompartmentalize is bound to raise questions about whether the government is restoring a system that, ultimately, was blamed for many of the failures to “connect the dots” before the Sept. 11 attacks, when the FBI and the intelligence agencies were barely sharing critical information.

The description of the Pentagon’s new cyberteams — which will be under the command of Gen. Keith B. Alexander of the Army, who directs the N.S.A. as well as the United States Cyber Command — was the most detailed yet of one of the military’s most closely held projects.

The administration recently conceded that it was developing cyberweapons. The best-known example is the covert effort called “Olympic Games,” which the Bush administration used against Iran’s nuclear program. The Obama administration accelerated the program, but suffered a major setback when a computer worm, later named Stuxnet, escaped from the Natanz nuclear enrichment plant in Iran and replicated itself on the Web, where the Iranians and others could download the code that was developed by the N.S.A. and Israel’s Unit 8200, the equivalent of the N.S.A.

Future operations run by Cyber Command, Mr. Carter suggested, would be focused on the teams. “The teams are new, and they are in addition to the N.S.A. work force,” he said. While they may ultimately be modeled on Special Operations, which provide fighting expertise to supplement traditional forces, for now the cyberforce will be drawn from members of the military services.

The cyberforces are inexpensive, Mr. Carter argued. But their very existence, which General Alexander alluded to in Congressional testimony this year, is bound to be cited by other nations that are justifying the creation of their own cyberunits. The People’s Liberation Army in China has a major effort under way; its Unit 61398 has been accused of stealing corporate secrets and intellectual property from American companies, as well as planning for potential attacks on American infrastructure. Iran has created its own cybercorps, which has been blamed for attacks on Saudi Aramco, a major oil producer, and American banks.

Twenty-seven of the 40 new teams will focus on cyberdefenses, General Alexander has said. Thirteen will be directed toward the creation of new cyberweapons. Included among the documents that Mr. Snowden made public was a presidential directive, signed by Mr. Obama last fall, providing guidelines for conducting both defensive and offensive operations. It reserves to the president the decision about whether to conduct cyberattacks.
http://www.nytimes.com/2013/07/19/us...perations.html





Attention, Shoppers: Store Is Tracking Your Cell
Stephanie Clifford and Quentin Hardy

Like dozens of other brick-and-mortar retailers, Nordstrom wanted to learn more about its customers — how many came through the doors, how many were repeat visitors — the kind of information that e-commerce sites like Amazon have in spades. So last fall the company started testing new technology that allowed it to track customers’ movements by following the Wi-Fi signals from their smartphones.

But when Nordstrom posted a sign telling customers it was tracking them, shoppers were unnerved.

“We did hear some complaints,” said Tara Darrow, a spokeswoman for the store. Nordstrom ended the experiment in May, she said, in part because of the comments.

Nordstrom’s experiment is part of a movement by retailers to gather data about in-store shoppers’ behavior and moods, using video surveillance and signals from their cellphones and apps to learn information as varied as their sex, how many minutes they spend in the candy aisle and how long they look at merchandise before buying it.

All sorts of retailers — including national chains, like Family Dollar, Cabela’s and Mothercare, a British company, and specialty stores like Benetton and Warby Parker — are testing these technologies and using them to decide on matters like changing store layouts and offering customized coupons.

But while consumers seem to have no problem with cookies, profiles and other online tools that let e-commerce sites know who they are and how they shop, some bristle at the physical version, at a time when government surveillance — of telephone calls, Internet activity and Postal Service deliveries — is front and center because of the leaks by Edward J. Snowden.

“Way over the line,” one consumer posted to Facebook in response to a local news story about Nordstrom’s efforts at some of its stores. Nordstrom says the counts were made anonymous. Technology specialists, though, say the tracking is worrisome.

“The idea that you’re being stalked in a store is, I think, a bit creepy, as opposed to, it’s only a cookie — they don’t really know who I am,” said Robert Plant, a computer information systems professor at the University of Miami School of Business Administration, noting that consumers can rarely control or have access to this data.

Some consumers wonder how the information is used.

“The creepy thing isn’t the privacy violation, it’s how much they can infer,” said Bradley Voytek, a neuroscientist who had stopped in at Philz Coffee in Berkeley, Calif. Philz uses technology from Euclid Analytics, of Palo Alto, Calif., the company that worked on the Nordstrom experiment, to measure the signals between a smartphone and a Wi-Fi antenna to count how many people walk by a store and how many enter.

Still, physical retailers argue that they are doing nothing more than what is routinely done online.

“Brick-and-mortar stores have been disadvantaged compared with online retailers, which get people’s digital crumbs,” said Guido Jouret, the head of Cisco’s emerging technologies group, which supplies tracking cameras to stores. Why, Mr. Jouret asked, should physical stores not “be able to tell if someone who didn’t buy was put off by prices, or was just coming in from the cold?” The companies that provide this technology offer a wide range of services.

One, RetailNext, uses video footage to study how shoppers navigate, determining, say, that men spend only one minute in the coat department, which may help a store streamline its men’s outerwear layout. It also differentiates men from women, and children from adults.

RetailNext, based in San Jose, Calif., adds data from shoppers’ smartphones to deduce even more specific patterns. If a shopper’s phone is set to look for Wi-Fi networks, a store that offers Wi-Fi can pinpoint where the shopper is in the store, within a 10-foot radius, even if the shopper does not connect to the network, said Tim Callan, RetailNext’s chief marketing officer.

The store can also recognize returning shoppers, because mobile devices send unique identification codes when they search for networks. That means stores can now tell how repeat customers behave and the average time between visits.

RetailNext also uses data to map customers’ paths; perhaps the shopper is 70 percent likely to go right immediately, or 14 percent likely to linger at a display, Mr. Callan said.

Brickstream uses video information to watch shoppers. The company, based near Atlanta, sells a $1,500 stereoscopic camera that separates adults from children, and counts people in different parts of a store to determine which aisles are popular and how many cash registers to open.

“Watching where people go in a store is like watching how they looked at a second or third Web page” on an online retailer, said Ralph Crabtree, Brickstream’s chief technical officer.

Cameras have become so sophisticated, with sharper lenses and data-processing, that companies can analyze what shoppers are looking at, and even what their mood is.

For example, Realeyes, based in London, which analyzes facial cues for responses to online ads, monitors shoppers’ so-called happiness levels in stores and their reactions at the register. Synqera, a start-up in St. Petersburg, Russia, is selling software for checkout devices or computers that tailors marketing messages to a customer’s gender, age and mood, measured by facial recognition.

“If you are an angry man of 30, and it is Friday evening, it may offer you a bottle of whiskey,” said Ekaterina Savchenko, the company’s head of marketing.

Nomi, of New York, uses Wi-Fi to track customers’ behavior in a store, but goes one step further by matching a phone with an individual.

When a shopper has volunteered some personal information, either by downloading a retailer’s app or providing an e-mail address when using in-store Wi-Fi, Nomi pulls up a profile of that customer — the number of recent visits, what products that customer was looking at on the Web site last night, purchase history. The store then has access to that profile.

“I walk into Macy’s, Macy’s knows that I just entered the store, and they’re able to give me a personalized recommendation through my phone the moment I enter the store,” said Corey Capasso, Nomi’s president. “It’s literally bringing the Amazon experience into the store.”

Nomi then uses Wi-Fi signals to follow the customer throughout the store, adding to the information it maintains. “If I’m going and spending 20 minutes in the shoe section, that means I’m highly interested in buying a pair of shoes,” Mr. Capasso said, and the store might send a coupon for sneakers.

If these methods seem intrusive, at least some consumers seem happy to trade privacy for deals. Placed, a company based in Seattle, has an app that asks consumers where they are in a store in exchange for cash and prepaid gift cards from Amazon and Google Play, among others. More than 500,000 people have downloaded the app since last August, said a company spokeswoman, Sarah Radwanick, providing information like gender, age and income, and agreeing to be tracked over GPS, Wi-Fi and cellular networks. Placed then sells the data to store owners, online retailers and app developers.

“I would just love it if a coupon pops up on my phone,” said Linda Vertlieb, 30, a blogger in Philadelphia, who said that she was not aware of the tracking methods, but that the idea did not bother her. Stores are “trying to sell, so that makes sense,” she said.
http://www.nytimes.com/2013/07/15/bu...your-cell.html





W3C Rejects Ad Industry Attempt to Hijack Do-Not-Track Specs

The advertisers' proposed changes would have led to widespread confusion, a W3C working group said
Loek Essers

The World Wide Web Consortium has rejected an attempt by the advertising industry to hijack a specification describing how websites should respond to "do not track" requests sent by Web browsers.

Suggestions from the Digital Advertising Alliance (DAA) would have allowed advertisers to continue profiling users who had asked not to be tracked. It would also have allowed them to "retarget" ads to those users by showing ads relevant to one site or transaction on all subsequent sites they visited, according to the co-chairs of the W3C's Tracking Protection Working Group.

A number of popular browsers can already send a special header along with requests for Web pages to indicate whether the user wishes to be tracked. The working group is mainly concerned with standardizing the technical mechanisms for server-side compliance with those do-not-track requests. It will continue its work on the specification in a teleconference Wednesday.

Proposals similar to those made by the DAA, an umbrella organization of online advertising organizations whose members conduct a large fraction of online advertising, will also be rejected, wrote working group co-chairs Matthias Schunter and Peter Swire on Monday.

Adopting the DAA's proposed changes would have led to "widespread confusion if consumers select a do-not-track option, only to have targeting and collection continue unchanged," they wrote.

There has already been a certain amount of confusion around the do-not-track header, which can signal three values: don't track, do track or no preference. Microsoft had proposed that Internet Explorer 10 would send the message "don't track" by default, even where users had not expressed a preference. Web sites including Yahoo retaliated, saying they would ignore IE10's do-not-track requests and continue to track.

The Tracking Protection Working Group said the DAA's proposals were not only confusing, but also inconsistent with the working group's charter. This states that the do-not-track standard should define mechanisms for expressing user preferences around Web tracking and for blocking or allowing Web tracking elements. The advertisers' suggestions didn't establish a significant change from the status quo, the working group's co-chairs said.

"Based on the comments received, the current DAA Proposal is less protective of privacy and user choice than their earlier initiatives," wrote Schunter and Swire, adding that all DAA proposed changes were rejected. "We will not revisit the choices presented in the DAA change proposal and rejected in this decision," they wrote.

Instead, the working group will continue developing the draft base text established in June. Next, the group will examine other change proposals to the June draft, and will seek to close as many as possible this month, they said. The working group's 110 members include consumer groups, browser developers, regulators and subject matter experts.
http://www.itworld.com/security/3653...ot-track-specs





‘Do Not Track’ Rules Come a Step Closer to an Agreement
Somini Sengupta and Natasha Singer

Web users should be able to tell advertising networks not to show them targeted advertisements based on their browsing activities — and those companies should comply. That is the verdict of the leaders of a working group that has been arguing for almost two years over how to establish a uniform Do Not Track standard for the Internet.

The group has been trying to arrive at a consensus draft document that outlines what it means when a Web user turns on a Do Not Track signal. Still unresolved and a major point of difference among the group’s members is whether advertising networks and data brokers should be allowed to collect, retain and categorize that browsing data, using small bits of code and other methods that identify each user.

But the decision on ad targeting moves the group, commissioned by the World Wide Web Consortium, or W3C, a step closer to reaching consensus.

“The public meaning of Do Not Track is to limit behavioral advertising,” said Peter P. Swire, a law professor at Ohio State University who is a chairman of the Tracking Protection Working Group, along with Matthias Schunter, principal engineer at the Intel Corporation.

The group’s internal disagreements aside, more Americans are turning on the Do Not Track signal. A March 2013 survey by Forrester Research found that 18 percent of Web users had turned on the Do Not Track setting in their browsers.

Forrester said the survey pointed to a greater awareness of behavioral tracking. The survey was commissioned by Neustar, an analytics company.

Nearly all browsers offer consumers the option of a Do Not Track signal — some turning it on by default — but it is little more than symbolic. Online advertisers are not required to respect the consumer’s request. The advertising industry has argued that behavioral tracking is a necessary part of free Web services; in the latest of several proposals, it sought to use behavioral data after scrubbing out certain information.

That approach was rejected by the group’s chairmen. It had been vigorously opposed by a host of consumer groups and companies that are among the group’s 110 members. In a decision to be made public on Tuesday, the chairmen say that they will use an earlier draft as the “base text” for discussions, rejecting the advertising industry’s proposal.

The Tracking Protection Working Group has argued for nearly two years about establishing a Do Not Track standard. Their arguments are far from over.

One set of objections comes from representatives of the digital advertising industry. They said on Monday that consensus would be hard to reach because many issues remained unresolved.

“We are always going to participate in an effort to get something that is meaningful, makes sense and continues to preserve the benefits to consumers in products and services that our members offer,” said Stuart P. Ingis, a lawyer representing the Digital Advertising Alliance, an industry body. “But participating in a process and agreeing to a failed standard are two different things.”

The advertising industry has been particularly exercised by the fact that browser makers like Microsoft are increasingly turning on the Do Not Track signal by default, rather than leaving it to consumers to activate the signal.

The working group also faces resistance from consumer advocates who contend that the latest proposal does little to assure Web users that their browsing history will not be collected and retained for indefinite periods of time. “We think Do Not Track should mean ‘You can’t collect information on users and you can’t retain information,’ ” said Dan Auerbach, a staff technologist at the Electronic Frontier Foundation.

The current draft, which is the basis of current negotiations, provides that companies should avoid “unique identifiers for users or devices if alternative solutions are reasonably available.” That, critics say, is far too vague.

“On substance, with a great deal of additional work issue-by-issue, it is not impossible to make this draft work, perhaps in 2014,” Aleecia McDonald, director of privacy at the Stanford University Center for Internet and Society, said on the working group’s comment page.
http://www.nytimes.com/2013/07/16/te...agreement.html





Merkel Gets Behind Controversial European Data Protection Reform

European Commission’s polarising data protection reforms get a boost thanks to Edward Snowden
Tom Brewster

German Chancellor Angela Merkel has given her backing to controversial data protection reforms in the European Union, following the revelations of US surveillance whistleblower Edward Snowden.

Merkel said Internet companies should tell Europeans where their data is going, following claims Microsoft, Google, Facebook and others were handing troves of information to the National Security Agency (NSA) as part of the PRISM programme.

In an interview with public broadcaster ARD, Merkel said that whilst the US should not be breaking any member state data protection laws, unified rules were needed.

Data protection changes

The European Commission has proposed fresh data privacy rules, which would see companies fined as much as two percent of their annual turnover for any breach of the law and would entrench the “right to be forgotten” in law, which would require providers to wipe user data when users request it.

Many, including the US and UK governments, have voiced protests against the plans, lobbying hard in Brussels to water them down. US firms, including Facebook and Amazon, have been lobbying in earnest too, claiming the rules would impose a significant extra burden on them, especially if they are asked, en masse, to ensure the deletion of customers’ information.

“Germany will take a strict position,” Merkel said. “I expect a clear commitment from the US government that in future they will stick to German law.”

Viviane Reding, the commissioner who has been spearheading European data protection reform, has said the PRISM revelations have given her cause a boost. Speaking in Germany this morning at the DLDWomen13 event, Reding said the Americans had given Europeans “a wake-up call” when it came to privacy.

“Strong rules allow trust and, in the Internet world, without trust you cannot go ahead,” she added, according to AllThingsD.

Germany hasn’t escaped criticism over mass surveillance, however. In comments to magazine Der Spiegel, Snowden said the NSA were “in bed with the Germans, just like most other Western states”.

Snowden is now seeking temporary asylum in Russia, he revealed on Friday, until he can reach another country where he is welcome.
http://www.techweekeurope.co.uk/news...w-prism-121782





MIT Moves to Intervene in Release of Aaron Swartz’s Secret Service File
Kevin Poulsen

Lawyers representing MIT are filing a motion to intervene in my FOIA lawsuit over thousands of pages of Secret Service documents about the late activist and coder Aaron Swartz.

I am the plaintiff in this lawsuit. In February, the Secret Service denied in full my request for any files it held on Swartz, citing a FOIA exemption that covers sensitive law enforcement records that are part of an ongoing proceeding. Other requestors reported receiving the same response.

When the agency ignored my administrative appeal, I enlisted David Sobel, a top DC-based FOIA litigator, and we filed suit. Two weeks ago U.S. District Judge Colleen Kollar-Kotelly ordered the government to “promptly” begin releasing Swartz’ records. The government told my lawyer that it would release the first batch tomorrow. But minutes ago, Kollar-Kotelly suspended that order at MIT’s urging, to give the university time to make an argument against the release of some of the material.

Based upon an off-the-record conference call with the parties’ counsel and counsel for non-party Massachusetts Institute of Technology (“MIT”), the Court understands that MIT intends to file a motion to intervene later today, which will include a request for relief relating to the Government’s production of certain documents to Plaintiff. In view of the impending motion, the Court hereby STAYS the obligation of the Government to promptly release to Plaintiff all responsive documents that it has located on a rolling basis, see Min. Order (July 5, 2013), until further order of the Court. Once the Court has had the opportunity to review MIT’s motion to intervene, and has considered the positions of the Plaintiff and the Government as to the motion, it shall order a schedule for further proceedings.

MIT claims it’s afraid the release of Swartz’s file will identify the names of MIT people who helped the Secret Service and federal prosecutors pursue felony charges against Swartz for his bulk downloading of academic articles from MIT’s network in 2011.

MIT argues that those people might face threats and harassment if their names become public. But it’s worth noting that names of third parties are already redacted from documents produced under FOIA.

I’ll post MIT’s motion here once it’s filed.

I have never, in fifteen years of reporting, seen a non-governmental party argue for the right to interfere in a Freedom of Information Act release of government documents. My lawyer has been litigating FOIA for decades, and he’s never encountered it either. It’s saddening to see an academic institution set this precedent.

We’ll be in court to oppose MIT being granted any right to redact the documents, and to oppose any further delay in filling this seven-month-old FOIA request.

Update: MIT just filed seven documents in the case. You can see the entire collection here.
http://www.wired.com/threatlevel/201...ntervene/all/1





Google Is Said to Consider Internet Cable Service
Brian Stelter

Foreshadowing what could someday be a new challenge to cable and satellite television providers, Google has begun talks with major media companies about licensing TV channels for an Internet cable service, according to people with direct knowledge of the meetings.

No deals appear imminent. But Google’s discussions with channel owners are a sign of the newfound race to sell cablelike services via the Internet, creating an alternative to the current cable packages that 100 million American households receive from companies like Comcast and Time Warner Cable.

Intel is working on one such service, and companies like Sony and Google have previously shown interest in the same idea, called an “over the top” service because the television channels would ride on top of existing broadband lines.

Google’s renewed push was first reported by The Wall Street Journal Tuesday afternoon. A Google representative did not immediately respond to a request for comment.

The people with direct knowledge of the meetings between Google and the channel owners, who spoke on condition of anonymity, said the talks were preliminary in nature.

In Kansas City, Google already sells a traditional package of cable channels as part of Google Fiber, its superfast broadband service. The company has plans to expand Google Fiber to other cities, but what it is proposing in its talks with channel owners is something different: an easy-to-use subscription service that would stream a bundle of live channels and on-demand shows, replacing the cable bundles that most households pay for.

Intel is trying to create something similar, but it has run into roadblocks set up by Time Warner Cable and other incumbent television distributors.

Some contracts between existing distributors and channel owners include clauses that expressly prohibit the channels to be sold to an Internet distributor like Intel or Google, while other contracts merely discourage such competition by including financial incentives or penalties.

Another challenge involves channel owners like the Walt Disney Company and Viacom, who could stand to benefit or suffer greatly from “over the top,” depending on how it develops. Some owners doubt that there is much of a market for cable via the Internet in the first place.

If a market for it does develop, existing distributors could suddenly compete directly in markets all across the country. Comcast has quietly been working on an “over the top” service for well over a year.
http://www.nytimes.com/2013/07/17/bu...e-service.html

















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