Star stock analyst Mahaney to lead Internet coverage at RBC

SAN FRANCISCO (Reuters) - Mark Mahaney, a top-rated Internet stock analyst who was fired from Citigroup in October after one of his staffers improperly shared research with a news website, has been hired by RBC Capital Markets.
Mahaney will oversee coverage of the Internet sector for RBC, the firm announced on Monday. RBC did not state which companies Mahaney will cover. He will be based in San Francisco.
Rated the top Internet analyst for the past five consecutive years by Institutional Investor, Mahaney is among the most well-known and respected analysts covering the online industry.
His research notes of companies including Google Inc, Amazon.com Inc and Facebook Inc, were considered must-reads among many investors, who praised his stock picks and his perspective on the fast-moving Web business.
One such report, which was being prepared ahead of the high-profile initial public offering of Facebook last year, led to Mahaney's exit from Citigroup, although Mahaney was only indirectly involved in the incident.
Mahaney failed to supervise a junior analyst who improperly shared Facebook research with the TechCrunch news website, according to a settlement that Citigroup struck with Massachusetts regulators in October.
Citigroup paid a $2 million fine to Massachusetts regulators to settle charges that the bank improperly disclosed research on Facebook ahead of its $16 billion IPO earlier in May. Last year, Reuters reported that Facebook had pre-briefed analysts for its underwriters ahead of its IPO, advising them to reduce their profit and revenue forecasts.
The settlement agreement also outlined an incident in which Mahaney failed to get approval before responding to a journalist's questions about Google - and told a Citigroup compliance staffer that the conversation had not occurred - even after being warned about unauthorized conversations with the media.
RBC said in a statement that Mahaney is "a well-known asset in the investing community and is widely-regarded as one of the most influential research analysts covering the Internet, as confirmed by our extensive due diligence." The firm declined to comment further.

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Lawyers in Ohio football rape case want trial moved

(Reuters) - Attorneys for two Ohio teenage football players accused of raping a 16-year-old student have asked that the trial be moved because potential witnesses are afraid to come forward in defense of the boys, one of the lawyers said on Monday.
Walter Madison, the attorney for one of the accused rapists, Ma'lik Richmon, said social media efforts to bring the alleged rape into the national spotlight have led to an atmosphere of intimidation and coercion.
"This has a chilling effect on witnesses who could come forward to be part of this process so my client can get a fair and full proceeding," he told Reuters. "So, we're left without the opportunity to make our case. That's pretty serious."
Richmond and Trenton Mays, both 16 and members of the Steubenville High School football team, are charged with raping a 16-year-old fellow student at a party last August.
The two students are set to be tried as juveniles in February in Steubenville, a city of 19,000 about 40 miles west of Pittsburgh.
Madison said his client's mother has had to change her cell phone number multiple times due to threats and harassment.
Last week, the online activist group Anonymous made public a picture allegedly of the rape victim, being carried by her wrists and ankles by two young men, and of a video that showed several other young men joking about an alleged assault.
Madison said that Richmond is not seen in the video.
A county sheriff under fire for how he has handled the high school rape investigation faced down a crowd of protestors on Saturday and said no new charges will be brought against anyone involved in the case.
Activists say there had been a cover-up by local officials to protect the integrity of the high school's football program.
Meanwhile, a petition to the White House calling for the two rape suspects to be tried as adults reached 25,000 signatures Monday, the threshold required to receive a response from the Obama Administration.
Moving the case to the adult court system would allow for a jury trial and a more severe penalty, the petition says.
"This is a serious offense and this needs to be an example for everyone that this type of behavior should not, and will not be tolerated in our society," it says.
The petition, created December 25, more than doubled its number of supporters overnight. It had 11,000 signatures on Sunday.
It was submitted to the White House through its online petition website, We The People. Now that it has the required 25,000 signatures, the Obama Administration will give an official statement at some point in the future. The petition has no legal impact.

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Audit of Canada native band casts cloud on protest movement

OTTAWA (Reuters) - A Canadian native band that successfully pressured the prime minister to hold a special meeting on aboriginal grievances cannot account for millions of dollars in federal funding, according to an audit that critics say was leaked to discredit a growing protest movement.
Angry native activists, fed up with poor living conditions they blame on decades of neglect from Ottawa, have blockaded rail lines and threatened to close Canada's borders with the United States in a campaign they call Idle No More.
Attawapiskat Chief Theresa Spence has been on a hunger strike for almost a month near Parliament Hill in Ottawa to demand better treatment for natives.
But the August 2012 report from accounting firm Deloitte said Spence's Attawapiskat First Nation in northern Ontario had shown "no evidence of due diligence" in accounting for how it spent federal money intended to improve housing and health. The audit was leaked to some media organizations over the weekend, and released on Monday.
A spokesman for Spence said she would address the audit on Friday when she and other aboriginal leaders will discuss social and economic issues with Conservative Prime Minister Stephen Harper. The leak was designed to discredit Spence, he added.
"They're trying to undermine the process here, the movement of the people. The people are speaking out," Danny Metatawabin told reporters.
Successive Canadian governments have for decades struggled to improve the life of natives, who want more federal money and a greater say over what happens to resources on their land.
Ottawa spends around C$11 billion ($11.1 billion) a year on an aboriginal population of 1.2 million, yet living conditions for many are poor, particularly for those on reserves with high rates of poverty, addiction, joblessness and suicide.
Critics say bands do not have to show enough evidence of how they spend the money they receive, and some groups insist on living in remote regions with few jobs or prospects.
Deloitte, which surveyed the Attawapiskat First Nation's expenditures from April 1, 2005 to Nov 30, 2011, said a probe of 505 transactions showed 81 percent of files did not have adequate supporting documents and more than 60 percent did not document the reason for payment. The band received C$109 million in federal funding over the period.
"We were unable to determine if the funds were spent for their intended purpose. There is no evidence of due diligence in the use of public funds," Deloitte said in a letter to Spence, recommending better financial controls.
"The independent audit ... speaks for itself, and we accept its conclusions and recommendations," said Jan O'Driscoll, a spokesman for federal Aboriginal Affairs Minister John Duncan.
Ontario Finance Minister Dwight Duncan, a Liberal, accused the federal government of trying to discredit aboriginal leaders. "Tough love the rallying cry of the cowards who 'leak' these 'audits'. Too much tough, not enough love, for our aboriginal brothers and sisters," he said on Twitter.
As part of the Idle No More campaign, protesters blocked a Canadian National Railway Co line in Sarnia, Ontario, in late December and early January. CN went to court to obtain an injunction on December 21, but local police did not enforce it until January 2.
The judge in the case, Justice David Brown, expressed his frustration at the failure of the police to act, saying "local police agencies cannot ignore judicial orders under the guise of contemplating how best to use their tactical discretion."
Brown granted CN another injunction on January 5 to clear a separate group of protesters blocking the main rail line from Toronto to Montreal.
Sarnia police were not immediately available for comment. A CN spokesman declined to say how much money the blockades had cost the company.
($1=$0.99 Canadian)

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How to fix incorrect song matches in Google Music

Good news: there’s a workaround to fix the issues related to the bug where Google Music’s music-matching service replaced explicit versions of songs with clean ones. Droid-Life reports that users who are seeing the issue should do click on the arrow next to each song or album title. Then select “Fix incorrect match” from the drop down menu. That should then upload the correct version of the song from your library into the Google (GOOG) cloud and replace the wrong one. Google’s music-matching service launched on December 18th in the U.S. as a free alternative to Apple’s (AAPL) $25 iTunes Match service and Amazon’s (AMZN) $25 Cloud Player.

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Leaked BlackBerry 10 slides show video calling and screen sharing for BBM

Research in Motion (RIMM) recently updated its BlackBerry Messenger application to include free Wi-Fi calling. With the release of BlackBerry 10 just around the corner, RIM is looking to add even more features to its flagship messaging app. Slides from a purported internal BlackBerry 10 presentation that were originally posted on the CrackBerry forums suggest that the company is planning to update BBM to include video calling and screen-sharing capabilities. A second slide highlights a task manager application called BlackBerry Remember, which is believed to be the replacement for RIM’s native Tasks app. Additional slides from the presentation can be viewed below.

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Multi-window update comes to AT&T Galaxy Note II starting today

 has announced that a software update will begin rolling out to its Galaxy Note II beginning December 27th. The arrival of the new software makes AT&T the last of the four major nationwide wireless carriers to bring multi-windows support to its Samsung (005930) “phablet,” a feature that allows users to open and operate several different apps at once. “AT&T plans to begin rolling out a software update for Samsung Galaxy Note II customers that includes the Multi-Window feature, which allows the user to divide the screen into two active ‘windows’ creating a split screen that enables fluid multitasking between applications,” AT&T said in a statement. “The update will be available for download over the air beginning Dec. 27.” BGR reviewed the Galaxy Note II in October and called it the best supersized smartphone on the market.

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Apple CEO's pay takes big hit vs. record 2011 package

Apple Inc CEO Tim Cook's 2012 compensation package of $4.17 million is a huge cut on paper for the top executive of the most valuable U.S. corporation, after a 2011 package fattened by more than $376 million in long-term stock awards.
Cook received the largest single pay package awarded to a company CEO in about a decade when he replaced Apple co-founder Steve Jobs in August last year, shortly before the Silicon Valley legend's death in October 2011.
The maker of the iPhone and iPad made the 2012 compensation disclosures in a regulatory filing on Thursday. Cook, 52, has been with Apple since 1998.
Virtually all of Cook's $376 million stock bonus in 2011 was in awards that vest in two chunks - one in 2016 and the other in 2021. This structure was intended to keep Jobs' longtime lieutenant at the helm for many years, as the value of the stock will depend on how well the company is doing in 2016 and 2021.
Cook, who is credited with masterminding a sprawling but efficient Asian supply chain, has generally received high marks for his first year for shepherding several successful gadget launches, including the iPhone 5.
But he was forced to make a public apology in September after the company launched a mapping service application riddled with glaring geographical errors. The Maps app fiasco contributed to the departure of fellow Apple veteran and software chief Scott Forstall.
In addition, some analysts questioned whether Cook, whose only major new product since taking the helm was a smaller version of the iPad that Jobs propelled into the mainstream in 2010, has the vision to produce the next big product category and sustain historically stellar growth for Apple as global mobile competition intensifies.
"The jury is still out in terms of the job he is doing," said fund manager Tim Ghriskey, whose Solaris Group counts Apple stock as the biggest holding among the approximately $2 billion it manages.
But he added that the company's long-term prospects look strong, particularly if it rolls out oft-rumored television products in the next few years.
As of Thursday's close, Apple shares were almost 37 percent higher than when Cook became CEO 16 months ago. However, since a record-high close of $702.10 on September 19, the stock has fallen almost 27 percent.
Ghriskey said Wall Street remained nervous about the growing popularity of Google Inc's Android phone software, used by global smartphone leader Samsung Electronics Co Ltd, and potential margin pressure from that intensifying competition.
BY THE NUMBERS
In terms of base salary, Cook actually received a 50 percent increase to $1.4 million for 2012, and the same 200 percent non-equity bonus other top Apple executives like CFO Peter Oppenheimer earned, Apple said in the Thursday filing ahead of a February 27 shareholders' meeting.
Cook's 2012 package includes a nonequity bonus of $2.8 million.
Despite the increase, Apple said Cook's target annual cash compensation is "significantly below the median annual cash compensation level for CEOs at peer companies." It also said that Cook will not receive any stock awards for 2012.
Cook's latest compensation package also pales in comparison to his package in 2010, when he was chief operating officer. That package was 14 times higher.
A company spokesman would not comment beyond the filing.
Jobs famously received $1 a year in salary in the three years before he stepped down, though in 2000 he too received a stock option that analysts say was valued at almost $600 million at the time.
Looking beyond Apple, Yahoo Inc's CEO, Marissa Mayer, a former Google Inc high-flyer hired this year to try to turn around the struggling Internet icon, won a pay package worth more than $70 million. [ID:nL1E8LJJB5] Despite her lack of a track record as CEO and Yahoo's tiny size in comparison, her basic pay is comparable to Cook's, with about $1 million in annual salary and up to $2 million in an annual bonus.
Oracle Corp's Larry Ellison, one of the most highly paid U.S. chief executives - and also the world's sixth-richest man, according to Forbes - received total compensation for the year ended May 31, 2012, of $96.2 million - almost all of it in stock options. That compared with $77.6 million in 2011.
According to a study of the Fortune 500 conducted by Forbes this year, CEOs were paid a base salary of $1.1 million in 2011 on average, with the mean annual bonus at $2.4 million and average total compensation - including stock awards - at around $17 million.
Apple shares closed up 0.4 percent at $515.06 on the Nasdaq on Thursday.

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750,000 ANDROID APPS INVADE OS X THANKS TO BLUESTACKS APP PLAYER

Earlier this year, BlueStacks App Player made headlines by allowing Android apps run on Microsoft’s (MSFT) Windows 8 platform. The company announced on Thursday its App Player is now available in beta form for free on Mac, giving OS X users access to 750,000 Android apps normally reserved for smartphones and tablets.

BlueStacks uses patent-pending virtualization software called “Layercake” to allow Android apps to run on other platforms. It works virtually the same as running Windows within OS X using software such as Parallels or VMWare. The Windows 8 version of BlueStacks has been out since March and has been installed on more than 5 million PCs, which is a good sign that people want to run mobile apps on their computers.

BGR tested BlueStacks on a mid-2011 MacBook Air running OS X 10.8 Mountain Lion and found performance to be hit or miss. Android apps can be searched and it will list which app stores to download them from, but sometimes apps won’t install properly because of missing code, especially from the Google Play store. Downloading apps from the Amazon (AMZN) Appstore seems to be a better bet, though. If it’s any consolation, Jetpack Joyride and Fruit Ninja are perfectly playable.

BlueStacks works as mostly advertised, but honestly, why bother running Android apps on your Mac? A mouse or trackpad isn’t a better substitute for a touchscreen. But if you must do so, it’s reassuring to know BlueStacks is available.

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Data: New (physical) book chronicles the virtual

NEW YORK (AP) — We question. We research. We catalog. We quantify. We aggregate, calculate, communicate, analyze, extrapolate and conclude. And eventually, if we're fortunate and thoughtful, we understand. These are the contours of the society that has taken shape in the past generation with the rise of an unstoppable, invisible force that changes human lives in ways from the microscopic to the gargantuan: data, a word that was barely used beyond small circles before World War II but now governs the day for many of us from the moment we awaken to the extinguishing of the final late-evening light bulb. This is the playing field of "The Human Face of Big Data," by Rick Smolan ("A Day in the Life of America") and Jennifer Erwitt, an enormous volume the size of a flat-screen computer monitor that chronicles, through a splash of photos and eye-opening essays and graphics, the rise of the information society. The book itself ($50, Against All Odds Productions) is a curious, wonderful beast — a solid slab that captures a virtual universe. Weighing in at nearly five pounds (a companion iPad app is available), it is being delivered Tuesday by the publisher to what it calls some of the world's most influential people, including the CEOs of Yahoo and Starbucks and Amazon, Oprah Winfrey and New York Mayor Michael Bloomberg. The goal, say those behind the project, is to "ignite a conversation about an extraordinary knowledge revolution." You would think that capturing such a sprawling — and, one might easily conclude, inherently nonvisual — societal change would be difficult in a coffee-table book. You'd be wrong. This is one of those rare animals that captures its era in the most distinct of ways. It's the kind of thing you'd put in a time capsule for your children today to show them, long after you're gone, what the world was like at the beginning of their lives. The obvious is here, of course — the crimefighting, the moneymaking, the advertising, the breathtaking medical advances, the dark pathways of data nefariousness. But there are more unexpected tales as well. Among the pools the book dips into: —How data can provide utterly unexpected results: In Singapore, a project designed to look at why people couldn't get a taxi during a rainstorm came back with a surprising dividend — the cabs, fearful of accidents and the financial impact they cause even for drivers who may not be at fault, were just pulling over when it started to pour. Now they're changing policies to counteract that problem. —How global connectivity can beget entirely new forms of storytelling: The Johnny Cash Project invites people worldwide to share their visual representations of the iconic musician, and each submission is combined with others to create a music video that keeps changing based on the images that people are sending in. —How crowdsourcing is changing science: "Technology grants us the ability to harness wisdom from anywhere for specific projects, encouraging scientists to cooperate more, seek other points of view and share their achievements quickly — "the beginning of a democratization of discovery," writes science journalist Gareth Cook. —How machines are now communicating among themselves (though no sign yet of Skynet from the "Terminator" movies): "Humans will no longer be the center of the data solar system, with all of the billions of devices orbiting around us, but will rather become just another player, another node, in an increasingly autonomous data universe," writes technological thinker Esther Dyson. Brave new world? Of course. Yet it's easy to be unsettled by all of this. Hackers lurk everywhere; organizations like WikiLeaks are — depending on your politics — irresponsibly revealing secrets or responsibly liberating information. And anytime the notions of biology and technology meld, it's difficult not to summon images of the part-human, part cybernetic Borg from "Star Trek." In the face of so many preconceptions, what makes "The Human Face of Big Data" so engaging, so important, is its balanced tone. This is not a screed, in either direction. Technology is not greeted only as a marvel to be worshipped, nor is it cast as only a villain whose bits and bytes can blight our inherent humanity. The notion of making sense of information, of unpacking what the changes that data has wrought will mean to all of us, is the underpinning of the book. That's as it should be: As information's pathways and archives develop at breakneck speeds, we must race, too, to develop a vocabulary to describe and critique its rise. Passionate, critical thinking about a subject is still the sole purview of humanity — at least for now. "The history of mankind has always been influenced by a shortage of knowledge," technology and business writer Michael S. Malone says in one essay. "Now the opposite — an information surplus — may soon define our lives." The question, of course, runs even deeper. There is information, there is knowledge and there is wisdom. And no matter how many strong numbers we humans have at our disposal, if we can't understand the important differences between those three categories, the odds are good that we're on a path not toward 1, but toward 0. Save to the cloud and fire up the iPad tonight, sure — but do it with open eyes and probing mind. "Not everything that can be counted counts," warns a saying that Albert Einstein loved, "and not everything that counts can be counted."

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Pope gets more than half million Twitter followers

VATICAN CITY (Reuters) - Even though he hasn't sent a single tweet yet, Pope Benedict had more than half a million Twitter followers in eight languages on Tuesday, the day after the Vatican unveiled his handle: @Pontifex. They included people ranging from the simple Roman Catholic faithful to a Jewish head of state. "Your holiness, welcome to Twitter. Our relations with the Vatican are at their best & can form a basis to further peace everywhere," tweeted Israeli President Shimon Peres, who at 89 is four years older than Benedict. The Vatican said on Monday that Benedict will start tweeting on mostly spiritual topics from December 12. The pope actually has eight linked Twitter accounts. @Pontifex, the main account, is in English. The other seven have a suffix at the end for the different language versions. For example, the German version is @Pontifex_de, and the Arabic version is @Pontifex_ar. On Tuesday afternoon, the English version had the most followers, with nearly 400,000. The next largest was Spanish, with some 93,000. The lowest number of followers was the Arabic, with about 3,500. Benedict's native German had about 10,000. But the pope, leader of some 1.2 billion Roman Catholics, won't be following anyone but himself, the Vatican said. A look at his official Twitter page on Tuesday showed that he is "following" seven people but they are merely versions of his own Twitter account in different languages. The first papal tweets will be answers to questions sent to #askpontifex. The tweets will be going out in Spanish, English, Italian, Portuguese, German, Polish, Arabic and French. Other languages will be added in the future. The tweets will come primarily from the contents of his weekly general audience, Sunday blessings and homilies on major Church holidays. They will also include reaction to major world events, such as natural disasters. He will push the button on his first tweet himself on December 12 but in the future most of the tweets will be written by aides, and he will sign off on them. The Vatican, whose website has been taken down by hackers in the past, said it has taken precautions to make sure the pope's certified account is not hacked. Only one computer in the Vatican's Secretariat of State will be used for the tweets. The pope's Twitter page is designed in yellow and white - the colors of the Vatican - and his picture over the backdrop of a St Peter's Square packed with pilgrims. The page may change during different liturgical seasons of the year and when the pope is away from the Vatican on trips.

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Nokia Siemens to close German services unit: sources

FRANKFURT/HELSINKI (Reuters) - Nokia Siemens Networks' (NSN) German services unit faces closure and 1,000 jobs are at risk as Nokia and Siemens shake up the joint venture, two sources said. One of the people familiar with the situation said the closure would be effective by the end of 2013 and will be announced on Wednesday during a meeting at which workers will be told a crucial contract with Deutsche Telekom will not be extended. The Mobile telecoms equipment joint venture is cutting costs and plans to shed a quarter of its staff and sell product lines to focus on mobile broadband. The program is expected to yield about 1 billion euros ($1.31 billion) in cost savings by the end of next year. The telecoms equipment market is going through tough times with stiff competition from Chinese peers Huawei and ZTE as the major telecoms operators postpone investments, faced with shrinking markets due to the weak economy. France's Alcatel-Lucent has also said it will cut costs and jobs to survive stiff competition and weak demand. NSN Services Gmbh, which generates under 100 million euros in annual sales and employs about 1,000 people, provides network operations and management services and also includes Vodafone among its customers. Deutsche Telekom sold the unit to NSN five years ago, when the two companies also agreed on a 300 million euro services contract that now will not be renewed, according to the sources. NSN, which declined to comment, has said such services, often provided on older overhead cable networks, are not considered core operations, and it exited a similar business in Brazil earlier this year. Verdi union representative Mike Doeding said that a meeting to update workers about next year's plans was scheduled for Wednesday, adding he had no idea about what message to expect from management. "If they are to close the unit it would be an outrage," Doeding said. Deutsche Telekom referred requests for comment to NSN. On Monday, NSN said it was selling its optical fiber unit to Marlin Equity Partners, resulting in the transfer of up to 1,900 employees, mainly in Germany and Portugal. NSN had 60,600 employees at the end of the third quarter. ($1 = 0.7650 euros)

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Android projected to own the smartphone market for the next four years

Despite the increased adoption rate of smartphones, the overall worldwide mobile phone market is expected to see minimal growth this year. The International Data Corporation predicts that the market will see a year-over-year increase of only 1.4% in 2012, the lowest annual growth rate in three years. Going forward, however, the market is expected to see increased growth. Mobile phone vendors are estimated to ship more than 1.7 billion handsets this year and more than 2.2 billion devices by 2016. Consumers are continuing to buy smartphones faster than ever. Vendors are expected to ship 224.5 million smartphones in the fourth quarter of 2012, representing a 39.5% year-over-year increase. On the year, smartphone shipments are predicted to grow 45.1% from 2011 to 717.5 million units. “Sluggish economic conditions worldwide have cast a pall over the mobile phone market this year,” said Kevin Restivo, senior research analyst with IDC’s Worldwide Quarterly Mobile Phone Tracker. “However, the fourth quarter will be relatively bright due in part to sales of high-profile smartphones, such as the iPhone 5 and Samsung’s Galaxy S3, in addition to lower-cost Android-powered smartphones shipped to China and other high-growth emerging markets.” The research firm forecasts Android will “be the clear leader in the smartphone mobile operating system race” due to the large selection of devices from a wide range of manufacturers. Samsung (005930) is once again expected to be the top Android vendor, although both LG (066570) and Sony (SNE) are seeing increased sales and “are not to be overlooked.” Google’s (GOOG) operating system is expected to control 68.3% of the market this year and continue its dominance through 2016 with a slightly lower 63.8% share. Apple’s (AAPL) iOS platform is expected to remain in the number two spot behind Android in 2012 with a 18.8% market share. The operating system is predicted to see minimal growth through 2016 due to “the popularity of the iPhone across multiple markets” and is expected to control 19.1% of the market. IDC notes that until Apple examines the possibility of offering less expensive models, iOS is expected to ship lower volumes than Android. Windows Phone is estimated to capture a 2.6% share of the market in 2012, compared to BlackBerry’s 4.7% share. The two platforms are expected continue to fight for the number three spot, although ultimately the research firm predicts Windows Phone will succeed. Microsoft’s (MSFT) operating system is expected to have an explosive future with the help of its partners — Nokia (NOK), HTC (2498), Samsung, ZTE (0763) and Huawei (002502) — and is estimated to increase its market share to 11.4% by 2016, while BlackBerry is seen falling to 4.1%. “Underpinning the worldwide smartphone market is a constantly shifting mobile operating system landscape,” said Ramon Llamas, research manager with IDC’s Mobile Phone team. “Android is expected to stay in front, but we also expect it to be the biggest target for competing operating systems to grab market share. At the same time, Windows Phone stands to gain the most market share as its smartphone and carrier partners have gained valuable experience in selling the differentiated experience Windows Phone has to offer. What bears close observation is how BlackBerry’s new platform, BlackBerry 10, and multiple versions of Linux will affect the market once the devices running these systems are available.”

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New net rules would hit digital economy: diplomat

DUBAI (Reuters) - Inter-governmental regulation of the Internet could deter investment, raise costs for consumers and hinder online access, a U.S. diplomat said on Wednesday. The United States has been leading efforts to stop a United Nations body from extending its authority into cyberspace. U.S. Ambassador Terry Kramer reiterated his country's "hands off" message at a summit hosted by the International Telecommunication Union that could decide the future of the Internet, at present largely unregulated at a global level. "We are concerned some of the proposals could create an investment environment that is very tenuous," Kramer told Reuters. "We need to be very mindful that we are not creating new, much greater problems than we are solving." About 150 countries are gathered to renegotiate an ITU treaty that was last updated in 1988, before the Internet and mobile phones transformed communications. Western Internet companies and rights groups are fiercely opposed to proposals that would require companies to identify Web users at the demand of national governments, which would make it easier for countries to identify and punish dissidents. Activists operating under the Internet banner Anonymous said on Wednesday they would organize public protests. A short time later, a denial-of-service attack was launched against the ITU's main website. Such attacks, in which thousands of computers try to connect to the same site simultaneously, can temporarily overwhelm the target with traffic, though they do not breach security or cause lasting damage. The ITU site was rendered at least temporarily unavailable to net users in some regions and was sluggish afterward. The United States wants to restrict the debate in Dubai to conventional telecoms, and two of its three core recommendations have been approved, Kramer said. Member states have agreed the definition of 'telecommunications' should remain unchanged, while the treaty's introductory passages, relating to its scope, will also be unaltered. The third recommendation, still being debated behind closed doors, is a technical, but important distinction that the treaty should relate only to "recognized operating agencies" - conventional telecom operators - and not "operating agencies." The latter definition would potentially place the likes of Facebook, Google and government and business networks under the jurisdiction of the ITU. "These sectors have done incredibly well without almost any regulation at all," said Kramer. The United States and its allies, including Australia, Canada, Europe and Japan, want a strict delineation between the two, while other countries say the two are now inseparable and both should be governed by ITU legislation. The United States says that allowing the Internet, and with it content, to come under global regulations would pave the way for online censorship and restrictions on free content. "There are still a lot of countries seeking to sweep the internet into this, and some of them have got ulterior motives," said Kramer. Some African and Arab states have adopted proposals from a European telecom association to introduce charges to companies such as Google if they deliver content to networks abroad. Telecom operators' voice revenue is in decline, and they claim the investment needed to keep up with surging demand for data does not justify the returns. "If there is a charge imposed on developers of content and applications that could significantly curtail traffic, it would potentially exacerbate the digital divide because a lot of countries would not receive the traffic they need," said Kramer.

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