May 9, 2008 11:57 AM PDT

Why Uncle Sam must stop subsidizing inefficient companies

Posted by Charles Cooper
News.com

From time to time, I’m going to open up this space to guest writers with
an interesting point of view.

This week, Gregory L. Rosston is taking a turn in the spotlight.

Rosston is the deputy director of the Stanford Institute for Economic
Policy Research and of the Public Policy program at Stanford University. He
served as the deputy chief economist of the Federal Communications
Commission from 1994 to 1997.

www.news.com/8301-10787_3-9940312-60.html?tag=nefd.riv

The Federal Communications Commission is about to continue its
anticompetitive policy of protecting incumbent telecommunications providers
at the expense of consumers. The FCC has one focus–making consumers better
off by forcing suppliers to compete. Yet, nearly every recent FCC decision
seems to promote incumbents instead of consumers. Next up is the FCC’s
proposal to cap universal service funding for new entrants, while
maintaining excessive subsidies for incumbent telephone companies.

Ever look at the details on your telephone bill? It shows some, but not
nearly all of the money you pay for inefficient “high-cost” subsidies to
telephone companies. It’s about 10 percent of your bill. That adds up to
more than $4 billion per year to subsidize telephone service in certain
locations. The costs of this system could grow substantially if Congress or
the FCC votes to include more advanced services. The FCC has a chance to
revamp the system to inject competition, or even better to eliminate
completely the inefficiencies.

Why do we give a $4 billion gift to “rural” incumbent telephone companies?
Because they have high costs–even they admit higher costs than their newer
competitors. A normal market rewards more efficient providers. But this is
the bizarro world of regulation. In this bizarro world, the incumbents are
rewarded for their inefficiency. They keep the same subsidies even as they
lose customers. Instead of encouraging more efficient competitors and
penalizing less efficient competitors, regulators are set to cement in
place a system that does the opposite, at the expense of consumers across
the country.

High cost “universal service” programs are grossly inefficient because they
tax the wrong things and the wrong people, and subsidize many who could
easily afford service or who would pay for it themselves. No serious
economic analysis shows otherwise.

But rural interests have political power out of proportion to their
numbers. That’s why taxpayers subsidize rich farm corporations and why
urban telephone customers subsidize rural telephone customers, rich and
poor alike. Even worse, low-income urban subscribers pay fees to universal
service funds that benefit upper- and middle-income residents of suburbs
and rural areas. A separate program offers subsidies to low-income
consumers, but this program, which at least make distributional sense and
is not at issue here, is only a small fraction of size of the high-cost fund.

The FCC has a problem–new entrants are taking customers away from
incumbents. Since the new entrant gets a subsidy when it steals a customer
but the incumbent never loses a subsidy, competition paradoxically
increases the total subsidy.

The obvious solution to this “problem” is to end this mindless pork barrel.
At the very least, the FCC should cap the total subsidy and divide the
subsidy according to the proportion of rural customers each firm serves.
Congressman Joe Barton just introduced a bill to do at least this. Instead
of following that logic, the FCC is proposing to cap payments to the
successful new entrants, but to maintain fully the payments to the
incumbents who are losing customers. The Barton bill actually adds another
potentially beneficial step–using “reverse auctions” to drive down the
subsidy dollars in each area.

Far better than even the Barton bill would be for Congress and the FCC to
declare the high-cost universal service program a success and close it
down. The entire program could be capped this year and then phased out over
the next five years. A gradual elimination of the program would allow firms
to cope with the transition, but it would mean a real transition.

In five years most rural areas are likely to still have service from
well-funded rural telephone companies–the cost of continuing to serve a
customer is a small fraction of the cost of installing a high-cost
telephone line to that customer, and most of those lines were installed
years ago. In addition, wireless providers continue to expand their
coverage areas, and satellite technology is already making Internet service
available anywhere in the country. But these competitive alternatives are
less likely to sprout and thrive if they have to compete with an unfairly
subsidized provider.

May 9, 2008 11:57 AM PDT

Why Uncle Sam must stop subsidizing inefficient companies

Posted by Charles Cooper
News.com

From time to time, I’m going to open up this space to guest writers with
an interesting point of view.

This week, Gregory L. Rosston is taking a turn in the spotlight.

Rosston is the deputy director of the Stanford Institute for Economic
Policy Research and of the Public Policy program at Stanford University. He
served as the deputy chief economist of the Federal Communications
Commission from 1994 to 1997.

www.news.com/8301-10787_3-9940312-60.html?tag=nefd.riv

The Federal Communications Commission is about to continue its
anticompetitive policy of protecting incumbent telecommunications providers
at the expense of consumers. The FCC has one focus–making consumers better
off by forcing suppliers to compete. Yet, nearly every recent FCC decision
seems to promote incumbents instead of consumers. Next up is the FCC’s
proposal to cap universal service funding for new entrants, while
maintaining excessive subsidies for incumbent telephone companies.

Ever look at the details on your telephone bill? It shows some, but not
nearly all of the money you pay for inefficient “high-cost” subsidies to
telephone companies. It’s about 10 percent of your bill. That adds up to
more than $4 billion per year to subsidize telephone service in certain
locations. The costs of this system could grow substantially if Congress or
the FCC votes to include more advanced services. The FCC has a chance to
revamp the system to inject competition, or even better to eliminate
completely the inefficiencies.

Why do we give a $4 billion gift to “rural” incumbent telephone companies?
Because they have high costs–even they admit higher costs than their newer
competitors. A normal market rewards more efficient providers. But this is
the bizarro world of regulation. In this bizarro world, the incumbents are
rewarded for their inefficiency. They keep the same subsidies even as they
lose customers. Instead of encouraging more efficient competitors and
penalizing less efficient competitors, regulators are set to cement in
place a system that does the opposite, at the expense of consumers across
the country.

High cost “universal service” programs are grossly inefficient because they
tax the wrong things and the wrong people, and subsidize many who could
easily afford service or who would pay for it themselves. No serious
economic analysis shows otherwise.

But rural interests have political power out of proportion to their
numbers. That’s why taxpayers subsidize rich farm corporations and why
urban telephone customers subsidize rural telephone customers, rich and
poor alike. Even worse, low-income urban subscribers pay fees to universal
service funds that benefit upper- and middle-income residents of suburbs
and rural areas. A separate program offers subsidies to low-income
consumers, but this program, which at least make distributional sense and
is not at issue here, is only a small fraction of size of the high-cost fund.

The FCC has a problem–new entrants are taking customers away from
incumbents. Since the new entrant gets a subsidy when it steals a customer
but the incumbent never loses a subsidy, competition paradoxically
increases the total subsidy.

The obvious solution to this “problem” is to end this mindless pork barrel.
At the very least, the FCC should cap the total subsidy and divide the
subsidy according to the proportion of rural customers each firm serves.
Congressman Joe Barton just introduced a bill to do at least this. Instead
of following that logic, the FCC is proposing to cap payments to the
successful new entrants, but to maintain fully the payments to the
incumbents who are losing customers. The Barton bill actually adds another
potentially beneficial step–using “reverse auctions” to drive down the
subsidy dollars in each area.

Far better than even the Barton bill would be for Congress and the FCC to
declare the high-cost universal service program a success and close it
down. The entire program could be capped this year and then phased out over
the next five years. A gradual elimination of the program would allow firms
to cope with the transition, but it would mean a real transition.

In five years most rural areas are likely to still have service from
well-funded rural telephone companies–the cost of continuing to serve a
customer is a small fraction of the cost of installing a high-cost
telephone line to that customer, and most of those lines were installed
years ago. In addition, wireless providers continue to expand their
coverage areas, and satellite technology is already making Internet service
available anywhere in the country. But these competitive alternatives are
less likely to sprout and thrive if they have to compete with an unfairly
subsidized provider.

They say the third time’s a charm and they must be right. With 41 out of 50 I am a newly minted extra.
Just in time for the trip to the UK.
Ray T. Mahorney
WA4WGA/AE
Al Gore and the perpetrators of the “man made” global warming hoax are to be considered as terrorists

(no surprise the only question was when)
Cable Broadband Users, Get Ready For Overage Fees
Clear caps? Great. $1.50/GB Overage fees? Wait a !@$% minute…

www2.dslreports.com/shownews/Cable-Broadband-Users-Get-Ready-For-Overage-Fees-94240

What seemed like a vague industry possibility just a few months ago now
seems like an inevitable certainty. Multiple carriers in North America
are now either employing or considering monthly caps where users pay per
gigabyte should they “over eat.” But the move begs a number of
questions. Not least of which is whether opening the door to overage
fees invites a broadband future where ISPs use the nebulous specter of
“excessive use” as a new piggy bank — and as a pre-emptive weapon
against competing content.

Earlier this week I broke the news that Comcast is considering
implementing a 250GB monthly cap, with a $15 penalty for each 10GB over
that cap you travel. I’ve been reading through the various subsequent
coverage (Associated Press, New York Times, CBC) , and came across this
Business Week report. In it, Time Warner Cable spokesman Alex Dudley
confirms they’re still on track to begin testing their own overage
system. If you recall, we also broke the news of that system, which
could come with caps as low as 5GB per month.

The public backlash apparently didn’t scare Time Warner Cable away from
the project. While Time Warner Cable and Comcast are still cooking their
overage plans, Canadian cable operator Rogers just became the first
major North American broadband operator to implement such a system (60GB
cap, between $1.25-$5 per additional gigabyte). Some smaller U.S. cable
broadband providers like Oregon based BendBroadband have also embraced
the idea (10-50GB cap, $1.50 per additional gigabyte).

If the caps are generous (and Comcast’s 250GB cap is), being clear about
them is certainly a welcome shift. However, many caps won’t be so
generous. And the sudden decision by the U.S. broadband industry to
adopt a system where “excessive use” is punished by per-GB charges
raises a lot of new questions.

What’s To Keep FiOS From Eating Cable’s Lunch?
Verizon has thus-far said they won’t cap or restrict their FiOS FTTH
service. With the cable industry suddenly imposing overage charges on
high-consumption users, it immediately puts them at further marketing
disadvantage to a product they’re already afraid of. Sure, 250GB is
reasonable, but it won’t be hard for Verizon or AT&T’s ad agency to make
cable broadband service seem miserly. Cable won’t have to worry about
Qwest, who has their own invisible consumption ceiling and hasn’t
invested in fiber.

What Will Keep Caps And Overage Fees Reasonable?
Honestly, what’s to keep investor pressure from constantly forcing caps
downward and overage fees upward? Unless you’re living in denial, we can
generally agree that most broadband markets in the United States consist
of a largely uncompetitive duopoly. In order to please investors and
create consistent quarter over quarter growth, ISPs have been selling
everything that isn’t nailed down (your personal browsing data and even
your typing mistakes).

Does anyone really believe that once overages become commonplace, the
general trend won’t be consistently lower caps and consistently higher
overage fees? Once we’ve agreed to the monetization of “excessive
consumption,” what stops ISPs from constantly lowering their definition
of “excessive,” while hiking user penalties? The highly lobbied FCC? A
bickering Congress? A cap that begins as reasonable can quickly become
oppressive.

ISP Usage Meters Suck
Sorry to be blunt. Don’t believe me? Spend some quality time in our
HughesNet or Wild Blue satellite broadband forums talking to users of
these services. Both providers cap monthly use, then throttle customers
who exceed consumption limits. The provided meters for these providers
have been so unreliable, many customers have been forced to code their
own. Australia ISP Telstra created a billing nightmare when they tried
to accurately track consumption back in 2002. Hopefully Time Warner
Cable and Comcast do a better job.

Usage Caps and Overages Impact Content Competition
It’s a constant meme thrown out by network neutrality supporters, but
it’s true. The future consists of any number of bandwidth eating
services that haven’t been invented yet. The present consists of
multiple, independent operators trying to force high-definition content
down Comcast’s pipe. DirecTV is launching an HD-delivery system that
uses your bandwidth as a VOD delivery vessel.

Time Warner Cable’s overage trials involve caps ranging from 5GB to 40GB
per month. If we agree that independent video is a direct and serious
threat to Time Warner Cable television revenue, and we agree that the
bandwidth needed for HD services will only grow, then what stops any
cable operator from lowering the definition of “reasonable consumption”
to deter use of competing HD services?

Why Not Just Make Gluttons Pay For a Business-Class Tier?
Time Warner Cable and Comcast agree that “bandwidth hogs” make up a very
small portion of their overall subscriber base. Comcast pegs the number
of bandwidth hogs as the top 0.1% of their user base (14,000 customers
out of Comcast’s 14.1 million users). Time Warner Cable argues that 5%
of their subscribers utilize over half of the total network bandwidth.
So why would TWC want to impose a 5GB cap on lower-tier users?

These ISPs could simply force these high-consumption users to a more
expensive business tier. Instead, they’re choosing to monetize
“excessive consumption.” This is happening just at a point when their
bread and butter income (TV and its endless rate hikes) is being
threatened by alternative video. It’s fair to ask whether the move is
less about network strain, and more about a pre-emptive strike against
competing video delivery systems.

Is This A Prelude To Billing By The Byte?
I’ve talked at length with multiple ISP executives who say their
companies have no plan to currently shift from a flat-rate pricing model
(the current U.S. standard) to a bill-by-the-byte model. The truth is
that existing profit margins (particularly for VoIP) are very healthy,
and many U.S. consumers already feel they pay too much for what they
get. It’s an uphill battle to convince consumers they should pay more,
to get less.

The general consensus among executives seems to be that they’d love to
migrate to such a model, but they’re afraid of consumer backlash. But
what if you could warm the public to per-byte billing via baby steps?
What if you could convince Joe consumer that a bandwidth apocalypse is
looming thanks to video and P2P, and per-byte billing is a “necessary
evil” to save the Internet as we know it?

This Is About More Than 250GB Being Reasonable
To be clear, I do think having reasonable caps on consumption is vastly
superior to nebulous caps, vague enforcement, and the throttling of
upstream P2P traffic. But while I embrace clear caps, I think a shift
toward per-GB overages is a dangerous migration that could have serious
repercussions down the line for consumers and content competition. This
is a door, once opened, that can’t be stepped back through.

(no surprise the only question was when)
Cable Broadband Users, Get Ready For Overage Fees
Clear caps? Great. $1.50/GB Overage fees? Wait a !@$% minute…

www2.dslreports.com/shownews/Cable-Broadband-Users-Get-Ready-For-Overage-Fees-94240

What seemed like a vague industry possibility just a few months ago now
seems like an inevitable certainty. Multiple carriers in North America
are now either employing or considering monthly caps where users pay per
gigabyte should they “over eat.” But the move begs a number of
questions. Not least of which is whether opening the door to overage
fees invites a broadband future where ISPs use the nebulous specter of
“excessive use” as a new piggy bank — and as a pre-emptive weapon
against competing content.

Earlier this week I broke the news that Comcast is considering
implementing a 250GB monthly cap, with a $15 penalty for each 10GB over
that cap you travel. I’ve been reading through the various subsequent
coverage (Associated Press, New York Times, CBC) , and came across this
Business Week report. In it, Time Warner Cable spokesman Alex Dudley
confirms they’re still on track to begin testing their own overage
system. If you recall, we also broke the news of that system, which
could come with caps as low as 5GB per month.

The public backlash apparently didn’t scare Time Warner Cable away from
the project. While Time Warner Cable and Comcast are still cooking their
overage plans, Canadian cable operator Rogers just became the first
major North American broadband operator to implement such a system (60GB
cap, between $1.25-$5 per additional gigabyte). Some smaller U.S. cable
broadband providers like Oregon based BendBroadband have also embraced
the idea (10-50GB cap, $1.50 per additional gigabyte).

If the caps are generous (and Comcast’s 250GB cap is), being clear about
them is certainly a welcome shift. However, many caps won’t be so
generous. And the sudden decision by the U.S. broadband industry to
adopt a system where “excessive use” is punished by per-GB charges
raises a lot of new questions.

What’s To Keep FiOS From Eating Cable’s Lunch?
Verizon has thus-far said they won’t cap or restrict their FiOS FTTH
service. With the cable industry suddenly imposing overage charges on
high-consumption users, it immediately puts them at further marketing
disadvantage to a product they’re already afraid of. Sure, 250GB is
reasonable, but it won’t be hard for Verizon or AT&T’s ad agency to make
cable broadband service seem miserly. Cable won’t have to worry about
Qwest, who has their own invisible consumption ceiling and hasn’t
invested in fiber.

What Will Keep Caps And Overage Fees Reasonable?
Honestly, what’s to keep investor pressure from constantly forcing caps
downward and overage fees upward? Unless you’re living in denial, we can
generally agree that most broadband markets in the United States consist
of a largely uncompetitive duopoly. In order to please investors and
create consistent quarter over quarter growth, ISPs have been selling
everything that isn’t nailed down (your personal browsing data and even
your typing mistakes).

Does anyone really believe that once overages become commonplace, the
general trend won’t be consistently lower caps and consistently higher
overage fees? Once we’ve agreed to the monetization of “excessive
consumption,” what stops ISPs from constantly lowering their definition
of “excessive,” while hiking user penalties? The highly lobbied FCC? A
bickering Congress? A cap that begins as reasonable can quickly become
oppressive.

ISP Usage Meters Suck
Sorry to be blunt. Don’t believe me? Spend some quality time in our
HughesNet or Wild Blue satellite broadband forums talking to users of
these services. Both providers cap monthly use, then throttle customers
who exceed consumption limits. The provided meters for these providers
have been so unreliable, many customers have been forced to code their
own. Australia ISP Telstra created a billing nightmare when they tried
to accurately track consumption back in 2002. Hopefully Time Warner
Cable and Comcast do a better job.

Usage Caps and Overages Impact Content Competition
It’s a constant meme thrown out by network neutrality supporters, but
it’s true. The future consists of any number of bandwidth eating
services that haven’t been invented yet. The present consists of
multiple, independent operators trying to force high-definition content
down Comcast’s pipe. DirecTV is launching an HD-delivery system that
uses your bandwidth as a VOD delivery vessel.

Time Warner Cable’s overage trials involve caps ranging from 5GB to 40GB
per month. If we agree that independent video is a direct and serious
threat to Time Warner Cable television revenue, and we agree that the
bandwidth needed for HD services will only grow, then what stops any
cable operator from lowering the definition of “reasonable consumption”
to deter use of competing HD services?

Why Not Just Make Gluttons Pay For a Business-Class Tier?
Time Warner Cable and Comcast agree that “bandwidth hogs” make up a very
small portion of their overall subscriber base. Comcast pegs the number
of bandwidth hogs as the top 0.1% of their user base (14,000 customers
out of Comcast’s 14.1 million users). Time Warner Cable argues that 5%
of their subscribers utilize over half of the total network bandwidth.
So why would TWC want to impose a 5GB cap on lower-tier users?

These ISPs could simply force these high-consumption users to a more
expensive business tier. Instead, they’re choosing to monetize
“excessive consumption.” This is happening just at a point when their
bread and butter income (TV and its endless rate hikes) is being
threatened by alternative video. It’s fair to ask whether the move is
less about network strain, and more about a pre-emptive strike against
competing video delivery systems.

Is This A Prelude To Billing By The Byte?
I’ve talked at length with multiple ISP executives who say their
companies have no plan to currently shift from a flat-rate pricing model
(the current U.S. standard) to a bill-by-the-byte model. The truth is
that existing profit margins (particularly for VoIP) are very healthy,
and many U.S. consumers already feel they pay too much for what they
get. It’s an uphill battle to convince consumers they should pay more,
to get less.

The general consensus among executives seems to be that they’d love to
migrate to such a model, but they’re afraid of consumer backlash. But
what if you could warm the public to per-byte billing via baby steps?
What if you could convince Joe consumer that a bandwidth apocalypse is
looming thanks to video and P2P, and per-byte billing is a “necessary
evil” to save the Internet as we know it?

This Is About More Than 250GB Being Reasonable
To be clear, I do think having reasonable caps on consumption is vastly
superior to nebulous caps, vague enforcement, and the throttling of
upstream P2P traffic. But while I embrace clear caps, I think a shift
toward per-GB overages is a dangerous migration that could have serious
repercussions down the line for consumers and content competition. This
is a door, once opened, that can’t be stepped back through.

(it has and it will continue to do so for some time to come.)
May 09, 2008

Has Big Media Global Warming Bias Begun to Endanger the Public?
Bill Tate
When Maine officials tried to warn residents of the dangers of this winter’s near-record snowpack, Big
Media slanted the story, hampering efforts to warn
folks of the danger. “This winters [sic] near-record snowfall has created a flood potential that is above
normal,” began a
news advisory
released by the Maine River Flow Advisor Commission on March 6th.

block quote
“Statewide water content readings from this week’s snow survey are some of the highest since 1969, the
’snow season’ of record, and in some locations higher
than the record.” In case there was any doubt, the banner headline on the release reads: “Spring Flood
Potential Elevated Due to Near-Record Snowfall.”

block quote end

However, the lead in the Associated Press
story
in the next day’s edition of the major regional daily, the Boston Globe, downplayed the threat posed by
the snowpack, referring to it as just “above-average,” and
shifting the emphasis to concern about an approaching storm.

block quote
“The National Weather Service says weekend rain could cause some flooding of streets and small streams.”

block quote end

The story does eventually reference “near-record snowfall”, in the 13th paragraph of a 17-paragraph story,
with a spin that turned the Maine officials’
warning on its head.

block quote
“While this winter’s near-record snowfall has created a flood potential that is above normal, that doesn’t
guarantee flooding will occur this spring….”

block quote end

The result? “There are people who are losing their property, their homes and their livelihoods,” Maine
Governor John Baldacci
said
after the flooding that officials had tried to warn the public about did occur last week.

Why did the AP and the Globe de-emphasize Maine officials’ snowpack warning, especially when doing so
endangered the property and safety of the public they
are supposed to serve?

The Globe is owned by the New York Times Company. Both the Times and the Associated Press are heavily
invested in the myth of Global Warming, or — as I
like to call it — Global Warning. Record snowpack means higher than normal amounts of snow, colder than
usual temperatures, or both. None of which readily
fits into the MSM’s chosen story line that mankind is giving Mother Nature a fever. Big Media’s Global
Warning bias has largely remained in the realm of
theory; now it has begun to endanger people’s lives and property in real time.

The AP and the Globe had the choice of reporting a truly inconvenient truth — for them — or of
perpetuating Global Warning, of facilitating officials’
efforts to protect the public or advancing their ideological agenda. Why are we not surprised by the
decision they made?

William Tate is a former award-winning broadcast journalist and the author of the new book,
A Time Like This.

www.americanthinker.com/blog/2008/05/has_big_media_global_warming_b.html at May 09, 2008 - 02:01:34
PM EDT
Ray T. Mahorney
WA4WGA
Al Gore and the perpetrators of the “man made” global warming hoax are to be considered as terrorists

The Ultimate Little Black Book
One Firm Routes All Phone Calls in North America

By Ellen Nakashima
Washington Post Staff Writer

Monday, May 5, 2008; D01

www.washingtonpost.com/wp-dyn/content/article/2008/05/04/AR2008050401719_pf.html

Once upon a time, there was one telephone company. Routing phone calls was
pretty straightforward.

Now there are hundreds, and it’s much more complicated. Whenever someone
dials a phone, texts on a cellphone or punches in a Web site on a laptop,
chances are the connection will rely on a central database that belongs to
a Northern Virginia firm.

That database is perhaps the most significant cog in the communications
network that most people have never heard of.

Sterling-based NeuStar is the carriers’ digital directory for all phone
calls in North America. More than 800 telephone companies have numbers in
the database. NeuStar assigns blocks of available telephone numbers to
carriers. It also manages the directory for common short codes: five- or
six-digit codes that people punch into their cellphones to take part in
sweepstakes or to vote for game-show contestants, for instance. And about
one out of every four Internet transactions is routed using a NeuStar
database, as NeuStar handles traffic for domains that include .biz, .us,
..org and .info.

NeuStar’s databases are so powerful that the FBI a few years ago sought
direct, unfettered access to one containing 310 million phone numbers in
the United States and Canada. The telephone companies that pay NeuStar to
run the database denied the FBI’s request, but they did allow NeuStar to
create a site where authorized law enforcement officials with court orders
can obtain carrier information on telephone numbers.

NeuStar is part of an evolving telecom industry that is creating caches of
information attractive to the government without clear guidelines governing
who may have access and under what circumstances. Its registries fall under
international, U.S. government and trade association rules, including those
set by the Federal Communications Commission.

The company is dependent on and crucial to telecom companies and state,
local and federal governments, part of the government-industrial complex
that drives the region’s economy. Indeed, said Jeffrey E. Ganek, NeuStar
chairman and chief executive, “this is a business that could only have
grown up in Washington.”

NeuStar was once a division of Lockheed Martin, where, under a different
name, it was created in part to help carriers manage one aspect of the
Telecommunications Act of 1996. That law made it possible for consumers to
keep their phone numbers even if they switched service providers or moved
to another state. Competing telephone companies needed a way to keep track
of those numbers to route calls. And other information, such as billing
data, the FCC said, needed to be provided by a neutral, trusted party.

The current contracts, covering all of North America, run through 2015. The
FCC created the rules that govern the contracts, but delegated oversight
and administration of the contracts to the industry.

The carriers in 1997 awarded the work to Lockheed Information Management
Systems. In 1999, Lockheed spun off the division, and NeuStar was born. It
went public in 2005.

Revenue last year was $429.2 million, and profit was $92.3 million, up from
$73.9 million the previous year. Company officials expect revenue to exceed
$500 million this year. Soon, they said, NeuStar expects to be providing
digital directory service for about 85 percent of all wireless devices in
the world.

NeuStar officials say the government has not sought direct access to any of
its databases other than the one the FBI requested, which covered numbers
kept by customers as they switched providers, called a ported number registry.

But Al Gidari, a lawyer representing wireless carriers, said other major
telecom entities — billing vendors, 911 emergency service providers and
call center operators — have databases the government might want to tap.
“If the government wanted access to their databases, there are no clear
procedures regulating that access as there are for phone companies,” he
said. “That’s a danger.”

NeuStar says trust is a significant part of its business.

“If we were to precipitously allow some overzealous law enforcement
official access to data that has not been formally authorized by the
courts, we are instantly jeopardizing our franchise,” Ganek said.

NeuStar charges its client companies about 89 cents for every update to the
ported number registry, about $500 to $1,000 a month for every common short
code and about $5 a year for each entry in the Internet domain name registry.

NeuStar also helps optimize Web traffic for clients such as Amazon so that
when a customer types in Amazon.com, NeuStar directs the request to one of
Amazon’s thousands of servers around the world. It provides the same kind
of service for Oracle, Emirates Airlines and Forbes.

“We’re at all the key Internet nodes in the world,” Ganek said. “Depending
on the time of the day and the point of origination, we send the traffic to
Seattle, for instance, or to a data center in Miami or another data center
in Singapore. If there’s a fiber cable cut in the Pacific, we see it before
[the carriers] do and turn the traffic in the other direction so it goes
counterclockwise around the globe.”

NeuStar helps maintain communication during crises. The Sept. 11, 2001,
attack on the World Trade Center took out a large AT&T switch that served
50,000 telephones for the Wall Street area, Ganek said. Within a week, AT&T
found another switching device, trucked it into lower Manhattan and
installed it at a telecommunications facility at 60 Hudson St. As soon as
the switch was plugged in and the green lights on the control panel were
blinking, NeuStar, instructed by AT&T, went into its database and deleted
the World Trade Center address for each of the 50,000 numbers and replaced
it with 60 Hudson St., Ganek said.

“Within 10 seconds of making that change, anyone could dial those numbers
and the calls were sent not to the World Trade Center, but six or seven
blocks south,” Ganek said.

About 70 percent of NeuStar’s revenue comes from its ported number
database. But as more communication takes place over the Internet, Ganek
foresees a need for more Internet routing information services.

“It’s just a matter of time before Google and AOL and Facebook and LinkedIn
are all managing communications between and among users,” Ganek said.

In 2005, the FBI and the Drug Enforcement Administration wanted a direct
link to the database in NeuStar’s Sterling headquarters, according to a
January 2005 letter from the Justice Department criminal division to a
consortium of carriers that have given NeuStar the contract to run the
database. The department wanted to use the data to identify which carrier
to subpoena for records concerning telephone numbers in an investigation,
the letter said.

“What they were asking for in a nutshell was a copy of the database,” said
Mike Warren, NeuStar vice president of fiduciary services. “They wanted us
to send them an update of the database once a day.”

Instead, NeuStar set up LEAP, or Local Number Portability Enhanced
Analytical Platform, a Web site to help local, state and federal law
enforcement in investigations that rely on phone call surveillance. The
database gives basic information such as carrier but not more technical
details such as whether a phone number is for a wireless phone or a
landline. Earlier this year, NeuStar added historical carrier information
to that service.

looks like I may be going there for the ham fest on the 17th. I’ll be waring a DSTAR hat.
Ray T. Mahorney
WA4WGA
Al Gore and the perpetrators of the “man made” global warming hoax are to be considered as terrorists