Keall on the Dotcom case

September 30th, 2015 at 11:00 am by David Farrar

Chris Keall writes at NBR:

I’ve previously written that Megaupload’s cash-incentive payments would loom large in Kim Dotocom and co’s extradition case.

And so it proved yesterday as the Crown alleged one user of Mr Dotcom’s file sharing service was paid more than $US50,000 as a reward for uploading files that proved popular with Megaupload members.

Files uploaded by user “H” – just one of many to take advantage of the cash-incentive rewards scheme – generated 1.2 million downloads between 2006 and 2011 (the expanded FBI evidence summary covers it in detail here).

The US Department of Justice, plus major Hollywood studios and multinational record labels, say most of the files covered by the cash-incentive scheme were copyrighted works and that Megaupload was rewarding piracy.

This is at the heart of the case, and the argument that Megaupload was not just like Dropbox – because it paid users for sharing content that got widely downloaded.

Mr Dotcom has also pointed out that YouTube gives uploaders of popular files a share of the Google Ad revenue generated by their clip. That could well be construed as an incentive programme. But to get a share of that Google Ad money, you have to be a trusted user. And if, in its vetting process, YouTube notices there is copyright-infringing music (for example, a zany wedding dance clip features a Taylor Swift soundtrack), the service then approaches the artist or rights-holder concerned and offers to either a) take the clip down or b) leave it up but cut them in on the revenue. Megaupload never gave a cent to an artist or rights holder when it generated an alleged $US175 million in membership fees and ad revenue generated around their material.

It is no surprise they were unhappy. It is possible though Megaupload did not breach US law. They certainly knew they were making money through encouraging copyright infringment. But they may hev done just enough to comply with the US MDCA which has a process for dealing with complaints.

Mr Dotcom has also styled Google as a giant piracy machine, saying it makes it easy to find copyright-breaching material, whereas Megaupload featured no search engine or other mechanism to help users find files stored by other members.

But the Crown has already focused on FBI evidence, gatheredthrough intercepted Skype conversations, that the Megaupload crew worked with third parties to make offending content on Megaupload easily discoverable.

Again quite damning.

Keall’s advice for each party

October 7th, 2014 at 10:00 am by David Farrar

Chris Keall gives succinct advice for each party in NBR:

  • Labour – change the leader and scrap the primary-style contest
  • Internet-Mana – give up and go home
  • Conservatives – media training for Colin Craig and a deal with National in Napier
  • ACT – media training for David Seymour and push National on tax
  • Maori Party – give up and go home
  • Green Party – stick to being Green
  • NZ First – recruit Shane Jones
  • United Future – cruise control
  • National – nothing different

Garner and Keall on Dotcom and his party

March 28th, 2014 at 1:00 pm by David Farrar

Duncan Garner blogs:

There’s one major and terminal problem with Kim Dotcom’s Internet Party: he can’t be the leader.

He can only be the shadowy, backroom figure that pulls the strings. He will do that. And that will turn off some voters.

The other thing that should, and will, turn people off is that he collects Nazi memorabilia. He should be treated the same as any other political leader found draped in the Nazi flag: they would be crucified.

If it was David Cunliffe or Peter Dunne or, in the past, Don Brash or Rodney Hide et al, they would be forced to resign. They would be shamed and sent packing. Dotcom should not be seen as any different. Why treat him as special?

Could you imagine the outcry if it turned out that (for example) the Leader of ACT purchased a signed copy of Mein Kampf, had a photo of him wearing an SS helmet and displayed a Nazi flag at his house? They’d be gone within hours.

I agree New Zealand needs better internet, but does it take an “internet party” to get us there? This party is a sham and a side-show feeding Kim Dotcom’s vast wealth and ego – not to mention his desperate ambitions to stay in New Zealand, rather than rot in some American jail.

This is the truth. He has a host of convictions:

He owes money to creditors; good hard-working Kiwis who are now out of pocket.

And he could have paid them months ago. He has chosen not to.

Chris Keall writes at NBR:

The first “action agenda” item listed on the website is 50% cheaper internet – and unlimited and universal, to boot.

I’d also like the price of books to be 50% cheaper, and the price of food.

I agree with the Internet Party’s stance that broadband at half the price would be “awesome.”

However, it’s not clear how we get to this state of awesomeness. 

The party doesn’t price any of its policies, say how they would be achieved or offer any other details. 

Details would be nice.

The 50% internet policy is actually the most fleshed out – if three sentences can be called fleshed out – with the line that  “We will take direct action to expand New Zealand’s infrastructure by building a second submarine cable.”

I’d like to see a second cable, too. I find it curious National has been quite willing to out-Labour Labour by sending $1.5 billion on the UFB and related projects, but offer only a paltry $15 million to assist a submarine cable startup (Pacific Fibre and others have estimated it will cost around $400 million to challenge the 50% Telecom-owned Southern Cross Cable’s monopoly on our broadband connection to the outside world).

I would also like to see a second cable. But Hawaiki is planning such a cable, and until we see if they succeed or not, I don’t think you can say the Government needs to step in. Far better to let the private sector compete.

I don’t think a second cable would make broadband 50% cheaper. In fact, I’d be surprised if it yielded savings of 10% or 5% or anything, based on what ISPs tell me (Orcon boss Greg McAlister recently said a $75 monthly connection includes about $7 in international bandwidth charges). 

This is correct. The price of international data is not a huge proportion of what we pay. The prices drop around 20% every year as capacity expands on the current cable. Also more of our international data is coming from Australia, not the US. 10 years ago it was over 90% US and 1% Australia and today it is 50% US and 37% Australia.

This is not to mean that a second US cable would not be a good thing. It would be. But it is not a silver bullet and will not reduce costs of broadband by 50% or probably even 5%.

Keall on Dotcom and fibre

November 7th, 2012 at 11:00 am by David Farrar

Chris Keall at NBR writes:

There are a number of reasons a Kim Dotcom-backed cable will never fly.

Pacific Fibre co-founder Rod Drury added another when he talked to NBR this morning: the accused pirate wouldn’t get approval to land the cable in the US.

Mr Drury saw Mr Dotcom’s overtures to Pacific Fibre as little more than clowning around on Twitter.

Amazing how one tweet gets so many stories. Keall notes:

Even at the height of Megaupload, Mr Dotcom didn’t have $US400 million to spare for a Sydney-Auckland-LA cable.

His Plan A is to fund the new cable through his revived file-sharing service, Megaupload – due to launch January 20, but its success is far from assured (the entrepreneur is asking for investors via a recently launched splash page).

His “plan B” proposal to fund the project by suing Hollywood studios is the stuff of fantasy.

And as for the parallel suggestion of crowdfunding … that’s a neat idea for a $ 1 million project. Not so much for one that costs half a billion.

Nice to see some critical analysis.

Keall’s Tech Power List

March 3rd, 2010 at 5:17 pm by David Farrar

Chris Keall at NBR (sub needed) blogs his power list for the tech sector. Some of his picks are:

  • 1 Bill English, Finance and Infrastructure Minister
  • 2 Steven Joyce, Comms and IT Minister
  • 3 Paul Reynolds, Telecom CEO
  • 4 Matt Crockett, Telecom Wholesale CE
  • 6 Russell Stanners, Vodafone CEO
  • 8 Ralph Chivers, Telecom GM of Govt and industry relations
  • 10 Tex Edwards, Founder of 2Degrees
  • 11 Rod Drury, Xero CEO
  • 12 Allan Freeth, Telstra-Clear CEO
  • 13 Mark Ratcliffe, Telecom Chorus CE
  • 16 Ross Patterson, Telecommunications Commissioner
  • 17 Ernie Newman, TUANZ CEO
  • 18 Simon Mackenzie, Vector CEO
  • 22 Keith Manch, DIA Deputy Secretary Regulation & Compliance
  • 23 Peter Dengate-Thrush, ICANN Chairman
  • 25 Matthew and Bronwyn Holloway-Smith, Creative Freedom Foundation founders

Personally I would have the Telco Commissioner much much higher up the list, and I would also have Bruce Parkes the MED Deputy Secretary on there. But an interesting selection.

Mobile termination rates

October 5th, 2009 at 12:00 pm by David Farrar

As usual, Chris Keall has the best summary of what the offers are on mobile termination rates:

Commerce Commission proposal
Voice calls: immediate halving of MTR on voice calls from 14 cents to 7.5 cents. Glide path to 3.8 cents by 2015.
Txt: immediate cut from 10 cents to 3.8 cents. Further cuts to 0.5 cents by 2015.

Voice: Looking to head off regulation with offer to cut MTR on voice calls to 12 cents per minute from April 2010, with glide path down to 73 cents a minute by 2015.
Txt: 1.2 cents from April 2010.

Voice: cut to 12 cents per minute from January 2010. Glide path down to 7 cents per minute by 2015.
Txt: no offer
Expresses support for bill-and-keep, an alternative to MTR that sees the a phone company whose network initiates a call pay all costs.

Wants MTR scrapped on all voice calls and txt. Prefers bill-and-keep model (initiating caller’s telco pays all cost). If that’s not possible favours immediate drop to 6.54 cents per minute for voice, falling to 3.45 cents by 2015.

So let us look at voice calls first. In 2010 the rate would be 7.5c under the Commerce Commission proposal, 12c offered by Vodafone, and 12c offered by Telecom.

By 2015, the rate would be 3.8c under the Commerce Commission proposal, 73c offered by Vodafone, and 7c offered by Telecom.

For text messages in 2010 the rate would be 3.8c under the Commerce Commission proposal, 1.2c offered by Vodafone, and 10c offered by Telecom.

By 2015, the rate would be 0.5c under the Commerce Commission proposal, 1.2c offered by Vodafone, and 10c offered by Telecom.

It is good to see Vodafone offering a more tempting package, with the huge drop in termination rates for text messages.

Also interesting to note:

Telecom’s numbers are close to those of its previous submission. More noteably, the telco has also expressed support for bill-and-keep – an alternative to MTR in the US and elsewhere that sees the phone company that initiates a call paying all costs.

I don’t think that is explained right. With bill and keep there is effectively a zero interconnect fee or termination rate. It is pleasing to see Telecom moot that. I think it is a superior model.

Think how retarded the Internet would be if ISPs charged each other 10c an e-mail?

Also pleasing has been that the Minister has ruled out any last minute negotiations with telcos on the proposed regulation. Trevor Mallard fell into this trap of privately negotiating a deal. Steven Joyce has said that any commercial offers have to go to the Commerce Commission, not him. And then once the Commerce Commission makes a recommendation, he will either accept it or not accept it – but won’t get into a game of considering ever increasing (or decreasing) commercial offers every few days.

It will be interesting to see what the final Commerce Commission recommendation will be.

Note that my company has done some market research for Exceltium Ltd on the issue of mobile termination rates, but all views are my own.

Fibre to the Home proposal finalised

September 16th, 2009 at 2:28 pm by David Farrar

I’m very very happy with today’s announcement from Steven Joyce:

Communications and Information Technology Minister Hon Steven Joyce today released the details of the government’s $1.5 billion ultra-fast broadband investment initiative. …

Key highlights of the proposal include:

  • An open, transparent partner selection process, which will be initiated in the next month.

  • Government investment directed to an open access, wholesale-only, passive fibre network infrastructure.

  • A new Crown-owned investment company (“Crown Fibre Holdings”), which will be operational by October, to carry out the government’s partner selection process and manage the government’s investment in fibre networks.

  • Crown Fibre Holdings and each partner establishing a commercial vehicle, a “Local Fibre Company” (LFC), to deploy fibre network infrastructure and provide access to dark fibre products and, optionally, certain active wholesale Layer 2 services.

  • Provision for national and regionally-focused proposals, as well as consortium and proposals aggregating any combination of LFC regions.

  • Independence, equivalence and transparency requirements for LFCs.

  • Expansion to 33 candidate coverage areas based on the largest urban areas (by population in 2021).

What is really good is the commitment to open access to dark fibre, and the regional approach to the issue. The Government has held firm to most of their draft proposal, with the main change being an increase in the number of coverage areas to 33.

Computerworld reports on positive reaction:

“This ushers in the biggest and most fundamental change to telecommunications in New Zealand since the privatisation of Telecom 20 years ago,” TUANZ CEO Ernie Newman said in reaction to the news.

“The paper builds very constructively on the work done previously,” Newman says. “It takes into account most of the key issues raised in submissions, and sets a timetable with milestones. It is an excellent blueprint on which to build.” …

InternetNZ also welcomed the plan, saying it is “delighted” with today’s announcement of a regionally-based approach to investment.

“This is a world-leading programme that can be expected to deliver the infrastructure New Zealand needs,” spokesperson Jordan Carter says.

“Steven Joyce and the Government have put in place a framework that over time can deliver a widespread fibre rollout across urban New Zealand.”

Those unsure about the benefits of ultra-fast broadband, might want to read the guest post from Rod Drury earlier this week.

Chris Keall (and Kelly Gregor) at NBR cover the proposal in detail. Keall highlights a new focus:

In the proposal document released today, the minister also flags that “The capacity and reliability of New Zealand’s international data connectivity will become increasingly important as LFCs’ [local fibre companies’] networks are deployed over the course of the UFB Initiative.”

The Commerce Commission recently identified slow international data as a roadblock to better domestic broadband performance, with testings showing that overseas pages take twice as long to load as those hosted locally – even with our current copper-dominated networks.

International bandwidth and data costs are often cited as a big issue also.

In a fit of good timing, Juha Saarinen has an article in Computeworld on dark fibre, and how you basically can not get it from Telecom or TelstraClear. Have a look at this price comparison and weep:

James Watts, who runs Palmerston North-based ISP Inspire Net, says the reason dark fibre is attractive to his customers is because they can “do whatever the hell they want with it.” Inspire currently charges $595 and $995 for intra-town dark fibre pair leases, depending on contract terms, and double that for inter-town unlit circuits.

To light the circuits, Watts says his company sells Gigabit Ethernet transceivers for $140 each.

A similar 1Gbit/s circuit from Telecom apparently costs $7000 a month, plus installation charges.It’s $69k a year according to Telecom’s pricing book.

Finally a focus on the issue of fibre providers being discouraged from also operating retail telecommunication services, both here and in Australia. Steven Joyce said in a Q&A:

Will Telecom have to structurally separate its network business to participate?

Any such decisions are up to Telecom.  The Government has made it clear that it will only invest money into fibre companies that are not controlled by shareholders who also operate retail telecommunication businesses.  The Government is also clear that potential partners who already own fibre assets can table options that involve those fibre assets being vended into any new fibre companies.

Preventing vertically integrated monopolies is crucial. This basically means Telecom can not be a majority shareholder in any regional fibre company unless they structurally separate (ie sell off Chorus). They can have a minority stake however.

In Australia, the Government has done similiar:

The government could also deny Telstra access to new spectrum for advanced wireless broadband unless the telco sells off its cable network and 50 per cent stake in Foxtel (25 per cent owned by News Corporation, owner of The Australian)

If you want to be part of the future, you need to be separated.

For those who think separation is not a big issue, think what it would be like if Air New Zealand owned the airports and could set access terms for other airlines. Or if Ford owned the roads and set the rules for what other cars could drive on them, and for how much.

So as I said, very pleased with the announcements today, and now working my way through the details.