Payment Wars: How Merchants And Carriers Are Trying To Block Payment Systems They Can't Track

from the dangeorus dept

Over the weekend, it came out that two giant pharmacy chains, Rite Aid and CVS, had started blocking Apple Pay, the massively hyped new payment system from Apple that has received much praise for its ease of use. The product had worked for about a week before the two companies started blocking such near field communication (NFC) payments (which also takes out other NFC payment options like Google Wallet). While Rite Aid gave a vague and slightly ridiculous explanation -- that it is "still in the process of evaluating our mobile payment options" -- pretty much everyone knows the truth. A bunch of retailers, led by Walmart, have been creating their own mobile payment system called CurrentC, which cuts out the credit card companies. But, it also builds in all the tracking and spying features of store loyalty cards, expanded across all merchant partners. Apple Pay lets people remain anonymous.

In short: CurrentC lets merchants (1) cut out credit card transaction fees and (2) get more and more data on shoppers. No wonder they want to block out other options.

But this isn't the start of such fights. Last year, mobile carriers like T-Mobile, Verizon and AT&T sought to block Google Wallet in favor of a similar consortium of mobile operators, looking to create their own NFC payment system, which was unfortunately named ISIS until world events led the consortium to change its name to Softcard.

All of these moves should be concerning. They're clearly not being done with the consumer in mind. Nearly everyone who's played with Apple Pay has agreed that the system is a huge leap ahead for mobile payments in terms of ease of use. Instead, we're seeing giant organizations looking to team up to keep competitors out of the market. At the very least, this should raise serious antitrust issues. But it also demonstrates, in a different sphere, why net neutrality is such a concern. When you have large companies that can effectively collude to block or kill certain powerful and useful apps and services, it hinders and blocks important innovations, leaving consumers significantly worse off. Not only are they left with fewer choices and lower quality apps and services, but it also pushes consumers into services -- like CurrentC -- that take away their privacy.

Filed Under: apple pay, collusion, control, credit cards, currentc, google wallet, mobile payments, nfc, operators, payment, retailers, softcard, wireless payments
Companies: apple, at&t, cvs, google, rite aid, softcard, t-mobile, verizon

FCC Fines Marriott For Jamming Customers' WiFi Hotspots To Push Them Onto Hotel's $1,000 Per Device WiFi

from the sleazy-sleazy dept

Hotel WiFi sucks. If you do any traveling, you're aware of this. Though, from what I've seen, the higher end the hotel, the worse the WiFi is and the more insane its prices are. Cheap discount hotels often offer free WiFi, and it's generally pretty reliable. High end hotels? I've seen prices of $30 per day or higher, and it's dreadfully low bandwidth. These days, when traveling, I often pick hotels based on reviews of the WiFi quality, because nothing can be more frustrating than a crappy internet connection when it's needed. But, even worse than the WiFi in your room, if you're using the WiFi for a business meeting or event -- the hotels love to price gouge. And, it appears that's exactly what the Marriott-operated Gaylord Opryland Hotel and Convention Center in Nashville did. Except, the company went one step further. Thanks to things like tethering on phones and MiFi devices that allow you to set up your own WiFi hotspot using wireless broadband, Marriott realized that some smart business folks were getting around its (absolutely insane) $1,000 per device WiFi charges, and just using MiFi's. So, Marriott then broke FCC regulations and started jamming the devices to force business folks to pay its extortionate fees.

In response, the FCC has now cracked down and Marriott has agreed to pay a $600,000 fine for the practice, while also promising to continue to make sure it doesn't make use of jammers and to update the FCC on "compliance" every three months for the next three years. The FCC found out about all of this because a customer sent in a complaint -- though its unclear if the customer just figured it out by themselves, or if some employee at Opryland stupidly admitted to the hotel's practices.

Update: Oh, and I missed the best part, as pointed out in the comments. Marriott is still claiming that what it did was legal... and for the benefit of consumers. Uh huh:

"Marriott has a strong interest in ensuring that when our guests use our Wi-Fi service, they will be protected from rogue wireless hot spots that can cause degraded service, insidious cyber-attacks and identity theft," the statement said. "Like many other institutions and companies in a wide variety of industries, including hospitals and universities, the Gaylord Opryland protected its Wi-Fi network by using FCC-authorized equipment provided by well-known, reputable manufacturers.

"We believe that the Opryland's actions were lawful. We will continue to encourage the FCC to pursue a rulemaking in order to eliminate the ongoing confusion resulting from today's action and to assess the merits of its underlying policy."

Filed Under: fcc, fines, jammer, mifi, opryland hotel, wifi
Companies: marriott

Rackspace Helps Kill A Patent Troll: Rotating Your Smartphone Is No Longer Infringing

from the bogus-patents dept

Over the last few years it's been great to see companies like Newegg and Rackspace decide that they're not going to give in to bogus patent troll lawsuits. As we've discussed, it's almost always easier, faster and cheaper to just settle and pay up whatever the troll is asking for. That's part of why trolling works. Fighting a patent lawsuit -- even a totally bogus one (i.e., not infrigning) -- on a clearly invalid patent will still cost many hundreds of thousands, if not millions, of dollars. If the troll is offering to settle for tens of thousands of dollars, many, many companies will do the obvious short-term cost-benefit analysis and settle. It's hard to directly fault them for this -- but it only makes the problem worse for everyone else. Not only does it fund the patent trolls to keep suing others, often they'll use some of that money to buy more bogus patents and shake down companies over that new ones as well. On top of that, settling patent threats just puts a big "sucker" sign on your company, meaning that more trolls will start circling. Making a stand and saying that you will not compromise or deal with trolls actually helps in the long run by scaring off some trolls. Both Newegg and Rackspace have been getting a lot of publicity (and goodwill) for their anti-troll efforts.

Rackspace has successfully defeated a patent troll called Rotatable Technologies by having its patent (US Patent 6,326,978) invalidated:

Rotatable owned a patent that it claimed covers the screen rotation technology that comes standard in just about every smartphone. You know, when you flip your device sideways and the screen shifts orientation from portrait mode to landscape mode? Like nearly all the apps in the Apple and Android app stores, Rackspace uses standard functionality provided by Apple’s libraries and Android open source software to provide this display feature in our mobile cloud applications.

Rotatable sued us and immediately asked for $75,000 to go away. We refused. And we fought. It’s Rackspace policy to not pay off patent trolls, even if it costs us more to fight. Eventually Rotatable offered to just walk away – but we refused again. Just as we promised last year, we challenged the patent and the USPTO invalidated it.

As Rackspace says, the company is now "an ex-patent troll." Kudos to Rackspace for fighting and winning, rather than giving in to the troll.

Filed Under: patent troll, patents, rotatable screens
Companies: newegg, rackspace

Good News: Mobile Devices Now Competing To Be Much More Secure Against Prying Eyes

from the very-good-to-see dept

While the more cynical folks out there have insisted that the tech industry is a happy partner with the intelligence community, the reality has been quite different. If anything, in the past many companies were simply... complacent about the situation, not realizing how important these issues were. That's problematic, but the Snowden revelations have woken up those firms and enabled the privacy and security gurus who work there to finally get the message across that they absolutely need to do more to protect the privacy and security of their users. That's why you see things like Apple's new local encryption by default on iOS8, meaning that even if law enforcement or the intelligence community comes knocking, Apple can't get much of your data off of your device.

“Unlike our competitors, Apple cannot bypass your passcode and therefore cannot access this data,” Apple said on its Web site. “So it’s not technically feasible for us to respond to government warrants for the extraction of this data from devices in their possession running iOS 8.”

Within hours, it was reported that the next update to Android would also have the same default encryption.

“For over three years Android has offered encryption, and keys are not stored off of the device, so they cannot be shared with law enforcement,” said company spokeswoman Niki Christoff. “As part of our next Android release, encryption will be enabled by default out of the box, so you won't even have to think about turning it on.”

Of course, you can expect to see the DOJ pushing for new laws to somehow block this or get backdoor access. It may create a future fight worth watching. In the meantime, though, it's great to see tech companies actually competing on how well they can protect the privacy of their users' data from the prying eyes of law enforcement and intelligence agencies.

Filed Under: android, competition, devices, encryption, ios8, privacy, security
Companies: apple, google

FCC's Tom Wheeler Suggests He Will Crack Down On Anti-Consumer Practices By Mobile Operators

from the talking-the-talk dept

FCC boss Tom Wheeler is continuing to talk the talk concerning actually putting in place more meaningful rules to protect consumers from telco/internet gatekeepers. The big question is still whether he'll get around to walking the walk. Last week, he gave a strong speech on the lack of real competition in broadband. And this week, he gave a talk at the big CTIA (mobile operators') trade show in which he didn't do the usual suck-up to the industry that we've come to expect in the past, but suggested that the industry needs to shape up. While it starts out with some rhetoric about how he's there to "aggressively represent the best interests of his client," who he notes is "the American people," he does call out some questionable practices by the carriers, including hinting that the net neutrality / open internet rules may be the tool he uses against them:

Recently, I sent letters to the four national wireless providers, asking them about their network management practices. We are very concerned about the possibility that some customers are being singled out for disparate treatment even though they have paid for the capacity that is being throttled. And we are equally concerned that customers may have been led to purchase devices relying on the promise of unlimited usage only to discover, after the device purchase, that they are subject to throttling.

I am hard pressed to understand how either practice, much less the two together, could be a reasonable way to manage a network.

Our Open Internet proceeding will look closely at both the question of what is “reasonable” and the related subject of how network management practices can be transparent to consumers and edge providers.

One of the big loopholes of the original rules was that they didn't apply to wireless at all, which was part of the reason why companies like Verizon started focusing more on wireless instead of wired broadband. Wheeler notes that the proposed rules keep it that way, but hints about changing it, given that the landscape is changing:

As evidenced by the growth in this industry over the past decade, mobile wireless broadband is a key component of that virtuous cycle.... One of the constant themes on the record is how consumers increasingly rely on mobile broadband as an important pathway to access the Internet. Microsoft, for instance, told the Commission that because we live in what they called a “mobile first” world, “There is no question that mobile broadband access services must be subject to the same legal framework as fixed broadband access services.” Thousands of consumers have echoed that sentiment.

The Commission’s previous Open Internet rules distinguished between fixed and mobile, and our tentative conclusion in this new rulemaking suggested the Commission should maintain the same approach going forward. In this proceeding, however, we specifically recognized that there have been significant changes in the mobile marketplace since 2010. We sought comment about whether these changes should lead us to revise our treatment of mobile broadband services. The basic issue that is raised is whether the old assumptions upon which the 2010 rules were based match new realities.

It's also nice to see that he's speaking up for competition, and suggests he doesn't believe consolidation is good for consumers:

This industry has always told policy makers, “We’re different, we’re competitive.” But in the last couple of years the FCC and the Department of Justice have had to be poised to intervene to protect that dynamic. First it was AT&T’s proposed acquisition of T-Mobile. Most recently the Assistant Attorney General for Antitrust and I were outspoken in discouraging Sprint’s potential acquisition of T-Mobile.

The American consumer has been the beneficiary: new pricing and new services that have been spurred by competition. I know that achieving scale is good economics, and that there is a natural economic incentive to accrue ever-expanding scale. We will continue to be skeptical of efforts to achieve scale through the consolidation of major players.

He further notes that the mobile world shows that when there is more competition, investment follows, which counters the big telco/broadband claims that consolidation and less competition will lead to greater investment.

The mobile industry has proven that competition drives capital investment. Equally important, you have shown that competition and investment are not mutually exclusive. In the past 10 years, the mobile industry has invested $260 billion to build competitive infrastructure

And getting back to the issue of net neutrality, he notes that competition alone doesn't appear to be enough to ensure an open internet where the operators aren't picking winners and losers:

One of the great facilitators of competition for online services is the open design of the Internet. I remember when this industry was united around the walled garden where the only apps that reached the consumer were those which the carrier approved, usually in return for a payment. That wasn’t a good environment for innovation, or the expansion of consumer services, or the industry for that matter. The fast pace of technology which we have been discussing effectively destroyed those walls. Once the world went IP it was possible to leap the garden wall and discover the abundance of an open ecosystem. And just look at the results! But it is instructive that the walled garden existed despite multi-carrier competition. At least in the short run, this suggests that competition does not assure openness.

This is great to see, as it's much more typical of the FCC boss at such events to pander to the audience. Wheeler doesn't do that at all. If anything, this speech is him giving them a pretty big warning shot (he also does this on the issue of spectrum auctions, but this post is getting long enough...).

Again, it's nice (and somewhat refreshing) to see Wheeler saying these kinds of things. In fact, he's been saying a lot of the right things over the past few months. The real question is if the actions will follow the words. Having seen an FCC that has failed to follow through for so many years, it pays to be skeptical until we see actual results. But, as a starting point, saying the right things is better than the opposite.

Filed Under: anti-consumer, competition, ctia, fcc, investment, net neutrality, open internet, tom wheeler, wireless

Ryan Seacrest's Typo Blows Off Injunction, Sells Thousands Of Possibly-Infringing Keyboards

from the lots-of-ways-to-be-wrong-and-Typo-found-most-of-them dept

Ryan Seacrest's Typo (because it is never to be referred to simply as "Typo" in headlines or opening paragraphs), maker of physical keyboard accessories for iPhones, was sued by RIM (maker of formerly-popular Blackberry phones) for patent infringement earlier this year. The ailing phone manufacturer took issue with the keyboards made by Ryan Seacrest's Typo, which it felt veered a bit too close to "looking damn near like a Blackberry keyboard."

The fact that most keyboards look like other keyboards notwithstanding (although the Ryan Seacrest's Typo keyboard did seem to cop a lot of the "look," if not the "feel" of Blackberry's vertically-aligned and contoured keys), the judge found RIM's claims substantial enough to grant a preliminary injunction barring the sale of keyboards. Ryan Seacrest's Typo apparently thought an injunction was nothing more than a fancy way of saying, "do whatever the hell you want to." (Court order PDF)

On Thursday, U.S. District Judge William Orrick agreed to let BlackBerry proceed with contempt of court proceedings after the Canadian phone maker showed that Typo has been selling keyboards in violation of the earlier order.

“I am very concerned with what appears to be deliberate contempt of the preliminary injunction by Typo,” wrote Orrick, pointing out that the company shipped around 15,000 keyboards despite the ban.

The court order touches on a lot of seeming wrongdoing by Seacrest's Typo, including multiple shipments being sent to Canada, the Middle East and Asia (Typo claimed these foreign sales weren't bound by the injunction) and a large sale to a reseller (4,000 keyboards to SMI Investments -- a company that Typo seems to be intertwined with) that occurred after the injunction was ordered but before it went into effect.

Seacrest's keyboard company also went out of turn by asking the court to find that its modified keyboard does not infringe on RIM's patents.

According to [Judge] Orrick, the existence of a “supposedly non-infringing design” was not relevant to the existing injunction. The judge added that Typo would have to bring a separate court proceeding to get an order related to the new designs.

Whether or not you agree that RIM's patent infringement case has merit, Typo seems to have completely botched its response. Sure, all the cool kids and their acts of civil disobedience have netted them contempt charges over the years, but blowing off a preliminary injunction in this sort of case is hardly sticking it to The Man.

As for RIM, this lawsuit may be going its way, but it doesn't really change the fact that a competitor saw a market niche and filled it. People still like physical keyboards, but they don't seem to care much for Blackberries. If RIM wasn't so stuck on the "you only get the keyboard if you buy the phone" strategy, it might have been able to capture this market before anyone else got to it, rather than just play spoiler by suing anyone veering too close to its look-and-feel.

Filed Under: blackberry, keyboards, patents, ryan seacrest
Companies: blackberry, rim, typo

Bad Idea: California Legislature Passes Bill To Mandate Mobile Phone Kill Switches

from the very-bad-idea dept

We've explained a few times now why the idea of mandatory kill switches for mobile phones is a really bad idea and a slippery slope to abuse. So, of course, the California legislature has passed a bill mandating it, introduced by California State Senator Mark Leno and sponsored by SF District Attorney George Gascon. While end users could "opt-out," how many people do you think will actually make that decision?

The reasoning behind this bill seems sound: a kill switch makes stealing phones less valuable, thereby decreasing phone theft. But, the mandate is dangerous for a number of reasons. If individuals want to use a kill switch there are plenty of third party apps they can get to do that themselves. But much scarier is how such kill switches will undoubtedly be abused. Having a single technology that can brick a ton of phones will be a very tempting target for hackers. And, it will probably be even more tempting for law enforcement for a variety of reasons. Someone videotaped the police doing something bad? Instead of having to go confiscate the phone, why not just brick it from afar? This seems like yet another bill pushed with good intentions that risks some very dangerous consequences.

Filed Under: california, kill switch, law enforcement, mobile phones, slippery slope, stolen phones

Music Freedom Or Holding Consumers Hostage? Letting ISPs Pick Winners And Losers Is A Problem

from the pushing-the-edges dept

With all of the current arguing over net neutrality lately, it's important to recognize that the people who actually supply your internet access have pretty much already figured out ways to get around anything the FCC is currently talking about. As we've discussed, Comcast (and others) recently realized that they can get the exact same solution (fast lanes and slow lanes, and getting big internet services to double pay for the bandwidth you already bought) by focusing on interconnection issues and purposely letting their ports get clogged. Separately, AT&T and Verizon are increasingly putting their focus on wireless over DSL/fiber anyway -- in part because they know that the original (now rejected by the courts) open internet rules and any new FCC rules don't apply to wireless networks.

AT&T has exploited this with its sponsored data efforts, in which service providers can pay AT&T so that their data doesn't apply towards the ridiculously low data caps they've placed on their mobile broadband offerings. T-Mobile has now done something similar, though it's not quite as nefarious. It's offering a program called Music Freedom, in which certain music streaming services (which can certainly eat up some bandwidth) don't count against the data cap. Now, unlike AT&T's sponsored data program, at least T-Mobile isn't charging the music services to be on the list -- but it is still a limited list of participants. T-Mobile is letting its users "vote" on other services to be exempted from the data cap limits.

Here's the nefarious bit about all of this: this is all promoted and spun as being for the consumer's benefit. And, in a way, it is. You get to listen to music streaming on your phone without any concern about it eating up your data cap. Consumers win! Except... not really. Think through the details here: consumers are "winning" only because some pre-selected services are being granted an exemption from the ridiculously low caps set by the mobile operators themselves. Now you see the problem? It's the mobile operator "saving" the consumer from the artificial limits the mobile operators themselves set up. And then the mobile operators themselves get to "pick" the winning services (T-Mobile) or see who will pay the most to be the winner (AT&T).

Saving a child from a burning building makes you a hero. Setting fire to the building to then save the child? Not so much.

And that's where the big problem lies. When the company that provides you access to the internet has the ability to pick the winners and losers for service providers, a key part of what makes the internet so powerful and useful... goes away. That they're spinning this as being for the consumer is particularly problematic. Down in Chile, they seem to recognize this. Just a few days ago, we wrote about how Chile has found that this kind of thing violates its net neutrality rules by giving preferential treatment. In that case, the issue may seem even trickier, because it banned so-called "zero-rated" social media apps. In many places where mobile data is paid for on a rate basis, Facebook (especially) and others have been able to better penetrate those markets by paying the local mobile operators for their users' access to those apps. On the one hand that seems great, as it offers up these services to users for free when otherwise they'd have to pay. But it also locks in the big companies with the money to pay.

Either way, what the T-Mobile program (especially) shows is that it is clearly artificially setting up very low data caps for no good reason. By offering Music Freedom, it is flat out admitting that the low data caps are not necessary because of any traffic issues, because it can easily handle much more data (for free, even). T-Mobile could have just said any music streaming service is automatically included -- but instead it chose to pick winners and losers -- meaning that consumers (and less popular or new music services) lose. That's a big problem. There are plenty of reasons why various internet services may succeed or fail, but adding in the end user's internet access provider/mobile operator to the equation just puts up another (very large) hurdle.

Filed Under: access, data caps, isps, music, music freedom, net neutrality, winners and losers
Companies: at&t, t-mobile

Chinese Government Publishes Secret List Of Microsoft's Anti-Android Patents

from the not-so-secret-anymore dept

A few years back, Microsoft trumpeted a series of high-profile licensing deals with manufacturers of smartphones and tablets whose Android-based products, it claimed, were infringing on its patents. As we pointed out, the deals proved nothing about the validity of that claim -- just that Microsoft and the companies concerned had come to some mutually-acceptable arrangement, of which nearly all details were kept secret. In particular, Microsoft refused to reveal which of its many patents it claimed were infringed upon by Android. This allowed it to point to the licensing deals as "proof" that Android was infringing without ever actually needing to demonstrate that in the courts. It could then go to other manufacturers and encourage them to sign up too, which of course strengthened its story yet further for the round of negotiations after that.

Unfortunately for Microsoft, China has just put a stop to that clever, self-sustaining approach by revealing the patents involved. Microsoft was required to list them as part of the approvals process by the Chinese Ministry of Commerce (MOFCOM) for the US company's acquisition of Nokia. As Ars Technica explains:

A list of hundreds of patents that Microsoft believes entitle it to royalties over Android phones, and perhaps smartphones in general, has been published on a Chinese language website.

The patents Microsoft plans to wield against Android describe a range of technologies. They include lots of technologies developed at Microsoft, as well as patents that Microsoft acquired by participating in the Rockstar Consortium, which spent $4.5 billion on patents that were auctioned off after the Nortel bankruptcy.

More specifically:

The Chinese agency published two lists on a Chinese-language webpage where it laid out conditions related to the approved merger. The webpage has an English version, but it doesn't include the patent lists. There's a longer list [MS Word Doc] of 310 patents and patent applications and then a shorter list [MS Word Doc] of just over 100 patents and applications that MOFCOM focused on.

Doubtless lawyers at many companies with products using Android are busy poring over those lists, which include US patent numbers as well as titles in English. At the very least, the release of these lists will make Microsoft's attempts to sign up new licensees much harder, since now companies will know exactly what Microsoft is claiming in this regard before they enter into any negotiations. Moreover, it's good news for the open source community, which is able to examine what claims Microsoft might be making about the free software elements of Android, allowing those to be challenged with prior art, say, or coded around.

But there's another important aspect here. Microsoft had managed to keep the lid on its secret anti-Android list of patents for many years. What changed things was the emergence of China as a sufficiently important market that the US company felt obliged to accede to the Chinese government's demands for a full list of the patents involved. The publication of the patent lists on the MOFCOM Web site is an indication that China will play by its own rules here, even -- or perhaps especially -- when it is dealing with what was once the world's most powerful computing company.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

Filed Under: android, china, patents
Companies: microsoft, nokia