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Wednesday, December 22, 2010

Consumers for the first time got federally approved rules guaranteeing their right to view what they want on the Internet. The new framework could also result in tiered charges for web access and alter how companies profit from the network.

The Federal Communications Commission on Tuesday voted 3-2 to back Chairman Julius Genachowski's plan for what is commonly known as "net neutrality," or rules prohibiting Internet providers from interfering with legal web traffic. President Barack Obama said the FCC's action will "help preserve the free and open nature of the Internet." The move was prompted by worries that large phone and cable firms were getting too powerful as Internet gatekeepers. Most consumers haven't had a problem viewing whatever they want online; few instances have arisen of an Internet provider blocking or slowing services.

Rather, the FCC rules are designed to prevent potential future harms and they could shape how Americans access and use the Internet years from now. In the future, the Internet industry will be increasingly centered around the fastest-growing categories of Internet traffic—online video, gaming and mobile services, analysts say. Cisco Systems Inc., the broadband network provider, has forecast those services could quadruple by 2014.

The FCC has approved rules that would give the federal government authority to regulate Internet traffic and prevent broadband providers from selectively blocking web traffic. WSJ's Amy Schatz explains what the new rules really mean. Comcast Corp. and other Internet providers have experimented with ways to handle the growing problem of network congestion. Recently, Mr. Genachowski suggested that instead of selectively slowing certain traffic to cope with congestion, providers could consider charging consumers for how much data they consume. That would be a departure from the flat monthly fees consumers pay now for Web access. It's something providers privately say is one of the only ways to make a profit and fund network infrastructure.

Such a system could pose a challenge to companies like Netflix Inc., which streams movies over broadband networks to televisions and computers. Netflix Tuesday said the FCC decision did not go far enough toward protecting content providers. The new rules will also allow phone and cable companies to sell to Internet companies like Amazon.com Inc. faster data delivery for extra money, particularly on wireless networks. That would let a company that offers streaming video, like Google Inc.'s YouTube, pay a wireless company like Verizon Communications Inc. a bonus for guaranteed delivery of its videos to consumers' smart phones.

But FCC officials said any such priority service must be disclosed, and they said they would likely probe and reject such efforts. That could prompt some of the many expected legal challenges to the new rules, since it is not clear if the FCC has authority to enforce them. Consumer groups and other organizations, including the American Library Association, oppose such high-speed toll lanes, arguing all Americans should have the same quality of Internet access.

The FCC's decision is a mixed bag for consumers. The new rules—which haven't been released in full—say that land-line broadband providers can't block legal content from websites, or "unreasonably discriminate" against companies like Skype or Netflix that want to use broadband networks to provide video or voice services. They also require providers to give consumers more information about their Internet service, like actual download speeds or usage limits.

But the rules come with some wiggle room for the industry. Service providers will be allowed to engage in "reasonable network management" to cope with congestion on their systems.

Wireless companies are less restricted by the new rules—a win for the industry because consumers are increasingly accessing the web using hand-held devices such as iPhones or Blackberries. Mr. Genachowski said mobile carriers faced more congestion issues than other companies and need more leeway to manage their networks.

Wireless companies would be prohibited from blocking Internet voice services but they could block access to many other applications, citing congestion issues.

Reaction the FCC's rules was mixed. AT&T Inc. said the rules were "not ideal" but would bring some "market certainty so that investment and job creation can go forward." Verizon said it was "deeply concerned" because it didn't think the rules were needed. A coalition of Internet companies including Google said the rules were a good first step but stronger regulations on wireless networks were needed to ensure the same rules apply to both wired and wireless Internet.

NETNEUT

Some venture capital firms that invest in innovative applications and wireless technology expressed concern about how the rules will impact the wireless business. "The problem is that there's so much ambiguity in the rules," said Brad Burnham of Union Square Ventures, which has invested in startups including Foursquare and Twitter Inc.

posted @ 11:12 PM | Feedback (143)

Ignited by support from key wireless players Nokia Corp. and Google Inc., global usage of near field communication (NFC) technology in cell phones is expected to begin an explosive growth phase starting next year, paving the way for a boom in the mobile payments business, according to the market research firm iSuppli, now part of IHS Inc. (NYSE: IHS).

Worldwide shipments of cell phones with built-in NFC capability will rise to 220.1 million units in 2014, up by a factor of four from 52.6 million in 2010. In 2014, 13 percent of cell phones shipped will integrate NFC, up from 4.1 percent in 2010.

 Cell Phones with Integrated NFC

NFC is a short-range wireless connectivity technology based on magnetic field induction. It is intended primarily for intuitive, simple and secure communications between two electronic devices in close proximity to each other—a perfect fit for mobile payment applications.

“Imagine paying your bus fare, buying a plane ticket or making an ATM/credit card purchase simply by holding your cell phone near a wireless terminal,” said Jagdish Rebello, director and principal analyst for communications and consumer electronics with iSuppli. “This is the mobile payment revolution on the verge of being unleashed by NFC technology. With NFC technology expected to be integrated into Nokia’s cell phones and Google’s Android operating system, the first shots of this revolution will be fired next year.”

NFC Infrastructure
Leading cell phone brand Nokia said it will support NFC in all new smart phone models introduced in 2011.

Google has announced support for NFC in Android 2.3, set for release this week.

Furthermore, after two years of discussions, the three largest U.S. mobile phone carriers—AT&T Wireless, Verizon Wireless and T-Mobile—have launched a joint venture known as ISIS that will develop a mobile payment system based on NFC. While ISIS is initially working with Barclaycard U.S. and Discover Financial Services, the carriers said they are open to collaborating with any bank or credit card company that would like to use the platform.

ISIS within the next 18 months hopes to have NFC-enabled cell phones sold by the three carriers and an NFC ecosystem in place in some regions of the United States, with a full nationwide rollout slated to be accomplished by 2013.

“iSuppli believes that 2012 will be the make-or-break year for NFC,” Rebello said. “With all the ongoing and planned NFC trials in different regions of the world—as well as support for the technology by major stakeholders, including wireless operators, financial institutions and banks—it is imperative that business models be established that allow each of the nodes to see value in offering the service.

NFC Technology
Beyond mobile payments in cell phones, NFC enables a range of other functions.

NFC chips are compatible with contactless smart cards. Devices that are NFC enabled can be used as access devices for secure facilities, such as office buildings and gated apartments. They also can work as information retrieval devices—allowing applications including the exchange of electronic business cards and the downloading of information from NFC-enabled posters. Furthermore, NFC can perform authentication features, initiating setup for other forms of wireless communication, such as Bluetooth or Wi-Fi.

Source: isuppli.com

posted @ 9:39 PM | Feedback (350)