In Battle Against Fraud in Free Phone Service, the Poor Might Pay the Price

“If it weren’t for my free phone, there were a few times I wouldn’t have made it to the hospital,” said Ms. James, who is unemployed because of chronic health problems and has no other telephone or Internet connection in her home. She is among the 15.3 million people in the United States who receive the Lifeline telephone service because they meet income guidelines or are enrolled in programs like Medicaid or food stamps.

But the fundamental feature of the program on which Ms. James relies — 250 minutes of free wireless service a month — is at the center of a legal battle linked to a new tactic to reduce fraud in the program. The outcome could have far-reaching consequences for the telecommunications industry and for millions of impoverished Americans.

Alarmed by accounts of households that have more than one subsidized phone — a breach of federal guidelines — and other allegations of fraud, the Georgia Public Service Commission voted this year to make this state the first to require phone companies to collect a fee of at least $5 a month from Lifeline users.

As an alternative, in an effort to force the service providers to better police phone usage, the commission also said that the companies could, for the same compensation they already receive from the government, offer participants 500 minutes a month. But the companies denounced that option.

Georgia regulators made their move about three years after the Government Accountability Office reported that officials from 21 states “indicated that they were somewhat or very concerned about consumer fraud in the Lifeline program.”

Georgia’s mandate, which had been scheduled to take effect in January before a judge in Atlanta granted an injunction last week, prompted outrage from some advocates for the poor, and a legal challenge from a trade group that represents cellphone companies. The group argued that Georgia was circumventing federal law to set rates.

But the author of the regulation has argued that the fee’s benefits outweigh the risks, and that it would do much to reduce Georgia’s share of fraud in the Lifeline program, which began in 1985 and was expanded to include wireless coverage two decades later.

“There’s always going to be collateral damage when you’re having a war, and we’re having a war with fraud and abuse,” Commissioner H. Doug Everett told WABE Radio in October.

Stan Wise, one of two public service commissioners who voted against the new regulation, conceded that the Lifeline program has been rife with misconduct, but warned that the fee would be ineffective and damaging.

“What it really does is harm those in the most need and the ones that the program was designed to help,” Mr. Wise said. “If you have three Lifelines and it’s important to you to have the three phones, what’s $15 to you if you’re promoting fraud?”

The program’s troubles have received widespread attention. Aware of the criticisms, the Federal Communications Commission, which cited the potential for “a significant burden on some classes of Lifeline consumers” when it turned back a plan in 2012 to impose monthly fees across the country, has started a campaign to clean up the program, including the introduction of new national databases tracking eligibility and participation.

But if Georgia’s new policy can survive in court, it could be replicated elsewhere by anxious state regulators.

“These sorts of cases are relatively unusual,” said James B. Speta, a professor at Northwestern University who specializes in telecommunications law. “So in a second state or a third state, they will certainly look at what happened in Georgia.”

As the legal battle plays out, Georgia residents who have Lifeline phones are beginning to contemplate what they will do if the fee is put in effect.

Ms. James, who has a monthly budget of about $350, said she was likely to have to choose between her phone and one of the six prescription medications she takes every day.

“I’ve got medicines I’ve got to buy with $5,” said Ms. James, 47, who lives just northwest of Atlanta and said she has medical debts well into six figures after numerous hospitalizations and health issues that include chronic bronchitis and gastrointestinal ailments.

Others who have the Lifeline phones, including Brenda Florence, said they would immediately return them.

“They’re supposed to be free,” said Ms. Florence, 60, who pays for a home landline and cell service but also participates in Lifeline because she receives Medicaid benefits. “I’m going to put it in the box and mail it back.”

In Georgia, where nearly 721,000 people use Lifeline, the debate has also exposed a fissure among those who work to aid people in poverty.

At the Christian Aid Mission Partnership, which provides food and clothing to the region’s poor and sometimes hosts phone providers offering their wares, officials said they endorsed the state’s new effort to stem fraud.

“I think there should be some skin in the game,” said Linda Oviatt, the organization’s outreach director. But she added that she generally supported the Lifeline program because it was “a godsend” for many of her clients.

Other advocates for the poor, though, have been sharply critical of Georgia’s plan.

“The proposed fee simply serves as a penalty on the poor,” the Rainbow PUSH Coalition wrote in an October letter to commissioners. “It is, in essence, a tax being arbitrarily applied to those who can least afford it and an incursion by the P.S.C. on the free market business practices of private companies.”

Back on Lot 54, Ms. James, whose kitchen on a recent day was cluttered with boxed and canned foods, said she thought the debate should focus less on complex legal arguments. She merely wants to keep her aging flip phone.

“It’s so hard on someone who is on a fixed, fixed income,” she said. “It was just an honor to get something that is going to help me.”

YouTube Said to Introduce Paid Service for Music

The competitive world of digital music is about to become even more crowded with the arrival of one of the most formidable forces on the Internet: YouTube.

By the end of the year, YouTube, a division of Google, will unveil a paid subscription music service to compete with Spotify and other streaming outlets, according to people briefed on the company’s plans.

Subscriptions to YouTube’s program, at about $10 a month, would be tailored to mobile devices, and let its customers watch videos — or just listen to the music on them — without interruptions from advertising, according to these people, who were not authorized to discuss the service publicly.

The deal would also allow record companies, which have long complained about low per-stream payouts, to reap bigger royalties on YouTube, which has become the dominant listening platform for young people all over the world.

YouTube declined to comment directly on its plans, but said in a statement: “We’re always working on new and better ways for people to enjoy YouTube content across all screens, and on giving partners more opportunities to reach their fans. However, we have nothing to announce at this time.”

The news of the imminent arrival of the service, which has been rumored in the music industry for months, was first reported by Billboard.

The service would solve problems for both YouTube and the music industry.

Mobile access to the site has skyrocketed — Google recently announced that 40 percent of YouTube’s traffic is mobile, compared with 6 percent just two years ago — but lower advertising rates on tablets and smartphones have caused some music labels to block their content from those devices.

Through the deal, YouTube would gain the licenses it needs, covering artists’ official videos as well as user-generated content like wedding videos with a popular song in the background.

In addition to higher payouts, the service could also help music companies tame somewhat the chaos of content on YouTube by organizing music in full albums and playlists.

YouTube has struck licensing deals for the service with Sony, Universal and Warner, the three major record label groups, as well as some independent labels, according to people involved with the talks.

YouTube is only the latest arrival in a crowded market. In addition to Rdio, Rhapsody and Spotify, similar subscription streaming services are offered by Sony and even Google itself — its Google Play Music All Access, developed and operated separately from YouTube, was introduced in May, also for $10 a month.

The music industry is also eagerly awaiting Beats Music, a subscription service expected soon from the makers of Beats by Dr. Dre headphones. Music executives are hoping that the company’s success in marketing $300 headphones can translate into music subscriptions, which have been slow to take hold, partly because of all the free music easily available on YouTube and elsewhere.

Some analysts said YouTube’s success with a paid product may depend on its ability to compete with services like Spotify while still attracting users with free videos.

“YouTube is the world’s largest music search and discovery engine,” said Richard Greenfield, a media analyst at BTIG Research. “Clearly there are people who would pay above and beyond using YouTube for free. It’s just about making a great consumer experience.”

Sam Jackson Joins The Secret Service

Director Matthew Vaughn has crossed comic-book universes to nab Nick Fury himself, Samuel L. Jackson, to play the bad guy in his upcoming The Secret Service.

Variety has the report on the film, which is based on the comic by Kick-Ass writer Mark Millar. Colin Firth and Taron Egerton have previously been cast in the project.

"Vaughn had always intended to have a big star as his main antagonist, having already pursued Tom Cruise and Leonardo DiCaprio," says the trade.

Next up will be finding the female lead, with Emma Watson and Dark Shadows' Bella Heathcote reportedly under consideration.

Talk to Senior Editor Scott Collura on Twitter at @ScottIGN, on IGN at scottcollura and on Facebook.

NBC Buying Web Service to Stream Phone Video

Those images, usually found by frantic producers on Twitter and Facebook, represented “the first generation of user-generated content for news,” said Vivian Schiller, the chief digital officer for NBC News. The network is betting that the next generation involves live video, streamed straight to its control rooms in New York from the cellphones of witnesses.

On Monday, NBC News, a unit of Comcast’s NBCUniversal, will announce its acquisition of Stringwire, an early stage Web service that enables just that. Ms. Schiller imagined using Stringwire for coverage of all-consuming protests like those that occurred in Tahrir Square in Cairo.

“You could get 30 people all feeding video, holding up their smartphones, and then we could look at that,” she said in an interview by phone. “We’ll be able to publish and broadcast some of them.”

Such a vision fits neatly into the future many academics predict. That future has fewer professional news-gatherers but many more unpaid eyes and ears contributing to news coverage.

Stringwire is embryonic. What NBC is really acquiring is Phil Groman, who developed the technology while a graduate student in the Interactive Telecommunications Program at New York University.

Such “acqui-hiring,” in which a start-up is bought primarily for its talent, is normally associated with technology companies like Google and Apple, not television networks like NBC. But that is partly the point of Monday’s announcement, Ms. Schiller said: to send a message that the network news division wants more entrepreneurs like Mr. Groman.

Mr. Groman, who graduated from N.Y.U. in May, will become a product lead, based at the NBC News Digital Group’s office in San Francisco, where he will finish building Stringwire. The service works by tapping into the multitudes of people who send Twitter messages when they witness a news event. Those people will receive a Twitter post that asks them to click a link and point their camera at what they are seeing. Without any special app, the service will start streaming live video to NBC. The video submissions will be vetted just like any other material the network uses, Ms. Schiller said.

“Wherever you see a swarm of eyewitnesses on Twitter, that’s the sweet spot for Stringwire,” she said, citing the July 6 crash-landing of an Asiana jet in San Francisco. That day, photos from a passenger and a short YouTube video from the terminal were the primary images on television until a local news helicopter arrived.

Ms. Schiller said Stringwire could have also helped coverage of the hunt for the suspects in the Boston Marathon bombing, when the movements of reporters were restricted. Several times during NBC’s coverage in April, local residents were interviewed via Skype from neighborhoods that had been cordoned off.

Generally, during news events, “we might have reporters there, but they may not be in the right places,” Ms. Schiller said. “They may not have the kind of access that eyewitnesses do.”

Clay Shirky, the N.Y.U. professor who introduced Ms. Schiller to Mr. Groman, said that by having reporters reach out to witnesses, “you don’t get the Pulitzer Prize-winning shot, but you get real information about life on the ground.” He said Mr. Groman’s insight was in applying “multiple sources and editorial judgment.”

The acquisition is the first by NBC News since its Web joint venture with Microsoft was dissolved last year. Their joint Web site, msnbc.com, has become NBCNews.com. The strategy now involves “building things in-house and placing a lot of bets,” Ms. Schiller said.

While Stringwire will initially be used by the news division, she said she thought the service had “great commercial opportunities,” suggesting that it could be licensed to others, creating a new source of revenue for NBC.

Online Service Is Accused in Laundering of $6 Billion

The organization, Liberty Reserve, was responsible for laundering over $6 billion over the last seven years, with millions of customers around the world, according to the indictment. Prosecutors said that the company “facilitated global criminal conduct” and that the case, which involved law enforcement agencies in 17 countries, is believed to be the largest international money laundering prosecution in history.

The charges detailed a complicated system designed to allow people to move sums of money both large and small around the world with virtual anonymity, according to a three-count indictment announced by the United States attorney’s office in Manhattan.

“This was really PayPal for criminals,” a senior law enforcement official said, calling the company and a system of related businesses “a shadow banking system for criminal conduct” that was “able to facilitate all sorts of criminal conduct that would not otherwise happen.”

The indictment charges seven of the company’s principals and employees. Five of them were arrested Friday in Spain, Costa Rica and Brooklyn.

“Liberty Reserve was in fact used extensively for illegal purposes, functioning in effect as the bank of choice for the criminal underworld,” the indictment states.

Liberty Reserve, an online currency exchange, has surfaced as a preferred vehicle to transfer money between parties in a number of recent high-profile cybercrimes, including the indictment of eight New Yorkers for their role in looting $45 million from bank machines in 27 countries.

Liberty Reserve was incorporated in Costa Rica in 2006 by Arthur Budovsky, who renounced his United States citizenship in 2011, and was arrested in Spain on Friday.

Preet Bharara, the United State attorney in Manhattan, was expected to announce the charges at a Tuesday afternoon news conference along with officials from the Justice Department, the Secret Service, the Internal Revenue Service and the Department of Homeland Security.

In addition to the criminal charges, five domain names were seized, including the one used by Liberty Reserve, and officials seized or restricted the activity of 45 bank accounts.

The charges outlined how the money transfer system operated, offering a glimpse into the murky world of online financial transactions that bounces money between far-flung accounts from Cyprus to New York in the blink of an eye.

In order to transfer money using Liberty Reserve, a user needed to provide a name, address and date of birth. But they were not required to validate their identity.

“Accounts could therefore be opened easily using fictitious or anonymous identities,” the indictment states. Prosecutors cited “blatantly criminal monikers” used by Liberty Reserve clients like “Russia Hackers.”

Essentially, all a customer needed to open an account was an e-mail address.

The senior law enforcement official, who spoke on the condition of anonymity because the charges had not yet been announced, said that one undercover agent was able to register accounts under names like “Joe Bogus” and describe the purpose of the account as “for cocaine” without questioning. That no-questions-asked verification system made Liberty Reserve the premier bank for cybercriminals, facilitating a broad range of illegal online activity.

The senior law enforcement official said the case was significant because it attacked the financial infrastructure utilized by many cyber criminals in much the same way that drug money laundering prosecutions have sought to target the financial underpinnings of the narcotics trade.

“They’re not going to have this kind of fluid system that allows them to work globally in the same way,” the official said, noting that federal authorities were unaware of any other such system that operates on a similar scale. “It’s not the end of it,” the official said, referring generically to such cyber money laundering schemes, “but it’s a big deal.”

Amtrak Upgrades Wi-Fi Service on Trains

Amtrak’s Wi-Fi has been the target of technology jokes since the railroad introduced the service, with some passengers comparing it to dial-up services like America Online or Prodigy. But others have praised the service, saying it allows them to be productive while traveling between cities, unlike airline travel. Because of the technical difficulties of maintaining a strong Internet connection on a moving train, the increase in speed would still be less than most people experience at home.

The railroad said the broadband upgrade was complete on the high-speed Acela trains that travel the more than 400 miles between Washington and Boston. Several state-supported routes in California, including the Capitol Corridor, Pacific Surfliner and San Joaquin routes, have also been upgraded.

Amtrak said it would roll out the upgrades to all remaining Amtrak trains equipped with Wi-Fi, including the Northeast Regional, by late summer.

“We continue to place a strong focus on improving customer satisfaction, and this upgrade is delivering the improved speeds and connectivity required to maintain a competitive edge,” Deborah Stone-Wulf, Amtrak’s chief of sales distribution and customer service, said in a statement.

Amtrak said Acela passengers have already noticed an improvement in the Wi-Fi service aboard the trains and have been commenting through social media.

But not all the social media chatter has been positive.

Shelton Mercer, chief executive of TwitChange, an Atlanta-based Web site that brings celebrities and fans together for good causes, wrote on Twitter last month, “#Amtrak ‘Wi-fi’ should be renamed ‘Why-Try.’ ”

Amtrak responded to some negative Twitter posts, saying the upgrades would strengthen its Wi-Fi network and increase the amount of bandwidth available for tech-savvy passengers who have become accustomed to being connected while traveling.

Sara Wachter-Boettcher, an author and Web consultant in Lancaster, Pa., called the service an infuriating luxury. On a recent trip home from teaching a workshop in New York, she said, she was desperately trying to catch up on e-mail. But the Wi-Fi on the train booted her off every few minutes, she said, and she had to resort to a combination of her smartphone and laptop to keep working.

“On the one hand, we’re lucky to have such pervasive Internet access,” she said in an e-mail. “On the other, it’s frustrating anytime something that should work doesn’t.”

Unlike most airlines, Amtrak said it would continue to provide free Wi-Fi service. The railroad said that Wi-Fi was available on trains that serve 75 percent of Amtrak passengers, and that it routinely supported 30 percent to 50 percent of passengers on a given train.

But Amtrak also said it would continue to limit some Internet activities.

To ensure that all passengers have an opportunity to use the Wi-Fi service, Amtrak said, it would still restrict data-heavy activities that could slow the service down, like streaming video sites like Netflix and music sites like Pandora. The railroad also restricts file downloads larger than 10MB.

Even with the upgrades, Amtrak will continue to face some challenges with its wireless service. High-speed service is not available everywhere, and because the railroad uses different carriers along its routes, including Verizon and AT&T, service could still be interrupted or slowed as the Wi-Fi signals switch between the carriers. In addition, as the speed of the service increases, so will the number of people trying to use it, potentially slowing it down.

Still, Amtrak seems confident that passengers will have a better Internet experience aboard its trains. In a news release announcing the upgrades, the railroad suggested the following Twitter post: “Productivity on @Amtrak #Acela just got better. Their onboard #Wi-Fi is now powered by 4G technology.”

30 More New York Subway Stations Get Cellphone Service

But more than a century after the founding of New York City’s underground subway, technological progress has layered a new din over the relative tranquillity of traveling preachers, fussy children and mariachi bands with loose change in their hats.

New Yorkers on cellphones.

On Thursday, Gov. Andrew M. Cuomo announced that 30 more underground stations would have cellphone service, bringing the total to 36, all in Manhattan. At some of the city’s busiest hubs, including Times Square and Rockefeller Center, riders will be able to make and receive calls, send text messages, and access Wi-Fi. Mr. Cuomo said the change would also bolster security, allowing travelers to call 911 in an emergency.

Another consequence of the improvements, though, was discussed little: With many of the newly connected stations bunched closely together, officials said that riders might be able to find cellphone signals not just on platforms but on moving trains themselves.

“It’s an added bonus,” said Jared Leavitt, a spokesman for Transit Wireless, the company behind the project. “It’s all just radio waves bouncing around.”

A handful of trial rides on Thursday yielded mixed results. While signals were often spotty, some riders were able to complete calls and exchange text messages on trains, particularly along the No. 1 train line between 14th Street and 59th Street — where all stops but one, 34th Street, have been brought online.

Even among the offending chatterers, there was ambivalence about the prospect of onboard calls.

“If you don’t get reception, that gives you peace of mind,” Leo Bruce, 44, from Maspeth, Queens, said as he waited for a train at 18th Street.

But when it arrived, Mr. Bruce tested the new system, placing a call as the doors closed. “Hey, how you doing, hon?” he shouted into the phone. “You going to be there by 2:30?”

About a dozen passengers turned toward him, displeased, as the train hurtled toward 14th Street.

On an uptown train, Neicy Castro, 21, from Yonkers, said that she could already sustain short phone conversations on sections of the underground No. 1.

“I don’t like being bothered sometimes,” she said, as a text message reached her phone between 23rd and 28th Streets. But she always answers, she added.

Kevin Ortiz, a spokesman for the Metropolitan Transportation Authority, noted that many IRT stations, including much of the Lexington Avenue line, were not very deep, allowing some riders to find a signal from above ground long before the networks were established at the stations.

Though officials have discussed plans for extending phone coverage into tunnels, the idea is not included in the existing agreement between Transit Wireless and the transportation authority. AT&T and T-Mobile USA customers can already use their phones at the 36 stations; Verizon and Sprint are expected to join by the end of the year, officials said.

Warren Sackman, 26, from the Upper West Side, said that cellphone service of any sort threatened perhaps the city’s most relied-upon excuse: attributing a missed call to being underground. He lamented, too, that a phone call from a platform or train “takes away from the social interaction” with other riders.

“I’m not really attached to my cellphone,” he said, looking up from his phone, where he had moments earlier been thumbing through pictures.

At Times Square, Juan Castillo, 44, who plays Andean and classical music on his guitar and flute for passing travelers, acknowledged that increased phone use in the system had made it more difficult to draw a crowd. But he remained optimistic.

“There are so many people in New York,” he said. “There’s still people who pay attention.”

VUDU Movie Streaming Service User Data Stolen

Vudu, a popular on-demand HD video streaming app that enables users to watch their favorite TVs and movies online as well as on Android tablets, Roku, Xbox 360 and PS3, experienced a break-in at its Santa Clara offices.

In addition to other objects of value, criminals made off with hardrives, which Vudu employees concluded had user data— names, email addresses, phone numbers, addresses, account activity and the last four digits of credit card numbers.

It's important to note that the drives did NOT contain full credit card numbers, as we do not store that information," Vudu CTO Prasanna Ganesan wrote in the email to users.

The break-in affected users who directly use the Vudu site or app only — users who have accessed media via other websites on Vudu are unaffected by the break-in. Ganesan says that all of the passwords on the harddrives were encrypted, but users should still be vigilant "given the circumstances" of the theft.

Vudu has already expired and reset the passwords of compromised users, and has advised everyone to be cautious about suspicious emails or phone calls from Vudu or other companies. In addition, Vudu is offering a year's worth of fraud and identity protection service AllClear ID in case anything does happen, with additional enrollment steps.

Got questions? Vudu has set up a FAQ to answer pertinent questions.

What do you think about Vudu's break-in? Let us know in the comments.

Lauren Hockenson is a tech reporter and 8-bit enthusiast who dreams of being a wizard. She can be found on MyIGN at lhockenson or on Twitter at @lhockenson.

Bits Blog: BlackBerry to End Music Service

BlackBerry will shut down a subscription service that married its BlackBerry Messenger instant messaging with online music downloads. Crystal Roberts, a spokeswoman for the company, said the decision to end BBM Music on June 2 followed a “strategic business review” by the company.

Like Apple’s attempt to turn iTunes into a social medium with Ping, BBM Music, started in 2011, was widely seen as something of a failure. Ms. Roberts declined to say how many people subscribed.

The service’s acceptance may have been limited by its complexity. Users do not purchase songs from it, as with Apple’s iTunes or with Amazon. Nor do their monthly subscription fees give them unlimited access to a large online catalog of music like that offered by Spotify.

Under BlackBerry’s system, users in the United States pay $5 a month but can pick only 50 songs. They can change only half of those songs each subsequent month.

Subscribers can download music from the 50-song playlists of other BBM Music users they know. But BlackBerry’s significant decline in the United States market reduced the utility of that feature.

Ms. Roberts said that BBM Music subscribers would be offered no-cost 30-day trial subscriptions to Rdio, an online subscription service similar to Spotify.

Gadgetwise Blog: A Crowd Service Gives Tips on Cloud Service

If you are looking for a cloud service, 50,000 friends would like to help you out.

The Web site Fixya, best described as a volunteer technical assistance forum, assessed more than 50,000 support requests to find the most common problems with five cloud services. Roughly 40,000 were about Apple’s iCloud; the rest were nearly evenly distributed among the others.

Among Dropbox, Google Drive, iCloud, SugarSync and Box, each had some technical difficulties, but the one that received the most positive feedback from Fixya users is the lesser known SugarSync.

And good news for users: While SugarSync was already was considered easy to use by the Fixya community, SugarSync has recently been redesigned to be simpler still.

There is one large fly in the SugarSync ointment. It won’t work with QuickBooks, a problem that was the top query for SugarSync.

Dropbox was cited by 40 percent of its audience for security concerns, followed by 25 percent for storage limits and 15 percent for syncing issues.

Google Drive drew 30 percent of its questions about missing folders, followed by 20 percent for syncing issues.

After upgrading to Apple’s Mountain Lion operating system, 35 percent of iCloud users sought answers about syncing between Apple devices, while 25 percent had problems syncing with non-Apple devices.

Box users required help with uploading 25 percent of the time, cited security issues 25 percent of the time and asked about backup failures 20 percent of the time.

The entire report with solutions for the most common problems of each service can be found on FixYa’s blog.

Bits Blog: What Instagram's New Terms of Service Mean for You

Instagram released an updated version of its privacy policy and terms of service on Monday, and they include lengthy stipulations on how photographs uploaded by users may be used by Instagram and its parent company, Facebook.

The changes, which will go into effect Jan. 16, will not apply to pictures shared before that date.

Facebook and Instagram have both hinted at plans to incorporate advertisements into Instagram’s application, although they have declined to provide details about how and when ads would be deployed. These freshly drafted terms give the first glimpse of what the companies might have planned. Here’s a quick rundown of what the new terms, the most significant changes in Instagram’s short history, could mean for users.

1. Instagram can share information about its users with Facebook, its parent company, as well as outside affiliates and advertisers.
Instagram said that the changes to its privacy policy are a means to help Instagram “function more easily as part of Facebook by being able to share info between the two groups.” The potentially lucrative move will let advertisers in Facebook’s ad network use data and information that users have shared on Instagram, like details about favorite places, bands, restaurants or hobbies, to better target ads at those users.

2. You could star in an advertisement — without your knowledge.
A section of the new terms of service, titled “Rights,” notes that Instagram will also be able to use your photographs and identity in advertisements. “You agree that a business or other entity may pay us to display your username, likeness, photos (along with any associated metadata), and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you,” the new terms say. This means that photographs uploaded to Instagram could end up in an advertisement on the service or on Facebook. In addition, someone who doesn’t use Instagram could end up in an advertisement if they have their photograph snapped and shared on the service by a friend. Facebook already runs ads that make use of people’s activity on its site.

Marc Rotenberg, executive director of the Electronic Privacy Information Center, an advocacy group in Washington, said that the use of a person’s likeness in ads could run into some state laws protecting people’s privacy.

“Most states have laws that limit the use of a person’s ‘name or likeness’ for commercial purposes without consent,” Mr. Rotenberg said. “The legal purpose is to allow people to obtain the commercial value of their images and endorsements, which is a big issue for celebrities and others, but also a reasonable concern for Facebook users whose images are used by Facebook to encourage friends to buy products and services.”

3. Underage users are not exempt.
Athough Instagram says people must be at least 13 years old to sign up for the service, the new terms note that if a teenager signs up, they are agreeing that a parent or guardian is aware that their image, username and photos can also be used in ads.

4. Ads may not be labeled as ads.
In another section of the updated terms, the company says ads will not necessarily be labeled as ads. “You acknowledge that we may not always identify paid services, sponsored content, or commercial communications as such,” the company wrote.

5. Want to opt out? Delete your account.
The only way to opt out of the new Instagram terms is to not use the service. If you log into Instagram in any way, including through the Web site, mobile applications or any other services offered by Instagram, you agree to have your content used in ads. Instagram’s new terms of service say that “by accessing or using the Instagram website, the Instagram service, or any applications (including mobile applications) made available by Instagram (together, the “Service”), however accessed, you agree to be bound by these terms of use.”

Instagram addressed the changes on its company blog, saying that “nothing has changed about your photos’ ownership or who can see them.” In its blog post, Instagram said the changes would primarily help the company combat spam, which has plagued the application as it has swelled in popularity.

“Our updated terms of service help protect you, and prevent spam and abuse as we grow,” the company wrote.

Cellphone Users Steaming at Hit-or-Miss Service

On Friday, four days after Hurricane Sandy, the major carriers — AT&T, Verizon Wireless, T-Mobile USA and Sprint — were still busily rebuilding their networks in the hardest-hit areas.

One-quarter of the cell towers in the storm zone were knocked out, according to the Federal Communications Commission. Many had no power, and their backup battery systems soon drained. The lines connecting those towers to the rest of the phone network were ripped out. Carriers deployed generators to provide power, but eventually those required more fuel — another limited resource.

In an emergency, a lack of cellphone reception can be dangerous, especially as more people have chosen to snip landlines out of their budgets. About 60 percent of American households have landlines, down from 78 percent four years ago, according to Chetan Sharma, an independent mobile analyst.

The carriers say they are trying their best to deal with an unusual disaster. But in the past, they have steadfastly objected to recommendations from regulators that they spend more money on robust emergency equipment, like longer-lasting backup batteries.

Neville Ray, chief technology officer of T-Mobile USA, said Hurricane Sandy was the biggest natural disaster he had ever dealt with and that service failures were inevitable.

“There’s an amount of preparation you can do, but depending on the size and scale and impact of the storm, it’s tough to anticipate every circumstance,” Mr. Ray said in an interview. “No degree of preparation can prevent some of those outages from happening.”

When networks fail, carriers deploy trucks, called C.O.W.’s, for cell on wheels, that act as temporary cell towers. But the companies say the challenge with deploying these trucks poststorm is connecting to power and to the wider phone network, which requires a microwave radio link to a working tower. Because of the density of the buildings in New York City, the trucks could serve only a small area, according to Mr. Ray.

The carriers have made other efforts to provide services while restoring their networks. AT&T wheeled out R.V.’s where customers could charge their phones. And it made an agreement to share networks with T-Mobile USA in the affected areas of New York and New Jersey. When customers of both companies place calls, they are carried by whichever network is available in the area.

But ultimately all of the carriers’ preparations and responses were not enough to get services running again in a hurry. Over the week the carriers reported gradual progress, and they declined to offer timelines indicating when customers could expect to have service again.

The unreliability of wireless networks may point to a bigger problem. Over the years, the phone companies have fought off regulators who want to treat them as utilities, arguing that if they are going to stay innovative, they cannot be burdened with the old rules that phone companies dealt with in the landline era. But as a consequence, there are almost no rules about what carriers have to do in an emergency, said Harold Feld, senior vice president for Public Knowledge, a nonprofit that focuses on information policy.

“With the new networks we’ve prized keeping costs down, we’ve prized flexibility and we’ve prized innovation,” said Mr. Feld, who wrote a blog post on Monday anticipating cell tower problems. “But we have not put stability as a value when we have been pushing to have these networks built out.”

Mr. Feld noted that after Hurricane Katrina in 2005, the F.C.C. recommended that carriers install backup batteries on their transmission towers that would last 24 hours, among other measures. But the carriers objected, presumably because they did not want to spend the money, he said. (Of course, 24 hours would not have been enough in many areas hit by the latest storm.)

In general, the carriers say it is in their own interest to fortify their networks for emergency situations, but Mr. Feld said this incentive was not enough.

“We ought to actually be doing this in the mind-set that there need to be actual rules, so that everybody knows how to behave when the crisis hits,” he said. “When I drive I have the best incentive in the world not to hit a telephone pole and not to slam into another car. But I still need speed limits, stop signs and stop lights.”

Debra Lewis, a spokeswoman for Verizon Wireless, said no amount of rules could have prepared carriers for the outcome of a storm like Hurricane Sandy.

“The fact is, regulation cannot anticipate the varied challenges that can arise in such situations, but we do learn from them and adapt accordingly to ensure we meet consumers’ needs,” Ms. Lewis said. She said the company prepared for natural disasters with generators and batteries that provided at least eight hours of power to cell sites.

Verizon Wireless said Friday evening that less than 3 percent of its network in the Northeast was still down. “In severely impacted areas, such as Lower Manhattan, while wireless service has yet to return to normal levels, coverage is good,” it said.

AT&T was the only major carrier that would not go into specifics about how much of its network was down. Anecdotally it seemed that in Manhattan at least, AT&T’s coverage was not as good as Verizon’s after the storm. One Twitter user directed this message at AT&T on Tuesday: “I live in lower manhattan. Vz has service u do not. You are ruining lives. I had to come midtown 2 call mom. Switching.”

Mark Siegel, a spokesman for AT&T, said the company would not comment because it was working on restoring its network.

New Online Storage Service to Put Users in Charge

WELLINGTON — Kim Dotcom, the founder of the closed file-sharing site Megaupload, which had housed material as varied as family photos and blockbuster films, announced Thursday a new online storage service called Mega that will give users direct control over — and responsibility for — their files.

Mega will begin service in January, just before Mr. Dotcom, the Internet entrepreneur, is scheduled to face a hearing on whether he can be extradited from New Zealand to the United States, where he and other Megaupload operators face charges of online piracy, fraud and money laundering.

The U.S. government alleges that Megaupload, once one of the world’s most popular Web sites, was directly responsible for illegally uploaded content and that it netted $175 million from unlawful activities.

“The new Mega will not be threatened by U.S. prosecutors,” Mr. Dotcom said in an interview, adding that he was confident Mega would avoid violating U.S. law. “The new Mega avoids any dealings with U.S. hosters, U.S. domains and U.S. backbone providers and has changed the way it operates to avoid another takedown.”

In other words, the new site will not use U.S.-based host companies as partners in an effort to avoid being shut down by the U.S. authorities.

Megaupload was shut down last January. New Zealand police helicopters swooped into Mr. Dotcom’s mansion outside Auckland to seize computers and other evidence at the request of the U.S. authorities.

Users of the new service will be able to upload, store and share photos, text files, music and films, encrypt those files and grant access using unique decryption keys. “You hold the keys to what you store in the cloud, not us,” a statement on the Mega Web site said.

While the new site will operate faster and have a bigger storage capacity, the encryption technology is a major change from Megaupload, with the objective that Mega operators will not have access to files and will therefore be immune to content liability.

The encryption system also aims to make it the job of content owners to ensure that files are not pirated, a major change from Megaupload, which the U.S. film industry says was directly responsible for taking down illegally uploaded content.

“Content owners can still remove infringing material and they will even get direct delete access if they agree not to make us responsible for actions of users,” Mr. Dotcom said.

Bits Blog: Amazon Cloud Service Goes Down and Takes Popular Sites With It

7:11 p.m. | Updated Updated throughout.
Some services at Amazon.com’s data centers went down Monday afternoon, taking with them a number of popular Web sites and services, including Flipboard and Foursquare.

Amazon reported problems at data centers in Northern Virginia that appeared to have had a ripple effect across the Internet, as many companies depend on the company’s cloud service to run their businesses. Several frustrated customers took to Twitter to complain.

In June, an electrical storm caused problems at the same Northern Virginia data centers and took down sites including Netflix, Pinterest and Instagram for a weekend.

The companies that were affected by the latest shutdown scrambled to respond.

“Like many other services, we’ve been taken down by the outage,” said Erin Gleason, a spokeswoman for Foursquare, the mobile check-in service. “Both the site and the app are inaccessible right now.”

Ms. Gleason said the company was still awaiting information from Amazon about when its service might be restored.

Another start-up, Airbnb, attempted to reassure its members via Twitter. “Apologies. Our site is having a case of the Mondays,” the company posted.

Tera Randall, a representative for Amazon, said in an e-mail that the problems only involved one zone of the company’s service and were affecting “a portion of customers in that zone.” She declined to elaborate on when service might be restored or what percentage of the company’s overall cloud computing business was involved.

A status message on Amazon’s Web site said that the company’s cluster of cloud computing services in Virginia were “currently experiencing degraded performance.”

By late evening, at least one service that suffered as a result of the shutdown, Pinterest, showed signs of coming back to life.

“The site issues we were experiencing should be resolved and you can pin to your heart’s content again,” the company wrote on Twitter. “Thanks again for your understanding!”

This post has been revised to reflect the following correction:

Correction: October 22, 2012

In a previous version of this post, the full name of Amazon's EC2 Web service was given as Elastic Cloud Computing; it is Elastic Compute Cloud.

French Music Streaming Service Takes on the World, Sans America

The company, Deezer, is one of the biggest players in digital music streaming, trailing only the market leader, Spotify, in the number of paying customers it has attracted globally. Like Spotify, which is based in London, Deezer, with headquarters in Paris, offers subscribers unlimited access to millions of songs on demand, via PCs, mobile phones and other devices.

Deezer just got a big endorsement for its approach. Access Industries, the owner of Warner Music Group, pumped 100 million euros, or about $130 million, into Deezer this month, in what analysts described as one of the biggest investments ever in a French start-up.

“This shows that they think the music market is beginning to turn around,” Axel Dauchez, chief executive of Deezer, said in an interview.

Deezer, which started in 2007, has just moved into a slick new headquarters, where employees conduct business meetings on lawn chairs and on sofas disguised as musical keyboards. “Paint it black,” reads a neon sign on the somber-toned wall behind Mr. Dauchez. Like the Rolling Stones, Deezer is on a mission to blot out the color red — in this case, from the ailing music industry’s ledgers.

After a battle with piracy that has cut its sales in half in just over a decade, the music industry has high hopes for streaming, which is growing faster than digital purchases, as many listeners decide that ownership makes less sense than in the days of plastic and vinyl.

While Deezer and Spotify are still losing money, their sales are growing rapidly. Deezer generated about 50 million euros in revenue last year, and Mr. Dauchez has set a goal of 1 billion euros in sales in 2016.

With more than two million paying customers, Deezer trails Spotify, which has more than four million. Spotify introduced an American version last year, and it has been growing quickly. But Deezer has turned its back on the United States and plans to use its new money to finance an expansion into more than 160 other countries.

“Like a canny general who decides to march around a heavily fortified stronghold and thus effectively leave it stranded behind enemy lines, so Deezer expects the streaming war to be waged on different shores,” Mark Mulligan, a music industry analyst, wrote on his Web site. “They are both right and wrong.”

Analysts say Deezer is right to worry about competition in the United States, where Spotify competes with services like Rhapsody, Pandora and Rdio, even though their business models all vary slightly.

Mr. Mulligan says there is room for growth in the United States, because premium streaming services remain too expensive for most consumers. But the field is less crowded outside the United States, where Spotify is the clear leader in streaming in many of the markets it has entered — except France, where Deezer reigns.

Spotify, too, is planning for the battles ahead. Several people briefed on the company’s plans said it had begun a new round of fund-raising, seeking to secure several hundred million dollars in new investment.

New financing is essential for Deezer and Spotify because they are burning through significant amounts of cash. To attract new listeners, both companies offer free versions of their services, subject to certain restrictions. Yet both companies must pay a royalty to a recording company every time someone listens to one of their tracks.

While streaming services sell advertising to cover some of the costs of free listening, Mr. Dauchez said raising revenue in this way had proved to be more challenging than expected. So Deezer now sees its free service primarily as a way to entice listeners into paying for its premium offerings, which include things like unlimited streaming and special content and recommendations, along with no ads.

This makes expanding into new markets expensive. While Deezer says it was profitable last year, it expects to lose money until 2014 as it enters new markets. The company set up sites in several other European countries in 2011 and accelerated its global expansion this month.

Raw Data: Americans Paying More for LTE Service

BERLIN — Does LTE, the superfast wireless service based on Long Term Evolution technology, cost too much in the United States? A recent study by the research arm of the GSM Association, a group based in London that represents mobile operators, suggests that may be the case.

The LTE network run by Verizon Wireless, the U.S. market leader, went live in 2010, shortly after Sweden turned on the world’s first LTE networks in December 2009.

Through June, there were 27 million LTE subscribers in the world, about half of them in the United States, according to TeleGeography, a market research firm based in Washington. South Korea is the second-largest market, with 7.5 million users, and Japan, with 3.5 million, is the third, according to the company.

LTE services are available in 21 European countries and used by 1.5 million people, TeleGeography says. Germany has the most users there.

A comparison by Wireless Intelligence, a unit of the GSM Association, suggests that being in the biggest LTE market has not brought low prices to U.S. consumers.

According to the study, Verizon Wireless, which is a joint venture of Verizon and Vodafone, charges $7.50 for each gigabyte of data downloaded over its LTE network. That is three times the European average of $2.50 and more than 10 times what consumers pay in Sweden, where a gigabyte costs as little as 63 cents.

Brenda Raney, a spokeswoman for Verizon Wireless, which is based in Basking Ridge, New Jersey, said the Verizon Wireless LTE plan cited in the study also included unlimited voice minutes, unlimited text, picture and video messages shared among 10 different data-capable devices and a mobile hotspot on the smartphone. Having a data-only plan, Ms. Raney said, would reduce the per-gigabyte charge at Verizon Wireless to $5.50 — still be more than twice the European average.

Calum Dewar, the Wireless Intelligence analyst who made the comparison, said there were several reasons for higher LTE prices in the United States.

First, U.S. operators like Verizon sell LTE as part of a larger mobile package, whereas European operators increasingly sell it as a stand-alone service at a lower price. U.S. operators are phasing out unlimited data plans, which is causing the price of data to increase above their levels in Europe, where a similar shift began two years ago. And you can buy LTE on a pay-as-you-go basis, often from virtual network discounters.

But another big reason for the trans-Atlantic discrepancy in LTE costs, Mr. Dewar said, is a difference in the levels of competition. Europe has the greatest number of operators selling LTE: 38 of 88 operators worldwide. Even small markets like Austria, Finland and Portugal have three LTE operators.

Until July, Verizon Wireless and AT&T Mobility were the only U.S. operators selling LTE nationally, Mr. Dewar said. And Verizon Wireless, which began selling LTE service in December 2010, has largely had the U.S. LTE market to itself in setting prices. In June, Verizon Wireless had 11.6 million LTE customers, and AT&T Mobility, the next biggest U.S. seller of LTE, had 750,000, according to TeleGeography.

The LTE comparison mirrors the trend for other types of mobile services, like 3G, which also tends to cost more in the United States.

U.S. consumers who bought mobile service through contracts spent $115 a month for 3G service, according to a survey conducted in May and June of 6,000 consumers in 12 countries by Ernst & Young, an accounting firm. In the Netherlands, the average was $51; in Britain, $59.

J. Scott Marcus, a senior Internet technology adviser at the U.S. Federal Communications Commission from 2001 to 2005, said European telephone behavior had developed in an environment of high prices, while U.S. habits had been shaped by low prices for landline and, initially, mobile service.

As a result, Europeans tend to be more restrained in calling and mobile surfing than Americans, said Mr. Marcus, who is an analyst at WIK-Consult, a research firm in Bad Honnef, Germany, owned by the German Economics Ministry.

The higher prices are slowing the adoption of smartphone services, according to Jonathan Dharmapalan, Ernst & Young’s global telecommunications leader.

“The No. 1 reason for customers’ discontinuing their use of a smartphone service or not taking the option is the fear of overspending,” Mr. Dharmapalan said.

Gadgetwise Blog: Tip of the Week: Checking the Mail Service

Web-based mail services like Google’s Gmail or Microsoft Hotmail/Outlook.com can keep you up to date with e-mail and online calendar services wherever you can get an Internet connection. These sites may have occasional technical trouble that can prevent you from getting your messages. If your mailbox seems suspiciously quiet for a period of time, you may want to check the status of your mail service to make sure it is up and running.

Most major sites have a status page that shows if Web-based mail and other services are functional and can sometimes provide information on the nature of the problem. Gmail users can check the Google Apps dashboard for service notes, while Hotmail/Outlook.com users can get information at https://status.live.com/. Apple has a similar status page for its iCloud suite of services. For Yahoo — and other popular sites like Facebook, Twitter and Foursquare — the Down Right Now site collects crowd-sourced reports and official announcements and displays a list of potential service disruptions around the Web.

Media Decoder Blog: Barnes & Noble to Introduce New Video Service for Nook Devices

Barnes & Noble said on Tuesday it would introduce a new video store for its Nook products this fall, the latest expansion of the bookseller’s digital content.

The service will allow customers to stream and download movies and television shows for a fee onto TV’s and mobile devices, while storing the content in the Nook cloud. The video catalog includes HBO shows, like “Game of Thrones” and “True Blood,” and movies including “The Artist” and “Toy Story 3.”

Barnes & Noble has focused heavily on its digital offerings to compete with retailers like Amazon and Apple. In April, it received a boost when Microsoft said it would invest hundreds of millions of dollars in the bookseller’s digital division.

Barnes & Noble’s Nook enters a crowded market of digital rental services that let viewers download movies and television shows to mobile devices. The video streaming service would be similar to Apple’s iTunes in that viewers could rent single episodes, movies or whole TV seasons. Wal-Mart entered the streaming business in 2010 with its $100 million acquisition of Vudu, which allows viewers to rent high-definition movies on Internet-enabled televisions. Many new television sets now come with the Vudu and Netfix apps built in. Verizon and Redbox recently partnered to introduce their own streaming service.

Major studios have taken a blow in home video revenue in recent years as DVD sales and traditional rentals decline. Deals like the one with Barnes & Noble help bring in additional rental revenue and offer viewers another outlet on which to find content. That’s in combination with home-grown streaming services like HBO Go, which requires users to authenticate that they pay for Time Warner’s HBO before accessing hundreds of episodes of past and current shows on tablets and mobile devices.

William J. Lynch, the chief executive of Barnes & Noble, said in a statement, “As one of the world’s largest retailers of physical video discs and digital copyrighted content, our new Nook Video service will give our customers another way to be entertained with a vast and growing digital video collection, as part of our expansive Nook store.”

Barnes & Noble currently has about 25 percent of the e-book market. In August, the company reported a loss of $41 million, or 78 cents a share, in the quarter ending July 28. Nook sales were flat over the previous year, at $192 million.

On Tuesday, Barnes & Noble also signaled its intentions to build a bigger presence in Britain. It said the company Dixons Retail, which owns the electronics retailers PC World and Currys, would sell Nook products in 600 stores. Barnes & Noble also named Patrick Nourvillois as a managing director responsible for building the Nook brand “outside the U.S. across the globe.”

For Young Jews, a Service Says, ‘Please, Do Text’

Then they looked up at the white screen behind the rabbi: Pray. Write. Text.

And text they did for nearly 90 minutes, sending out regrets, goals, musings and blissful thoughts, all anonymously for everyone to see.

“Let’s see some texting, guys,” Rabbi Amy L. Morrison told the group. “Take those phones out.” What do you need to let go of, she asked the congregants, in order to be “fully present”?

Hunched over their phones, they let loose their words and watched them scroll into view: Past mistakes. Shyness. Anger. Fear of failure. Self-pity. Ego. Doubt. Control.

At an offbeat service on Sunday night at the Jewish Museum of Florida, organizers were trying an innovation that few if any rabbis have embraced: using the language of the tech generation instead of the Torah to keep the crowd of 20- to 30-year-olds, mostly unmarried and transient, connected to their Jewish roots and to one another.

It is the age cluster least likely to attend synagogue. “For young Jews in America, we are a demographic different from our parents and our grandparents,” said Rabbi Jessica Zimmerman, the director of congregational engagement for Synagogue 3000, an organization that seeks to re-energize synagogue life and re-engage young professionals. “We’re more educated, we move many more times and live further away from our family of origin, and we are single much longer, for years after college, which was never the case before.”

Enter Rabbi Morrison, 33, an ebullient, unconventional cleric at Temple Beth Sholom, a Reform synagogue in Miami Beach, who is as comfortable belting Bob Marley’s “Redemption Song” as she is reciting Mi Chamocha, a Jewish prayer of redemption. She is also a lesbian, something that she revealed to the group in an attempt to foster openness and honesty at the gathering.

“For my generation, the generation that the service is for, prayer is not something you can find in your own life until someone helps you wrestle with it,” said Rabbi Morrison, who works with the Tribe, the group that organized the event and tries to find novel ways to reach the younger generation. As a rabbi, she added, she is committed “to making prayer as accessible as possible.”

So, “I recommended texting,” she said. Semantics were important, too. The Tribe billed the event as “an experience,” not as a service.

At a lectern, her phone within easy reach, Rabbi Morrison told the 150 or so young people arrayed before her that “texting will give you a voice in the service.”

She spoke to them about acceptance, loving themselves so they can love others and giving themselves a pat on the back when they deserve it.

What is one thing you wish you had done differently this past year? she asked.

The messages popped up: Be a better friend. I wish I was less stressed. Procrastinate less. Listened to my gut feeling. Be a better listener. Worry less, enjoy life more. Less materialistic.

And, because who can resist a little texting levity, “I wish I spent less time on FB” — for Facebook — prompting laughter and a round of nods. Except for a bit of glibness (“I lived this on ‘Glee,’ ” one prankster texted), the uncensored remarks were inoffensive, a relief to the organizers.

There were also flashes of seriousness. During the Mi Shebeirach, or healing prayers, Rabbi Morrison asked congregants to text the names of ailing loved ones who needed prayer, a solemn ritual that many people shy away from sharing publicly.

But in this collection of like-minded people, the names popped on the screen: Bernice. Craig going through chemo. Haiti. Abuelo ... and on it went.

“We can no longer assume that young people will join the Jewish community,” said Rabbi Gary A. Glickstein, Temple Beth Sholom’s spiritual leader. “They need to be helped on that journey.”

After the service, as the young congregants sipped wine and nibbled on food in an adjoining room, most said the evening was “refreshing” and “fun,” not a word they typically attach to High Holy Day services. Some were recent out-of-state transplants to Miami Beach; others said the high cost of synagogue membership, usually structured for families, could be prohibitive for young single people. This was free, and cellphone-friendly.

“It felt like a community, which is what it should be in the New Year,” said Sarah Silver, 26, a violinist for the New World Symphony who recently moved from Pittsburgh. “It was great to share. I am not a super-strict practicing Jew, and it was nice to feel like other people are human, too.”

Her synagogue back home is Conservative, she said, and would have scoffed at the notion of a texting Rosh Hashana service. But Judaism has to stay relevant, she said. “Services there aren’t as thought-provoking or honest or sharing, which is what I liked here.”

Hannah Citrin, 25, an actress from Miami Beach, who could not resist posting a joke, said she had stayed “alert,” which seldom happens during services.

“I paid attention the whole time; that’s a problem with me, tuning it out,” she said. And, she added, “in the end, everyone gets through life with laughter.”

Uber, an App That Summons a Car, Plans a Cheaper Service

In San Francisco and New York on Wednesday, Uber will start to give customers the option of choosing a hybrid car at a price that it says will be 10 to 25 percent more than a taxi. That compares with the 40 to 100 percent premium that customers pay for a black town car.

“This is the first big step Uber is taking to go to the masses,” said Travis Kalanick, the company’s chief executive.

Uber, which has raised $43 million from investors since 2011, is one of several start-ups, including Cabulous and Taxi Magic, that are trying to profit by connecting drivers and passengers more efficiently.

Its software tries to predict areas where rides are likely to be in high demand at different times of day. This information appears on a driver’s smartphone so that he can know where to linger and, ideally, pick up customers within minutes of a request for a ride. Uber does not itself provide the cars; it works up with existing for-hire car services that piggyback on its technology and give it a cut of fares.

Uber can come in handy in cities or neighborhoods where cabs are hard to flag down on the street. But cities often have decades-old regulations regarding car services acting as taxis, and officials in some cities, including Washington, say they are concerned about Uber confusing riders or breaking the rules.

Of course, Uber’s convenience comes with a cost. People are paying not just for the service, but also the gas used by the big sedans. That’s where hybrid vehicles will help bring down the price: drivers will spend less time and money fueling up.

The company plans to expand its offering of hybrid cars to other cities in the coming months. Uber is now operating in about a dozen cities, including Los Angeles, Chicago, Boston, San Diego, Paris and London.

When people use the Uber app in San Francisco and New York, they will be able to choose between a town car and a hybrid. In most cities, the company is also adding the option to hire an S.U.V. for larger groups. Rates will vary from city to city, but in general hybrids will cost 30 to 40 percent less than Uber’s black town cars, according to Scott Munro, an operations manager at Uber.

In San Francisco, for example, the hybrid cars will cost $5 for the base fee, and then $3.25 a mile after that. By contrast, the town cars cost $8 for the base fee and then $4.95 a mile. Taxis in San Francisco cost $3.16 a mile including a tip of 15 percent.

Despite its higher fares, Uber has grown significantly. The company declined to disclose precise numbers, but Mr. Kalanick said it had recorded 20 to 30 percent revenue growth from month to month over the last year, and that there were thousands of cars using Uber’s technology. In San Francisco, 400 drivers are signed up with Uber, and that number is growing all the time, Mr. Munro said.

The company convinced its car-service partners to buy a total of 50 hybrids just for customers coming through Uber — a sign that drivers are making money with the start-up.

Mohamed Mandour, a partner of Uber who owns a car service called Nada Limo in San Francisco, bought a Toyota Prius hybrid for the new program. He said his passengers were interested in taking the hybrid cars, even though they are less roomy and luxurious, because of the lower fares.

Mr. Mandour said that when he drove cabs for nine years, he would make only about $300 on a busy 10-hour shift. But when he worked with Uber, the amount he earned jumped to more than $700 on a good day, he said. “I hope the new idea will work, because then we’ll be taking over the whole Bay Area,” Mr. Mandour said.

The cab commission of the District of Columbia is less thrilled: it is in the midst of a legal tussle with Uber. Ron M. Linton, chairman of the commission, said Uber had begun operating in the city without its approval.

He said that under the commission’s rules, there are limousines, which set a price with passengers in advance, and there are cabs, which have meters that charge by time or distance. He said Uber was breaking the rules by trying to be both. Uber calculates fares by time and distance, and then bills the customers’ credit card.

The commission’s inspectors have been citing Uber’s car-service partners for infractions, Mr. Linton said. The commission is proposing to change the district’s taxi laws to strengthen regulation of sedans like the ones that Uber’s partners use. Mr. Linton said this would allow it to protect consumers from issues like extra fees that they don’t understand.

“There’s room for limos, for taxis and this new concept for sedans,” he said. “We’re trying to make it work for everybody, but we need cooperation. We can’t deal with an organization that sticks its thumb up our nose.”

Mr. Kalanick of Uber said its operations in Washington were completely legal, and that the commission was citing rules that don’t exist. He said the commission wanted to regulate sedans more tightly so that it could control their fares, which would prevent Uber from eventually undercutting cabs.

“They want to keep our prices from going down, which is a very unusual price-fixing scheme,” Mr. Kalanick said. “Essentially they’re trying to protect taxis from competition, from having any viable alternative.”

New York doesn’t seem to have a problem with Uber. Allan Fromberg, a spokesman for the city’s taxi and limousine commission, said that as long as services like Uber conformed to the city’s rules, “we are highly supportive of ways to use technology to enhance service to the riding public.”

In Boston, Uber is shaking things up in other ways. Starting Wednesday, customers there will have the option to request stretch limos. And soon they will be able to summon an ice cream truck.

“You’d have ice cream on demand,” Mr. Kalanick said. “It’s kind of fun. That’s part of how we roll.”

Jenna Wortham contributed reporting.

This article has been revised to reflect the following correction:

Correction: July 3, 2012

An article on Monday about Uber, a company whose app lets users summon a car service, misstated a point made in an e-mail from Allan Fromberg, a spokesman for New York City’s taxi and limousine commission. He wrote that the city supported such services as long as they followed its rules; he did not say that Uber was following them.