AT&T merger compromise may signal 'net neutrality' shift

The compromise that allowed AT&T Inc. to win federal approval of its $85 billion acquisition of BellSouth Corp. may signal that the takeover of Congress by Democrats has shifted telecoms' regulatory landscape.

After opposing restrictions on its ability to give priority to its own Internet content, AT&T agreed to "maintain neutral network and neutral routing in its wireline broadband Internet access service" for two years.

The concept of preserving "net neutrality" has been the paramount telecom issue for consumer advocates all year. They fear economic interests will compel big telecom and cable companies that own Internet infrastructure to discriminate against smaller competitors whose Internet-based voice and video services undermine the cash cows operated by the giants.

For their part, large telecom carriers contend they need flexibility to manage the trillions of bits and bytes that flow across their lines daily. Government restrictions intended to ward off anti-competitive moves could stifle technologic innovation, say executives at big telecom concerns.

AT&T's concessions sparked year-end celebrations Friday among consumer advocates who'd been stymied through most of 2006 in their efforts to pass network neutrality laws in the Republican-controlled Congress.

"We are no longer having a debate about whether net neutrality should be the law of the land," said Ben Scott, policy director for Free Press, a consumer advocacy group. "We are having a debate about how and when."

Another aspect of AT&T's compromise proposal would put a cap of $20 a month for 30 months on its basic digital subscriber line high-speed Internet service. At present, people who want to buy DSL without also getting an AT&T phone line must pay a minimum of about $45 a month.

Gene Kimmelman, vice president of the Consumers Union, said customers who cannot afford AT&T's prices today should soon be able to "get fast connections to the Internet at a reasonable price."

DVD security cracked

An anonymous computer programmer might have skewed the competition over standards for high-definition DVD discs by defeating a scheme to protect digital content.

The standards, HD-DVD and Blu-ray, are being backed by rival coalitions of Hollywood studios and consumer electronics and computer companies that are eagerly marketing a new generation of digital media players and video game machines tailored for widescreen TVs.

The standards use different technical approaches to prohibit people from making copies of movies and other digital material stored on discs. Both use an encryption scheme known as Advanced Access Copy System. The Blu-ray system adds a software-based component that makes it possible to modify the copy protection scheme on new discs if the old one is broken by hackers.

The HD-DVD camp might have suffered a setback when a programmer, who identified himself as Muslix64, announced Dec. 18 in the Internet discussion forum Doom9 that he had copied movies distributed in the HD-DVD format. The note directed readers to a site where demonstration software he had written could be downloaded.

"I was not aware of anyone having done that, so I did," he wrote.

In an accompanying video demonstration posted on the YouTube Web site, the programmer showed encryption keys for six movies and concluded by stating "AACS is unbreakable? I don't think so. Do you? Stay tuned for source code in January. Merry Christmas."

Technical experts who have examined the software posted by Muslix64 said that it was only a partial solution for making copies of the digitally protected material. But they said it does not bode well for the Advanced Access Content System.

"They're playing with something that is incomplete, but it is still a troubling sign," said Richard Doherty, the president of Envisioneering, a consumer electronics industry consulting company.