Verizon "Northern States" Deal is Complete with Fairpoint

Yesterday, the New Hampshire Public Utilities Commission held a last minute meeting to approve the Verizon sale of Maine, New Hampshire and Vermont to Fairpoint Communications. Regulators were concerned when they learned last week that Fairpoint had to spend an additional $17 million on bonds in order to finance the Verizon deal for the 3 states.

Today, a Verizon press release explained some detail on how the transaction has been handled. Here's a piece from that press release:

Verizon Communications Inc. (NYSE:VZ) today announced the completion of the spin-off of the shares of Northern New England Spinco Inc. (Spinco) to Verizon stockholders. Spinco held specified assets and liabilities that were used in Verizon's local exchange business and related activities in Maine, New Hampshire and Vermont. Immediately following the spin-off, Spinco merged with FairPoint Communications, Inc. (NYSE: FRP), resulting in Verizon stockholders collectively owning approximately 60 percent of FairPoint common stock.

Verizon stockholders are receiving one share of FairPoint common stock for every 53.0245 shares of Verizon common stock they owned as of March 7, 2008. This is equivalent to 0.0189 shares of FairPoint common stock for each share of Verizon common stock owned as of March 7, 2008. FairPoint will pay cash in lieu of any fraction of a share of FairPoint common stock.

Here's a brief summary of the deal collected from various sources:

Verizon received a $1.16 billion cash payment from Spinco
Verizon will receive $551 million of 13 1/8% senior notes due in 2018 issued by Spinco
Verizon loses over $1.4 billion in debt
Verizon gets over $500 million in tax writeoffs
Fairpoint gets 1.6 million new landline customers
Fairpoint gets 230,000 new DSL customers
Fairpoint gets over 2,500 new employees from Verizon
Fairpoint becomes the eigth largest telecom company in the United States

It was a big effort for the 3 states, Fairpoint and Verizon to get this deal done.

MacBook Air Hacked

The ninth annual CanSecWest 2008 Conference was held last week in Vancouver, British Columbia. CanSecWest focuses on applied digital security, bringing together ndustry luminaries in a relaxed environment that promotes collaboration and social networking.

A crowd favorite at the conference has been the hacking contest and last week the tradition continued. This year's target machines were Ubuntu, Vist and OSX based. Here's details on the contest from the CanSecWest website:

Three targets, all patched. All in typical client configurations with typical user configurations. You hack it, you get to keep it.

Each has a file on them and it contains the instructions and how to claim the prize.

Targets (typical road-warrior clients):

• VAIO VGN-TZ37CN running Ubuntu 7.10
• Fujitsu U810 running Vista Ultimate SP1
• MacBook Air running OSX 10.5.2

This year's contest will begin on March 26th, and go during the presentation hours and breaks of the conference until March 28th. The main purpose of this contest is to present new vulnerabilities in these systems so that the affected vendor(s) can address them. Participation is open to any registered attendee of CanSecWest 2008.

Once you extract your claim ticket file from a laptop (note that doing so will involve executing code on the box, simple directory traversal style bugs are inadequate), you get to keep it. You also get to participate in 3com / Tipping Point's Zero Day Initiative, with the top award for remote, pre-auth, vulnerabilities being increased this year. Fine print and details on the cash prizes are available from Tipping Point's DVLabs blog.

Quick Overview:

• Limit one laptop per contestant.
• You can't use the same vulnerability to claim more than one box, if it is a cross-platform issue.
• Thirty minute attack slots given to contestants at each box.
• Attack slots will be scheduled at the contest start by the methods selected by the judges.
• Attacks are done via crossover cable. (attacker controls default route)
• RF attacks are done offsite by special arrangement...
• No physical access to the machines.
• Major web browsers (IE, Safari, Konqueror, Firefox), widely used and deployed plugin frameworks (AIR, Silverlight), IM clients (MSN, Adium, Skype, Pigdin, AOL, Yahoo), Mail readers (Outlook, Mail.app, Thunderbird, kmail) are all in scope.

Here's the results according to Heiss Online:

Of three laptops to be hacked, the MacBook Air with Mac OS X 10.5.2 was the first to fall victim to crack attempts of participants in the PWN to OWN contest at CanSecWest. The laptops with Windows Vista SP1 and Ubuntu 7.10 remain uncompromised. According to information provided by organizers of the TippingPoint competition, Charlie Miller, Jake Honoroff and Mark Daniel of security service provider Independent Security Evaluator were able to take control of the device through a hole in the Safari web browser. The vulnerability has supposedly not yet been made public and is still under wraps until Apple is able to provide a patch. In addition to $10,000 prize money, the winners also get to keep the MacBook as a bonus.

Here's more on the contest from ChannelWeb:

The vulnerability has been purchased by the Zero Day Initiative, and has been made known to to Apple, which is now working on the issue, TippingPoint said. "Until Apple releases a patch for this issue, neither we nor the contestants will be giving out any additional information about the vulnerability."

Nine Inch Nails and Creative Commons: Share, Remix, Reuse — Legally

Nine Inch Nails, a popular alternative/industrial band, earlier this month released a 36 track instrumental collection titled Ghosts I–IV. If you are not familiar with Nine Inch Nails, the band was started in 1988 by Trent Reznor who, as the only official member, is the producer, singer, songwriter, and instrumentalist.

For Ghost I-IV, Reznor has chosen a unique distribution method. Fans can get the first volume free by downloading off the web, they can pay $5 and download all 4 volumes from Amazon, they can purchase a double CD for $10, a deluxe edition set for $75 or buy a $300 (sold out) ultra-delux limited (2500 copies) edition set. Fans will also be able to purchase a $39 vinyl edition starting the first week of April.

What I find most exciting is the fact the album is licensed under Creative Commons . If you are not familiar with Creative Commons licensing, here's a piece from the organization website:

Creative Commons provides free tools that let authors, scientists, artists, and educators easily mark their creative work with the freedoms they want it to carry. You can use CC to change your copyright terms from "All Rights Reserved" to "Some Rights Reserved."

And here's more on the process from the site:

Creators choose a set of conditions they wish to apply to their work:

Attribution. You let others copy, distribute, display, and perform your copyrighted work — and derivative works based upon it — but only if they give credit the way you request.

Noncommercial. You let others copy, distribute, display, and perform your work — and derivative works based upon it — but for noncommercial purposes only.

No Derivative Works. You let others copy, distribute, display, and perform only verbatim copies of your work, not derivative works based upon it.

Share Alike. You allow others to distribute derivative works only under a license identical to the license that governs your work.

Reznor has decided to both give the music away and charge for it. In addition, by using Creative Commons licensing, he is giving others rights that they would not have had he used traditional music publishing licensing. Other bands, publishing companies, record companies, businesses, etc will be watching this closely.

FCC Expands and Improves Broadband Data Collection

Last week, the Federal Communications Commission (FCC) adopted an order that will increase the precision and quality of broadband subscribership data collected every six months from broadband services providers.

I've written in the past about how the Federal Communications Commission currently defines broadband in the United States:

The Federal Communications Commission (FCC) generally defines broadband service as data transmission speeds exceeding 200 kilobits per second (Kbps), or 200,000 bits per second, in at least one direction: downstream (from the Internet to your computer) or upstream (from your computer to the Internet)."

I've also written in the past about how the FCC currently collects broadband data. Here's a piece from a press release by House Subcommittee on Telecommunications and the Internet Chairman Ed Markey describing the current FCC broadband data collection methods:

"...the fact that current data collection methods used by the Federal Communications Commission (FCC) are inadequate and highly flawed. Currently, the FCC counts a single broadband subscriber in a 5-digit zip code as indicating the entire zip code has broadband availability, even if the sole subscriber is a business and not a residential consumer. This can lead to highly inaccurate and overly generous notions of actual broadband availability and use, particularly in rural areas where zip codes are quite large."

Here's a brief outline of the new order summarized from an excellent post at CNET's News.com:

200Kbps speeds are no longer considered "broadband"

768Kbps, typical entry-level speed offered by major DSL providers, will be considered the low end of "basic broadband," a range that extends to under 1.5Mbps.

Broadband service speeds will have to be reported both for uploads and downloads

Previously the FCC had six big categories of broadband speeds, and they effectively only tracked download speeds. Now the agency says it will require reporting on upload speeds.

Upload and download speeds will have to be reported in a more specific way

At the moment, the broadband speeds most commonly offered by cable and telephone companies are lumped into two major categories: those between 200Kbps and 2.5Mbps, and those between 2.5Mbps and 10Mbps. The FCC's new rules would require them to be broken down further, in an attempt to address charges that the current buckets have the potential to overstate the number of high-end subscriptions and understate the number of low-end subscriptions. Those new tiers will be: 1) 200Kbps to 768Kbps ("first generation data"); 2) 768Kbps to 1.5Mbps ("basic broadband"); 3) 1.5Mbps to 3Mbps; 4) 3Mbps to 6Mbps; and 5) 6Mbps and above.

Internet Service Providers (ISPs) will be required to report numbers of subscribers, and at the census-block level

The ISP's will have to report the number of subscribers in each census tract they serve, broken down by speed tier. The FCC decided to use census tracts because researchers may be able to use other demographic statistics collected by the U.S. Census, such as age and income level, to gain insight about what drives broadband penetration rates.

In addition, ISPs will not have to report the prices they charge at this time but like will have to in the future. You can read the March 19 FCC press release titled "FCC EXPANDS, IMPROVES BROADBAND DATA COLLECTION" here.

This is a significant and necessary decision that we all should be excited about.

The FCC 700 MHz Auction Results Podcast

Mike Q and I recorded "The FCC 700 MHz Auction Results" podcast today. Below are the show notes. You can listen directly by turning up your speakers and clicking here. If you have iTunes installed you can get this one, listen to others, and subscribe to our podcasts by following this link.

If you don't have iTunes and want to listen to other podcasts and read shownotes using your web browser, turn up your speakers and click here.

Shownotes:

Intro: On March 18, FCC Auction 73 bidding round 261 ended and, after 38 days and $19.592 billion in bids (almost double the $10 billion the FCC had hoped for), the FCC closed out the auction. In this podcast we review and discuss the auction results.

Mike: Gordon, can you give us an overview of the auction results?
Sure Mike - this comes from the FCC auction website linked up in the shownotes.

Rounds: 261 (started on 1/24 and ended on 3/18)

Bidding Days: 38

Qualified Bidders: 214

Winning Bidders: 101 Bidders won 1090 Licenses

Auction 73 concluded with 1090 provisionally winning bids covering 1091 licenses and totaling $19,592,420,000, as shown in the Integrated Spectrum Auction System. The provisionally winning bids for the A, B, C, and E Block licenses exceeded the aggregate reserve prices for those blocks. The provisionally winning bid for the D Block license, however, did not meet the applicable reserve price and thus did not become a winning bid. Accordingly, Auction 73 raised a total of $19,120,378,000 in winning bids and $18,957,582,150 in net winning bids (reflecting bidders' claimed bidding credit eligibility), as shown above.

Mike: Before we get into the auction results, can you give us an overview of the different spectrum blocks? I know we've done this before but - how about a quick refresher?
Sure Mike - this comes from a blog I wrote back on January 14.

Back in 2005 Congress passed a law that requires all U.S. TV stations to convert to all digital broadcasts and give up analog spectrum in the 700 MHz frequency band. This law will free up 62 MHz of spectrum in the 700 MHz band and effectively eliminate channels between 52 and 69. This conversion, which has a deadline of February 18, 2009, has freed up spectrum that is being split up by the FCC into five blocks:

• A-Block - 12 MHz, split up into 176 smaller economic areas
  
• B-Block - 12 MHz, split up into 734 cellular market areas
  
• C-Block - 22 MHz, up into 12 regional licenses
  
• D-Block - 10MHz, combined with approximately 10MHz allocated for public safety, a single national license.
  
• E-Block - 6 MHz, split up into 176 smaller economic areas

So in summary, each spectrum block in the 700 MHz auction, except for the national public safely D-Block, has been assigned an area designation by the FCC.
All FCC areas, along with names, county lists, maps and map info data can be found on the Commission's website linked here.

Mike: How about a quick review of the D-Block again?
Sure Mike, this also comes from that January 14 blog:

The D-Block lately has been most interesting to watch. Early on it appeared Frontline Wireless would be one of the biggest bidders for D-Block spectrum - the company was setup for D-Block and had worked closely with the FCC on putting together specifications for the spectrum. Frontline built a formidable team including Vice Chairman Reed Hundt, who served as Chairman of the FCC between 1993 and 1997. The business plan, the organization, the technology seemed to all be in place........ On January 12 the company placed the following statement on their website:

Frontline Wireless is closed for business at this time. We have no further comment.

Another company, Cyren Call also looked like they were planning to bid on the D-Block Auction but did not.

What happen? Rumor has it Frontline could not attract enough funders - it seemed like a good investment - or at least you may think so up front. Many are now asking if the FCC's approach to solving the public safety inter-operability problem is in trouble.

Mike: OK, how about the results?
Here's a summary from the Wall Street Journal:

Verizon and AT&T accounted for 80% of the nearly $20 billion AT&T agreed to pay $6.6 billion for 227 spectrum licenses in markets covering much of the country. Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodafone Group PLC, won 109 licenses for $9.4 billion.

Dish Network Corp., which bid for spectrum through Frontier Wireless LLC, did acquire a significant footprint, winning 168 licenses throughout the country for $712 million. Satellite-TV providers are looking for a way into the high-speed Internet business to better compete with cable and phone companies. But Credit Suisse analyst Chris Larsen said in a research note that the particular segment of spectrum Dish acquired would make it difficult for the company to offer interactive wireless broadband service. He said the company could use the spectrum to broadcast data or for on-demand video.

Google had indicated interest in a nationwide package of licenses before the auction, but it bid just high enough to trigger rules that will force winners of one segment of spectrum, known as the C-block, to allow any mobile devices and applications on their networks. Verizon won the lion's share of spectrum in this segment. Google had pushed for the regulation since its efforts to sell some mobile services had been stymied by major carriers, which traditionally have strictly limited the kinds of devices that consumers could use on their networks. Even before the auction had wrapped up, Google scored a victory as Verizon voluntarily agreed to open its network to devices it doesn't sell through its own retail network. Verizon released details of its new policy on Wednesday.

Mike: Were there any licenses that dod not get any bids?
There were 1,099 licenses auctioned and only eight did not receive any bids:

A-Block:

Lubbock, Texas
Wheeling, W.Va.

B-Block:

Bismarck, N.D.
Fargo, N.D.
Grand Forks, N.D.
Lee, Va.
Yancey, N.C.
Clarendon, S.C.

Mike: So, what will happen to these?
These licenses will need to be re-auctioned by the FCC. I'm guessing they were over priced, the FCC will end up dropping the re-auction minimum bid and they will end up going quickly.

Mike: What's going to happen with D-Block?
The Public Safety D-Block did not meet the minimum bid and the FCC will have to decide what to do. It looks like the FCC could go one of two directions for the re-auction - drop the price or change the requirements.

From the start, the public safety D-Block auction was seen as one of the biggest auction challenges...... I've expressed my opinion on the D-Block in the past........ the FCC still has some major work ahead before they can close this one out.

This comes from InfoWorld:

On Thursday, the FCC voted to de-link the so-called D block from the rest of the auction results. The D block was a 10MHz block that was to be paired with another 10MHz controlled by public safety agencies, and the winning bidder would have been required to build a nationwide voice and data network to serve both public safety and commercial needs. But the FCC failed to receive its $1.33 billion minimum bid for the D block, with the lone $472 million bid coming from Qualcomm.

The FCC has no plans to immediately reauction the D block, a spokeswoman said. Instead, the agency "will consider its options for how to license this spectrum in the future," the FCC said in a news release.

Mike: So, it looks like the big carriers won?
For the most part, yes. Kevin Martin had an interesting quote in an EFluxMedia piece though:

"A bidder other than a nationwide incumbent won a license in every market," FCC chairman Kevin Martin said hinting that it’s possible for a "wireless third-pipe" competitor to emerge in every market across the U.S. This would increase the competition and the first one to benefit from it will be the consumer.

Things still could get interesting!

Anime - Do You Get It?

Up eary this morning with my 16 year old daughter for a 1.5 hour drive into the Hynes Convention Center in Boston for Anime Boston 2008.

Anime Boston is an annual three-day Japanese animation convention held in Boston, Massachusetts and I'm posting this entry here at the convention. Anime Boston has grown considerably since the first Boston event was held in 2003. The conference is, once again (according to the conference website), presenting popular events which include a masquerade, an anime music video contest, video programming rooms, an artists' alley and art show, karaoke, game shows, video games, manga library, dances and balls, and much more...

I'll get to our experience here in a minute. Last night the conference kicked off with opening ceremonies. Conference Co-Chair Andrea Finnin, asked what has been referred to at the conference as a very frank question and a great answer. Here's both:

How many of you out there have parents who just don't get it? Brothers? Sisters? Friends? Significant others?

Well, this weekend you will all be surrounded by people who get it.... You and all the other attendees will be part of this big family who gets it!

I'll be honest - it's something I've tried to get but maybe have not got just yet. I think I came a little closer today though. We got to the convention center at 9:00 and waited in a registration line for over three hours to get in. Yesterday afternoon, many stood in line for over 6 hours, only to be turned back.....

Standing in line with thousands of teenage gamers is probably the last thing someone my age would want to do on a Saturday morning. That said, I don't think I've ever been around such a large group of respectful, complementary and helpful people - of any age. For example, I have not heard one of George Carlin's "7 words you are not allowed to broadcast" today yet! If I were to compare the adult crowd at a Red Sox game late last summer to the people that are here today..... well..... there is no comparison.

Anime conventions are held in most of the major cities in the country - maybe you have children or grandchildren, nieces, nephews, etc...... Check one out if you get a chance and maybe you'll start to "get it" too. See my photo-blog of the conference here: http://gsnyder.tumblr.com

FCC 700 MHz Auction is Over..... Sort Of

Yesterday afternoon, FCC Auction 73 bidding round 261 ended and, after 38 days and $19.592 billion in bids (almost double the $10 billion the FCC had hoped for), the FCC closed out the auction.

Eight of the C-Block regional licenses had a reserve price of $4.6 billion that, when passed early in the auction (round 17), triggered an open access provision in the auction. This meant bidders could bid on individual C-Block licenses and, it appears the 12 C-Block licenses may be split up among bidders. Most experts are predicting Verizon and/or AT&T will take most of the C-Block while a smaller group still believes Google will be in the mix.

The C-Block provision requires the C-Block winner(s) to give access to any device compatible with the network’s chosen technology. This open access provision was pushed hard by Google and, whether Google is a winning bidder or not, Google will have access to this spectrum.

There were 1,099 licenses auctioned and only eight did not receive any bids:

A-Block:

Lubbock, Texas
Wheeling, W.Va.

B-Block:

Bismarck, N.D.
Fargo, N.D.
Grand Forks, N.D.
Lee, Va.
Yancey, N.C.
Clarendon, S.C.

These licenses will need to be re-auctioned by the FCC. I'm guessing they were over priced, the FCC will end up dropping the re-auction minimum bid and they will end up going quickly.

The Public Safety D-Block did not meet the minimum bid and the FCC will have to decide what to do. It looks like the FCC could go one of two directions for the re-auction - drop the price or change the requirements. House Telecom Subcommittee Chairman Edward Markey (D-Mass.) is quoted on the D-Block in a post by RCRWirelessNews:

“I believe that any new auction for the ‘D-block’ should be consistent with an overarching policy goal of advancing public-safety objectives and ultimately achieving a state-of-the-art, broadband infrastructure for first responders. In developing a plan for a re-auction of the ‘D-block,’ the FCC should also take into account the auction results to gauge the level of new competition achieved. Policymakers should also analyze whether a need for a high reserve price continues to exist. Moreover, I believe we must fully review the nature and authority of the public safety spectrum trust and whether this model should be retained or modified, the length of the license term, the build-out requirements and schedule of benchmarks for such build-out, the opportunities for ensuring further openness in wireless markets, the penalties associated with failure to fulfill license conditions, and other issues.”

From the start, the public safety D-Block auction was seen as one of the biggest auction challenges...... I've expressed my opinion on the D-Block in the past........ the FCC still has some major work ahead before they can close this one out.