phrack/issue35/13.txt

                               == Phrack Inc. ==

                 Volume Three, Issue Thirty-five, File 13 of 13

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              PWN                                             PWN
              PWN              Phrack World News              PWN
              PWN                                             PWN
              PWN           Issue XXXV / Part Four            PWN
              PWN                                             PWN
              PWN            Compiled by Dispater             PWN
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The Media Monopoly
~~~~~~~~~~~~~~~~~
by Dispater

     As we all know, more technology means more and more legal questions.  It
is important not only to understand the economic but social impacts of the
recent "Telco-TV" issue.  I think technologically the idea of transmitting
audio/video signals through phiber optic line is fascinating and a great
technological triumph.  However, how will society benefit by having an even
smaller number of owners controlling the media?  There is already a media
dynasty due to policies established in Ronald Reagan's presidency.

     Today almost all of the media is controlled by 18 global corporations.
That is down from 23 in 1990 and down from 50 corporations in 1983.  The trend
is very scary.  In the United States there are around 25,000 different media
voices.  This includes newspapers, book publishers, television stations, radio
stations, movie studios, and magazines.  However we should not kid ourselves
into thinking that there are 25,000 different owners.  Is it fair to that 23
companies have so much power over our lives?  It is incredibly dangerous to
allow this trend to continue.  We must stop this trend and "bust up" the media
as it was done in the pre-Reagan era.

    If you are concerned about this issue I strongly urge you to read "The
Media Monopoly" by Ben Bagdickian.  It is published by Beacon Press and runs
around 300 pages in length.
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Phone Companies Could Transmit TV Under FCC Plan               October 25, 1991
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
by Edmund L. Andrews (The New York Times)

     In a surprising and controversial move to promote cable television
competition, the Federal Communications Commission proposed today that local
telephone companies be allowed to package and transmit television programming.

      The proposed rules, which were unanimously endorsed and are likely to be
adopted within a year, would expose cable companies to the most threatening
competition yet.  But they could benefit cable television consumers, many of
whom have seen their bills double and triple in recent years.

      The cable industry vowed to fight the proposals and threatened to
challenge the rules in court if they are adopted.  Telephone companies, eager
to enter a lucrative new business, applauded.

     "Today's action will create competition and offer consumers more choices,"
said James R. Young, vice-president of regulatory and industry relations at the
Bell Atlantic Corporation.  "Let's hope it's a beginning to the end of turf
wars."

     In essence, the commission recommended that telephone companies be allowed
to offer "video dial tone" over telephone lines that would carry programming
produced by outside companies.  Consumers could view whatever programs they
pleased and would be charged accordingly.

     Initially, telephone companies would serve primarily as a pipeline, not
producing the programs.  But the commission said telephone companies should
also be allowed to organize and package video services, as long as they make
their networks available to all programmers.  The commission also opened an
inquiry on whether to let telephone companies produce programs.

     The idea of allowing so-called video dial tone service has long been a
favorite of the FCC's chairman, Alfred C. Sikes.  Congress, which is weighing
regulatory legislation to rein in cable process has shied away from the issue.
Today's action makes it more likely that lawmakers will have to reconsider the
role of telephone companies in television.

     Before cable companies would feel much impact from today's FCC proposal,
however, most telephone companies would have to spend billions of dollars to
install new fiber-optic transmission lines and switching equipment that could
carry large volumes of television material.  Analysts have estimated that the
cost of converting every home in the country to a fiber-optic line would be
$100 billion to $200 billion and that it would take at least five years.

     Most large telephone companies, including all of the regional Bell
companies, already plan to replace their copper wires with fiber over the next
two decades.  The immense business opportunity posed by the $18 billion cable
television market is likely to accelerate those plans.

     High-capacity communications lines that reach every home in America could
radically alter the distribution of entertainment and enable people on home
computers to tap distant libraries and obtain information in seconds.

     "Both program providers and consumers would have chances they don't have
today, without the bottlenecks provided by cable companies and without the
bottlenecks of broadcasting," said Richard Firestone, chief of the FCC's common
carrier bureau.

     The move was immediately attacked by the National Cable Television
Association, which threatened to challenge any new rules in court.

     "Until and unless the telco's monopoly in voice telephone is ended, no
level of Government safeguards against cross-subsidies will be effective," said
James P. Mahoney, president of the cable association.

     The most controversial issue, which the FCC raised for discussion without
recommendation, is whether telephone companies should be allowed to produce
programming, a much bigger business than transmission.  Many Bush
Administration officials favor such a move, but television broadcasters and
producers bitterly oppose it.  Officials noted that such a shift would require
changes in the Cable Television Act of 1984.

     "Among the top two or three concerns of ever cable operator has always
been head-to-head competition against local telephone companies," said John
Mansell, a senior analyst at Paul Kagan Associates, a marketing-research firm
that monitors the cable industry.

     For telephone companies, the move could be a windfall.  Steven R.  Sieck,
vice president of Link Resources Inc., a market-research firm in New York,
said, "It's by far the largest market opportunity among the whole collection of
information services" for telephone companies.

     It remains unclear, however, whether the new rules will survive in court.
The Cable Television Act of 1984 bars a telephone company from owning a cable
television franchise in the same market.  The FCC ruled today, however, that
the law does not prevent a local telephone company from transmitting programs
produced by other companies and that it does not bar long-distance carriers in
any way.

     The Bell companies have lobbied strongly for legislation that would allow
them to enter the cable business, and several companies have invested in
European cable franchises.  In addition, Pacific Telesis Group, which provides
local phone service in California, already holds an option to buy a controlling
interest in a Chicago cable franchise, which could be [sic] permissible since
it is outside the company's telephone area.

     The commission also handed down a ruling that could give telephone
companies an important price advantage in future competition with cable
operators and could prompt protests from local governments, ruling that neither
a telephone company nor a video programmer needs to pay franchise fees to local
governments.

     Under the cable act, by contrast, local governments can charge cable
operators a franchise fee as high as five per cent of revenues.

     Explaining today's ruling, Mr. Sikes said, "We have segregation laws, and
these segregation laws should be ended."  He added that some cable companies
were already installing optical fibers in their own networks, and that some
were exploring the option of using their networks to offer telephone service.

     The proposals mark the second major change in longstanding restrictions on
the telephone companies' ability to move into new services.  Less than three
weeks ago, a Federal appeals court cleared the way for the regional Bell
companies to begin providing information services, like news, stock and sports
tables, immediately.

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Phiber Optic or Twisted Pair?
~~~~~~~~~~~~~~~~~~~~~~~~~~~
by John J. Keller (Wall Street Journal)                        October 28, 1991
                
     Expanding the nation's telephone network into a vast television broadcast
system is going to cost tens of billions of dollars and won't be finished
before the end of the decade, say executives at some of the largest phone
companies.

     But the scale of the project isn't stopping the phone giants, such as GTE
Corp., Ameritech, Bell Atlantic Corp., and Pacific Telesis Group, from
methodically exploring how to implement such a system.

     The Baby Bells and GTE have spent several million dollars testing new
systems that carry cable TV shows into homes via the phone network.  The phone
companies will spend many million of dollars more before they are satisfied
that they have a service that matches the current voice phone system and tops
today's entrenched cable TV monopolies.

     Last week the phone companies were buoyed by a Federal Communications
Commission plan to support a new technology called video dial tone, that would
put the big phone companies into direct competition with local cable-television
monopolies.

     Phone subscribers could use such a system to dial up and order video
programs from an entertainment company through the same wire that connects a
typical phone call.  More important, allowing the phone companies could
generate enough traffic to fund "broadband" upper-capacity information highways
that could someday carry TV, medical information, and even FM stereo channels
into a home through a single wire, say the executives.

     However, big hurdles remain.  The FCC hasn't decided whether to let the
phone companies participate in the programming end of the cable TV business.
The phone companies argue that's a financial necessity, because cable TV
companies would be reluctant to share the programs they now support and run
them over a rival's network.  In addition, the 1984 Cable TV Act, which
prohibits phone company participation in the cable business, would have to be
rewritten.

     "We're encouraged by the FCC action, but it's not as complete a step as
there needs to be made," said Larry J. Sparrow, vice president of regulatory
and governmental affairs at GTE Telephone Operations, Irvine, Texas.  Adds
Kathleen Ahren, Nynex Corp.'s director of federal regulatory policy: "For us to
build facilities without anyone to use them would be irresponsible...
programming is essential."

     There are also technical issues such as whether TV service to the home
should be provided through a cable-TV-like coaxial cable or advanced fiber-
optic line.  Either would require pulling out existing "twisted pair" wiring
that now binds the phones in homes and most small businesses to the local phone
network.  Moreover, the phone industry must still hammer out technical
standards for melding video transmission, which requires tremendous
transmission capacity, with voice traffic, which uses far less.

     The system that is finally built will require mountains of capital to
transform the existing phone network into a high-capacity phone network of
systems that pump signals digitally through fiber-optic transmission lines,
which are glass wires.  "We've seen figures that it would cost about $250
billion nationwide," says James R. Young, vice president of regulatory and
industry relations at Bell Atlantic.  Adds Ms. Ahern, "I don't think our plans
would have us doing this in less than 20 years and if we do you're talking
billions of dollars."

     Pacific Bell, which spends about $1 billion a year on new network
equipment, would see that annual tab jump by two to three times in the first
several years of constructing a broadband network, says Michael Bloom, customer
premise, broadband applications at the San Francisco-based unit of Pacific
Telesis Group.  But he notices that as equipment purchases grow and the
technology is perfected the annual cost should drop down to current levels
after about four years.

     PacBell, like most other phone companies, already has installed fiber-
optic "trunking" lines to carry bulk traffic between its switching centers.
 It has also begun replacing copper facilities in some neighborhoods, running
optical fibers to the pedestal at the curb and then connecting to the regular
phone home wires.  Someday these lines will carry cable TV, but for now
regulation restricts the phone company to voice and data transmission, says Mr.
Bloom.

     Someday this will change, says the FCC, which envisions a service where
phone customers would turn on their TVs and find a listing of TV shows, movies,
news and other programs, supplied by the phone company and other programmers
and accessible via remote control.

     Several phone companies are already testing such services.  In Cerritos,
Calif., GTE has built an elaborate network of fiber-optic and coaxial cables
lines and advanced switching systems to deliver TV services to several thousand
customers.  One service, called "Main Street," allows a customer with a remote
control to shop via TV, check a bank account and even seek information on
colleges in the US.  Another service, dubbed "Center Screen," lets 3,900
residential customers call for a movie or a TV show by dialling a special
number.  A third service lets some customers talk to one another through a
videophone in the house.

     "We've found [from the Cerritos tests] that our customers like full-motion
video and not still pictures," which is all that's possible over today's
regular phone lines, Mr. Sparrow says.

     That's because regular conversation travels over phone lines at the rate
of 64,000 bits a second.  By contract, "reasonable quality" video, such as the
kind that appears from a VCR tape, requires transmission capacity of at least
1.3 megabits to 1.5 megabits a second.  High quality video will take capacity
of 45 megabits to 90 megabits a second, he says.  A megabit equals 1 million
bits.

     To save money and get as much capacity out of the existing copper-based
systems, Bell Communications Research, the Baby Bell's research arm, has
developed "video compression" technology which uses existing copper wire to
deliver TV to the home.  With video compression, a microprocessor squashes
video signals so they can be sent through a regular phone line at the rate of
1.5 megabits a second.  The little chip, which is in an electronic box attached
to the phone line, looks at an incoming video signal, and filters out the parts
of the moving image that are redundant.  The chip codes and sends the parts of
the signal that are different through the phone line to a receiving box, which
decodes and reconstructs the image before projecting it onto the TV screen.

     The cable companies hope to retaliate by providing phone service through
their cable networks.  They are funding research to develop switching systems
that can pass phone calls from one cable subscriber to another and out to
customers using the regular phone system.

     But the blood between the industries isn't all bad.  Ameritech's Indiana
Bell subsidiary and Cardinal Communications, an Indiana cable TV operator, are
testing a fiber distribution system made by Broadband Technologies Inc, of
Raleigh, NC.  The system is being used to route video and phone signals over
backbone fiber-optic lines and finally through coaxial and twisted pair lines
attached to homes in Tipton Lake, a Columbus, Ind. residential development.
Bell Atlantic is negotiating with Loudon Cablevision, a cable TV company in
Loudon County, Va., to test the transmission of TV signals through phone
company lines to 5,000-6,000 homes in The Cascades, a local housing
development.

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Baby Bells as Big Brother                                      November 2, 1991
~~~~~~~~~~~~~~~~~~~~~~~~
>From The New York Times

     Two official decisions in October, one liberating and the other
frightening, may shape telecommunications -- and America -- for decades.  The
liberating decision, by the Federal Communications Commission, proposes to
allow the seven regional telephone companies to transmit TV programs.

     If implemented, that proposal for video-by-phone would free families to
tell cable operators, if they misbehave, to get lost.

     The frightening decision, by a federal appeals court, unblocked the same
seven "Baby Bell" companies from owning electronic yellow pages, video shopping
and other information services.

     Unless Congress intervenes, this decision will allow the Baby Bells to
exploit their monopolistic stranglehold over residential phone lines and
dictate what information reaches nearly every home.  The same principle ought
to govern in both situations: democracy needs diversity.

     Technological advances have brought the nation to a regulatory crossroad.
A single information pipeline -- perhaps fiber-optic cable, perhaps enhanced
coaxial or copper wire -- may soon pour an unimaginable array of phone, video
and data communications into homes.  Whoever controls the pipeline controls
access to American minds.

     The best protection against Big Brother is to separate control of the
pipeline from the information.  That could be easily enforced by requiring that
pipeline owners, like the Baby Bells, serve only as common carriers and lease
pipeline space to information providers on a non-discriminatory basis.

     Common carrier status is what the FCC proposal would achieve for video
services but what the appeals court decision would foreclose for information
services.

     Congress seems unwilling to impose common carrier status. But Rep. Jim
Cooper, D-Tenn., offers a second-best remedy.  As long as the Baby Bells retain
monopoly control over local phone service, he would allow each to sell
information only outside its own region.  His bill also offers stringent
safeguards against anti-competitive behavior.
   
     Yet the bill's provisions aren't as safe as common carrier status.  The
Baby Bells have frequently violated regulations; rules alone are unlikely to
stop them from subsidizing forays into information services with funds
extracted from captive rate-payers.

     Contrary to their claims, the Baby Bells have no special abilities to
provide electronic services.  If they could sell video shopping for a profit,
so could hundreds of other companies -- not one of which has the power to
intimidate ratepayers because not one has privileged access to their homes.

     Nor, as the Baby Bells claim, do they need to produce their own
information services in order to fill capacity on fiber-optic cables they might
lay.

     The strongest argument the Baby Bells offer is technological.  Only a
single company, they contend, will be able to marry pipeline and information.
But there's no proof of this speculation and besides, there are better ways to
manage the problem.

     The Cooper bill provides plausible protection against monopolistic Baby
Bells, giving them ample room to compete but limited room to exploit.

     Newspapers, including The New York Times Co., support the bill for
competitive commercial reasons. But there is a much more important reason for
the public to favor, and Congress to adopt, the Cooper bill: to protect the
free, diverse flow of information on which democracy depends.

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Don't Baby the Bells                                          November 10, 1991
~~~~~~~~~~~~~~~~~~~
>From The New York Times

     Although the Bell companies are opposed by numerous groups, including the
Consumer Federation of America, the cable television industry and existing
providers of electronic information services, it is the newspapers that are its
biggest opponents.

     The publishers argue that the telephone companies can compete unfairly by
subsidizing their services with money from their regulated telephone businesses
and by imposing technical obstacles to competing information suppliers.

     But one of their biggest fears is simply that the telephone companies
could attract a large proportion of the classified advertising, a mainstay for
newspapers, by offering cheap and easy-to-use electronic bulletin boards.

     The newspapers are pushing Congress to adopt a bill introduced by
Representative Jim Cooper, Democrat of Tennessee, which would not allow a Bell
company to offer information services unless those services are already
available to at least 50 percent of the people in the area over an alternative
network.

     As a practical matter, the bill would reinstate the information-service
ban for all Bell companies for years, because of the difficulty in building an
alternative network that reaches most customers.

     To defend their position as more than a simple bid to keep out
competition, the newspaper association has crafted a blunt advertising campaign
around the slogan "Don't Baby the Bells."

     In one ad, the association warns that the telephone companies could amass
as much private information on customers as the Internal Revenue Service.

     But while many members of Congress are worried about giving new powers to
the Bell companies, the Cooper bill has thus far attracted only 24 sponsors,
and most experts doubt the bill can muster enough support to pass even the
House.

     Meanwhile, the Bush administration strongly favors lifting the prohibition
on information services and would probably move to veto a bill that kept it in
place.  The upshot is that newspaper publishers are in a difficult position.

     A stalemate in Congress amounts to a complete victory for the Bell
companies, because court decisions have already given them precisely what they
want.

     In Congress, however, aides to leading lawmakers say they are waiting in
part to see how much popular and political strength each side can muster.  "We
want them to show us what they can bring," one staff member said about the
publishers.

     One lobbyist allied with the publishers said opponents of the Bell
companies were essentially trying to build up a bargaining position. "You could
see this as the beginning of a minuet," he said.  "The question is whether they
will ever get into the middle of the floor and dance."
_______________________________________________________________________________