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Telecom security false alarm; Google's digital divide struggle

This week in telecom news, a government contract is raising concerns about telecom security issues, while Google Fiber struggles to reach low-income users.

This week in telecom news, a foreign telecom company is in the running for a government contract to administer U.S. telephone routes, raising concerns in some organizations about national telecom security. Meanwhile, a recent study by The Wall Street Journal found that Google hasn't quite been able to keep its promise to close the "digital divide" with its Google Fiber rollouts.

Also, AT&T announced that two million cars in the U.S. are connected to its Wi-Fi service, as the provider focuses its efforts on Wi-Fi-enabled homes and cars.

Telecom security community sees threat in telephone routing change

The possibility that a European contractor could end up functioning as a kind of air traffic controller for U.S. telephone calls and text messages is raising alarm among lobbyists concerned that national security could be at risk if the deal goes through.

The New York Times reported last week that U.S.-based Telcordia Technologies, owned by Swedish-based Ericsson, is in the running to win a federal government contract to route millions of U.S. phone calls. Some in the intelligence and security communities, including the FBI, the Drug Enforcement Administration and the Secret Service, are concerned that the U.S. government's ability to trace phone data in law enforcement and identify terrorism threats could be hindered if a non-U.S.-based company wins the contract.

The contract, which allows one company to run the Number Portability Administration Center -- the phone-routing system in question --  stems from a 1997 law allowing telephone users to have number portability when switching carriers. Virginia-based Neustar Inc. has had the federal contract since the late 1990s, but a telephone-industry panel recommended to the Federal Communications Commission that Telcordia receive the new contract.

Telcordia grew out of Bell Communications Research (Bellcore), which was the R&D division of the regional Bell operating companies after the Bell System was broken up in 1984. Telcordia was purchased by Ericsson in 2012, a deal that was approved by the Committee of Foreign Investment in the United States (CFIUS)

Neustar is trying to hold on to the $446 million contract and hired former Secretary of Homeland Security Michael Chertoff to review the security and law enforcement implications of the deal, and write a report for the FCC.

Ericsson said that Neustar is using "scare tactics" and spreading misinformation about potential national security threats if the deal goes through. Ericsson added that the network's operation would be handled by Telcordia in the U.S., which could run it more cheaply than Neustar can.

The FCC has no specific deadline for awarding the phone-routing contract. -- Kate Gerwig

Google Fiber falls short for low-income users

Despite promises to bridge the "digital divide," Google Fiber rollouts have not reached low-income subscribers, according to a survey by The Wall Street Journal.

Conducted in six low-income neighborhoods in Kansas City, Mo., the survey found only 10% of residents have switched to Google Fiber and 5% of residents use a slower version of the fiber service that is free for seven years after a $300 installation fee, which is intended to attract people not already online.

Higher-income neighborhoods saw much different results, with 42% of residents subscribing to the fiber service and 11% of residents opting for the slower service.

The Wall Street Journal noted that the cost of switching to Google Fiber is difficult for residents who live in rental housing and rely on landlords to have the service installed in the building.

"Literally tens of thousands of families who may have wanted to subscribe were never given the chance because of that dependence on landlords," Michael Liimatta, president of the Kansas City nonprofit Connecting for Good, told the news source.

A 2013 Pew Research study on non-Internet users found that 19% of people cite cost as a reason for not connecting. Other major reasons for staying offline are lack of relevance and concerns about ease of use -- 34% and 32%, respectively.

In a blog, Google said that closing the digital divide is a "long-term, complex problem, " and the company is working with partners to get more users connected.

"We also have a goal to make it more affordable, more relevant, and more useful. It takes a lot more than wires to bridge the digital divide, and we can't do it alone," Google said in the blog.

AT&T connects two million Wi-Fi enabled cars

Nearly 2 million cars in the U.S. are connected to AT&T's Wi-Fi service, the provider announced in a filing with the U.S. Securities and Exchange Commission this week. About 500,000 of those connected cars were added in the third quarter of 2014.

AT&T has been focusing its efforts lately on Wi-Fi enabled homes and cars for potentially $1 billion in sales opportunities, according to Bloomberg News. A report from Accenture found that drivers are twice as likely to choose a car based on in-vehicle technology options, rather than performance.

In its filing, AT&T expects to connect nearly half of new Wi-Fi enabled cars in the U.S. by 2015 and more than 10 million cars by 2017. While AT&T did not detail the revenue gained from its connected car platform, the provider said it expects revenues to be "driven initially by wholesale customer relationships with auto manufacturers, with the opportunity to develop a direct retail relationship with drivers."

AT&T launched its connected car platform, AT&T Drive, in January of this year and boasts features including advanced diagnostics, remote services and an automotive app store. AT&T customers can add their connected cars to their data plan for $10 per month.

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