BREAKING: Weev sentenced to 41 months followed by three years of supervised release.

— Tim Pool (@Timcast) March 18, 2013

Just moments before sentencing, Auernheimer (also known as Weev), was cuffed by court officers in a struggle over his tablet and phone. Auernheimer, who was not permitted to use computers with keyboards, was asked to surrender his devices, but tried to hand them to his lawyer.

“It looks like Andew got slammed into a desk by federal agents while trying to hand his phone to his lawyer after the court asked for his phone,” his publicist told me via email.

Auernheimer is, by all accounts, a controversial figure, which became abundantly clear in a Reddit AMA (ask me anything) conducted yesterday.

He’s a founder of GNAA (Gay N*iggers Association of America), a group that probably has no actual gay or black members and seems, much as many other online trolling groups, to be devoted to causing as much online damage and destruction as possible. He’s also a member of Goatse Security, a grey-hat organization that focuses on finding and exploiting computer and website vulnerabilities. And he has done things online that most of us would consider morally reprehensible and ugly, if not precisely illegal, such as taking a leading role in the massive online harassment that caused usability expert Kathy Sierra to abandon the Internet.

But the specific charges that he was convicted of and has now been sentenced for seem tame by comparison. Essentially, he queried a public server with exactly the same kind of request your browser sent to the servers that run this website, aggregated the results, and sent them to a news agency, Gawker.

Auernheimer got a harder sentence than the #Steubenville rapists. One journalist equated the prosecution of hackers to the Red Scare.

— Tim Pool (@Timcast) March 18, 2013

The charges were based on the same law that federal prosecutors used against Matthew Keys, Aaron Swartz, and Stephen Watt: the Computer Fraud and Abuse Act, which opponents have decried as vague and Swartz’s lawyers have said was misused by federal prosecutors to overly-aggressively pursue Swartz, who ended up committing suicide.

Auernheimer knows he is not exactly a lovable figure.

“I’m a nutjob from Arkansas,” he told me yesterday. “That’s any sane person’s perspective.”

But the question today is whether his exact actions in the AT&T case were illegal. And if they were, how many other actions of ordinary Americans are now being criminalized?

Auernheimer told me yesterday that he already plans to appeal the sentence, and the EFF is helping with the appeal.

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Tomorrow, he’s likely going to jail.

“It’s a fucking ludicrous charge,” Auernheimer told me this morning from New Jersey. “The FBI has tried to frame me for terrorism five times, and by their own admission they’ve been surveilling me since I was 15 years old.”

Update: Auernheimer was sentenced to 3 years in jail and $73,000 in fines

But tomorrow he expects to go to jail. In preparation, he and supporters have rented a 10,000 square foot hall where they’ll party the night away in perhaps his last taste of freedom for 10 years.

If he does go to jail, it’ll be the latest chapter in a long list of federal prosecutions of computer “crimes” by hackers who are forcing mainstream society to reconsider what freedom of speech means online, what is an appropriate response to a corporation’s poor security, and what kinds of access constitute crimes. That list includes Aaron Swartz, who committed suicide after what many have said was DOJ misconduct.

The story starts with a boneheaded AT&T decision.

During the summer of 2010, Auernheimer and co-defendant Danile Spitler discovered that by querying AT&T’s iPad servers with a string of numbers that matched subscribers’ SIM card identifiers, AT&T’s servers would send back the unencrypted, unprotected email address of the AT&T customer, the iPad owner. AT&T had a massive security design flaw, which, as it admitted in Auernheimer’s one-week trial, was intentional: for subscriber convenience. After running the script to capture 114,000 email addresses of AT&T iPad subscribers, Auernheimer sent a list of the email addresses to Gawker to highlight the security hole. Gawker then printed them in redacted form.

“If you buy an Apple product, you have a right to know that Apple partners could compromise your privacy,” Auernheimer told me, explaining why he sent the email addresses. “And that they take six months to patch security issues.”

So there’s obviously a security issue. And there’s obviously a privacy issue. But where’s the crime?

“We sent Get requests to a public API,” Auernheimer says. “They charged me with unauthorized access to a computerized device … and identity theft, which is a possession charge … if you walk down a street and write down physical addresses, you’re stealing identifiers, and you’re an identify thief.”

If sending Get requests is a crime, we are all criminals.

You could be charged with unauthorized access to a computerized device, for instance, simply because you clicked on the link that brought you to this article. Oh, and Google, one of the most successful corporations in the world, is the root of all evil. A Get request is simply a note from a browser computer code asking for a resource. You issue thousands of them every day all by yourself. Google issues billions.

Whether the receiving server responds to that request in any way, shape, or form is entirely at the discretion of the developers and system administrators who control that server.

The CFAA does not define the phrase “unauthorized access,” so according to Auernheimer, the government essentially told the jury that his access to the server was unauthorized because they said it was. Which, if true, means that whether you commit a legal act or an illegal act is at the discretion of anyone who runs a webserver, who can change their mind at any time without you knowing.

Good luck following the straight and narrow.

After a one-week trial, a jury found Auernheimer guilty on November 20 after just a few hours of debate. Auernheimer told me that his friend overheard “vicious arguing and screaming” in the jury room, so there was some serious debate, but there was a potential reason to be fast, and maybe even hasty.

“The trial was right before Thanksgiving … I think people wanted to get the hell out of there and get to Thanksgiving,” Auernheimer said.

Tonight he’s awaiting sentencing, which could be up to 10 years in jail and up to $500,000 in fines. And he’s not too hopeful that the judge will go easy on him.

“I’m probably going to prison, and they may take me into custody immediately,” Auernheimer told me. “But I have an excellent chance on appeal … any sane examination of the CFAA at this point is going to realize that it criminalizes all web access.”

The Electronic Frontier Foundation has already agreed to help him with that appeal.

One thing that’s almost too good is AT&T’s mobile share plans, in which a subscriber can buy a single data plan for multiple devices, such as a laptop, phone, and tablet.

The plans are superpopular, AT&T said, with 10 percent of its customers, or 6.6 million people, having signed up. Users average three devices each, and a quarter of them have purchased plans with 10GB/month or higher, all of which add up to a much higher uptake than AT&T anticipated.

That was a bit of a problem for the company, as it reported, saying that “data revenue growth was slowed somewhat by the growth of Mobile Share plans.” In addition, sales of tethering plans and mobile Internet devices such as MiFi’s were also down due to the share plans.

Which is probably more shocking to cellular subscribers than anything else: a massive telecom actually did something pretty customer-friendly, even at the cost of some extra revenue.

AT&T did not break out how much it lost due to sharing plans. Nor did it speculate on how many customers the carrier might have lost if it did not offer the customer-friendly option.

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July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Verizon is the king of fast cellular networks in America, or so it says. And it’s hard to argue with the company’s numbers.

Verizon reported its fourth-quarter 2012 earnings today, revealing that 63 percent of its smartphone sales were Apple iPhones. But chief financial officer Fran Shammo made a special point of stressing the carrier’s fast 4G LTE network.

“Customer adoption of 4G LTE is really gaining momentum,” Shammo said on the company’s earnings call. “Our total 4G LTE devices sales reached 7.3 million [units] … up 60 percent from last quarter.”

Almost all of the Android phones Verizon sold were 4G LTE capable, and 65 percent of the entire 9.8 million smartphones sold were 4G LTE. (The non-Android numbers are down slight due to sales of Apple’s older iPhone models, which do not support LTE.)

Source: Verizon

Verizon devices/4G LTE coverage

But it’s not just the devices, of course. It’s the network that matters.

“Almost half of our data traffic is on the 4G LTE network,” Shammo said, adding that Verizon believes its 4G network is five times more efficient than 3G. “We are by far the market leader, with 476 markets covering 89% of the US population.”

The company will no long be adding any capacity to its 3G network; instead it is continuing to expand 4G coverage. Verizon expects to have full coverage of the U.S. by mid-year 2013.

Chief competitor AT&T’s LTE ambitions had a slow start and have generally not compared favorably with Verizon. However, late last year AT&T did manage to acquire some additional spectrum that should help it expand LTE more rapidly.

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July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Apparently, information does want to be free. And phone calls, and text messages. At least, if you’re a subscriber to FreedomPop, “America’s free wireless Internet company.”

FreedomPop, which already offers free wireless Internet service, is announcing a partnership with TextPlus today that will enable it to also offer free voice calls and free texts.

“We’re allowing consumers to cut the carrier,” CEO Steve Stokols told me. “And basically screw AT&T and Verizon.”

Starting in the first quarter of this year, TextPlus’ free calls and texts will be integrated into FreedomPop’s services, so existing free wireless customers will have the ability to go 100 percent free, Stokols said.

Voice calls will run over data channels, Stokols said, using the FreedomPop app for Android and iOS, as will text messages. Users simply set up a new number — any number that is available in any area code — or port their existing number over. No new SIM card is needed.

And coverage?

“Today we’re in the top 80 markets,” Stokol said. “That’s 120 million people. By the third quarter, we’ll have coverage for 240 million people.”

FreedomPop makes money when users add premium services on top of its basic, free services. Currently 30 percent of its users purchase some form of upgrade. The company uses Clearwire’s WiMAX network to provide 4G service. And according to Stokol, it’s growing fast through viral marketing.

“We’re averaging about 10-11 invites per user,” Stokol told me today. “So some of the key metrics that were speculative at our launch are now proving themselves.”

Ten to 11 invites per user is pretty spectacular, and should result in a very sweet viral coefficient. In other words, watch your backs, AT&T and Verizon.

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July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

AT&T took a moment to toot its own horn this morning, announcing that it sold more than 10 million smartphones in the last quarter.

And while the company didn’t announce a product-level breakdown, thanks to Kantar Worldpanel data released last week we can guesstimate that this translates to 7.2 million iPhones, 2.2 million Android phones, and some small number of BlackBerry and Windows phones. Those numbers are interesting, as Apple’s Q1 2013 financials are coming in just a couple of weeks, with estimates as high as 55 million iPhones sold.

“During the quarter, we averaged more than 110,000 smartphone sales a day as customers flocked to our leading portfolio of the latest Android, Apple, and Windows devices,” AT&T President and CEO Ralph de la Vega said in a statement.

Significantly, de la Vega did not mention BlackBerry in his statement. Windows Phone has become the third contender in the U.S. mobile market — because, according to that same Kantar data, Microsoft surged into third place with 2.7 percent of the U.S market, while RIM free-fell from seven percent the previous quarter to just 1.4 percent in the Christmas quarter.

The numbers are big, there’s no question.

AT&T’s huge quarter undoubtedly helped Apple push above 50 percent market share for the first time ever in the U.S. market, as the massive mobile carrier was, of course, the first (and for years the only) iPhone-carrying telecom, giving it an advantage in high-end wireless customers that continues to this day. And, perhaps, something of a bias toward iPhone.

Humility is, of course, a key AT&T virtue, which explains the next part of de la Vega’s statement:

“Combine that with the nation’s largest 4G network and lightning-fast LTE network that now reaches more than 170 million people and you’ll understand why customers continue to choose AT&T in record numbers.”

AT&T’s full financial results for the quarter will be released the same day as Apple’s: January 24.

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In his new book The Fine Print, Pulitzer Prize-winning journalist David Cay Johnston tell us, among other things, what’s wrong with the Internet in America. The answer is fairly depressing: It’s too slow, too expensive, and … too controlled by a duopoly of AT&T and Verizon.

Japan has fiberoptic Internet available to many homes with speeds of 100 or 200 megabits per second, and, believe it or not, an available 1 gigabit per second service. (At least one place in the U.S, Chattanooga, Tenn., can get an equivalent speed.) South Korea is still the king of Internet speeds, however, with an average 17.5 megabits per second to all homes.

Average speed in the U.S., meanwhile is a measly 5.8 megabits per second — actually a decrease from U.S speeds of 2011, according to Royal Pingdom. It’s the barely visible blue line in the chart below:

Source: Royal Pingdom

Average global internet connection speeds.

That slower speed comes, unfortunately, at a higher cost than many other countries.

Hong Kong gets 500 megabits per second for $37 a month. Other major international cities, such as Paris and Berlin, get 100 megabits per second for $40. But the same speed in Washington, DC, comes at $105, courtesy of Comcast, and Verizon’s 150 megabits per second service sets New Yorkers back $159.95.

Typically, service providers point to the vast distances of North America as the reason why speeds are slower here. VentureBeat contacted both Verizon and AT&T for comment, but neither have responded (yet).

The question remains for cities as densely packed as New York: Why such high cost for such comparably slow service?

Johnston’s answer is that Americans were better off with Ma Bell’s monopoly. Adjusting for inflation, he says, phone service is 230 percent more expensive than in 1984.

That’s a future even Orwell didn’t anticipate.

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The American taxpayer? She might hate it too.

The Institute for Policy Studies released a report this morning on 26 companies that pay their executives more than the entire corporation pays the U.S. government in taxes. The problem? Tax code structures that encourage high executive pay by allowing deductions for performance-based pay, for one.

The 26 firms, which have 537 foreign subsidiaries in tax havens like Cayman Islands, Bermuda, and Gibraltar, each had an average of more than $1 billion in pre-tax income … and tax benefits averaging $163 million. And IPS estimates the four biggest direct tax subsidies cost taxpayers over $14 billion a year.

AMD paid chief executive Rory P. Read $15.6 million while paying negative $3 million in taxes (if only we all could pay negative taxes). AT&T paid Randall Stephenson $18.7 million while collecting a sweet tax check of negative $420 million. And Google’s new pet, Motorola, must have some good accountants: The company shows up on the list not once but twice.

Motorola Mobility showed up for CEO Sanjay Jha, paying him a whopping $47 million while paying precisely zero, zilch, and nada in U.S. corporate income tax. Of course, the company lost half a billion dollars in 2011: You need talented people to lose that much in just 12 months. And Motorola Solutions — the part of the original Motorola that Google did not buy — tossed Gregory Brown a relatively paltry $29.3 million while paying taxes of just $2 million.

It’s kind of what we said last week: In the income battle between the CEO and you, you’re not winning.

The full list:

Source: IPS

Companies that paid their CEO more than they paid in 2011 taxes

photo credit: Vermin Inc via photo pin cc

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

The U.S. government’s ongoing crusade against insider trading has claimed its latest victim.

Alnoor Ebrahim, a former network consultant for AT&T, admitted on Monday that he fed sensitive information to traders and hedge fund managers, who then used that information to buy and sell stocks, Reuters reports.

Many of the details concerned key metrics like sales numbers, which companies make a point to keep to themselves. With his position at AT&T, Ebrahim was privy to this sort of key, nonpublic information about devices like the Blackberry, iPhone, and others.

Ebrahim worked as a member of expert-network firm Primary Global Research, and from 2008 to 2010 received about $180,000 for the information he provided to traders.

In one recorded call presented during his trial, Ebrahim is heard divulging that AT&T would likely sell 2.2 million iPhones during the fourth quarter of 2009. AT&T says that these numbers were very close to what the company ultimately moved during that time.

Ebrahim pleded guilty to a single count of conspiracy to commit wire and securities fraud, a charge for which he could get a two-year jail sentence.

Unsurprsingly, he also lost his job. “We took this matter very seriously and cooperated fully with the authorities,” an AT&T spokesperson told The Wall Street Journal. “The conduct alleged was clearly against our code of business conduct, and Mr. Ebrahim is no longer an AT&T employee.”

Design is determining the winners in everything mobile. The most successful players are focusing on one thing: How to make products, services, and devices as compelling and delightful as possible – visually, and experientially. MobileBeat 2012, July 10-11 in San Francisco , is assembling the most elite minds to debate how UI/UX is transforming every aspect of the mobile economy, and where the opportunities lie. Register here.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

The digerati pooh-poohed it, but Amazon.com’s advertising-supported Kindle 3G with Special Offers is now the company’s top-selling e-book device.

Amazon made the revelation in its quarterly earnings report Tuesday. The $139 device is $50 cheaper than the comparable Kindle 3G, and costs the same as a Kindle with Wi-Fi connectivity only (and no 3G). The advertisements appear only in screensavers (which appear when the reader is in an idle state) and at the bottom of the home screen, so they don’t interrupt the reading experience.

“Since AT&T agreed to sponsor screensavers, Kindle 3G with Special Offers is now our bestselling Kindle device,” Amazon’s press release said.

As in the past, the company did not release specific details about the number of Kindles sold. Many believe it is the most popular dedicated e-book device on the market today, having zoomed past the earlier Sony Reader, and kicked off a wave of competition including the Barnes & Noble Nook and the Kobo E-Reader.

Related articles

• How Sony blew the chance to make a Kindle killer (venturebeat.com)
• Amazon finally introduces Kindle textbook rentals (venturebeat.com)

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Like the kid who beat you up at the bus stop because he felt bad about being obese, AT&T is a bully because it hates itself. At least that’s how the mobile giant appears in its enormous and unintentionally hilarious FCC filing, its first attempt at trying to convince regulators that acquiring T-Mobile will “promote, not diminish” competition among mobile carriers.

As first reported by Ars Technica, here are a few examples of how AT&T describes itself in an attempt to make it appear like the underdog who’s just trying to make it in the big ol’ mobile world:

• “AT&T’s network-capacity challenges, however, are not just ‘looming’ a few years down the road—they are here today, the product of AT&T’s mobile broadband leadership and its need to support multiple generations of services.”
• “In many markets where T-Mobile USA has spectrum, AT&T’s capacity constraints also prevent it from dedicating enough spectrum to launch LTE, deploy it optimally, or meet expected demand.”
• “From a consumer’s perspective, the capacity constraints confronting these companies, if unaddressed, would translate into more dropped and blocked calls, slower speeds, and access to fewer and less advanced applications.”

And their friend T-Mobile? Surely it is better off?

• “T-Mobile is not an important factor in AT&T’s competitive decision-making.”
• “As a standalone company, however, T-Mobile USA would continue to face substantial commercial and spectrum-related challenges. It confronts increased competition from industry mavericks such as MetroPCS, Leap, and others; its percentage of US subscribers has been falling for nearly two years; and it has no clear path to LTE.”
• “T-Mobile USA, in contrast to others, does not have a differentiated network position. T-Mobile USA has admitted that it suffered from its late transition to a 3G network, and unlike Sprint, which first promoted a 4G network, T-Mobile USA’s HSPA+ launch appears to have been lost among other carriers’ 4G messaging.”
• “AT&T does not believe that T-Mobile USA has a particularly compelling portfolio of smartphone offerings as compared to AT&T, Verizon, and Sprint.”
• “To the extent that T-Mobile USA’s prices are lower than those received by AT&T and Verizon Wireless for otherwise comparable subscribers, T-Mobile USA’s lower prices have not stimulated growth in its share of retail subscribers. This indicates that other aspects of T-Mobile USA’s service are in some way lacking.”

Ouch. Maybe $39 billion will smooth over things between the two of them.

Systems thinking is a broad concept that concerns the process of understanding how things influence one another other within a whole, be it the ecosystem of a forest or the process of product innovation within a company. Systems Thinking Institute tackles the latter, delivering risk management solutions (RMS) to companies engaged in new product development.

Systems Thinking Institute helps customers manage various steps in the process, including requirements definition, systems analysis, verification and validation as well as safety, quality and security. Its flagship product is called SystemKey, a scalable systems analysis framework that turns the traditional risk-management approach on its head, said company co-founder Matthew Weilert.

“The most seasoned people in an organization typically are the ones who are most aware of what can’t be done, or the way it’s always been. True innovation would have to come from the outside,” Weilert said. “So [with] Systemkey … we take the newest person in the organization and give them a structured way of asking questions of the most senior people.”

That way, the process benefits from the experience of the senior staff and the fresh sets of eyes of the newer people, “who are not afraid to say the emperor has no clothes,” he said.

The company cites an estimate from AT&T that every new product introduction costs it $10 million, so any tool that can reduce the risk associated with a new product or service can protect that investment. Systems Thinking Institute says SystemKey speeds time to market by a factor of three with lowered risk, reduced brain drain and betterqqqqqqqqqqqqqqqqqqqq

The Cedar Creek, Texas-based firm is self-funded and identifies competitors in the space as Isograph’s FaultTree+, ABS Consulting, Invention Machine and ESACS.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

AT&T is budgeting up to $19 billion this year to improve its nationwide phone network, a 5 percent to 10 percent increase over its $17.3 billion investment last year, the company said today.

Although AT&T didn’t break out how much of the budget it plans to spend in California, it said it will add 200 new cell sites and upgrade 500 existing sites to 3G capability in the Golden State this year on top of 200 new sites and 320 site upgrades in 2009. The carrier has spent $7.3 billion on wireline and wireless networks in California from 2007 to 2009, $1.5 billion of that on wireless in particular, according to a release from AT&T’s office in Sacramento.

The company said its 2010 budget includes a $2 billion increase in capital spending for “wireless and backhaul related to AT&T’s wireless network.” Backhaul refers to the portion of its wireline network that moves wireless voice and data traffic when it’s not flying through the air.

AT&T’s spending seems to be on par with that of rival carrier Verizon Communications, whose capital budget is projected to be $16.8 billion to $17.2 billion, compared to $17 billion in 2009, the company stated in a Jan. 26 earnings release.

The breadth and strength of AT&T’s 3G network has been called into question by a series of ads Verizon has been running on TV and in other media for several months, depicting AT&T’s coverage as sparse compared to Verizon’s. This led to an air war of commercials from each carrier dissing the other’s network and providing actor Luke Wilson with a steady job.

Pressure on AT&T’s wireless network has been building ever since it was picked as the exclusive carrier for Apple’s wildly popular iPhone in 2007. It can expect more pressure once Apple starts selling its new iPad tablet computers, whose 3G version would also run exclusively on AT&T.

Wireless data traffic on the AT&T network has grown more than 5,000 percent over the past three years, the company said, largely attributed to growth in the sale of smartphones, which now account for 40 percent of its postpaid customer base.

Despite the negative publicity about a weak network and dropped calls, AT&T appears to be actively pursuing a build out program.

The deployment of High-Speed Packet Access (HSPA) 7.2 technology is continuing along with a second AT&T initiative to increase the number of high-speed backhaul connections to cell sites, primarily with fiber-optic connections. In addition, improvements to its 3G network will bring the network closer to offering 4G/LTE broadband technology, offering data speeds 10 times faster than on existing 3G networks. AT&T currently trails Verizon in this race; Verizon anticipates having faster 3G networks up this year, while AT&T said it won’t be ready until 2011.

Today, AT&T announced the equipment suppliers for the company’s 4G technology, dubbed LTE (Long Term Evolution). The supplier choices, Alcatel-Lucent and Ericsson, shouldn’t be too surprising to those who’ve followed the evolution of LTE and 3G networks. Both companies also supplied the technology for AT&T’s 3G network, and were also selected by Verizon last year for its own LTE plans.

By sticking with Alcatel-Lucent and Ericsson, AT&T hopes to make the transition to LTE fairly painless. 3G Equipment delivered by both companies this year will be easily upgradeable to LTE.

AT&T doesn’t plan to begin LTE deployment until late 2011. To tide users over until then, the company will continue its upgrade of 3G sites to the new HSPA 7.2 technology, which raises 3G download speeds to 7.2 megabits per second.

AT&T has already completed the HSPA software upgrade across its network, but the equipment that actually makes the network perform faster is still being rolled out. Full HSPA deployment isn’t expected until 2012. AT&T expects the deployment of HSPA, along with enhanced fiber connectivity across the network, to help with its LTE roll out.

The company’s expected capital expenditures in 2010 will be between $18 and $19 billion, with a $2 billion increase over last year’s investment in its wireless network and backhaul. AT&T also plans to add 2,000 cellular sites, along with other upgrades that will help network performance and capacity, throughout the year.

For years now, the world’s largest phone maker, Nokia, has been in cold decline in the U.S. market. Right now, it seems left with a few trial phones and no serious attempt to distribute here. Nokia has a 5 percent market share in the U.S., well below its 38 percent global share.

Meanwhile, wildly successful new smart mobile phone platforms have launched from the U.S. — including the iPhone and Android — inspiring users with new interfaces and features that now seriously threaten Nokia’s stature as world market leader. These smartphones are showing robust growth, not only in the U.S., but across the world.

Nokia has finally admitted its mistake, and is now aggressively pursuing deals to attempt to at least double its market share in the U.S. over the next year. “Mea culpa, mea culpa,” Mary McDowell, Nokia’s executive vice president and chief development officer, told me last week. After years of ignoring U.S. carriers, upset at their insistence to exert control over phones and customers, Nokia is working closely with Verizon, AT&T and T-Mobile to work with them after all. There was a good story in the New York times about this a few days ago.

In the latest sign of that about-face, VentureBeat has heard from sources close to Nokia that the company has even agreed to launch a phone in the U.S. market with AT&T using a Qualcomm chip. While details are slim (the final points are still being negotiated, we hear), and the launch date is unknown, this is surprising for a number of reasons. For years, Nokia and the San Diego chip company squabbled over Qualcomm’s ownership of a patent governing the chip that runs on CDMA networks. Nokia and Qualcomm finally declared a truce earlier this year.

Now they’ve done more than make up; they’ve jumped into bed with each other: Qualcomm was a gold sponsor at the SEE event here in London, hosted by the Symbian Foundation, the group that manages the operating system behind most Nokia phones. And Qualcomm today announced it has joined the Symbian Foundation board, meaning it will support Symbian-Nokia phones (see Q&A with Rob Chandhok, Senior Vice President, Software Strategy, Qualcomm). Qualcomm also appears willing to develop chips for AT&T’s phones, even though the carrier has used a GSM network, not supported until now by Qualcomm. Qualcomm, already a member of Open Handset Alliance which is behind the Android phones, seems to be interested in hedging its bets. Chandhok told us in the interview: “We want relationships with all platform players. We want to input to Android, Windows, Symbian phones… There are different demands from our customers, depending on their geography. Yet, we are not picking a winner. That’s not our role.” (Nokia just launched a phone with China Mobile’s TD-SCDMA networks, China’s proprietary standard that is an off-shoot of CDMA.)

Nokia plans to launch a number of other phones in U.S. market. It plans to launch the high-end N900 next month (see video links below). This is the touch-phone that runs multiple applications at the same time (something the iPhone can’t do), and does so in a way that doesn’t drain battery power within a few hours (something the Android phones have been criticized for). The reason is that Nokia has worked hard on optimizing integration between its phone hardware and software layers. I had a chance to try it out, and it’s a step up on previous Nokia phones. The N900 has a full slide-out QWERTY keyboard and uses a Maemo operating system (Nokia’s Linux version, as opposed to Nokia’s traditional Symbian operating system). It replicates a lot of the iPhone’s features, and thus that big “UI experience” gap with the iPhone has been closed. I wouldn’t say yet that the N900 phone is better. There are pros and cons to each. iPhone users won’t like the courseness of the N900 touch technology; its edit features lack the touch-induced magnifying glass and things like pinch and expand, for example.

More here:
Getting started with N900
See what else the N900 can do
Maemo browser tips and tricks
Behind the scenes
N900 interaction
The new nokia N900

Nokia will also launch its x6 phone (see video) in eight weeks. The lower-end phone (pictured at top of this article) again replicates much of the iPhone’s interface (kinetic scrolling, touch screen, landscape-capable technology), but will launch at a much lower price point: Free, if bought with a contract. This phone will run on Symbian, and is cheaper because Symbian performs well when running on smaller, lower power processors (the iPhone and Android need higher-power processors). It’s new for Nokia, but at the same time, the sophisticated touch interface features of the iPhone (including pinch, expand and slide features) won’t be replicated by Symbian’s operating system until the second half of next year, with the release of Symbian version 4.

Lee Williams, executive director of the Symbian Foundation, says Nokia will double its market share next year in the U.S, and predicts most of the headway will come from stealing customers from RIM phones. He says the iPhone’s momentum is still too strong to stop within a year, but hopes to curb the iPhone’s gains after that. The Android phones, meanwhile, show signs of splintering, because of Google Android’s willingness to allow manufacturers to dictate interface decisions — something that Symbian will exert more control over.

Matthaus Krzykowski contributed to this piece.

This slowdown is forcing carriers to consider doing the inevitable: Keep pricing low for basic users, but increase pricing substantially for customers who use too much data — or simply cut off users who abuse the data plans. In other words, get ready to say goodbye to wireless net neutrality. The chart below (sorry, you’ll have to squint) is from a presentation by Shen Donglin, VP, Mobility ZTE Corporation, at this year’s Mobile World Congress in Barcelona. It illustrates how the industry could look like over the next few years: While mobile traffic explodes, carrier revenue barely grows. Consequently, carriers just can’t cover the costs of all these customers using all these great applications on their smart phones. So they’ve got to either offload the traffic to someone else, or they’ve got to cut costs. Really, it boils down to the simple business equation: Profit = Sales – Costs.

Already, you’ve seen AT&T revise its terms of service on some of its new netbooks, prohibiting things like “downloading movies using P2P file-sharing services, customer-initiated redirection of television or other video or audio signals via any technology from a fixed location to a mobile device, Web broadcasting, and/or for the operation of servers, telemetry devices and/or Supervisory Control and Data Acquisition devices.” It means you may no longer be allowed to stream content from third-party Web sites, such as You Tube, or via applications like Slingbox.

Subscriber growth for AT&T and Verizon has fallen below 10 percent for the first time in five years, to 8.8 percent and 8.7 percent.

While smartphone demand was still growing in the very challenging first quarter, McCormack said carriers will have to subsidize their plans to keep smartphone growth sales humming. Indeed, AT&T is considering cutting the iPhone’s monthly service plan by $10 when Apple introduces the newest version of the smartphone next month, according to Cote Collaborative analyst Michael Cote. He said there’s a “strong possibility” AT&T will cut the iPhone’s entry-level data service plan from $69 per month to $59, reducing the total cost of a two-year contract by $240.

Verizon, which has been shut out from selling the iPhone is also prowling for cool smartphones to sell. We reported earlier that it was courting Android, and indeed we’re seeing new reports that Verizon will launch an Android phone with Motorola. It’s true, this is a growing market, but no one knows how big it will get. In this market, as McCormack also noted, households are looking for cheaper options, including pre-paid (or pay-as-you-go) plans. Increasingly, what once looked like an open prairie of opportunity — endless versions of smartphones leading to endless growth — is now looking more unrealistic.

We’ll be writing more on the net neutrality issue in the coming days.

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1) Yahoo expands stake in Chinese search portal
2) AT&T buys up $2.5 billion worth of 700mhz spectrum
3) Facebooks FBfund chucks initial applications
4) Twitter’s first attempts to monetize
5) More details on Google’s plans for Orkut
6) E.ON blows another $1.4 billion into wind power
7) Vlaze may be today’s MTV

Yahoo expands stake in Chinese search portal Alibaba – As China’s Alibaba.com prepares to go public next week, Yahoo has invested another $100 million into the company, raising its overall ownership stake to about half. The latest investment represents about 10 percent of the company; Yahoo already owned about 39 percent. The move reflects a growing realization by both Google and Yahoo that the Chinese search market is culturally different enough to make competition against entrenched local sites difficult.

Yahoo has also bet on Baidu.com, which went public in August 2005. Baidu is the largest search portal in China. It has captured enough market share to rank third overall in the world market, according to a comScore study. Alibaba, which folded Yahoo China into its site under the original deal, is China’s second largest search engine.

AT&T picks up spectrum from Aloha Partners — A $2.5 billion deal by AT&T will deliver 12 megahertz of spectrum in the lower end of the 700 mhz range to the telecom giant. The seller was Aloha Partners LP, parent of mobile TV company HiWire. The 700 mhz spectrum is important to AT&T’s plans for mobile video offerings: The 700 mhz spectrum is particularly effective for long range transmission, and penetrates walls and other obstacles more easily than other wavelengths. The acquisition also helps hedge AT&T’s bets, in case a rival like Google wins the FCC auctions for other parts of the spectrum. However, the news may not be the best for entrepreneurs: AT&T is not known for being open to innovation, and its dominance over mobile TV might spell slow growth for the market.

Facebook’s FBfund asks developers to resubmit applications – Last month, the company announced a $10 million fund that will award seed grants to third-party developers (our coverage). The company now says all interested developers need to resubmit their applications. It says it needs to make sure applicants understand the requirements of the application, as the company had been receiving applications with “similar or even identical ideas.” In the company’s own legalese:

As a result, and in order to protect other developers and us from claims that we or anyone else copied material without the creator’s permission, unless we agree otherwise in writing, we can’t promise that any materials or information you submit here will be kept confidential, or specifically that we or others might not develop similar or identical products or services.

You can apply here.

Twitter appears to be gearing up mobile ad unit — Some users, including CNET’s Caroline McCarthy, have noticed text ads slipping into Twitter’s mobile notifications. The text “tips” take the form of small, single-line advertisements slipped in between posts by users. The news of the new ads comes just as Jaiku announces its acquisition by Google (our coverage). it appears that Twitter may intend to remain independent, gearing up to protect its position and begin monetizing the service.

More on Google’s plans for Orkut, social networking – Google has been rumbling for months with secret plans to introduce more interesting social networking features across its web properties. Now, more specifics are leaking out. A Businessweek article yesterday confirms an earlier report that Google will be introducing a number of new features on November 5th. The article suggests, for example, that Google may let third party developers run applications for Orkut from their own servers — applications that also let developers provide Orkut data within other social networks.

E.ON lays down big bucks for wind power — Despite criticisms of wind turbines, including problems with their low output and unattractive appearance, it appears that investments in wind are paying off. Two big European players who both have operations in the United States made a $1.4 billion swap, with Ireland-based Airtricity trading off its US subsidiary to Germany’s E.ON. The acquisition adds 210 megawatts to E.ON’s total wind production, which will now be about 850 MW, with another 4.6 gigawatts still in production. Government subsidies have made the US market one of the world’s most attractive for wind power, with an expected growth of about 10 percent per year, and the field is wide open for entrepreneurs: Growth would be even higher, but production of the actual turbines used to generate wind power has not yet scaled to meet market demand.

Vlaze, an internet TV site and social network, shows impressive growth – If you combine social networking features with live shows that broadcast 14 hours every weekday, you might go from 10,000 unique visitors a year ago to more than 8 million last month. Well, at least if you’re Vlaze, the site formerly known as MusicPlusTV. The Los Angeles company is no longer just focusing on music-related content, but it compares itself to “MTV back in the old days,” back when MTV had more music and less lame reality TV shows. Vlaze shoots its videos in a huge studio in LA, but lets users contribute their own footage as well.