May 2006 - cypherpunks-legacy

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06 May '06

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[Clips] The RFID Hacking Underground
by R.A. Hettinga 05 May '06

05 May '06

--- begin forwarded text Delivered-To: rah(a)shipwright.com Delivered-To: clips(a)philodox.com Date: Fri, 5 May 2006 13:49:14 -0400 To: Philodox Clips List <clips(a)philodox.com> From: "R.A. Hettinga" <rah(a)shipwright.com> Subject: [Clips] The RFID Hacking Underground Reply-To: rah(a)philodox.com Sender: clips-bounces(a)philodox.com <http://www.wired.com/wired/archive/14.05/rfid_pr.html> Wired 14.05: The RFID Hacking Underground They can steal your smartcard, lift your passport, jack your car, even clone the chip in your arm. And you won't feel a thing. 5 tales from the RFID-hacking underground. By Annalee Newitz James Van Bokkelen is about to be robbed. A wealthy software entrepreneur, Van Bokkelen will be the latest victim of some punk with a laptop. But this won't be an email scam or bank account hack. A skinny 23-year-old named Jonathan Westhues plans to use a cheap, homemade USB device to swipe the office key out of Van Bokkelen's back pocket. "I just need to bump into James and get my hand within a few inches of him," Westhues says. We're shivering in the early spring air outside the offices of Sandstorm, the Internet security company Van Bokkelen runs north of Boston. As Van Bokkelen approaches from the parking lot, Westhues brushes past him. A coil of copper wire flashes briefly in Westhues' palm, then disappears. Van Bokkelen enters the building, and Westhues returns to me. "Let's see if I've got his keys," he says, meaning the signal from Van Bokkelen's smartcard badge. The card contains an RFID sensor chip, which emits a short burst of radio waves when activated by the reader next to Sandstorm's door. If the signal translates into an authorized ID number, the door unlocks. The coil in Westhues' hand is the antenna for the wallet-sized device he calls a cloner, which is currently shoved up his sleeve. The cloner can elicit, record, and mimic signals from smartcard RFID chips. Westhues takes out the device and, using a USB cable, connects it to his laptop and downloads the data from Van Bokkelen's card for processing. Then, satisfied that he has retrieved the code, Westhues switches the cloner from Record mode to Emit. We head to the locked door. "Want me to let you in?" Westhues asks. I nod. He waves the cloner's antenna in front of a black box attached to the wall. The single red LED blinks green. The lock clicks. We walk in and find Van Bokkelen waiting. "See? I just broke into your office!" Westhues says gleefully. "It's so simple." Van Bokkelen, who arranged the robbery "just to see how it works," stares at the antenna in Westhues' hand. He knows that Westhues could have performed his wireless pickpocket maneuver and then returned with the cloner after hours. Westhues could have walked off with tens of thousands of dollars' worth of computer equipment - and possibly source code worth even more. Van Bokkelen mutters, "I always thought this might be a lousy security system." RFID chips are everywhere - companies and labs use them as access keys, Prius owners use them to start their cars, and retail giants like Wal-Mart have deployed them as inventory tracking devices. Drug manufacturers like Pfizer rely on chips to track pharmaceuticals. The tags are also about to get a lot more personal: Next-gen US passports and credit cards will contain RFIDs, and the medical industry is exploring the use of implantable chips to manage patients. According to the RFID market analysis firm IDTechEx, the push for digital inventory tracking and personal ID systems will expand the current annual market for RFIDs from $2.7 billion to as much as $26 billion by 2016. RFID technology dates back to World War II, when the British put radio transponders in Allied aircraft to help early radar system crews detect good guys from bad guys. The first chips were developed in research labs in the 1960s, and by the next decade the US government was using tags to electronically authorize trucks coming into Los Alamos National Laboratory and other secure facilities. Commercialized chips became widely available in the '80s, and RFID tags were being used to track difficult-to-manage property like farm animals and railroad cars. But over the last few years, the market for RFIDs has exploded, driven by advances in computer databases and declining chip prices. Now dozens of companies, from Motorola to Philips to Texas Instruments, manufacture the chips. The tags work by broadcasting a few bits of information to specialized electronic readers. Most commercial RFID chips are passive emitters, which means they have no onboard battery: They send a signal only when a reader powers them with a squirt of electrons. Once juiced, these chips broadcast their signal indiscriminately within a certain range, usually a few inches to a few feet. Active emitter chips with internal power can send signals hundreds of feet; these are used in the automatic toll-paying devices (with names like FasTrak and E-ZPass) that sit on car dashboards, pinging tollgates as autos whiz through. For protection, RFID signals can be encrypted. The chips that will go into US passports, for example, will likely be coded to make it difficult for unauthorized readers to retrieve their onboard information (which will include a person's name, age, nationality, and photo). But most commercial RFID tags don't include security, which is expensive: A typical passive RFID chip costs about a quarter, whereas one with encryption capabilities runs about $5. It's just not cost-effective for your average office building to invest in secure chips. This leaves most RFIDs vulnerable to cloning or - if the chip has a writable memory area, as many do - data tampering. Chips that track product shipments or expensive equipment, for example, often contain pricing and item information. These writable areas can be locked, but often they aren't, because the companies using RFIDs don't know how the chips work or because the data fields need to be updated frequently. Either way, these chips are open to hacking. "The world of RFID is like the Internet in its early stages," says Ari Juels, research manager at the high tech security firm RSA Labs. "Nobody thought about building security features into the Internet in advance, and now we're paying for it in viruses and other attacks. We're likely to see the same thing with RFIDs." David Molnar is a soft-spoken computer science graduate student who studies commercial uses for RFIDs at UC Berkeley. I meet him in a quiet branch of the Oakland Public Library, which, like many modern libraries, tracks most of its inventory with RFID tags glued inside the covers of its books. These tags, made by Libramation, contain several writable memory "pages" that store the books' barcodes and loan status. Brushing a thatch of dark hair out of his eyes, Molnar explains that about a year ago he discovered he could destroy the data on the books' passive-emitting RFID tags by wandering the aisles with an off-the-shelf RFID reader-writer and his laptop. "I would never actually do something like that, of course," Molnar reassures me in a furtive whisper, as a nonbookish security guard watches us. Our RFID-enabled checkout is indeed quite convenient. As we leave the library, we stop at a desk equipped with a monitor and arrange our selections, one at a time, face up on a metal plate. The titles instantly appear onscreen. We borrow four books in less than a minute without bothering the librarian, who is busy helping some kids with their homework. Molnar takes the books to his office, where he uses a commercially available reader about the size and heft of a box of Altoids to scan the data from their RFID tags. The reader feeds the data to his computer, which is running software that Molnar ordered from RFID-maker Tagsys. As he waves the reader over a book's spine, ID numbers pop up on his monitor. "I can definitely overwrite these tags," Molnar says. He finds an empty page in the RFID's memory and types "AB." When he scans the book again, we see the barcode with the letters "AB" next to it. (Molnar hastily erases the "AB," saying that he despises library vandalism.) He fumes at the Oakland library's failure to lock the writable area. "I could erase the barcodes and then lock the tags. The library would have to replace them all." Frank Mussche, Libramation's president, acknowledges that the library's tags were left unlocked. "That's the recommended implementation of our tags," he says. "It makes it easier for libraries to change the data." For the Oakland Public Library, vulnerability is just one more problem in a buggy system. "This was mostly a pilot program, and it was implemented poorly," says administrative librarian Jerry Garzon. "We've decided to move ahead without Libramation and RFIDs." But hundreds of libraries have deployed the tags. According to Mussche, Libramation has sold 5 million RFID tags in a "convenient" unlocked state. While it may be hard to imagine why someone other than a determined vandal would take the trouble to change library tags, there are other instances where the small hassle could be worth big bucks. Take the Future Store. Located in Rheinberg, Germany, the Future Store is the world's preeminent test bed of RFID-based retail shopping. All the items in this high tech supermarket have RFID price tags, which allow the store and individual product manufacturers - Gillette, Kraft, Procter & Gamble - to gather instant feedback on what's being bought. Meanwhile, shoppers can check out with a single flash of a reader. In July 2004, Wired hailed the store as the "supermarket of the future." A few months later, German security expert Lukas Grunwald hacked the chips. Grunwald cowrote a program called RFDump, which let him access and alter price chips using a PDA (with an RFID reader) and a PC card antenna. With the store's permission, he and his colleagues strolled the aisles, downloading information from hundreds of sensors. They then showed how easily they could upload one chip's data onto another. "I could download the price of a cheap wine into RFDump," Grunwald says, "then cut and paste it onto the tag of an expensive bottle." The price-switching stunt drew media attention, but the Future Store still didn't lock its price tags. "What we do in the Future Store is purely a test," says the Future Store spokesperson Albrecht von Truchsess. "We don't expect that retailers will use RFID like this at the product level for at least 10 or 15 years." By then, Truchsess thinks, security will be worked out. Today, Grunwald continues to pull even more-elaborate pranks with chips from the Future Store. "I was at a hotel that used smartcards, so I copied one and put the data into my computer," Grunwald says. "Then I used RFDump to upload the room key card data to the price chip on a box of cream cheese from the Future Store. And I opened my hotel room with the cream cheese!" Aside from pranks, vandalism, and thievery, Grunwald has recently discovered another use for RFID chips: espionage. He programmed RFDump with the ability to place cookies on RFID tags the same way Web sites put cookies on browsers to track returning customers. With this, a stalker could, say, place a cookie on his target's E-ZPass, then return to it a few days later to see which toll plazas the car had crossed (and when). Private citizens and the government could likewise place cookies on library books to monitor who's checking them out. In 1997, ExxonMobil equipped thousands of service stations with SpeedPass, which lets customers wave a small RFID device attached to a key chain in front of a pump to pay for gas. Seven years later, three graduate students - Steve Bono, Matthew Green, and Adam Stubblefield - ripped off a station in Baltimore. Using a laptop and a simple RFID broadcasting device, they tricked the system into letting them fill up for free. The theft was concocted by Avi Rubin's computer science lab at Johns Hopkins University. Rubin's lab is best known for having found massive, hackable flaws in the code running on Diebold's widely adopted electronic voting machines in 2004. Working with RSA Labs manager Juels, the group figured out how to crack the RFID chip in ExxonMobil's SpeedPass. Hacking the tag, which is made by Texas Instruments, is not as simple as breaking into Van Bokkelen's Sandstorm offices with a cloner. The radio signals in these chips, dubbed DST tags, are protected by an encryption cipher that only the chip and the reader can decode. Unfortunately, says Juels, "Texas Instruments used an untested cipher." The Johns Hopkins lab found that the code could be broken with what security geeks call a "brute-force attack," in which a special computer known as a cracker is used to try thousands of password combinations per second until it hits on the right one. Using a home-brewed cracker that cost a few hundred dollars, Juels and the Johns Hopkins team successfully performed a brute-force attack on TI's cipher in only 30 minutes. Compare that to the hundreds of years experts estimate it would take for today's computers to break the publicly available encryption tool SHA-1, which is used to secure credit card transactions on the Internet. ExxonMobil isn't the only company that uses the Texas Instruments tags. The chips are also commonly used in vehicle security systems. If the reader in the car doesn't detect the chip embedded in the rubbery end of the key handle, the engine won't turn over. But disable the chip and the car can be hot-wired like any other. Bill Allen, director of strategic alliances at Texas Instruments RFID Systems, says he met with the Johns Hopkins team and he isn't worried. "This research was purely academic," Allen says. Nevertheless, he adds, the chips the Johns Hopkins lab tested have already been phased out and replaced with ones that use 128-bit keys, along with stronger public encryption tools, such as SHA-1 and Triple DES. Juels is now looking into the security of the new US passports, the first of which were issued to diplomats this March. Frank Moss, deputy assistant secretary of state for passport services, claims they are virtually hack-proof. "We've added to the cover an anti-skimming device that prevents anyone from reading the chip unless the passport is open," he says. Data on the chip is encrypted and can't be unlocked without a key printed in machine-readable text on the passport itself. But Juels still sees problems. While he hasn't been able to work with an actual passport yet, he has studied the government's proposals carefully. "We believe the new US passport is probably vulnerable to a brute-force attack," he says. "The encryption keys in them will depend on passport numbers and birth dates. Because these have a certain degree of structure and guessability, we estimate that the effective key length is at most 52 bits. A special key-cracking machine could probably break a passport key of this length in 10 minutes." I'm lying facedown on an examination table at UCLA Medical Center, my right arm extended at 90 degrees. Allan Pantuck, a young surgeon wearing running shoes with his lab coat, is inspecting an anesthetized area on the back of my upper arm. He holds up something that looks like a toy gun with a fat silver needle instead of a barrel. I've decided to personally test-drive what is undoubtedly the most controversial use of RFIDs today - an implantable tag. VeriChip, the only company making FDA-approved tags, boasts on its Web site that "this b$always there' identification can't be lost, stolen, or duplicated." It sells the chips to hospitals as implantable medical ID tags and is starting to promote them as secure-access keys. Pantuck pierces my skin with the gun, delivering a microchip and antenna combo the size of a grain of long rice. For the rest of my life, a small region on my right arm will emit binary signals that can be converted into a 16-digit number. When Pantuck scans my arm with the VeriChip reader - it looks sort of like the wand clerks use to read barcodes in checkout lines - I hear a quiet beep, and its tiny red LED display shows my ID number. Three weeks later, I meet the smartcard-intercepting Westhues at a greasy spoon a few blocks from the MIT campus. He's sitting in the corner with a half-finished plate of onion rings, his long blond hair hanging in his face as he hunches over the cloner attached to his computer. Because the VeriChip uses a frequency close to that of many smartcards, Westhues is pretty sure the cloner will work on my tag. Westhues waves his antenna over my arm and gets some weird readings. Then he presses it lightly against my skin, the way a digital-age pickpocket could in an elevator full of people. He stares at the green waveforms that appear on his computer screen. "Yes, that looks like we got a good reading," he says. After a few seconds of fiddling, Westhues switches the cloner to Emit and aims its antenna at the reader. Beep! My ID number pops up on its screen. So much for implantable IDs being immune to theft. The whole process took 10 minutes. "If you extended the range of this cloner by boosting its power, you could strap it to your leg, and somebody passing the VeriChip reader over your arm would pick up the ID," Westhues says. "They'd never know they hadn't read it from your arm." Using a clone of my tag, as it were, Westhues could access anything the chip was linked to, such as my office door or my medical records. John Proctor, VeriChip's director of communications, dismisses this problem. "VeriChip is an excellent security system, but it shouldn't be used as a stand-alone," he says. His recommendation: Have someone also check paper IDs. But isn't the point of an implantable chip that authentication is automatic? "People should know what level of security they're getting when they inject something into their arm," he says with a half smile. They should - but they don't. A few weeks after Westhues clones my chip, Cincinnati-based surveillance company CityWatcher announces a plan to implant employees with VeriChips. Sean Darks, the company's CEO, touts the chips as "just like a key card." Indeed. Contributing editor Annalee Newitz wrote about Spyware in issue 13.12. -- ----------------- R. A. Hettinga <mailto: rah(a)ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire' _______________________________________________ Clips mailing list Clips(a)philodox.com http://www.philodox.com/mailman/listinfo/clips --- end forwarded text -- ----------------- R. A. Hettinga <mailto: rah(a)ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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by Dantzler Iyanna 05 May '06

05 May '06

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by Nieto Elishama 05 May '06

05 May '06

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by Maura Jim 05 May '06

05 May '06

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by Jim Voss 05 May '06

05 May '06

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by Latoya Sorensen 05 May '06

05 May '06

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[Clips] How To Steal an Election
by R.A. Hettinga 04 May '06

04 May '06

--- begin forwarded text Delivered-To: rah(a)shipwright.com Delivered-To: clips(a)philodox.com Date: Thu, 4 May 2006 21:01:35 -0400 To: Philodox Clips List <clips(a)philodox.com> From: "R.A. Hettinga" <rah(a)shipwright.com> Subject: [Clips] How To Steal an Election Reply-To: rah(a)philodox.com Sender: clips-bounces(a)philodox.com <http://www.washingtonpost.com/wp-dyn/content/graphic/2006/03/16/GR200603160…> The Washington Post washingtonpost.com > Nation How To Steal an Election It's easier to rig an electronic voting machine than a Las Vegas slot machine, says University of Pennsylvania visiting professor Steve Freeman. That's because Vegas slots are better monitored and regulated than America's voting machines, Freeman writes in a book out in July that argues, among other things, that President Bush may owe his 2004 win to an unfair vote count. We'll wait to read his book before making a judgment about that. But Freeman has assembled comparisons that suggest Americans protect their vices more than they guard their rights, according to data he presented at an October meeting of the American Statistical Association in Philadelphia. -- ----------------- R. A. Hettinga <mailto: rah(a)ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire' _______________________________________________ Clips mailing list Clips(a)philodox.com http://www.philodox.com/mailman/listinfo/clips --- end forwarded text -- ----------------- R. A. Hettinga <mailto: rah(a)ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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[Clips] Who Owns the Internet?
by R.A. Hettinga 04 May '06

04 May '06

--- begin forwarded text Delivered-To: rah(a)shipwright.com Delivered-To: clips(a)philodox.com Date: Thu, 4 May 2006 16:12:01 -0400 To: Philodox Clips List <clips(a)philodox.com> From: "R.A. Hettinga" <rah(a)shipwright.com> Subject: [Clips] Who Owns the Internet? Reply-To: rah(a)philodox.com Sender: clips-bounces(a)philodox.com <http://www.mises.org/story/2139#> - Mises Institute Thursday, May 04, 2006 Who Owns the Internet? by Tim Swanson [Posted on Thursday, May 04, 2006] [Subscribe at email services and tell others] The "Net neutrality" debate has many similarities with that unbundling cul-de-sac. Both raise the question: Is innovation better served by undermining the property rights of network owners, or by reinforcing them? - The Wall Street Journal Editorial, March 8, 2006 Before you can answer who owns the Internet, you must answer what the Internet is. Is it a jumble of random wires and duct tape? Is it a software packet, a computer, or a router? While some may argue that it is one big snuff collection, in truth it is an amalgamation, an assortment of heterogeneous computer systems with varying capabilities linked together by various protocols.[1] Last week, a congressional committee voted down a provision calling for increased regulation and oversight of the Internet from the FCC. The issue in a nutshell is this: Internet service providers such as AT&T have mentioned that they may charge variable prices for different types of traffic that move throughout their infrastructure. In theory, AT&T can lower the quality of the data transferred across the network, they can charge companies such as Google or eBay a higher price for letting them use their network, or they can simply block the data altogether. In its defense, AT&T notes that it is their network and they can charge any price structure they deem appropriate. One of the catalysts for this new mindset is that the large telecommunication firms are trying to finance infrastructure upgrades - such as fiber optic rollout - and are facing lower margins due in part to disruptive technologies (e.g., wireless, satellite).[2] In addition, another opportunity the management teams at the telecom firms have hit upon for generating additional revenue is rolling out their own version of IPTV and voice-over-IP.[3] Because of this, executives at the established telecom firms have mentioned that in the future, they might charge third-party developers such as Google, Yahoo, and Skype higher rates. And because they control large swaths of network pipeline, they have the leveraging ability to discriminate. Uncle Sam to The Rescue Unsurprisingly, content providers such as Amazon, Microsoft, Google, and others have been lobbying Congress to prevent this from occurring under a scheme called network neutrality. This would not be the first time government interference has been solicited. Throughout the 20th century, State intervention and regulation of the communication industry has been an assumed role.[4] The Communications Act of 1934 created the Federal Communication Commission, a politically-appointed entity that has overseen and gerrymandered the licensing of radio waves and otherwise dictated who can and cannot communicate electronically on both a commercial and non-commercial basis. The main issue is not a matter of bit discrimination, multiple tiers, or even denial-of-service; rather it is a fight over private property and who owns the cornucopia of wires, cables, fibers and network infrastructure spanning the continent. Unfortunately due in large part to State intervention throughout the past century, this is a somewhat vague and nebulous area with many seemingly gray regions. The only reason AT&T (formerly SBC), BellSouth, Cox Communications, and other incumbents have the large user bases they currently do is because they were granted geographic monopolies for communications.[5] [6] They were legally insulated from outside competition for much of the past century. And, by and large, this protected status still continues unabated, shielded by the current FCC regulatory regime.[7] >From Qaddafi with Love In the movie The Aviator, Senator Owen Brewster adamantly opposed competition in international flights deeming that it was in the national interest to support only one provider. This was a canard. The same argument has been continually used in creating and protecting geographic monopolies for a host of resources including utilities such as telecom service providers. Vladimir Lenin called these resources the "commanding heights" of the national economy - too important to be left to the whims of the private sector. Unfortunately, many proponents of net neutrality miss the forest for the trees when promoting their nationalization of network pipelines.[8] [9] The real recipe for reform is not yet another round of reregulation or confiscation of private property,[10] rather it is the abolition of State machinations involved in the telecom industry as a whole. Many users mistakenly believe that the current radio spectrum and telecom regime is the product of the free-market. It is not. The FCC did not create the radio spectrum nor does it have some homesteading claim to the near-infinitesimal ranges found within it. It is, simply, a bureaucratic sophistry, which oddly enough believes it can distribute something it does not own.[11] Market intervention begets yet more market intervention: the State caused the problem in the first place, and is now called into action to fix it.[12] It is a history of folly that has been studiously chronicled and its only cure is cold-turkey abstinence. Geographic Monopolies Throughout much of the country, individuals, families and companies have usually only one or two choices for accessing the Internet: through the cable company or the telephone company. Similar to utilities such as water and electricity, the reason for this is that the State intervened and gave certain companies a geographic monopoly for offering these services. This is misleading and a sham for it alone has put content providers in the bind, in between the proverbial rock and hard place. Several pundits-cum-activist, including science-fiction author Doc Searls advocate a net neutrality policy akin to the communal farms of command economies. For instance, Mr. Searls recently compared Internet access to natural resources such as rivers and seas, asking if any of these should be private. His is a public goods argument, an argument that conflates natural resources that have been homesteaded with endeavors that have been created through confiscation (taxes). One of the chronic problems plaguing public roads (i.e., road socialism) is traffic. There is no pricing mechanism to discriminate between off-peak and on-peak times; the roads are a clear illustration of the tragedy of the commons.[13] Internet traffic experiences a parallel phenomenon: throughout the work week, network traffic peaks during the day and declines at night - a cycle also found on public streets. Whether or not proponents of net neutrality want to acknowledge that scarcity exists, it does. Despite continued increase in bandwidth capacity, a router can only handle a certain amount of traffic. Just like a four-lane highway, it can only supply a certain threshold of traffic and is therefore inherently limited.[14] Fluctuating Prices, Mercurial Rates Numerous cell phone companies have created a business model that illustrates this principle in true form, the differentiation of minutes. Sure, the bits of information that are sent across the airwaves and through the network backbones are essentially the same no matter the time of day, but the amount of traffic varies. Therefore various pricing packages include variables ranging from the daytime, evening, weekends, and even roaming. Some even discriminate based upon whom you call (e.g., free calls to someone using the same phone service). This phenomenon of adapting to supply and demand is also seen in other markets, such as sporting events. Many baseball teams now offer ticket packages that vary according to whether a game is held at night, against a specific team, or during a particular month.[15] Additionally, rates change according to the type of seat (e.g., sky-boxes), location of the seat, and group discounts. Several commercial airline providers, most notably Northeastern-based JetBlue, have successfully used variable pricing based upon how far in advance you booked, the level of demand for a particular flight, weekdays versus weekends, and so forth. There is no shortage of empirical examples illustrating profitable business models that embrace variable pricing. However, it is neither the job nor obligation of the taxpayer to finance, or in any manner subsidize, any business entity. The chief concern for both individuals and corporations alike has been the role of the State. If either side had their druthers, the State would intervene; it is a win-win situation for government intervention - a role whose legitimate jurisdiction has been left unquestioned. In reality, both sides are at fault. If the legislative proposals lobbied by the content providers are enacted, the FCC will ultimately be allowed to regulate and intervene more than it currently does. It will be setting a foreboding precedent and granting a level of authority that Leviathan has historically been reluctant to relinquish. Similarly, if the legal monopolies protecting service providers continue without deregulation, then the censorship fears imagined by some could become a reality. It is not a matter of having regulatory oversight - checked or unchecked the intervening State apparatus and its subterfuge obfuscate and remove accountability that private property and contracts would otherwise resolve. Tim Swanson is a graduate student at Texas A&M University. He would like to thank DJC|TANSTAAFL and Andy Stedman for their comments and suggestions. Send him mail. Comment on the blog. Notes [1] The research and development efforts at Stanford Research Institute and Xerox PARC should not be understated. While SRI originally operated in part through government financed grants, due to anti-war sentiments throughout its organization and on campus, it later became a non-profit organization divorced from DARPA funding. The totality of PARC was funded privately. In addition, it was through the private commercial efforts of Apple to incorporate many of these ideas into practical everyday computing applications (e.g. Ethernet and the GUI). See also the "Mother of All Demos" as well as this vintage technical documentary covering the original ARPANET design methodology circa 1972. [2] To the chagrin of John Dvorak, see also: Bower, JL & Christensen, CM. "Disruptive Technologies: Catching the Wave." Harvard Business Review. (January-February) 1995: 43-53. [3] While numerous telecom firms have indeed begun rolling out "Triple Play" services, in reality it would be counterproductive and inefficient for them to build their own search engines and web applications. They already specialize in certain areas, none of which involves this particular division of labor. Arguably, their efforts could be as ineffective as the joint national Franco-German affair in creating their own subsidized imitation of Google. [4] While some urban legends claim the original purpose for ARPANET was to allow institutions to communicate with one another in the event of disastrous war, this is a myth. Charles Herzfeld, who was director of ARPA at the time, has noted that it was designed to effectively and efficiently manage and utilize relatively scarce computing resources across the country. [5] The hypocritical irony of the Sherman Anti-Trust Act is that the government only applies the strong-arm tactics when it is in their best interest - they penalize the private industry for acts they themselves perpetuate. See also Dominick Armentano, "Antitrust: The Case for Repeal" and "Antitrust and Monopoly." [6] This monopoly was granted in exchange for the promise of "universal service" (like "universal education"). It has served to subsidize rural and residential customers at the expense of urban and business use. Arguably we might have very different patterns of land use if this subsidy never existed ("the seen and unseen"). And like all rights artificially concocted by the State, it set forth the disingenuous precedent that everyone has an invented right to service regardless of location - which was taxing enough in the days of POTS let alone broadband. [7] While some vary by degree, without exception, regardless as to the political party in control of Congress or White House, FCC commissioners are always pro-State - less government is still government intervention. See also: "Now On The Auction Block" and "The Baptists Are The Bootleggers." [8] Speaking of trees, in 1958, Leonard Read detailed the complex processes of pencil construction. From chopping down the cedar trees and transporting them to mills, to mining graphite and refining it to certain grades; to locating and squeezing rubber into the familiar cylindrical shape, to identifying and applying the exterior color. No one entity orchestrated the plethora of variables involved in each meticulous step from beginning to end; from excavating Earthen elements to placement on the store shelf. Rather it was through the independent entrepreneurial actions of the market that coordinated the supply and demand through prices - not a federal commission. See: I, Pencil. [9] While somewhat tangential, in the early 1970s Libyan Colonel Muammar Qaddafi nationalized oilfields owned by foreign firms. The Hunt family is historically seen as "sacrificial lambs" due to resisting theft and extortion imposed from his brand of socialism. [10] Some techno-pundits point to South Korea as a modern success story. While cities such as Seoul may indeed be more wired, with larger capacity connections, what is glossed over or ignored entirely is how this was achieved. In a word: subsidies. The South Korean government took tax revenues and redistributed the wealth - at least $24 billion worth - to broadband endeavors. In their mind, the ends justified the means. [11] With land-line Internet connections today, firms have the ability to add near-limitless bandwidth without little FCC oversight. As Declan McCullagh has pointed out, if net neutrality as enshrined by individuals like Doc Searls is legislated, the FCC would gain the ability to install, monitor and otherwise control the network. See also this collection of op-eds and editorials from the National Journal's Policy Council. [12] For instance, the government's anti-spam solution, enacted through legislation has failed by nearly all objective measurements. The management of top-level domains through ICANN, whom is granted the monopoly by the Department of Commerce, has been criticized due to seemingly vague governing procedures - there is a disconnect between its central mission, to bring about more TLD space, and its relatively glacial pace in doing so (see the cases of .xxx and .web) - and non-compete bids with Verisign. [13] See also, Thomas DiLorenzo: Why Socialism Causes Pollution. [14] Among other analogies, a toll-road has been used to negatively describe the throttling mechanism the telecom companies might employ. While this is possible and even plausible, it is risky from a PR stand point. They would not just punish the provider who does not pay them off; they would also alienate the end user who wants content that does not have favored status - and those are customers too. In the end however, it is still their network and their property to use as they wish. [15] For a good overview see: "Case 7.1: Variable Ticket Pricing, Should the Minnesota Twins Catch the Wave?" The Business of Sports: Text and Cases on Strategy and Management. Stanford University Graduate School of Business. 2001, 304-313. Ludwig von Mises: "Nothing could by more mistaken than the now fashionable attempt to apply the methods and concepts of the natural sciences to the solution of social problems." - Omnipotent Government -- ----------------- R. A. Hettinga <mailto: rah(a)ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire' _______________________________________________ Clips mailing list Clips(a)philodox.com http://www.philodox.com/mailman/listinfo/clips --- end forwarded text -- ----------------- R. A. Hettinga <mailto: rah(a)ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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[Clips] FCC approves Net-wiretapping taxes
by R.A. Hettinga 04 May '06

04 May '06

--- begin forwarded text Delivered-To: rah(a)shipwright.com Delivered-To: clips(a)philodox.com Date: Thu, 4 May 2006 16:26:22 -0400 To: Philodox Clips List <clips(a)philodox.com> From: "R.A. Hettinga" <rah(a)shipwright.com> Subject: [Clips] FCC approves Net-wiretapping taxes Reply-To: rah(a)philodox.com Sender: clips-bounces(a)philodox.com <http://news.com.com/2102-1028_3-6067971.html?tag=st.util.print> CNET News FCC approves Net-wiretapping taxes By Declan McCullagh http://news.com.com/FCC+approves+Net-wiretapping+taxes/2100-1028_3-6067971.… Story last modified Wed May 03 13:16:56 PDT 2006 WASHINGTON--Broadband providers and Internet phone companies will have to pick up the tab for the cost of building in mandatory wiretap access for police surveillance, federal regulators ruled Wednesday. The Federal Communications Commission voted unanimously to levy what likely will amount to wiretapping taxes on companies, municipalities and universities, saying it would create an incentive for them to keep costs down and that it was necessary to fight the war on terror. Universities have estimated their cost to be about $7 billion. "The first obligation is...the safety of the people," said FCC Commissioner Michael Copps, a Democrat. "This commission supports efforts to protect the public safety and homeland security of the United States and its people." Federal police agencies have spent years lobbying for mandatory backdoors for easy surveillance, saying "criminals, terrorists and spies" could cloak their Internet communications with impunity unless centralized wiretapping hubs become mandatory. Last year, the FCC set a deadline of May 14, 2007, for compliance. But universities, libraries and some technology companies have filed suit against the agency, and arguments before a federal court are scheduled for Friday. "We're going to have a lot of fights over cost reimbursement," Al Gidari, a partner at the law firm of Perkins Coie, who is co-counsel in the lawsuit, said in an interview after the vote. "It continues the lunacy of their prior order and confirms they've learned nothing from what's been filed" in the lawsuit, he said. The original 1994 law, called the Communications Assistance for Law Enforcement Act, or CALEA, authorized $500 million to pay telecommunications carriers for the cost of upgrading their networks to facilitate wiretapping. Some broadband and voice over Internet Protocol (VoIP) providers had hoped that they'd be reimbursed as well. Jonathan Askin, general counsel of Pulver.com, likened Wednesday's vote to earlier FCC rules extending 911 regulations to VoIP. "It essentially imposed a mandate on the industry without giving the industry the necessary support to abide by the rules--and the same thing seems to be happening here," Askin said. Even without the CALEA regulations, police have the legal authority to conduct Internet wiretaps--that's precisely what the FBI's Carnivore system was designed to do. Still, the FBI has argued, the need for "standardized broadband intercept capabilities is especially urgent in light of today's heightened threats to homeland security and the ongoing tendency of criminals to use the most clandestine modes of communication." The American Council on Education, which represents 1,800 colleges and universities, estimates that the costs of CALEA compliance could total roughly $7 billion for the entire higher-education community, or a tuition hike of $450 for every student in the nation. Documents filed in the lawsuit challenging the FCC's rules put the cost at hundreds of dollars per student. But during Wednesday's vote, commissioners dismissed those concerns as unfounded. "I am not persuaded merely by largely speculative allegations that the financial burden on the higher-education community could total billions of dollars," said FCC Commissioner Deborah Taylor Tate, a Republican. The FCC's initial ruling last fall had left open the question of whether broadband and VoIP providers would be reimbursed for rewiring their networks and upgrading equipment to comply with CALEA. Another open question is what portion of a university's or library's network must be rendered wiretap-friendly. One possibility is that only the pipe (or pipes) connecting a school with the rest of the Internet must be made CALEA-compliant. Another is that the entire network would be covered. The FCC adopted its second order on Wednesday but released only a two-page summary, which didn't offer much clarity. In its initial ruling last year, the FCC said only that it had reached "no conclusions" about exactly what universities and libraries would have to do, prompting a flurry of comments filed with the agency and the federal lawsuit. (Plaintiffs in the lawsuit include Sun Microsystems, the American Civil Liberties Union, the Center for Democracy and Technology, the American Library Association, the American Council on Education and VoIP firm Pulver.com.) Commissioner Copps acknowledged that there is "still some clarity to be provided" for library and university network operators, but he suggested that additional clarity would not be forthcoming from the FCC. Instead, "all those agencies and offices of government who are involved in CALEA implementation should be working together to provide clarity there to avoid confusion and possibly expenses for these institutions," Copps said. At the Computers, Freedom and Privacy conference here Wednesday, John Morris of the Center for Democracy and Technology said libraries and universities are still left with more questions than answers. "There's some serious uncertainty about how it will really play out for universities," Morris said. Even if the FCC technically calls for Internet interception at the edge of a campus network, that likely won't be enough to satisfy law enforcement demands for all of an individual student's network traffic, including on-campus activities, he added. Injecting additional uncertainty is whether the FCC's action is legal. It represents what critics call an unreasonable extension of CALEA--which was designed to address telephone features such as three-way calling and call waiting--to the Internet. A House of Representatives committee report (click here for PDF) prepared in October 1994 emphatically says CALEA's requirements "do not apply to information services such as electronic-mail services; or online services such as CompuServe, Prodigy, America Online or Mead Data (Central); or to Internet service providers." When Congress was debating CALEA, then-FBI Director Louis Freeh reassured nervous senators that the law would be limited to telephone calls. "So what we are looking for is strictly telephone--what is said over a telephone?" Sen. Larry Pressler, R-S.D., asked during one hearing. Freeh replied: "That is the way I understand it. Yes, sir." Two of the four FCC commissioners who voted for the initial CALEA ruling last fall acknowledged that the federal government was on shaky legal ground. The FCC's regulation is based on arguing that the law's definition of "telecommunications carrier" applies to broadband and VoIP providers. Then-FCC Commissioner Kathleen Abernathy, a Republican, said, "Because litigation is as inevitable as death and taxes, and because some might not read the statute to permit the extension of CALEA to the broadband Internet access and VoIP services at issue here, I have stated my concern that an approach like the one we adopt today is not without legal risk." The FCC is no stranger to having its decisions rejected by a federal appeals court that can be hostile to what it views as regulatory overreaching. Last May, for instance, the FCC's "broadcast flag" was unceremoniously tossed out by the U.S. Court of Appeals for the D.C. Circuit. -- ----------------- R. A. Hettinga <mailto: rah(a)ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire' _______________________________________________ Clips mailing list Clips(a)philodox.com http://www.philodox.com/mailman/listinfo/clips --- end forwarded text -- ----------------- R. A. Hettinga <mailto: rah(a)ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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