Sen. Schumer

That new Internet-enabled television in your living room may be allowing virtual Peeping Toms to watch and listen to you because manufacturers never bothered with adequate security measures to keep unwanted guests out.

Sen. Charles Schumer (D-N.Y.) is calling on major television manufacturers to create a uniform security standard to stop the hacking before it becomes widespread.

A security research group recently highlighted security flaws in so-called “smart” TVs that make it simple for anyone to hack the television’s internal microphone and embedded camera originally designed for video chatting. The security group warned that almost anyone could begin eavesdropping within minutes of identifying a vulnerable television — most lacking any significant security measures to prevent unauthorized video spying.

“You expect to watch TV, but you don’t want the TV watching you,” said Schumer. “Many of these smart televisions are vulnerable to hackers who can spy on you while you’re watching television in your living room. Our computers have access to firewalls and other security blocks but these televisions do not and that’s why manufacturers should do everything possible to create a standard of security in their internet-connected products.”

The security vulnerability exists because many modern “smart” TVs are now connected to the Internet. To enhance the social experience, many of these televisions are equipped with microphones and unobtrusive video cameras similar to those found in a laptop. But many consumers do not realize these devices could allow anyone on the outside to activate the camera and microphone unbeknownst to the owner and quietly watch and listen in on what is happening inside a home.

Particularly vulnerable

Samsung televisions starting with the 2012 model year were called particularly vulnerable to hacking. Researchers found they could not only access cameras and microphones, they could also tap into the television’s web browser, steal user accounts and passwords, and redirect consumers to hacked websites designed to capture personal information including credit card numbers and bank account information.

Some manufacturers have not taken responsibility for the security flaws, suggesting worried consumers put black electrical tape over the camera or unplug the TV when not in use. Samsung has issued patches for many of the affected devices and promises more changes in future models.

Schumer called current measures inadequate and too often leave the burden solely on consumers. He wants an industry security standard implemented that includes a firewall and other security measures that keep unwanted visitors out without forcing consumers to disable features they paid to have on their television.

[flv width=”368″ height=”228″]http://www.phillipdampier.com/video/WTEN Albany Schumer Says TV Could Be Watching You 8-4-13.mp4[/flv]

Your Internet enabled television set may be vulnerable to hacking. WTEN in Albany reports Sen. Schumer wants manufacturers to create a uniform security standard to keep unwelcome visitors out of your living room. (2 minutes)

A Wall Street analyst has urged Time Warner Cable’s competitors to deny promotional pricing to new customers switching providers because of the CBS blackout.

“While Time Warner Cable’s competitors appear to be resisting predatory marketing campaigns to take advantage of the CBS blackout, at least so far, we believe they need to go even further to cause real industry change,” wrote BTIG Research’s Richard Greenfield. “While TWC’s competitors cannot stop consumers from switching their video service provider due to the loss of CBS, they could make it less appealing to switch due to a programming dispute blackout.”

Greenfield wants providers to support solidarity against programmers like CBS by not taking advantage of the situation to poach subscribers away from Time Warner with attractive promotional packages and pricing. He believes it will ultimately lead to lower prices for consumers.

“The only way to begin to shift leverage in these content negotiations is for [providers] to start supporting each other in programming disputes, rather than try to steal each others’ subscribers,” said Greenfield. “We believe it would make strategic sense for all major [providers] to add a script to their website and call-center new customer acquisition process that asks whether a customer is switching due to the Time Warner CBS dispute (or whatever disputes are currently on-going in the country).  If the answer is ‘Yes’ we believe that consumer should not be offered promotional pricing and should be informed that these types of disputes are becoming a problem for all video providers — essentially teaching consumers that ‘switching won’t help’ during these short-term programming battles.”

DirecTV is among the first to express solidarity with its cable competitor, issuing a statement last weekend:

DirecTV has certainly had its share of these battles, so we applaud Time Warner Cable for fighting back against exorbitant programming cost increases. We are also appalled to learn that CBS is now punishing DirecTV customers, who may happen to have Time Warner as their Internet provider, by denying them access to CBS content online.

Greenfield’s suggestion essentially asks that cable operators and telephone companies agree not to compete. His idea also penalizes consumers caught in the middle of programming disputes that customers ultimately pay for in the form of higher bills. We think it comes dangerously close to illegal, anti-competitive behavior. Even Greenfield seems to understand his suggestion comes close to the line.

“It is obviously illegal for MVPD’s to collude,” Greenfield concludes. “However, it is not illegal for each to do what is right for the future of their business, even if it means passing on short term opportunity.  Tacit cooperation is the best strategy we see available, barring government intervention.”

What is right for business is not right for consumers. Stop the Cap! strongly recommends those signing up with a competitor over programming blackouts avoid explaining their reasons for switching. As well as being none of their business, being candid could cost consumers valuable money-saving discounts and promotions that other new customers receive.

We believe the most effective “game-changer” in the fight between providers and broadcasters demanding 600% rate increases for programming available for free on any television is technology like Aereo, which picks up over-the-air stations with dime-sized antennas and provides customers with online streams of those channels. This technology, if found legal, could eventually be adopted by cable operators to avoid retransmission consent payments altogether or use as effective leverage in negotiations. Aereo is a win-win for providers and consumers. Telling providers to deny consumers new customer pricing just because someone wants to get missing programming back is not.

We’d remind Greenfield of this universal truth: cable bills never go down unless a customers downgrades or threatens to leave.

Analysts were surprised at the premium price AT&T agreed to pay when it announced last month it was acquiring Leap Wireless — owner of the Cricket brand prepaid cell phone service — for $1.2 billion plus assuming $2.8 billion in net debt. But newly released documents show AT&T will win significant tax concessions allowing it to shelter hundreds of millions in revenue from the tax man.

In fact, the more Leap Wireless piles up debt and hemorrhages customers, the more AT&T’s taxes go down.

If AT&T wins approval for its deal to take over Cricket’s dwindling customer base, wireless spectrum, and the company’s existing wireless network, it will receive 20 years of tax savings from “pre-change” losses, offering AT&T a tax shelter worth $155 million in taxable income a year. That means AT&T will see at least a $60 million reduction in its tax bill each of the first five years after the deal is approved. Then the savings decrease somewhat for the next 15 years as AT&T gets to write off $35 million annually.

Despite Cricket’s efforts to promote its bundled music and prepaid cell services as an industry game-changer, customers did not agree.

On Thursday, Leap admitted Cricket lost $163 million, or $2.09 per share, on revenue of $731 million for the quarter ended June 30. The company also saw 18 percent of its customers leave over the past year, with 4.8 million remaining. Leap management admitted it was becoming increasingly difficult to compete because its network was smaller than its larger competitors and Cricket had trouble acquiring the hottest smartphones to sell to customers.

Leap has been peddling Cricket on the wireless market since 2009 with no takers, even after it began to slowly pursue a network upgrade to 4G LTE service that was more promise than reality. Recent disclosures show the company lacked the money to expand more quickly.

AT&T still showed little interest in the little carrier that couldn’t over the course of 2012.

In May, as T-Mobile closed in on its takeover of similarly sized MetroPCS, things changed. AT&T ended up being the sole bidder for Cricket, offering $9.50 a share.

AT&T raised its offer to a whopping $15 a share after Leap executives promoted Cricket as a useful brand for AT&T to improve its standing in the prepaid market. But executives also sold AT&T on the fact Leap was lousy in debt, which opened up significant tax savings opportunities for AT&T.

BTIG Research’s Walter Piecyk thinks AT&T is shelling out a lot for Leap, even after considering the tax and spectrum benefits. But more than anything else, AT&T may have been willing to pay a premium for Cricket just to make sure none of its competitors, particularly T-Mobile, got there first.

The deal still requires approval by the Federal Communications Commission with a likely weigh-in from the Department of Justice’s Antitrust Division.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Bloomberg ATT Buys Leap Wireless Who Wins 7-15-13.flv[/flv]

Moffett Research senior research analyst Craig Moffett tells Bloomberg News AT&T’s acquisition of Leap Wireless sticks it to competitors, in particular T-Mobile. AT&T’s purchase blocks T-Mobile and other carriers from getting access to Cricket’s wireless spectrum. Moffett also talks about the trend towards wireless mergers and acquisitions and how Verizon and AT&T got stuck with unwanted, unsold iPhones that could cost the companies millions. (6 minutes)

A Samsung femtocell offered by Verizon Wireless.

The wireless industry’s push to offload wireless traffic to microcells and other short-range femtocell base stations has opened the door for hackers to intercept voice calls, SMS text messages and collect enough identifying information to clone your phone.

Researchers from iSec Partners demonstrated femtocell vulnerability last month at the Black Hat conference in Las Vegas, successfully recording phone calls, messages, and even certain web traffic using a compromised $250 Samsung “network extender” sold to consumers by Verizon Wireless.

Once anyone gets within 15-20 feet of a femtocell using compatible network technology (CDMA or GSM), their device will automatically attempt to connect and stay connected to a potentially rogue cell signal repeater as long as the person remains within 50 feet of the base station. Many phone owners will never know their phone has been compromised.

“Your phone will associate to a femtocell without your knowledge,” said Doug DePerry from iSEC Partners. “This is not like joining a Wi-Fi network. You don’t have a choice. You might be connected to ours right now.”

During the demonstration, the presenters were able to record both sides of phone conversations and compromise the security of Apple’s iMessage service. All that was required was to trick Apple’s encrypted messaging service to default to exchanging messages by plain text SMS. Phones were also successfully cloned by capturing device ID numbers over Verizon’s cell network. Once cloned, when the cloned phone and the original are connected to a femtocell of any kind, at any location, the cloned unit can run up a customer’s phone, text, and data bill.

“Eavesdropping was cool and everything, but impersonation is even cooler,” DePerry said.

Although the very limited range of femtocells make them less useful to track a particular person’s cell phone over any significant distance, installing a compromised femtocell base station in a high traffic area like a restaurant, mall, or entertainment venue could allow hackers to quietly accumulate a large database of phone ID numbers as people pass in and out of range. Those ID numbers could be used to eventually clone a large number of phones.

iSEC Partners believe femtocells, as designed, are a bad idea and major security risk. Although Verizon has since patched the vulnerability discovered by the security group, DePerry believes other vulnerabilities will eventually be found. He worries future exploits could be used to activate networks of compromised femtocells controlled by unknown third parties used to snoop and steal from a larger user base.

iSEC says network operators should drop femtocells completely and depend on implementing security at the network level, not on individual devices like phones and cell phone extenders.

AT&T’s femtocells support an extra layer of security, so they are now unaffected by hacking. But that could change eventually.

“It’d be easy to think this is all about Verizon,” said Tom Ritter, principal security engineer at iSec Partners. “But this really is about everybody. Remember, there are 30 carriers worldwide who have femtocells, and [that includes] three of the four U.S. carriers.”

iSec Partners is working on “Femtocatch,” a free tool that will allow security-conscious users to automatically switch wireless devices to “airplane mode” if they ever attempt to connect to a femtocell. The app should be available by the end of August.

Frontier is enticing Rochester-area customers to “say goodbye to Time Warner Cable.”

Time Warner Cable’s relentless rate increases, particularly on its broadband service, are leading to calls for more competition in the upstate New York cities of Buffalo and Rochester, now dominated by Time Warner, Verizon Communications (Buffalo), and Frontier Communications (Rochester).

“Bloodsuckers,” came the terse reply of Cathy Slocum.

Frontier Communications is making the most out of the cable company rate increases with a new “Goodbye Time Warner” ad campaign (that incidentally includes a link to Stop the Cap!’s coverage of TWC’s modem fee). It is pitching $19.99 broadband price-locked for two years — an improvement over its earlier offers thanks to a major reduction in sneaky fine print.

Customers can get up to 6Mbps service (up to 12Mbps available in limited areas) at the special offer price as long as they keep a Frontier landline active with a qualifying calling package. There are no contracts with this promotion, but Frontier’s pesky $9.99 “Broadband Processing Fee” applies if customers ever choose to disconnect Internet service. A free Wi-Fi Internet router is included and the company claims it offers “free Internet activation.” But an installation fee still applies, discounted if customers choose the self-install option. Taxes, governmental and other Frontier-imposed surcharges also apply and new Frontier customers are subject to credit approval, which will show up as an inquiry on your credit report.

In the past, we have taken Frontier to task for its expensive early termination and modem rental fees, as well as its bundling requirements, but the company has since ditched most of these as part of its new self-proclaimed reputation as “BS free.”

Unfortunately, Frontier’s DSL speeds can wildly vary, so if you take advantage of their offer, be sure to verify the speed actually get at your home or office. If the service proves too slow to your liking after installation, you can negotiate canceling within the first two weeks without any termination fees.

Where FiOS is available in Buffalo, Verizon is offering promotional pricing on its bundled services, including an $84.99 offer including 50/25Mbps Internet with a Verizon landline offering unlimited calling. This is cheaper than Time Warner’s offer with considerably faster upload speeds and no modem fees. In parts of Buffalo, Verizon is authorized to offer broadband and phone service only, although several suburbs have franchise agreements that allow the phone company to also sell television service. A large part of the city and other suburbs are still stuck with Verizon’s copper network, however, which means DSL is the best they can offer.

Time Warner Cable’s new customer promotions, useful when negotiating a customer retention deal, have resumed bundling Standard tier (15/1Mbps service) Internet speeds into most offers. Previously, the company bundled 3Mbps service in many of its promotions. Broadband-only customers can pay as little as $34.99 a month for a year of Internet service at 15/1Mbps speeds, assuming one buys their own cable modem. A double play offer of broadband basic television (around 20 channels, mostly local over-the-air) with 30/5Mbps Internet service is now priced at $94.97 a month after a $5.99 mandatory modem rental fee is included (not optional with this package).

Time Warner Cable executives have repeatedly told investors its higher priced promotions are intentional to increase revenue and profits even if the company loses customers by charging higher prices.

Verizon FiOS offers in the Buffalo area.

“I moved here from the New York City area a year ago where we had two cable companies — Cablevision and Verizon FiOS,” noted Stephen O’Brien. “Competition changes everything. Not only were the rates much lower than here, the companies would offer you all kinds of incentives to switch from one to the other. One time we switched and got a free iPod Touch. The argument that the rate increase is needed to cover investment is the biggest red herring of all — Cablevision and FiOS spent many times more on infrastructure, yet their rates were much lower.”

Stop the Cap! recommends Time Warner Cable customers check out our guide to getting the best deal possible from TWC.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WGRZ Buffalo Time Warner Rate Hikes 8-6-13.flv[/flv]

WGRZ in Buffalo reports upstate New York residents are upset about two recently announced broadband rate hikes. Time Warner Cable says it needs the money to keep up its broadband service’s reliability. What alternatives do customers have?  (2 minutes)