Wireless

Smartphones aren't just smart, they're personal computers. Unlike a desktop or even a laptop PC, those devices and other mobile phones can easily slip out of a pocket or purse, be left in a taxi, or get snatched off a table. They let you store photos, access e-mails, receive text messages, and put you one browser click away from potentially malicious Web sites.

In effect, gadgets like the Apple iPhone and those running Google's Android software can be as risky to use as PCs, except that the wide variety of mobile platforms has deprived malicious hackers of one dominant software element to target, such as they have with Microsoft's Windows operating system on desktops and laptops.

Here is a look at the different types of threats that affect smartphone users and what people can do to protect themselves.

Researchers Collin Mulliner and Charlie Miller at the Black Hat security conference last summer where they proved they could attack my iPhone with a text message, even after a beer or two.

(Credit: Elinor Mills/CNET News)

What's the biggest security threat to my mobile phone?
Losing it. "You are way more likely to leave it in the back of a taxi than to have someone break into it," Charlie Miller, a principal analyst at consultancy Independent Security Evaluators, said in a recent interview. The best way to protect data in the event of losing a device is to not store sensitive information on it, he said. If you must store sensitive information on it, use a password on the phone and encrypt the data. Devices can be configured so that they ask for a password every time e-mail or a VPN is accessed. Use a strong enough password that a stranger can't guess it. And back up your data frequently.

There are also ways to lock the phone remotely or wipe the data if it is stolen. AT&T spokesman Mark Siegel said users who lose their phone should call the company immediately and "with just a keystroke, we can prevent anyone else from using the phone--and from running up charges."

A number of companies offer software and services to protect mobile phones. One of them is a start-up called Lookout that offers a Web-based service that backs up the data, remotely wipes the data if stolen, can help locate the device, and includes antivirus and firewall protection.

Mobile device users should also be careful about leaving the phone unattended, or loaning it to people. Spyware can be installed without you knowing it. For instance, the PhoneSnoop program can be used with BlackBerry devices to remotely turn the microphone on to eavesdrop on nearby conversations.

Can mobile phones get viruses?
Yes. Mobile viruses, worms and Trojans have been around for years. They typically arrive via e-mail but can also spread via SMS and other means. Mobile phone users should be diligent in installing security software and other updates for their devices. All the major desktop security vendors have mobile antivirus and related offerings.

In November, several worms hit the iPhone, but only devices that had been jailbroken so they can run apps other than those approved by Apple. One worm changes the wallpaper on affected devices to a photo of 80s pop singer Rick Astley of "Rickrolling" fame. The second, more dangerous worm attempts to remotely control affected iPhones and steal data such as bank login IDs. Jailbroken iPhones have also been directly hacked via SMS, including by one Dutch hacker who was demanding $7 from victims for information on how to secure their iPhones.

Miller says: "Don't jailbreak your phone. It breaks all the security, basically." If you simply must jailbreak it, you should change the default root password and not install SSH (Secure Shell network protocol).

What are other types of attacks?
Just like with computer users, smartphone users are vulnerable to e-mail and Web-based attacks like phishing and other social-engineering efforts. All attackers have to do is create a malicious Web page and lure someone to visit the site where malware can then be downloaded onto the mobile device. People should avoid clicking on links in e-mails and text messages on their mobile device. (For more anti-phishing tips read "FAQ: Recognizing phishing e-mails.")

SMS offers another avenue for attack. Last year, researchers demonstrated several ways of attacking phone using SMS messages. In one, they exploited a vulnerability in the way the iPhone handles SMS messages. Researchers also showed how an attacker could spoof an SMS to make it look like it comes from the carrier to get the target to either download malware or visit a site hosting it. In another proof-of-concept attack, a text message was used to launch a Web browser on a mobile device and direct it to a site that could host malware. When the attack is used to phish for personal information it is referred to as "SMiShing."

Is it safe to use Wi-Fi and Bluetooth?
Yes and no. If you are doing something sensitive on your phone, like checking a bank account or making a payment, don't use the free Wi-Fi at a coffee shop or other access point. Use your password-protected Wi-Fi at home or the cellular network to avoid what is called as a man-in-the-middle attack in which traffic is intercepted. Pairing a mobile phone with another Bluetooth-enabled device, like a headset, means any device that can "discover" another Bluetooth device can send unsolicited messages or do things that could lead to extra fees, data being compromised or corrupted, data stolen in an attack called "bluesnarfing," or the device being infected with a virus. In general, disable Wi-Fi and Bluetooth unless you absolutely need to use them.

Which is safer: the iPhone or Android?
Apple vets all the apps that are used on the iPhone, and that tight regulation of the Apps store has kept users safe from malicious apps so far. Nothing is foolproof, however. Once apps are approved they can do any number of things. For instance, Apple removed free games in November developed by Storm8 that were found to be collecting users' phone numbers.

From an architecture standpoint, Android offers more granular access control. But the open-source nature of the Android platform means apps aren't as controlled as they are on the iPhone and holes can be introduced by any number of parties. For instance, Miller found a vulnerability in the Android mobile platform last year that could have allowed an attacker to remotely take control of the browser, access credentials, and install a keystroke logger if the user visited a malicious Web page. The hole was not in code written by Google, but was contributed by a third party to the open-source Android Project. However, any risk was mitigated by an application sandboxing technique Google uses that is designed to protect the device from unauthorized or malicious software that gets onto the phone, Google said. Miller recommends that Android users only download software from trustworthy vendors and reputable sites.

Are standard mobile phones safe?
Obviously regular mobile phones don't pose the Web-based threats that smartphones do. But they are still used to store sensitive information that can be accessed by gaining access to the device. For instance, the inbox and outbox for text messages can contain information that can be used for identity fraud, said Mark Beccue, a senior analyst for consumer mobility at ABI Research. "Regardless of what type of cell phone, the most dangerous current threat is through a cellphone's in/out message boxes," he said. "Clear (them) out regularly. Do not transmit full account numbers, PIN or passwords within a text message unless you immediately delete the out box message."

Standard phones that support Java can be susceptible to certain threats that smartphones are. For instance, scammers in Russia and Indonesia are hiding a Trojan in pirated software that surreptitiously sends SMS messages to premium rate numbers - costing as much as $5 each, thus racking up huge bills, said Roel Schouwenberg, a senior antivirus researcher at Kaspersky Lab.

And what about spam?

That's a growing problem on mobile devices. For information on what to do when you get mobile spam read "FAQ: How to vanquish mobile spam."

Apple is set to announce that it has acquired Quattro Wireless for $275 million, several sources confirmed.

The announcement might come as soon as Tuesday, upping the ante in the mobile advertising business significantly.

Google recently forked over an astonishing $750 million for AdMob, a Quattro competitor, which Apple had also made a bid to acquire.

Both start-ups are aimed squarely at the fast-growing market to advertise on smartphones, such as Apple's iPhone and Google's Android devices. In fact, Google will unveil the Nexus One tomorrow, a Android-powered mobile phone it designed and will sell on a Web site instead of via telecom companies.

Waltham, Mass.-based Quattro has raised close to $30 million from two main venture investors-Highland Capital Partners and Globespan Capital Partners. Founded several years ago, its clients include Ford, Disney, and the National Football League.

An Apple spokesperson declined to comment to BoomTown and e-mails to Quattro have not yet been returned.

Story Copyright (c) 2010 AllThingsD. All rights reserved.

Karsten Nohl talks about his project at the Hacking at Random conference in August.

(Credit: Hacking at Random)

A German computer engineer said Monday that he had cracked the secret code used to encrypt most of the world's mobile phone calls.

In an attempt to expose holes in the security of global wireless systems, 28-year-old Karsten Nohl cracked the 21-year-old GSM algorithm, which is used to encrypt 80 percent of the world's mobile calls, reports The New York Times.

Nohl revealed his success at the Chaos Communication Congress in Berlin, Germany. He said that 24 people worked independently to reproduce the code book, or binary code log, for the algorithm, which contains the equivalent of about two terabytes of data.

He announced his intentions to crack the GSM algorithm at a conference in August.

Read more of "Code that encrypts world's GSM mobile phone calls is cracked" at ZDNet's Between the Lines.

A new version of Bluetooth has been revealed by the industry group behind the wireless technology, which is targeting low-energy applications in the health care, fitness, and security markets.

The Bluetooth Special Interest Group announced the adoption of Bluetooth Core Specification version 4.0 on Thursday. The new iteration follows the speed-centric version 3.0 of the Bluetooth specification by just 10 months, but the two versions are intended for different use cases.

"With today's announcement, the race is on for product designers to be the first to market," Bluetooth SIG chief Michael Foley said in a statement. "Bluetooth low-energy modules for all sorts of new products may now be qualified--this is an important step towards our goal of enabling new markets with Bluetooth wireless technology."

Read more of "Bluetooth 4.0 goes low-power for sensors" from ZDNet UK.

WASHINGTON--The wireless and TV broadcasting industries faced off for the first time at a congressional subcommittee meeting on the Hill on Tuesday, setting in motion what could be a long drawn out battle over whether wireless spectrum should be reallocated and where the government will get this new spectrum.

Steve Largent, president and CEO of CTIA, the wireless industry group, and Gordon Smith of the National Association of Broadcasters, were among the witnesses gathered before the House Energy and Commerce Committee's Subcommittee on Communications, Technology and the Internet to discuss what the CTIA and the Federal Communications Commission have called a looming spectrum crisis.

CTIA and FCC Chairman Julius Genachowski have said that finding new spectrum as well as new ways to use existing spectrum more efficiently are top priorities that need to be addressed to keep up with growing demand for new wireless broadband services.

"Spectrum is our industry's backbone and it is what allows us to continue to innovate and create new apps, products, and services," Largent said in a statement. "Without this additional spectrum, our industry will cease to provide U.S. consumers with the most innovative and most competitive wireless offerings in the world."

The hearing comes just weeks after the CTIA ruffled broadcasters' feathers when it filed comments with the FCC suggesting that some of the additional spectrum it seeks for wireless broadband could come from unused TV broadcast spectrum. Broadcasters oppose giving up their spectrum. And some representatives for broadcasters say they don't believe that there is a spectrum crisis.

"There is no shortage of wireless spectrum in this country," said John Hane, counsel in the communications practice group of Pillsbury Winthrop Shaw Pittman, which represents the TV broadcast industry. "There is a lot of spectrum already available that could be used more efficiently. That is why we need these bills to take an inventory of what is currently being used."

Indeed, NAB and CTIA both said they support the passage of the Radio Spectrum Inventory Act, which would require the FCC and the U.S. National Telecommunications and Information Administration (NTIA) to inventory the wireless spectrum available in the U.S. It would also require those organization issue a public report on the government and private uses of the spectrum.

Smith of NAB also said during his testimony that it's important for Congress to look at all spectrum holders to ensure they are using their spectrum efficiently rather than singling out the broadcast industry.

"NAB believes that any inventory of spectrum should be comprehensive," he said in his prepared testimony. "Let's look at all bands and all services, including federal government bands. And let's view how each service is using its existing spectrum."

The NAB also said it supports another bill in the House, called the Spectrum Relocation Improvement Act, which would streamline the process for federal agencies to turn over unused spectrum so it can be auctioned to bidders in the private sector.

It's clear that the CTIA and FCC are taking on a big fight with calls for spectrum reallocation. And Jim Cicconi, senior executive vice president of external and legislative affairs for AT&T, said in an interview Tuesday that he admires the FCC for taking on such a battle.

"We certainly think that there is looming spectrum crisis," he said. "And I give the FCC chairman a great deal of credit for being courageous enough to lay out the problem and to seek what is best for consumers."

But he added that he also believes that the government needs to look at all sources of spectrum in solving this problem.

"That's why we agree there should be a spectrum inventory done," he said.

But skeptics, such as Hane, believe that a full inventory will actually show that no spectrum crisis exists. He argues that Congress may realize once it evaluates the data that there is no real crisis and that the current allocation of spectrum is sufficient to handle future growth.

Specifically, he says that wireless operators could be doing more with Wi-Fi and femto cell technology, which boosts radio signals indoors and then uses a wired broadband connection to send calls and data across a carriers network. He thinks this could help solve some of the efficiency problems that exist today instead of forcing TV broadcasters or government agencies to give up their spectrum.

But the CTIA argues that Wi-Fi and Femto cells are not enough to solve the spectrum shortage. Largent said additional spectrum is necessary to keep the U.S. competitive in the wireless market. And carriers such as AT&T, which is currently facing capacity issues due to heavy use of data services on devices like the iPhone, agree that freeing up more spectrum could help alleviate the problems the company currently faces.

Using a report from the International Telecommunications Union, CTIA calculates that by 2015 the U.S. and other developed nations will need about 1300 MHz spectrum to keep up with growing wireless broadband demand. Largent said in his testimony that the U.S. is lagging other nations in making additional spectrum available. Today, the U.S. has a little less than 500 MHz of spectrum that is commercially available. The trade group is asking the FCC to identify 800 MHz of additional spectrum that can be reallocated for wireless broadband use.

Largent pointed out that countries much smaller than the U.S. have much more spectrum available to them. For example, Germany, which has about 107 million wireless subscribers, will soon have about 645 MHz of spectrum available commercially. And the United Kingdom, which has only about 77 million subscribers will soon have 707 MHz of spectrum available for commercial purposes.

Largent said it is important for Congress to begin the spectrum reallocation process now because it takes years to identify and auction off new spectrum. The past two major FCC spectrum auctions each took more than 10 years to complete from start to finish.

NAB's Smith cautioned congressional leaders to not act hastily in reallocating spectrum. Not only could it hurt free over the air TV, but he said it could stifle innovation in improving digital TV. The U.S. just spent several years and billions of dollars converting to digital TV service, which uses spectrum more efficiently and often provides better service to consumers.

"Our national priorities should recognize the value that free over-the-air broadcasting brings to every American," Smith said in his testimony. "Broadcasting and broadband are not 'either/or' propositions as some have suggested; that's a false choice."

The bills before Congress are just the first step in what is likely to be a long battle for the wireless industry, government agencies and TV broadcasters.

"This is the first round in a 128-round match up," Hane said. "This is just getting started. So it's premature for the CTIA to begin talking about reallocating spectrum when we don't even have a full inventory of the spectrum that's currently being used."

AT&T 3G wireless customers in San Francisco had problems making calls, sending and receiving text messages, and accessing data on Friday evening.

AT&T spokesman Mark Siegel said that starting at about 4 p.m. PT on Friday afternoon, AT&T experienced a hardware issue in San Francisco that disrupted its 3G wireless network within the city. The hardware issue, which he did not elaborate on, was fixed by around 6:15 p.m. PT. And the 3G network has been working fine ever since, he said.

The problem did not affect AT&T's older and slower networks that use 2.5G EDGE or GSM technologies. This means that even though 3G service was disrupted, most customers' devices were able to switch to the slower networks to make calls and to send and receive data. Still, Siegel noted that AT&T detected that customers were having trouble accessing the 3G network, and the company quickly figured out the problem and resolved the issue within hours.

Even though their phones were likely switching over to AT&T's slower technology, many AT&T customers still noticed the issues, with many people reporting having problems with their 3G service on Twitter. Some of these customers said they were unable to access voice, data, or SMS messages at all.

Truth be told, the service disruption in San Francisco was not a really big deal. It affected a handful of customers. But at this point, any network problems, particularly in tech-savvy areas of the country such as San Francisco, only flames the fire of criticism that is heating up around AT&T's 3G service.

The disruption comes at a time when AT&T's reputation for 3G service is already tarnished. For more than a year, iPhone users have complained about dropped calls and poor service on the 3G network. The problems appear to be particularly acute in densely populated urban areas, such as New York and San Francisco.

Last week, Ralph de la Vega, head of AT&T's wireless business, admitted that AT&T is having problems in these cities. He said the company is working on resolving the issues.

De la Vega also admitted that AT&T is struggling to keep up with demand for data on its 3G network. And he alluded to adopting new "incentives" to encourage wireless customers to use less data.

Verizon Wireless, AT&T's biggest competitor, sees AT&T's problems as a golden marketing opportunity. And the carrier started running advertisements recently that highlight AT&T's lack of 3G coverage in some parts of the country. AT&T sued Verizon last month over the ads, accusing Verizon of misleading consumers.

AT&T has dropped its lawsuit, but the publicity around the tiff has likely not endeared AT&T to its customers, nor has it painted the company in a favorable light to anyone considering becoming an AT&T customer.

Meanwhile, AT&T claims in its own ads that it has the fastest 3G wireless network, a notion Verizon disputes. Earlier this year, Verizon also filed a lawsuit against AT&T claiming that the company was not being truthful in its advertising. But Verizon has also decided to dismiss its complaint.

The biggest problem for AT&T is that it is the only carrier in the United States that offers the most data-friendly and data-hungry mobile phone on the market: the iPhone. Analysts say users of the Apple smartphone consume five to seven times more data per month than other wireless subscribers.

AT&T has been upgrading its network to add capacity to keep up with demand, but for many consumers, the upgrades have not solved their service problems. AT&T recognizes more needs to be done. It has launched a new application for the iPhone that lets users report service problems. And the company is urging the Federal Communications Commission to find more wireless spectrum to auction off. But these solutions will take years to implement.

In the meantime, AT&T is faced with a major dilemma. It must continue to market the iPhone and all its bandwidth-hungry applications in order to continue growing its subscriber base, but it also needs to curb data usage until its network can handle the additional load.

In short, AT&T is in an impossible situation. If it backs off on its marketing, it risks losing Wall Street's confidence. If it continues to add new iPhone users, and its service suffers for it, it risks alienating its customers. And then the company may find itself spending the next several years repairing a severely damaged reputation.

Yet another wireless technology has been finalized by its backers, this one promising even faster speeds than current Wi-Fi specs.

The new WiGig standard has been finalized by the Wireless Gigabit Alliance, a group comprised of such heavy hitters as Intel, Dell, NEC, Toshiba, and Microsoft. WiGig promises speeds as fast as 7 gigabits per second, about ten times quicker than Wireless N (802.11n).

But don't get ready to throw out your existing Wi-Fi network. WiGig will only work over short distances, for instance, within a single room. So it's not designed to replace 802.11, but rather supplement it.

As such, its backers see WiGig as the right technology to wirelessly connect home media equipment, such as PCs, mobile devices, TVs, and video and audio players. Its speed could make WiGig the ideal platform for wirelessly streaming high-definition video to TVs and computers. It's also backward compatible with existing Wi-Fi standards.

"When we launched the WiGig Alliance in May, we announced our plan to complete the industry's first unified 60 GHz specification by Q4 2009, and we are proud to deliver on this promise to the industry," said Dr. Ali Sadri, president and chairman of the Wireless Gigabit Alliance. "We're rapidly paving the way for the introduction of the next generation of high‐performance wireless products--PCs, mobile handsets, TVs and displays, Blu‐ray disc players, digital cameras, and many more."

WiGig will run over the 60GHz spectrum, an unlicensed frequency relatively unused at this point. The spec joins an already growing superfast streaming WiFi playing field that includes WirelessHD and Wireless Home Digital Interface (WHDI).

Launched in May with 15 members, the WiGig Alliance has since doubled in size with four new companies joining this past quarter. Nvidia has been added to its board of directors, while AMD, SK Telecom, and TMC have jumped on board as contributor members.

The group said the WiGig specification is now ready for member review and is likely to be available to members who want to push it out by the first quarter of next year.

WASHINGTON, D.C.--The Federal Communications Commission got a slap on the wrist Thursday from federal auditors for not doing enough to protect wireless subscribers.

The Government Accountability Office issued a report Thursday that said the FCC needs to improve oversight of the wireless industry to protect consumers. The agency said the FCC needs to do a better job enforcing consumer protection rules and educating the public about how they can submit complaints when they have experienced problems with their carriers.

The report was requested by Rep. Edward Markey (D-Mass.) when he was chairman of the House Subcommittee on Telecommunications and the Internet.

The survey of more than 1,100 cell phone users found that the vast majority of wireless subscribers, 84 percent to be exact, are satisfied with their mobile phone service, which is good news for the industry. But for the millions of wireless consumers who are dissatisfied, the report determined that the FCC is not doing enough to help them resolve their problems or protect their interests.

One of the biggest issues uncovered in the report is the fact that carrier early termination fees are preventing dissatisfied consumers from switching carriers. The report found that among consumers who wanted to switch carriers but did not, about 42 percent said they didn't switch because of the early termination fees that carriers charge customers when they end their contracts early. These fees apply to consumers who sign up for carrier contracts and buy a subsidized device. The fees can cost anywhere between $150 and $350.

The industry argues that the fees are set so that carriers can cover the cost of subsidizing the phones. Congress and the FCC have questioned this practice and now all four major U.S. wireless carriers prorate their early termination fees.

The GAO report also found that the FCC is not providing enough oversight in how carriers resolve complaints. The FCC receives about 20,000 complaints from consumers per year, and it forwards these complaints to carriers. But the GAO said the agency does not provide enough oversight to make sure those issues are resolved.

"FCC also lacks goals and measures that clearly identify the intended outcomes of its complaint processing efforts," the report said. "Consequently, FCC cannot demonstrate the effectiveness of its efforts to process complaints."

Other issues cited in the report include billing problems. According to the report, about 34 percent of mobile-phone customers received unexpected charges on their bills. And roughly 31 percent had difficulty understanding their bill.

CTIA, the trade group that represents the mobile phone industry, pointed to the positive aspects of the report that found that 84 percent of customers were satisfied with their service.

"In this fiercely competitive industry, our members work very hard for each customer to provide them with the best products and services," Steve Largent, CTIA's president and CEO, said in a statement.

The GAO report suggests the FCC develop goals for handling consumer complaints. And it recommends that the agency analyze the complaints to identify trends and to see if carriers are actually complying with existing rules. The report also suggests the FCC come up with better ways to communicate with state officials to address some of these problems.

"The FCC can--and must--do more to make sure consumer concerns are resolved by wireless carriers and oversee the wireless industry with a greater focus on consumer protection," Senate Commerce Committee Chairman John Jay Rockefeller (D-W. Va.), said in a statement. "It is time for the agency to take real action to better protect wireless consumers."

At the telecommunications and policy summit here on Thursday, Ruth Milkman, chief of the wireless telecommunications bureau at the FCC, said the agency is already addressing some of these issues. Last week it opened an inquiry into Verizon's recent early termination fee hike. Verizon Wireless raised the fee for terminating a contract for a smartphone to $350 from $175.

In a formal response to the GAO report, the FCC said it has already launched three proceedings examining mobile-phone practices. And the FCC also noted that it's developing a new system for tracking complaints.

Correction made December 9 at 7:51 p.m. PDT: An earlier version of this story incorrectly stated that AT&T had announced a tiered pricing plan. The company is considering incentives to curb heavy wireless data usage.

AT&T wants its iPhone users to use less wireless data, and it may consider new pricing models to curb users' data usage as it tries to keep up with growing demand.

At an investor conference in New York on Wednesday, Ralph de la Vega, AT&T's head of wireless, said the wireless operator is considering incentives to get consumers to reduce their data usage.

De la Vega said 3 percent of smartphone users are consuming 40 percent of the network capacity.

"We're going to try to focus on making sure we give incentives to those small percentages to either reduce or modify their usage so they don't crowd out the other customers in those same cell sites," said de la Vega according to a transcript of the conference. "And you'll see us address that more in detail."

He went on to say that most consumers aren't aware which applications use a lot of bandwidth and which do not. For example, email does not consume a lot of bandwidth, whereas streaming video and audio do consume a great deal of bandwidth.

"What's driving usage on the network and driving these high usage situations are things like video, or audio that keeps playing around the clock," he said, according to the transcript provided by AT&T. "And so we've got to get to those customers and have them recognize that they need to change their pattern, or there will be other things that they are going to have to do to reduce their usage."

AT&T has been struggling to keep up with demand for wireless-data usage on its network. The iPhone, launched more than two years ago, has revolutionized mobile Web usage. The device, which was built more for accessing the Net than making calls, can access more than 100,000 applications, many of which use the mobile Internet.

iPhone users on average consume five to seven times more data per month than average wireless subscribers, according to analyst firm Sanford Bernstein. And all this usage is clogging the network, causing many iPhone users, especially in large cities such as New York and San Francisco, to experience dropped calls, slow 3G service, and issues connecting to the network at all.

AT&T has been reluctant to admit that there is a problem, but recently, the company has acknowledged that problems exist. According to The Wall Street Journal, de la Vega admitted that New York and San Francisco have been experiencing service issues. And the company recently launched an iPhone application that allows users to report service problems.

AT&T has been upgrading its network to the next generation of 3G wireless service to increase network capacity. But now the company is saying it needs to actually curb usage in order to get a handle on demand.

De la Vega didn't provide specifics about how the company would actually get consumers to use less data. But he said that a usage-based pricing model may be considered in the future.

"I think longer-term, there's got to be some sort of a pricing scheme that addresses the usage," he said. "But that's going to be determined by industry competitive factors, regulatory factors and customer [successes]."

The idea is that usage based pricing may actually deter consumers from using high-bandwidth applications. Unlike voice service, which is already tiered, wireless-data service is charged at an all-you-can-eat flat rate. iPhone users select a voice plan, then pay an extra $30 a month for unlimited data usage. By contrast, AT&T has limited the amount of data that its wireless-data card users can consume each month to 5GB. After that limit has been reached, customers who use the AT&T network to access the Net from their laptops get charged more based on their usage.

But asking iPhone users and other smartphone subscribers to cut back on their data usage may be somewhat unrealistic, and it could actually stifle innovation and development of the mobile Internet.

AT&T seems to realize that this is not a long-term solution. And not only is the carrier upgrading its network, but it's also asking the Federal Communications Commission to find more spectrum to auction off that can be used for wireless-data services. Jim Cicconi, senior executive vice president of external and legislative affairs for AT&T, said in a separate interview with CNET on Wednesday that something needs to be done to deal with the flood of wireless-data traffic.

Cicconi and AT&T's CEO Randall Stephenson met with FCC staff members earlier this week to discuss the spectrum issue.

"Clearly, there is a looming crisis that needs to be addressed when it comes to spectrum availability," Cicconi said in an interview at his office in Washington, D.C. "Wireless-data usage is growing far faster than anyone had expected. And if we don't do something soon, we will run out very fast. And then we will have to start telling wireless customers that they can't do all the things they want to do with their devices."

FCC Chairman Julius Genachowski has made freeing up more spectrum a top priority. And he has already proposed that the FCC look into taking some spectrum away from TV broadcasters to give to wireless operators to deliver more wireless-broadband services.

Naturally, the TV broadcasters oppose such a proposal.

Verizon Wireless, AT&T's main competitor, has already amended wireless-data pricing for its low-end phones in an effort to squeeze out more revenue from users. But drastic changes in data pricing could scare off some customers and curb smartphone adoption altogether.