• Orphan works–books whose copyright holders are unknown–will be overseen by an independent trustee who will administer their licensing, not by Google.
• Books published outside the United States, United Kingdom, Canada and Australia will be excluded from the settlement.

Those are substantive alterations, but they clearly haven’t placated critics who accuse Google (GOOG) of attempting an “end-run around copyright law as we know it.”

The Open Book Alliance–a coalition whose members include the Internet Archive, Amazon (AMZN), Microsoft (MSFT) and Yahoo (YHOO)–has blasted the revision twice already, decrying it as “a sleight of hand” intended to distract people from Google’s continued efforts to establish a monopoly over digital content access and distribution.

“The proposed changes fail to address this deal’s fundamental flaws,” Open Book Alliance Co-Chair Gary Reback said in a vitriolic statement. “Despite Google’s effort to spin this deal, it does nothing to promote competition nor does it reform Google’s exclusive access and monopoly hold on this digital database of books. Their proposed ‘unclaimed works fiduciary’ will have zero authority to promote competition or expand access. It is a cynical diversion away from the parties’ continued reliance on the discredited argument that competitors can obtain access through the very means Google did–getting sued for copyright infringement and abusing the class action process. This deal remains rife with anti-trust, class action and copyright violations.”

Apple TV 3.0 is largely as rumored: Adding support for Internet radio, Genius Mixes, iTunes LP and iTunes Extras (bonus clips, interviews, etc.). But it boasts another new feature as well: A redesigned user interface.

Whether the debut of Apple TV 3.0 heralds a hardware refresh of the device itself is anyone’s guess. It is worth noting, though, that there’s been quite a bit of speculation recently that Cupertino is working on an overhauled device that will offer DVR capabilities and support iTunes TV show subscriptions.

As Piper Jaffray analyst Gene Munster wrote back in August: “Apple could leverage its deep library of content with many network and cable channel content owners to provide unlimited access to a sub-library of its TV shows for a standard monthly fee ($30 or $40 per month).”

According to Munster, “Such a product would effectively replace a consumer’s monthly cable bill (~$85/month) and offer access to current and older episodes of select shows on select channels. The selection would dictate the value, and several tiers could be offered, but we see this as one way for Apple to leverage its large iTunes content library as well as its unique Apple TV hardware in order to get digital video to the TV for a price significantly less than the average cable or satellite TV bill.”

Sounds sweet, right? And it would be sweeter still if it were to offer App Store support and allow users to control games and other apps via iPhone or iPod touch …

Below, the official Apple (AAPL) release:

Apple Introduces Apple TV 3.0 Software With Redesigned User Interface

Enjoy iTunes Extras, iTunes LP & Genius Mixes on Your HD TV

CUPERTINO, Calif., Oct. 29 — Apple® today introduced new Apple TV® 3.0 software featuring a redesigned main menu that makes navigating your favorite content simpler and faster, and makes enjoying the largest selection of on-demand HD movie rentals and purchases, HD TV shows, music and podcasts from the iTunes® Store even better on your TV. You can now enjoy iTunes Extras and iTunes LP in stunning fullscreen with your Apple TV, as well as listen to Genius Mixes and Internet radio through your home theater system. The new Apple TV software is available immediately free of charge to existing Apple TV owners, and Apple TV with 160GB capacity is available for just $229.

“The new software for Apple TV features a simpler and faster interface that gives you instant access to your favorite content,” said Eddy Cue, Apple’s vice president of Internet Services. “HD movies and HD TV shows from iTunes have been a huge hit with Apple TV customers, and with Apple TV 3.0 they get great new features including iTunes Extras, Genius Mixes and Internet radio.”

The redesigned main menu on Apple TV gives you instant access to your favorite content. Recently rented or purchased movies, as well as other content including TV shows, music, podcasts, photos and YouTube, are accessible directly from the new main menu. The new software also allows Apple TV users to enjoy stunning fullscreen iTunes Extras and iTunes LP, including great new movie titles such as “Star Trek” or classics like “The Wizard of Oz” and albums such as Taylor Swift’s “Fearless (Platinum Edition)” and Jack Johnson’s “En Concert.” iTunes Extras gives movie fans great additional content such as deleted scenes, interviews and interactive galleries. iTunes LP is the next evolution of the music album, delivering a rich, immersive experience for select albums on the iTunes Store by combining beautiful design with expanded visual features like live performance videos, lyrics, artwork, liner notes, interviews, photos, album credits and more.

Now Apple TV users can enjoy Genius Mixes through their home theater system and listen to up to 12 endless mixes of songs that go great together, automatically generated from their iTunes library. Customers can also enjoy Internet radio, allowing them to browse and listen to thousands of Internet radio stations, as well as tag favorite stations to listen to later. Apple TV’s support of HD photos is enhanced with iPhoto Events, which simplifies finding your favorite photos on Apple TV, as well as iPhoto® Faces, which gives access to photos organized by people identified in iPhoto.

Apple TV users have direct access to a catalog of over 8,000 Hollywood films on iTunes including over 2,000 in stunning HD video available for rent or purchase. Users can also choose from a selection of 11 million songs, 10,000 music videos and over 50,000 TV episodes to purchase directly from their Apple TV or browse and enjoy the iTunes Store podcast directory of over 175,000 free video and audio podcasts. Purchases downloaded to Apple TV are automatically synced back to iTunes on the user’s computer for enjoyment on their Mac® or PC or all current generation iPods or iPhones.* iPod touch® or iPhone® users can download the free Remote app from the App Store to control their Apple TV with a simple tap or flick of the finger.

Much has changed at Yahoo since May 17, 2006, the last time the company held an investor day gathering. In May 2006, Yahoo’s shares traded at about $30 and the company claimed 28.98 percent of the U.S. search market. Today, its stock is worth a little over $16 and its share of the search market has fallen to 18.8 percent.

Ugly declines, both of them. Fitting then, that Yahoo CEO Carol Bartz, speaking at the company’s first investor day gathering in three-and-a-half years, would describe the company’s future as “a journey back to respect.” “We are not here to wow you today,” Bartz said “We are here to intrigue you.”

What follows is a brief historical overview of Yahoo (YHOO)–“Yahoo was the big shining star, then wasn’t”–and then a redefinition of the company as that more intriguing entity to which Bartz referred earlier. “We are not a search company, we are not a display company,” she said. “We are a broad-based Internet company….We are the largest communications engine in the world.”

Communications engine? Sounds like a sneaky way of avoiding comparisons with Google (GOOG). Not that anyone makes them anymore.

Anyway, Bartz continues, playing up Yahoo’s scale, diversity of content and technology. “We combine amazing editorial with very sophisticated machine-learning,” she says. But what makes Yahoo most unique, says Bartz, is the company’s ability to learn from its mistakes. “We have fallen and we really want to get back up. If you haven’t had good times and bad times, you don’t know what you’re doing. We prefer the good times. We have passion to get back there. Today is the start of that.”

Reporting third-quarter results after market close Thursday, Google (GOOG) topped estimates, posting net income that rose to $1.64 billion, or $5.13 a share, from $1.29 billion, or $4.06 a share in the same period last year. Net revenue for the period ended in September rose nearly one percent to $4.38 billion. Excluding items, earnings for the quarter were $5.89 a share. Consensus estimates had been calling for $5.42 a share and $4.24 billion in net revenue. The chart below shows revenue sources within Google (click to enlarge).

Impressive. Seems paid clicks grew 14 percent compared to the same period last year, and four percent compared to the prior period. Cost per click was down six percent year over year, but up five percent sequentially.

“Google had a strong quarter–we saw seven percent year-over-year revenue growth despite the tough economic conditions,” said CEO Eric Schmidt. “While there is a lot of uncertainty about the pace of economic recovery, we believe the worst of the recession is behind us and now feel confident about investing heavily in our future.”

Good to hear. Google’s shares, which have already risen more than 50 percent in the past six months, are on another upward tear. They rose 1.82 percent to $539.27 on the news in after-hours trading.

Earnings call highlights via The Wall Street Journal’s Andrew LaVallee:

4:32: Call starts. The cast is the same as last quarter: Mr. Schmidt, CEO; Patrick Pichette, CFO; Jonathan Rosenberg, SVP of product management; and for the first time, Nikesh Arora, president of global sales operations and business development. But there’s a twist–they’ll be using Google’s moderator to vet questions with voters. They vote on “the most relevant questions,” which go to the Google execs, the operator says.

4:35: “While there’s obviously a lot of uncertainty about the pace of the economic recovery, we believe the worst of the recession is behind us,” Schmidt says.

He adds that Google now has the confidence to invest “heavily” in its future. “It’s all good news from our perspective, at least in looking at the quarter.”

4:37: Says “we want to really get to the perfect search engine” and that many advertisers would like to spend more with Google if the company’s product allow them to do that.

4:38: Schmidt says “we’re open for business in making strategic acquisitions, both large and small.”

4:39: It’s Pichette’s turn. “At a high level, we’re very pleased with our Q3 results,” he says. The quarter benefited from growth in AdSense for content and display initiatives.

4:41: U.S. revenue up 4% to $2.8 billion. U.K. revenue decline affected by foreign exchange as well as ongoing macroeconomic weakness, Pichette says.

4:42: Operating expenses rose from the prior quarter, mostly due to payroll, equipment and facilities-related expenses.

“We believe the worst of the recession is behind us,” he says.

4:44: Brazil was a standout in Latin America, Arora says. We’re beginning to see signs of recovery in Europe and Africa, particularly Spain. In Asia, China performed strongly as an emerging market.

4:46: Looking at the display-advertising business, those have also shown strong results, he says.

On YouTube, new advertisers and partners are helping with monetization efforts. Ninety percent of the top 50 advertisers have run YouTube campaigns with successful results–recent examples include McDonald’s and Hewlett-Packard.

4:47: YouTube has signed deals with all four major record labels and several independent labels. Earlier today, Google announced a partnership with Channel 4 in the U.K., which will bring full-length programming to the video-sharing site.

4:48: Arora adds a personal shout-out to the sales team.

4:50: Rosenberg calls the new AdWords front-end one of the company’s biggest investments of the year. Advertisers have new reports, can run more efficient campaigns and can get new features faster thanks to the platform, he says.

Essentially, Wi-Fi Direct turns supporting devices into access points, allowing them to connect to one another without joining a traditional network. They’ll support typical Wi-Fi ranges and the same data-transfer rates, which in the case of 802.11n is some 30 times faster than the three megabits per second for Bluetooth.

“Wi-Fi Direct represents a leap forward for our industry. Wi-Fi users worldwide will benefit from a single-technology solution to transfer content and share applications quickly and easily among devices, even when a Wi-Fi access point isn’t available,” Wi-Fi Alliance Executive Director Edgar Figueroa said in a statement. “The impact is that Wi-Fi will become even more pervasive and useful for consumers and across the enterprise.”

And Bluetooth inevitably less so. Especially since Wi-Fi Direct will be available as a software upgrade for existing Wi-Fi devices. Why wait around for high-speed Bluetooth, which itself will rely on Wi-Fi for high speed data transfers, when you can use Wi-Fi Direct for your personal area network?

For one thing, Palm (PALM) is waiving its $99 app submission fee for open-source webOS apps. For another, it’s giving developers the option of selling their apps through the App Catalog or via a Web-based storefront.

The first option entails a $50-per-app fee and requires review and approval by Palm. This includes the chance to bid on priority placement in the App Catalog if developers wish. The second option requires neither fee nor review and allows developers to distribute their apps over the Web with Palm handling transactions and fulfillment–assuming the apps conform to Palm’s content and user interface criteria.

“By opening up a web distribution channel free from our review, we are placing a great deal of trust in you–the developer–and the community,” Palm said on its blog. “We want you to embrace these principles, establish a high bar of quality and user experience, and help enforce these rules.”

An interesting strategy–assuming developers do establish the high bar of quality to which the company refers. Certainly, it’s very different from Apple’s (AAPL) approach, which includes an application-approval process criticized as obtuse and byzantine. By offering developers the chance to pay to promote their software in its Apps Catalog or to distribute it via the Web without having to suffer through an approval process, Palm is positioning its program as the polar opposite of Apple’s. Question is, are these enticements enough to win their attention?

In a letter submitted to Apple and Palm today, the group dismissed Palm’s claim that Apple has violated its USB-IF Membership Agreement. Worse, the Forum took issue with Palm’s alleged use of Apple’s vendor identification number, which it says violates USB-IF policy.

Palm (PALM) had argued that Apple (AAPL), by issuing an update to iTunes that used the USB vendor ID number to prevent the software from automatically transferring content to any non-Apple USB device, had violated “the letter and spirit of the USB-IF Membership Agreement,” which is “intended to facilitate interoperability between USB devices, not to regulate the content that flows between them.”

But the USB-IF didn’t quite see things that way. “In the view of the USB-IF, Palm’s allegation (if true) does not establish that Apple is using its Vendor ID (VID) contrary to the USB-IF’s policies,” the group said. “Therefore, under present USB-IF policies, the USB-IF does not consider the alleged use, without more, to be ‘improper.’”

Ugly news for Palm, and it only gets worse–because the USB-IF goes on to suggest that Palm itself is violating its Membership Agreement by using Apple’s vendor ID number to disguise the Pre as an Apple device. From the USB-IF letter:

… Your letter also states that:

“Palm will shortly issue an update of its WebOS operating system that uses Apple’s Vendor ID number for the sole purpose of restoring the Palm media sync functionality.”

I attach for your information the USB-IF’s adopted and published policy regarding Vendor Identification Numbers (VIDs). Under the Policy, Palm may only use the single Vendor ID issued to Palm for Palm’s usage. Usage of any other company’s Vendor ID is specifically precluded. Palm’s expressed intent to use Apple’s VID appears to violate the attached policy.

Please clarify Palm’s intent and respond to this potential violation within seven days.

Uh oh.

Clearly, this isn’t the outcome Palm imagined when it first decided to up the ante in its quaint little cat-and-mouse game with Apple. Reached for comment, Palm had only this to say: “We engaged with the USB-IF because we believe consumers should have freedom and choice in how and where they use the non-rights managed media they already own. We are reviewing the letter from the USB-IF and will respond as appropriate.”

An impressive number when you consider that Apple (AAPL) employs only 40 full-time reviewers and requires at least two of them to scrutinize each app–or so says Apple’s reply to the Federal Communication Commission inquiry into why Google’s (GOOG) Google Voice hasn’t yet made it into the App Store.

That said, the volume of approved apps does make you wonder about just how thoroughly they’re are being vetted. Reviewers are charged with checking apps for buggy software, content and privacy violations and anything that “degrades the core experience of the iPhone,” among other things. For a team of 40 people to review and approve 1,394 apps based on these criteria, and presumably reject a few others, in a single workday seems at least a bit miraculous–unless, of course, someone accidentally hit the “Bulk Approve” button.

Just hours after Julius Genachowski, chairman of the Federal Communications Commission, unveiled his open Internet proposal, a number of Republican senators stepped forward to oppose it. Arguing that Net Neutrality will “impede investment and innovation of new technologies,” Sen. Kay Bailey Hutchison (R., Texas) proposed an amendment to an Interior Department appropriations bill that would bar the FCC from using federal funds to implement the proposal.

“I am deeply concerned by the direction the FCC appears to be heading,” Hutchison, the ranking Republican on the Senate Commerce Committee, said in a statement. “Even during a severe downturn, America has experienced robust investment and innovation in network performance and online content and applications. For that innovation to continue, we must tread lightly when it comes to new regulations. Where there have been a handful of questionable actions in the past on the part of a few companies, the commission and the marketplace have responded swiftly.”

Joining her in proposing the amendment were Senators John Thune (R., S.D.), Sam Brownback (R., Kan.), David Vitter (R., La.), Jim DeMint (R., S.C.), and John Ensign (R., Nev.), who had this to say in a statement of his own:

“In this struggling economy, any industry that is able to thrive should be allowed to do so without meddlesome government interference that could stifle innovation. We must avoid burdensome government regulations that micromanage private businesses or that limit the ability of companies to provide what their customers want. The Internet has flourished in large part because of a lack of government interference; I see no need to change that now.”

Nor does AT&T (T), which–coincidentally, I’m sure–happens to be a top-20 donor not just for Ensign and Hutchison, but for the four other senators who would block Genachowski’s initiative as well. Said Jim Cicconi, AT&T’s senior executive vice president of external and legislative affairs: “AT&T would be very disappointed if [the FCC] has already drawn a conclusion to regulate wireless services despite the absence of any compelling evidence of problems or abuse that would warrant government intervention.”

“The Internet is an extraordinary platform for innovation, job creation, investment, and opportunity,” Genachowski said during an event at the Brookings Institute. “It has unleashed the potential of entrepreneurs and enabled the launch and growth of small businesses across America. It is vital that we safeguard the free and open Internet.”

To that end, Genachowski proposed that the FCC formalize its four principles of network openness. To encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet, consumers are entitled:

• to access the lawful Internet content of their choice.
• to run applications and use services of their choice, subject to the needs of law enforcement.
• to connect their choice of legal devices that do not harm the network.
• to competition among network providers, application and service providers, and content providers.

To these, Genachowski proposed adding two more: The first would prevent Internet access providers from discriminating against particular Internet content or applications, while allowing for reasonable network management. The second would ensure that Internet access providers are transparent about the network management practices they implement.

Under Genachowski’s proposal, all six principles would apple to all platforms that access the Internet, something that will likely prove controversial with the likes of AT&T (T) and Verizon (VZ), whose wireless operations haven’t yet been subjected to the same kind of scrutiny as, say, Comcast (CMCSA), which ran afoul of the FCC last year when it was caught throttling Bit Torrent traffic.

These companies will no doubt argue that the FCC is overstepping its bounds in working to implement such principles. But Genachowski says that’s not the case. “This is not about government regulation of the Internet,” he said. “It’s about fair rules of the road for companies that control access to the Internet.”

Below, Genachowski’s speech in full:

Preserving a Free and Open Internet: A Platform for Innovation, Opportunity, and Prosperity
Prepared Remarks of Chairman Julius Genachowski Federal Communications Commission
The Brookings Institution
Washington, DC
September 21, 2009

I’d like to thank Brookings for hosting me and this discussion about the future of broadband and the Internet.

We’ve just finished a summer of big-ticket commemorations, celebrating the 40th anniversaries of the Apollo landing and of Woodstock; 1969 was also a good year to be a kid in New York, with Joe Namath calling the Super Bowl, and the Knicks’ season that ended with the legendary Willis Reed in Game 7. I grew up a long fly ball from Shea Stadium and soaked up every minute of the Miracle Mets’ season. Maybe that’s why I tend to believe in miracles.

But perhaps the most momentous birthday from that famous summer of 1969 went by just a couple of weeks ago with little mention. Just over forty years ago, a handful of engineers in a UCLA lab connected two computers with a 15-foot gray cable and transferred little pieces of data back and forth. It was the first successful test of the ARPANET, the U.S.-government-funded project that became the Internet–the most transformational communications breakthrough since the printing press.

Today, we can’t imagine what our lives would be like without the Internet–any more than we can imagine life without running water or the light bulb. Millions of us depend upon it every day: at home, at work, in school–and everywhere in between. The Internet has unleashed the creative genius of countless entrepreneurs and has enabled the creation of jobs–and the launch of small businesses and the expansion of large ones–all across America.

That’s why Congress and the President have charged the FCC with developing a National Broadband Plan to ensure that every American has access to open and robust broadband. The fact is that we face great challenges as a nation right now, including health care, education, energy, and public safety. While the Internet alone will not provide a complete solution to any of them, it can and must play a critical role in solving each one.

Why has the Internet proved to be such a powerful engine for creativity, innovation, and economic growth? A big part of the answer traces back to one key decision by the Internet’s original architects: to make the Internet an open system.

Historian John Naughton describes the Internet as an attempt to answer the following question: How do you design a network that is “future proof”–that can support the applications that today’s inventors have not yet dreamed of? The solution was to devise a network of networks that would not be biased in favor of any particular application. The Internet’s creators didn’t want the network architecture–or any single entity–to pick winners and losers. Because it might pick the wrong ones. Instead, the Internet’s open architecture pushes decision-making and intelligence to the edge of the network–to end users, to the cloud, to businesses of every size and in every sector of the economy, to creators and speakers across the country and around the globe. In the words of Tim Berners-Lee, the Internet is a “blank canvas”–allowing anyone to contribute and to innovate without permission.

It is easy to look at today’s Internet giants–and the tremendous benefits they have supplied to our economy and our culture–and forget that many were small businesses just a few years ago, founded on little more than a good idea and a no-frills connection to the Internet. Marc Andreessen was a graduate student when he created Mosaic, which led to Netscape, the first commercially successful Web browser. Mark Zuckerberg was a college student in 2004 when he started Facebook, which just announced that it added its 300 millionth member. Pierre Omidyar originally launched eBay on his own personal website. Today more than 600,000 Americans earn part of their living by operating small businesses on eBay’s auction platform, bringing jobs and opportunity to Danvers, Massachusetts, Durham, North Carolina and Lincoln, Nebraska, and many other communities in both rural and urban America. This is the power of the Internet: distributed innovation and ubiquitous entrepreneurship, the potential for jobs and opportunity everywhere there is broadband.

And let us not forget that the open Internet enables much more than commerce. It is also an unprecedented platform for speech, democratic engagement, and a culture that prizes creative new ways of approaching old problems. In 2000, Jimmy Wales started a project to create a free online encyclopedia. He originally commissioned experts to write the entries, but the project only succeeded after moving to volunteers to write them collaboratively. The result is Wikipedia, one of the top 10 most visited websites in the world and one of the most comprehensive aggregations of human knowledge in our history. The potential of collaboration and social media continues to grow. It is changing and accelerating innovation. And we’ve seen new media tools like Twitter and YouTube used by democratic movements around the globe.

Even now, the Internet is beginning to transform health care, education, and energy usage for the better. Health-related applications, distributed over a widely connected Internet, can help bring down health care costs and improve medical service. Four out of five Americans who are online have accessed medical information over the Internet, and most say this information affected their decision-making. Nearly four million college students took at least one online course in 2007, and the Internet can potentially connect kids anywhere to the best information and teachers everywhere. And the Internet is helping enable smart grid technologies, which promise to reduce carbon dioxide emissions by hundreds of millions of metric tons.

At the same time, we have also seen great strides in the center of the network. Most Americans’ early exposure to the Internet was through analog modems, which allowed a trickle of data through the phone lines to support early electronic bulletin boards and basic email. Over the last two decades, thanks to substantial investment and technological ingenuity, companies devised ways to retrofit networks initially designed for phones and one-way video to support two-way broadband data streams connecting homes and businesses across the country. And a revolution in wireless technologies–using licensed and unlicensed spectrum–and the creation of path-breaking devices like the Blackberry and iPhone have enabled millions of us to carry the Internet in our pockets and purses.

The lesson of each of these stories, and innumerable others like them, is that we cannot know what tomorrow holds on the Internet, except that it will be unexpected; that the genius of American innovators is unlimited; and that the fewer obstacles these innovators face in bringing their work to the world, the greater our opportunity as citizens and as a nation.

Notwithstanding its unparalleled record of success, today the free and open Internet faces emerging and substantial challenges. We’ve already seen some clear examples of deviations from the Internet’s historic openness. We have witnessed certain broadband providers unilaterally block access to VoIP applications (phone calls delivered over data networks) and implement technical measures that degrade the performance of peer-to-peer software distributing lawful content. We have even seen at least one service provider deny users access to political content. And as many members of the Internet community and key Congressional leaders have noted, there are compelling reasons to be concerned about the future of openness.

One reason has to do with limited competition among service providers. As American consumers make the shift from dial-up to broadband, their choice of providers has narrowed substantially. I don’t intend that remark as a policy conclusion or criticism–it is simply a fact about today’s marketplace that we must acknowledge and incorporate into our policymaking.

A second reason involves the economic incentives of broadband providers. The great majority of companies that operate our nation’s broadband pipes rely upon revenue from selling phone service, cable TV subscriptions, or both. These services increasingly compete with voice and video products provided over the Internet. The net result is that broadband providers’ rational bottom-line interests may diverge from the broad interests of consumers in competition and choice.

The third reason involves the explosion of traffic on the Internet. With the growing popularity of high-bandwidth applications, Internet traffic is roughly doubling every two years. Technologies for managing broadband networks have become more sophisticated and widely deployed. But these technologies are just tools. They cannot by themselves determine the right answers to difficult policy questions–and they raise their own set of new questions.

In acknowledging the existence of challenging competitive, economic, and technological realities for today’s Internet, I want to underscore that this debate, as I see it, isn’t about white hats or black hats among companies in and around the network. Rather, there are inevitable tensions built into our system; important and difficult questions that we have an obligation to ask and to answer correctly for our country.

When I worked in the private sector I was fortunate to work with some of the greatest innovators of our time. That taught me some lessons about the importance of innovation and investment. It also taught me the importance of developing clear goals and then being focused and practical in achieving them, making sure to have the best input and ideas from the broadest group possible.

I am convinced that there are few goals more essential in the communications landscape than preserving and maintaining an open and robust Internet. I also know that achieving this goal will take an approach that is smart about technology, smart about markets, smart about law and policy, and smart about the lessons of history.

The rise of serious challenges to the free and open Internet puts us at a crossroads. We could see the Internet’s doors shut to entrepreneurs, the spirit of innovation stifled, a full and free flow of information compromised. Or we could take steps to preserve Internet openness, helping ensure a future of opportunity, innovation, and a vibrant marketplace of ideas.
I understand the Internet is a dynamic network and that technology continues to grow and evolve. I recognize that if we were to create unduly detailed rules that attempted to address every possible assault on openness, such rules would become outdated quickly. But the fact that the Internet is evolving rapidly does not mean we can, or should, abandon the underlying values fostered by an open network, or the important goal of setting rules of the road to protect the free and open Internet.

Saying nothing–and doing nothing–would impose its own form of unacceptable cost. It would deprive innovators and investors of confidence that the free and open Internet we depend upon today will still be here tomorrow. It would deny the benefits of predictable rules of the road to all players in the Internet ecosystem. And it would be a dangerous retreat from the core principle of openness–the freedom to innovate without permission–that has been a hallmark of the Internet since its inception, and has made it so stunningly successful as a platform for innovation, opportunity, and prosperity.

In view of these challenges and opportunities, and because it is vital that the Internet continue to be an engine of innovation, economic growth, competition and democratic engagement, I believe the FCC must be a smart cop on the beat preserving a free and open Internet.

This is how I propose we move forward: To date, the Federal Communications Commission has addressed these issues by announcing four Internet principles that guide our case-by-case enforcement of the communications laws. These principles can be summarized as: Network operators cannot prevent users from accessing the lawful Internet content, applications, and services of their choice, nor can they prohibit users from attaching non-harmful devices to the network.

The principles were initially articulated by Chairman Michael Powell in 2004 as the “Four Freedoms,” and later endorsed in a unanimous 2005 policy statement issued by the Commission under Chairman Kevin Martin and with the forceful support of Commissioner Michael Copps, who of course remains on the Commission today. In the years since 2005, the Internet has continued to evolve and the FCC has issued a number of important decisions involving openness. Today, I propose that the FCC adopt the existing principles as Commission rules, along with two additional principles that reflect the evolution of the Internet and that are essential to ensuring its continued openness.

The fifth principle is one of non-discrimination–stating that broadband providers cannot discriminate against particular Internet content or applications. This means they cannot block or degrade lawful traffic over their networks, or pick winners by favoring some content or applications over others in the connection to subscribers’ homes. Nor can they disfavor an Internet service just because it competes with a similar service offered by that broadband provider. The Internet must continue to allow users to decide what content and applications succeed.

This principle will not prevent broadband providers from reasonably managing their networks. During periods of network congestion, for example, it may be appropriate for providers to ensure that very heavy users do not crowd out everyone else. And this principle will not constrain efforts to ensure a safe, secure, and spam-free Internet experience, or to enforce the law. It is vital that illegal conduct be curtailed on the Internet. As I said in my Senate confirmation hearing, open Internet principles apply only to lawful content, services and applications–not to activities like unlawful distribution of copyrighted works, which has serious economic consequences. The enforcement of copyright and other laws and the obligations of network openness can and must co-exist.

I also recognize that there may be benefits to innovation and investment of broadband providers offering managed services in limited circumstances. These services are different than traditional broadband Internet access, and some have argued they should be analyzed under a different framework. I believe such services can supplement–but must not supplant–free and open Internet access, and that we must ensure that ample bandwidth exists for all Internet users and innovators. In the rulemaking process I will discuss in a moment, we will carefully consider how to approach the question of managed services in a way that maximizes the innovation and investment necessary for a robust and thriving Internet.

I will propose that the FCC evaluate alleged violations of the non-discrimination principle as they arise, on a case-by-case basis, recognizing that the Internet is an extraordinarily complex and dynamic system. This approach, within the framework I am proposing today, will allow the Commission to make reasoned, fact-based determinations based on the Internet before it–not based on the Internet of years past or guesses about how the Internet will evolve.

The sixth principle is a transparency principle–stating that providers of broadband Internet access must be transparent about their network management practices. Why does the FCC need to adopt this principle? The Internet evolved through open standards. It was conceived as a tool whose user manual would be free and available to all. But new network management practices and technologies challenge this original understanding. Today, broadband providers have the technical ability to change how the Internet works for millions of users–with profound consequences for those users and content, application, and service providers around the world.

To take one example, last year the FCC ruled on the blocking of peer-to-peer transmissions by a cable broadband provider. The blocking was initially implemented with no notice to subscribers or the public. It was discovered only after an engineer and hobbyist living in Oregon realized that his attempts to share public domain recordings of old barbershop quartet songs over a home Internet connection were being frustrated. It was not until he brought the problem to the attention of the media and Internet community, which then brought it to the attention of the FCC, that the improper network management practice became known and was stopped.

We cannot afford to rely on happenstance for consumers, businesses, and policymakers to learn about changes to the basic functioning of the Internet. Greater transparency will give consumers the confidence of knowing that they’re getting the service they’ve paid for, enable innovators to make their offerings work effectively over the Internet, and allow policymakers to ensure that broadband providers are preserving the Internet as a level playing field. It will also help facilitate discussion among all the participants in the Internet ecosystem, which can reduce the need for government involvement in network management disagreements.

To be clear, the transparency principle will not require broadband providers to disclose personal information about subscribers or information that might compromise the security of the network, and there will be a mechanism to protect competitively sensitive data.

In considering the openness of the Internet, it is also important to recognize that our choice of technologies and devices for accessing the Internet continues to expand at a dizzying pace. New mobile and satellite broadband networks are getting faster every day, and extraordinary devices like smartphones and wireless data cards are making it easier to stay connected while on the go. And I note the beginnings of a trend towards openness among several participants in the mobile marketplace.

Even though each form of Internet access has unique technical characteristics, they are all are different roads to the same place. It is essential that the Internet itself remain open, however users reach it. The principles I’ve been speaking about apply to the Internet however accessed, and I will ask my fellow Commissioners to join me in confirming this.

Of course, how the principles apply may differ depending on the access platform or technology. The rulemaking process will enable the Commission to analyze fully the implications of the principles for mobile network architectures and practices–and how, as a practical matter, they can be fairly and appropriately implemented. As we tackle these complex questions involving different technologies used for Internet access, let me be clear that we will be focused on formulating policies that will maximize innovation and investment, consumer choice, and greater competition.

I’ve talked about what we need to do; now I’d like to talk about how we should do it. I will soon circulate to my fellow Commissioners proposed rules prepared by Commission staff embodying the principles I’ve discussed, and I will ask for their support in issuing a notice of proposed rulemaking. This notice will provide the public with a detailed explanation of what we propose to do and why.

Equally importantly, the notice will ask for input and feedback on the proposed rules and their application, such as how to determine whether network management practices are reasonable, and what information broadband providers should disclose about their network management practices and in what form. And–as I indicated earlier–it will pose a series of detailed questions on how the Internet openness principles should apply to mobile broadband.

While my goals are clear–to ensure the Internet remains a free and open platform that promotes innovation, investment, competition, and users’ interests — our path to implementing them is not pre-determined. I will ensure that the rulemaking process will be fair, transparent, fact-based, and data-driven. Anyone will be able to participate in this process, and I hope everyone will. We will hold a number of public workshops and, of course, use the Internet and other new media tools to facilitate participation. Today we’ve launched a new website, www.openinternet.gov, to kick off discussion of the issues I’ve been talking about. We encourage everyone to visit the site and contribute to the process.

Some have argued that the FCC should not take affirmative steps to protect the Internet’s openness. Let me be clear about what this is about, and what it isn’t.

The fundamental goal of what I’ve outlined today is preserving the openness and freedom of the Internet. We have an obligation to ensure that the Internet is an enduring engine for U.S. economic growth, and a foundation for democracy in the 21st century. We have an obligation to ensure that the Internet remains a vast landscape of innovation and opportunity.

This is not about government regulation of the Internet. It’s about fair rules of the road for companies that control access to the Internet. We will do as much as we need to do, and no more, to ensure that the Internet remains an unfettered platform for competition, creativity, and entrepreneurial activity.

This is not about protecting the Internet against imaginary dangers. We’re seeing the breaks and cracks emerge, and they threaten to change the Internet’s fundamental architecture of openness. This would shrink opportunities for innovators, content creators, and small businesses around the country, and limit the full and free expression the Internet promises. This is about preserving and maintaining something profoundly successful and ensuring that it’s not distorted or undermined. If we wait too long to preserve a free and open Internet, it will be too late.

Some will seek to invoke innovation and investment as reasons not to adopt open Internet rules. But history’s lesson is clear: Ensuring a robust and open Internet is the best thing we can do to promote investment and innovation. And while there are some who see every policy decision as either pro-business or pro-consumer, I reject that approach; it’s not the right way to see technology’s role in America.

An open Internet will benefit both consumers and businesses. The principles that will protect the open Internet are an essential step to maximize investment and innovation in the network and on the edge of it–by establishing rules of the road that incentivize competition, empower entrepreneurs, and grow the economic pie to the benefit of all.

I believe we share a common purpose–we want the Internet to continue flourishing as a platform for innovation and communication, with continued investment and increasing deployment of broadband to all Americans. I believe my fellow Commissioners share this purpose, and I look forward to working collaboratively with them in this endeavor.

In closing, we are here because 40 years ago, a bunch of researchers in a lab changed the way computers interact and, as a result, changed the world. We are here because those Internet pioneers had unique insights about the power of open networks to transform lives for the better, and they did something about it. Our work now is to preserve the brilliance of what they contributed to our country and the world. It’s to make sure that, in the 21st century, the garage, the basement, and the dorm room remain places where innovators can not only dream but bring their dreams to life. And no one should be neutral about that.

“I think the whole category is still a hobby right now. I don’t think anybody has succeeded at it. And actually the experimentation has slowed down. A lot of the early companies that were trying things have faded away. So I would have to say that given the economic conditions, given the venture capital outlooks and stuff, I continue to believe it will be a hobby in 2009.”

– Apple CEO Steve Jobs, October 2008

“We still consider this a hobby. It is clear that the movie rental business has really helped Apple TV and there are more and more customers that want to try it. And we’re going to continue to invest in it, because we fundamentally believe there is something there for us in the future.”

– Apple COO Tim Cook, January 2009

There’s not much of a business yet in Apple TV, as Apple’s leadership often notes. But there may be soon, with the market for connected TVs evolving as it has been.

In a research note issued this morning, Piper Jaffray analyst Gene Munster says the time is right for Apple to release the next iteration of Apple TV–one that offers DVR capabilities and supports iTunes TV show subscriptions.

“Apple could leverage its deep library of content with many network and cable channel content owners to provide unlimited access to a sub-library of its TV shows for a standard monthly fee ($30 or $40 per month),” Munster writes. “Such a product would effectively replace a consumer’s monthly cable bill (~$85/month) and offer access to current and older episodes of select shows on select channels.”

Further, Munster notes, “The selection would dictate the value, and several tiers could be offered, but we see this as one way for Apple to leverage its large iTunes content library as well as its unique Apple TV hardware in order to get digital video to the TV for a price significantly less than the average cable or satellite TV bill.”

Makes great sense. And if Apple (AAPL) were to launch these services in concert with App Store support, as Munster has suggested in the past, it would be a pretty compelling proposition. And it would set the stage for the next evolution of the platform, the Apple Television, an Internet-connected TV with onboard DVR and media center functionality.

Says Munster:

“Beyond new hardware with DVR or iTunes video subscription features, we believe the 2-5 year roadmap for the Apple TV product lineup is robust. To begin with, Internet-connected TVs with interactive features will likely gain popularity in the next several years. Apple could differentiate itself in this market as a seasoned software developer competing largely with television hardware manufacturers that do not excel in the software arena. The device could also bring iPhone games, a relatively new segment for Apple, to the television.

“While this is unlikely in the near term,” Munster continues, “we believe the iPhone will succeed as a portable gaming platform and Apple may consider bringing higher quality games developed on a similar platform to the TV. The iPhone app developer community is already robust, and Apple could leverage those developers to enter the gaming arena on the TV. In fact, the iPhone or iPod touch could itself operate as a touchscreen gaming control for a game-centric Apple TV.”

Again, this makes great sense, though TV hardware is not an easy business–just ask Sony (SNE). But, as Munster aptly notes, it might be quite a bit less difficult if Apple were to “change the rules of the game,” something it’s done in a number of markets already.

That said, as Media Memo’s Peter Kafka just reminded me, the cable companies are working very closely with Hollywood to make sure it’s difficult for people to replace their cable service. They’d almost certainly attempt to sack an initiative like one Munster describes above.

“According to complaints from many residents, Google’s English language search engine has spread large amounts of vulgar content that is lascivious and pornographic, seriously violating China’s relevant laws and regulations,” foreign ministry spokesman Qin Gang told a regularly scheduled news conference. “I’d like to stress that google.com, as an Internet enterprise providing services in China, should earnestly abide by Chinese laws and regulations.”

The disruption of Google (GOOG) services follows a widely criticized mandate from Beijing requiring all computers sold in the country to include Green Dam, an application designed to prevent citizens from viewing “offensive” content, which in the Chinese government’s case includes all manner of material. From a report by the Open Net Initiative, an academic consortium dedicated to the study of censorship and surveillance:

The version of the Green Dam software that we tested, when operating under its default settings, is far more intrusive than any other content control software we have reviewed. Not only does it block access to a wide range of web sites based on keywords and image processing, including porn, gaming, gay content, religious sites and political themes, it actively monitors individual computer behavior, such that a wide range of programs including word processing and email can be suddenly terminated if content algorithm detects inappropriate speech. The program installs components deep into the kernel of the computer operating system in order to enable this application layer monitoring. The operation of the software is highly unpredictable and disrupts computer activity far beyond the blocking of websites.

…The deeply intrusive nature of the software opens up several possibilities for use other than filtering material harmful to minors. With minor changes introduced through the auto-update feature, the architecture could be used for monitoring personal communications and Internet browsing behavior. Log files are currently recorded locally on the machine, including events and keywords that trigger filtering. The auto-update feature can used to change the scope and targeting of filtering without any notification to users.

“In the end, in attempting to ‘do no evil,’ Google has done exactly that. I say this not just as someone running a content site but also as an end user. If this inequity of support continues along these lines, we will see a continuing destruction of our journalistic enterprises–enterprises that are one of the core building blocks of our democracy. Last year, while addressing the magazine publishers and editors of the MPA at the Google Campus, Eric Schmidt suggested that the Web was a ‘cesspool’ and that it was up to the major journalistic brands to clean it up. Well, Eric, in a great many ways, Google has helped to create that cesspool, and as such I would hope that it can be part of the solution.”

– Forbes CEO Jim Spanfeller

A wise move, since Sirius needs to drive sales and consumers are cutting back on the purchase of new cars, one of the company’s main sources of new subscribers. Indeed, in its latest quarter, Sirius said net subscriber growth slowed markedly, falling to 82,900 from 1.1 million.

There are some customers which we chose not to serve. We don’t know how to make a $500 computer that’s not a piece of junk, and our DNA will not let us ship that. But we can continue to deliver greater and greater value to those customers that we choose to serve. And there’s a lot of them. We’ve seen great success by focusing on certain segments of the market and not trying to be everything to everybody. So I think you can expect us to stick with that winning strategy and continue to try to add more and more value to those products in those customer bases we choose to serve.”

– Apple CEO Steve Jobs, Oct. 2008

Perhaps Macworld Expo 2009 will have its “one more thing” after all.

In a note to clients this morning, Ezra Gottheil of Technology Business Research speculates that Apple (AAPL) will indeed launch a new product category at Macworld in early January. A netbook designed to leverage Apple’s design prowess and its online delivery system as well. “[The device] will provide Web access, email, media playing, and essential applications at a single low price,” Gottheil writes. “Computer beginners will be able to start using it quickly and easily. Users will have fewer questions, problems, conflicts and security breaches, as the device will be less intimidating than both PCs and Macs. As with the iPhone, iTunes and the App Store will offer an array of content, applications and games. As with the iPhone, the software can be rebuilt from the App Store. With an optional online backup service, the entire device can be restored…. Because all applications are delivered through the iTunes App Store, Apple will maintain sustained relationships with users, making it easier to upsell and cross-sell to existing customers. TBR believes Apple will make online services like MobileMe increasingly attractive to all customers, but purchasers of the new Apple device may find its simplicity especially appealing.”

Now, I know Gottheil’s the guy who said “Apple doesn’t need Jobs anymore”–blasphemy! But the scenario he lays out above makes quite a bit of sense, doesn’t it?

If such a device is indeed uncrated at Macworld, Gottheil expects it will arrive at market around midyear at prices beginning at $599–$99 more than the $500 computer Apple CEO Steve Jobs claims the company doesn’t know how to make….