Reuters - Hacking Oracle's database will soon get easier

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Hacking Oracle's database will soon get easier

Wednesday, Jul 22, 2009 7:55PM UTC

By Jim Finkle

BOSTON (Reuters) - Hackers will soon gain a powerful new tool for breaking into Oracle Corp's database, the top-selling business software used by companies to store electronic information.

Security experts have developed an easy-to-use, automated software tool that can remotely break into Oracle databases over the Internet to simulate attacks on computer systems, but cybercrooks can use it for hacking.

The tool's authors created it through a controversial open-source software project known as Metasploit, which releases its free software over the Web.

Chris Gates, a security tester who co-developed the Metasploit tool, will unveil it next week at the annual Black Hat conference in Las Vegas, where thousands of security experts and hackers will gather to exchange trade secrets.

"Anyone with no skill and knowledge can download and run it," said Pete Finnigan, an independent consultant who specializes in Oracle security and who advises large corporations and government agencies.

He has not yet studied the Oracle tool but is familiar with other Metasploit software and said it works by automating many of the complicated procedures required to hack into Oracle databases, allowing amateurs to hack into them.

Oracle, which declined to comment, has already issued patches to protect against vulnerabilities that the Metasploit tool targets. But some companies are not diligent in upgrading their software to add the patches, so they are vulnerable to attackers using the new tool. They hire consultants like Gates to help them make sure they are protected.

Metasploit hacks are available for other software programs, including Microsoft Corp's Windows as well as the Firefox and Internet Explorer browsers.

Gates said this is the first Metasploit program to target Oracle's database.

"There is no way to keep these tools out of the hands of people who want to use them for nefarious purposes," said Alan Paller, director of research for the SANS Institute. SANS trains security professionals in areas including use of Metasploit.

Security testers and hackers have previously used other programs to break into Oracle databases, but the new software from Metasploit is easier to operate and runs more quickly than existing options, said Gates.

Metasploit is the most widely used free hacking tool and has a loyal following in the security community.

In addition to letting hackers break into databases over the Internet, the Metasploit tool allows rogue employees to access them from their work PCs.

Workers could break into an Oracle system and secretly steal confidential data such as credit card numbers, give themselves pay raises or make other changes to corporate databases, said Finnigan, who has specialized in Oracle security for eight years.

(Reporting by Jim Finkle; Editing by Richard Chang)

Reuters - Amazon buying shoe seller Zappos

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Amazon buying shoe seller Zappos

Wednesday, Jul 22, 2009 11:54PM UTC

By Nicole Maestri and Alexandria Sage

SAN FRANCISCO (Reuters) - Amazon.com made an aggressive move to grab market share in shoes and apparel on Wednesday, announcing a deal to buy online shoe retailer Zappos.com Inc for $927.9 million, mostly in stock.

Amazon, the world's largest online retailer, should benefit from the fiercely loyal customer base at Zappos, which had about $1 billion of gross merchandise sales last year.

Zappos is known for its attentive customer service, free shipping and a free returns policy which inspires shoppers to gamble on shoes. The company said Amazon will allow it to continue running its business as it always has.

Analysts applauded the deal. Bernstein Research analyst Jeffrey Lindsay called it an "outstanding acquisition." But the move also signaled Amazon had fallen short in its online shoe site Endless.com, launched in 2007.

"This is, in some ways, Amazon throwing in the towel on footwear because they've tried to compete with Zappos," said Forrester Research analyst Sucharita Mulpuru. "If you can't beat them, buy them."

Amazon, which began as an online bookseller, has greatly expanded its range of offerings while also allowing third-party sellers to showcase their own items on its site.

That has allowed the company to post robust online sales in recent years, outpacing brick-and-mortar retailers, even as former online stalwarts like eBay Inc, have stumbled.

"A big part of the reason why Amazon is interested in us is because they recognize the value of our culture, our people, and our brand," said Zappos Chief Executive Tony Hsieh in a letter on its blog. "Their desire is for us to continue to grow and develop our culture (and perhaps even a little bit of our culture may rub off on them)."

IRREVERENT SHOE SELLER

An irreverent company, Zappos' website calls its executives monkeys and Hsieh joked in his letter that the deal's headline should read "Zappos and Amazon sitting in a tree ...," a reference to a nursery rhyme.

Zappos has put customers at ease buying shoes online because it guarantees free shipping on deliveries as well as returns. It also places a big emphasis on service, saying its No. 1 core value is to deliver "wow" through service.

"To WOW, you must differentiate yourself, which means doing something a little unconventional and innovative. You must do something that's above and beyond what's expected," it states on its website.

Pacific Crest analyst Steve Weinstein said the deal allows Amazon to dominate a big new category.

"It (Endless.com) certainly hasn't been as successful as Zappos," he said. In shoes I think Zappos is clearly the brand in the mind of consumers."

The acquisition is slated to close this autumn, and Amazon said the Zappos management team will remain intact. Zappos said it will be run as an independent entity and its brand will be separate from the Amazon brand.

"We think that there is a huge opportunity for us to really accelerate the growth of the Zappos brand and culture, and we believe that Amazon is the best partner to help us get there faster," Hsieh said in his letter to employees.

Amazon said it will acquire all of the outstanding shares of Zappos and assume its outstanding options and warrants in exchange for approximately 10 million shares of Amazon common stock. It will provide Zappos employees with $40 million of cash and restricted stock units.

Based on Amazon's closing price of $88.79, the deal is valued at about $927.9 million.

The Zappos website says the company, founded in 1999, has more than 1,300 employees and stocks more than 3 million shoes, handbags, clothing items and accessories from more than 1,136 brands.

Morgan Stanley, and Fenwick & West advised Zappos on the deal. Lazard Ltd advised Amazon.

(Editing by Gary Hill, Steve Orlofsky and David Gregorio)

Reuters - Microsoft releases Windows 7 code to PC makers

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Microsoft releases Windows 7 code to PC makers

Wednesday, Jul 22, 2009 10:1PM UTC

SEATTLE (Reuters) - Microsoft Corp said on Wednesday it is releasing the code for Windows 7 to PC manufacturers, keeping the software company on track to have machines running its new operating system in the stores by late October.

The move means Hewlett-Packard Co, Dell Inc, Acer Inc and other computer makers can start to load up new PCs, laptops and netbooks with the operating system, the successor to the unpopular Vista.

Both Microsoft and the manufacturers are hoping the full launch of Windows 7, scheduled for October 22, will help lift PC sales out of the slump caused by the global economic downturn, and give the holiday shopping season an extra lift.

Manufacturers have been testing early versions of Windows 7 for several months, but this week marks the release of the "gold code," according to a Lenovo Group Ltd executive, referring to the software industry jargon for the finished product.

PC makers no longer have to fly discs in helicopters to their manufacturing plants, as the transfer is now done electronically. But it still marks a dramatic day as manufacturers hustle to get new products into stores in time for the release date.

Machines that have Windows 7 installed, or devices that are compatible with it, will simply have the Windows 7 logo on them, a Microsoft executive said. The company will not be splashing the word "capable" around in marketing efforts, after it received complaints at its last launch that some machines branded "Windows Vista Capable" could only run the lower-end versions of the software.

Few industry watchers expect such problems to hit Microsoft this time around as the company has spent more time making sure PCs will be able to run the new software.

(Reporting by Bill Rigby; Editing by Steve Orlofsky)

CNN - Obama: Health care reform central to economic recovery

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Obama: Health care reform central to economic recovery

President Obama said Wednesday that health care reform is "central" to successfully rebuilding the U.S. economy after the current economic crisis.

"Even as we rescue this economy from a full-blown crisis, we must rebuild it stronger than before -- and health insurance reform is central to that effort," Obama said in a nationally televised news conference Wednesday night.

Spiraling health care costs are bankrupting Americans, causing 14,000 people to lose their health insurance coverage every day, and also will bankrupt the nation if allowed to continue, Obama said.

"Let me be clear: If we do not control these costs, we will not be able to control our deficit. If we do not reform health care, your premiums and out-of-pocket costs will continue to skyrocket," he said.

"These are the stakes of the debate we're having right now."

As he laid out the list of benefits that health care reform offers, he dropped a direct reference to a government-funded public health insurance option.

Until now, Obama has consistently touted the government-funded public option as competition for private insurers in expanding access to health coverage.

It was unclear if Obama changed the wording to avoid a label opposed by Republican supporters, or if he was signaling a policy shift toward a compromise being negotiated by the Senate Finance Committee to have health insurance cooperatives rather than a government-funded public option.

Instead, he promised that his plan would offer "security" and "stability" to sick and healthy Americans.

"It will prevent insurance companies from dropping your coverage if you get too sick. It will give you the security of knowing that if you lose your job, move, or change your job, you will still be able to have coverage. It will limit the amount your insurance company can force you to pay for your medical costs out of your own pocket. And it will cover preventive care like check-ups and mammograms that save lives and money," he said.

He also said his program would not add to the deficit over the next decade, addressing concerns from Republican opponents and fiscally conservative Democrats over the costs of the program.

"Already, we have estimated that two-thirds of the cost of reform can be paid for by reallocating money that is simply being wasted in federal health care programs. This includes over $100 billion in unwarranted subsidies that go to insurance companies as part of Medicare -- subsidies that do nothing to improve care for our seniors," he said.

Earlier Wednesday, Obama worked the phones, urging lawmakers to embrace health care reform, White House Communications Director Anita Dunn said Wednesday.

It follows the president's Tuesday meeting with Democrats at the White House, dubbed a "serious working session" where "major progress" was made, Dunn said.

Officials said Obama will be taking a more hands-on approach with members of Congress in the days and weeks to come regarding the health care debate.

Tuesday, House Energy and Commerce Chairman Rep. Henry Waxman of California and six other committee members met at the White House for more than two hours -- and during one hour the president was with them, aides said.

During that meeting the six so-called Blue Dog Democrats gave their list of 10 demands on how they want the bill changed, including ways to cut costs, according to aides.

Some argued the Medicare advisory council, which advises Congress in setting rates for reimbursement to medical providers under the Medicare program, should be empowered to make changes in cost-related issues. White House aides said they want the panel to be empowered to make cuts in benefits and increases in premiums, and to force those changes, unless Congress rejects.

While lawmakers say a tentative deal was reached on this point, White House officials would only say the president "agreed with the lawmakers he met with [on] the need to cut costs."

They refused to confirm there was a verbal agreement because there was "not an actual ink agreement" regarding the council. "The process is still going on," one official said.

White House aides say the administration is concerned about three centers of serious opposition from House Democrats: the fiscally conservative Blue Dog Democrats who are worried about the cost of a public health care plan; the freshmen and other Democrats from high-income districts who are concerned about taxes for high-income Democrats, and the anti-abortion Democrats who are concerned about federal funding going for abortion services, and whether health care providers can opt out of certain procedures.

One official said the administration is aware that "if any of these three groups abandon the effort the bill would be impossible to get out of committee, much less pass."

Aides say the president and lawmakers also discussed the public option versus a co-op option.

Reuters - Apple smashes profit forecasts, iPhone shines

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Apple smashes profit forecasts, iPhone shines

Wednesday, Jul 22, 2009 10:29AM UTC

By Gabriel Madway

SAN FRANCISCO (Reuters) - Apple Inc's quarterly profit blew past Wall Street forecasts thanks to strong sales of Macs and iPhones and higher-than-expected gross margins, boosting its shares 4 percent on Tuesday.

The company continued to defy the global recession with a solid 13 percent jump in fiscal third-quarter net profit. It sold more than seven times as many iPhones -- 5.2 million units of its latest signature device -- as the year-ago period.

"The numbers are great. Their gross profits continue to surprise people and there is a return to product momentum ... a return to growth in the Mac business," said Andy Hargreaves, an analyst at Pacific Crest Securities. "And then the iPhone is doing tremendously well and that is a potent combination."

Apple reported a net profit of $1.23 billion, or $1.35 a share, for its fiscal third quarter ended June 27, up from $1.07 billion, or $1.19 a share, in the year-ago period.

Earnings per share beat by far the average Street forecast of $1.18 according to Reuters Estimates, and topped even the most bullish "whisper" numbers of $1.30 to $1.35.

Sales of Macs and iPhones both beat analysts' expectations, helped by product refreshes and lower prices, while iPod shipments were toward the low end of forecasts.

Apple said it sold 2.6 million Macs, up 4 percent from a year ago, and 5.2 million iPhones in the June quarter, during which the company launched its third-generation iPhone 3GS and cut the price on the second-generation model to $99.

The iPhone is often thought of as more of a consumer device, but Apple said nearly 20 percent of Fortune 100 companies have bought at least 10,000 units and it is unable to make enough iPhone 3GSes to meet demand -- a shortfall the company said it is working to address.

Although the smartphone segment continues to grow more crowded with competitors, Chief Operating Officer Tim Cook said on a conference call the company is "years ahead of other people" in its competitive position.

IPHONE DRIVES

The install base for the iPhone and the iPod Touch -- which share operating systems -- is now 45 million, Apple said.

"The iPhone is the biggest driver right now, because the profitability is really high," said Frost & Sullivan analyst Ronald Gruia. "It's been an absolute success."

Yet there had been some concern about margin pressure heading into the results, given the product price cuts and the trend of higher component costs.

Although Mac units rose, revenue in the segment fell 8 percent from a year ago as average selling prices came down, a trend seen throughout the PC industry.

But Apple posted a gross margin of 36.3 percent, above the 34 percent some analysts predicted. That compared with 36.4 percent in the last quarter and 34.8 percent a year ago. The company saw margins at 34 percent in the September quarter.

Apple said component costs rose, but not as much as expected and it spent less than it planned in several areas.

"The overall takeaway is that Apple continues to execute in this tough environment," said Kaufman Bros analyst Shaw Wu.

"They do the hardware, software and service, and that really allows them to have a leg up against competitors."

Investors have pushed Apple's stock about 75 percent higher this year, well ahead of other big technology issues.

Apple issued a typically conservative outlook for the current quarter, forecasting earnings of $1.18 to $1.23 a share on revenue of $8.7 billion to $8.9 billion.

While that was below the average analyst estimate of $1.30 in earnings per share and $9.1 billion in revenue for the fiscal fourth quarter, it had little impact on investors.

Revenue rose 12 percent to $8.3 billion in the June quarter, versus analysts' average estimate of $8.2 billion.

Cash and marketable securities totaled more than $31 billion, one of the biggest cash hoards in all of technology.

The results demonstrated the consumer appeal of Apple's products despite a troubled economy that has dented sales at competitors selling less expensive products.

Apple reported relative strength in consumer demand, and weakness in education, one of its key markets.

But iPods were a chink in its armor. Apple shipped 10.2 million iPods in the quarter, down 7 percent on the year. As iPod sales slow down, analysts see alternative catalysts on the horizon, with the expected launch of an iPhone in China and a rumored tablet PC or Internet device in the works.

Cook said the company hoped to have an iPhone in China within a year.

Chief Executive Steve Jobs did not make an appearance on the company's conference call, despite rumors that he might. Jobs recently returned from a nearly six-month medical leave, where he underwent an a liver transplant.

Shares of Cupertino, California-based Apple closed at $151.51 on Nasdaq and rose to $158.34 in extended trading.

(Reporting by Gabriel Madway; Additional reporting by Doris Frankel and Tiffany Wu; Editing by Edwin Chan and Richard Chang)

Reuters - Movie studios try to harness "Twitter effect"

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Movie studios try to harness "Twitter effect"

Saturday, Jul 18, 2009 2:27AM UTC

By Alex Dobuzinskis

LOS ANGELES (Reuters) - Audiences are voicing snap judgments on movies faster and to more people than ever before on Twitter, and their ability to create a box office hit or a flop is forcing major studios to revamp marketing campaigns.

The stakes are especially high this summer season when big budget movies like "Harry Potter and the Half-Blood Prince," which opened on Wednesday, play to a core audience of young, plugged-in moviegoers.

Box office watchers say Twitter, a micro-blogging service that allows anyone to post on-the-fly wisecracks for all the world to see, is the latest weapon in an arsenal of cell phones and computers that audiences use to critique films quickly, often when they are still sitting in theaters.

Such word-of-mouth publicity from fan to fan can boost, or bomb, ticket sales.

"Has everything speeded up? The answer is yes," said Adam Fogelson, Universal's president of marketing and distribution. "Depending on how big your opening day audience is, word-of-mouth starts playing a factor immediately," he said.

Film marketers look at weekly declines in ticket sales to judge fan buzz. In recent years those "drops" have widened significantly as communication has speeded up thanks to the Internet and more recently social networking services like Twitter and Facebook.

This summer, which is the most lucrative movie season and can make up as much as 40 percent of annual box office, ticket revenues for new films have dropped 51 percent, on average, from week No. 1 to week No. 2, a figure matched only in 2007, according to tracking firm Box Office Mojo.

"If people don't like the movie now on Friday it can die by Saturday," said Paul Dergarabedian, president of tracking firm Hollywood.com Box Office.

BRUNO GETS TWITTERED

Last Friday, actor Sacha Baron Cohen's gay-themed comedy "Bruno," which was distributed by Universal Pictures, made an impressive one-day debut of $14.4 million at U.S. and Canadian box offices, but the next day it suffered a large single-day drop, falling 39 percent to $8.8 million.

Media reports speculated that "Bruno" suffered from the "Twitter effect," meaning audiences reacted quickly online to raunchy scenes of sex and nudity, scaring people away.

Soon after the movie's opening, Twitter was awash with comments such as this from user Cathy Zhang: "Some scenes from Bruno I'll never erase from my mind." On the flip side, many Twitter commentators raved about "Bruno."

Universal's Fogelson said even Twitter comments that seem critical can be good publicity because they show people are passionate about the movie and can spark discussion that increases attendance. He attributed "Bruno's" lopsided opening day not to negative fan buzz, but to an unusually large crowd of Cohen's fans rushing to see the film on its first day.

Hollywood has a long history of both embracing and spurning new technology. In the case of Twitter, it is giving an early embrace. Sony Pictures, for instance, has been notably aggressive, creating Twitter pages for upcoming movies "District 9," "Julie & Julia" and "The Ugly Truth."

Using Twitter, actor Ashton Kutcher has raised his profile and that of his production company among the most tech-savvy, and he is not alone. Filmmakers and actors often "tweet" from the set with the blessing of publicists looking to create interest in a film.

"As much as it seems chaotic, it's not. It's just extremely quick and real-time," said online marketing consultant Gordon Paddison.

(Editing by Bob Tourtellotte)

Reuters - Google sees YouTube profitable in near future

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Google sees YouTube profitable in near future

Friday, Jul 17, 2009 5:41PM UTC

NEW YORK (Reuters) - Web video site YouTube will be profitable for Google Inc in the near future, the Internet search leader said on Thursday.

Google acquired YouTube for $1.65 billion in 2006, but has lost money on the site that lets people post and share videos free.

Analysts have raised concerns about the huge costs involved in streaming millions of videos with only a tiny swathe of them being supported by advertising.

"YouTube is now on a trajectory that we're very pleased with," Google Chief Executive Eric Schmidt said during an earnings call on Thursday.

He added that Google is helping marketers and advertising agencies create "great ads easily" for YouTube.

Google executives have recently made bullish remarks on YouTube's revenue growth. Schmidt told reporters at the Sun Valley technology and media conference this month that new advertising formats, such as pre-roll ads that appear before a Web video program, will draw in more revenue.

On Thursday, Google's head of product management and marketing, Jonathan Rosenberg, said "monetized views" -- people viewing videos that are supported by advertising -- more than tripled in the past year.

"We're now monetizing billions of views of partner videos every month," he said.

In response to an analyst question, Google Chief Financial Officer Patrick Pichette said recent efforts to introduce new ad formats and promote videos have helped to establish YouTube's home page among advertisers as relevant and "desirable for customers."

"We're really pleased both in terms of (YouTube's) revenue growth, which is really material to YouTube, and... in the not long, too-long-distant future, we actually see a very profitable and good business for us," Pichette said.

Google reported a quarterly profit on Thursday that beat Wall Street expectations, but its revenue growth was not as stellar as some investors had hoped, sending its shares down nearly 3 percent.

(Reporting by Anupreeta Das; Editing by Tiffany Wu and Tim Dobbyn)

Reuters - Goldman makes peace with blogger in trademark case

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Goldman makes peace with blogger in trademark case

Friday, Jul 17, 2009 6:33PM UTC

By Martha Graybow

NEW YORK (Reuters) - Goldman Sachs Group Inc has quietly reached an agreement to end a legal dispute with a blogger who will be allowed to keep running a website critical of the investment bank.

The agreement required blogger Michael Morgan to post a disclaimer on his goldmansachs666.com website, saying it has no affiliation with the financial firm.

Morgan, a Florida investment adviser, uses his blog -- whose name combines Goldman's name with numbers used to evoke connotations with the devil -- to criticize the bank and its large profits.

The bank this week posted a 33 percent increase in quarterly earnings on blowout trading results, putting its employees on pace for big bonuses at a time when many Americans are struggling.

A Goldman attorney had sent Morgan a cease-and-desist letter in April, contending he was violating the firm's intellectual property rights by using its trademark. Morgan then filed a complaint in federal court in Florida, seeking a ruling that he had not infringed on any trademarks.

The two sides agreed to have the litigation dismissed in court papers filed last month. The agreement was reported by The Am Law Daily legal publication.

Goldman spokeswoman Gia Moron said on Friday that "our concern about this site ceased when Mr. Morgan posted a prominent disclaimer making it clear that his site was not associated with Goldman Sachs."

(Reporting by Martha Graybow; editing by Andre Grenon)

Reuters - ooVoo takes on Skype, Cisco in video conferencing

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ooVoo takes on Skype, Cisco in video conferencing

Friday, Jul 17, 2009 10:48PM UTC

NEW YORK (Reuters) - Start-up ooVoo is hoping to take on everybody from Skype, the Internet telephony arm of eBay, to Cisco Systems with a new video conferencing offer for small businesses.

While Skype has the higher profile, New York-based ooVoo has quietly built up 7.5 million registered users in the last few years with a service that supports video chats between up to six people and up to six phone participants.

Now, the fledgling company is adding a desktop sharing option that will let business colleagues view each other's computer screens and enable remote collaboration. It will also block advertising for business users who pay a monthly fee.

"We took what we had with the consumer and packaged it with a business plan," said ooVoo CEO Philippe Schwartz who said that about 20 percent of the company's current users were business customers even before its business-targeted plan.

Cisco's development of a telepresence video conferencing system, which uses large screens and shows life-like images, has created renewed interest in video communications in recent years. But such systems cost thousands of dollars to install, at a time small businesses are looking to shave costs.

A few years ago, Cisco also bought firm WebEx, which lets people share documents and collaborate online.

Schwartz hopes to double ooVoo's customer base this year and increase business users to as much as 40 percent of total customers as companies look to cut costs in a weak economy.

"You're seeing people use more video because of the economy and the need to travel less," Schwartz said.

ooVoo's business service costs $39.95 a month per person or less, depending on the number of users in a company, ad-free. The consumer service starts at no fee to as high as $17.95 a month for six-way chats. Voice calls to phones are extra.

In comparison, Skype, which had 443 million customers at the end of March, does not charge a fee for video chat between computers, but charges per-minute for calls to telephones.

Skype recently added the option of screen sharing, which allows users to share all or part of their screen, and says it does not charge for this service.

But Skype, which provides voice conferencing options for up to 25 people, only provides one-to-one video and does not offer the call recording feature that ooVoo has.

IDC analyst Rebecca Swensen said that ooVoo's ability to combine video and phone participants in the same call is a big plus for attracting business customers. She also noted that the option of setting up a Web video call with non-ooVoo users could help it attract new customers.

But she said Skype would likely be a formidable rival.

"They also are starting to focus heavily on the business market, which leads me to believe more features and functionality are on their way," Swensen said.

Howard Lichtman, president of consulting firm Human Productivity Lab, said that while large companies would be more likely to opt for a high-end telepresence system, many smaller companies would be content with a cheaper option.

"There's a kind of a virtuous cycle going on in that more and more companies are deploying video, so more and more people want to use it," he said. "A lot of little companies are saying, we'll just use Skype or WebEx or some of these other services."

(Reporting by Sinead Carew; Editing by Tim Dobbyn)

Reuters - Verizon says it will limit new handset deals

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Verizon says it will limit new handset deals

Friday, Jul 17, 2009 7:55PM UTC

By Diane Bartz and Sinead Carew

WASHINGTON/NEW YORK (Reuters) - Verizon Wireless is dialing back on its exclusivity agreements with handset makers after pressure from U.S. lawmakers and smaller carriers.

The biggest U.S. mobile service said on Friday it will limit exclusivity periods with cellphone makers to six months and then allow the country's smallest wireless service providers to sell the devices.

The move comes after reports that the U.S. Department of Justice was taking a preliminary look into whether U.S. operators had violated antitrust laws by obtaining exclusive deals to sell specific phones.

Exclusivity deals are common among the biggest U.S. carriers but have recently faced strong opposition from small, rural carriers, which say they lack the clout to make deals to carry the most popular advanced phones.

The iPhone has drawn such deals into the spotlight because AT&T Inc <T.N>, the second biggest U.S. wireless service, has had exclusive U.S. rights with Apple Inc <AAPL.O> since 2007.

In an apparent effort to preempt any regulatory changes, Verizon Wireless, a venture of Verizon Communications <VZ.N> and Vodafone Group <VOD.L>, sent a letter to major lawmakers on July 17 offering to limit exclusivity.

Verizon said the offer would apply to carriers with 500,000 or fewer subscribers. However, Verizon spokesman Jeffrey Nelson said it applies to all "small" operators, without giving a specific definition. Cellular South, a vocal activist against phone exclusivity deals would be able to avail of the offer even though it has roughly 800,000 customers, he said.

However, the offer will not extend to larger companies such as U.S. Cellular Corp <USM.N>, which has about 6 million customers and has been a vocal opponent of the practice, Nelson said. U.S. Cellular did not immediately comment.

"Effective immediately for small wireless carriers ... any new exclusivity arrangement we enter with handset makers will last no longer than six months -- for all manufacturers and all devices," Verizon Wireless CEO Lowell McAdam said in the letter.

He said 24 small wireless carriers had asked Verizon to eliminate its long-term exclusive handset agreements with LG <066570.KS> and Samsung <SAGR.UL> in February. The company was now expanding that idea to all handsets.

Stifel Nicolaus analyst Rebecca Arbogast described the letter as a "significant move to diffuse the heightening pressure for regulation to curtail" exclusive deals and said it would put pressure on other big carriers to follow suit.

"It will likely not be the end of the debate, in our view, as US Cellular, one of the more vigorous advocates for eliminating exclusives, will not benefit," Arbogast said, but she said the move would take pressure off of the U.S. telecom regulator, the Federal Communications Commission, to change laws.

But Consumers Union, a Washington based consumer advocate, said Verizon's focus on the smallest carriers would mean more phone choices for a very limited number of consumers.

"For the rest of the hundreds of millions of wireless consumers its not nearly enough," said Consumers Union policy analyst Joel Kelsey. "This is Verizon trying to dodge tough questions about its anti-competitive behavior."

A spokeswoman for the Justice Department was not immediately available for comment. The DoJ's preliminary examination is believed to be focused on deals like AT&T's with Apple and Sprint's <S.N> with Palm's <PALM.O> Pre cellphone. Another is Verizon's deal with LG for its Voyager phone.

AT&T spokesman Mark Siegel declined to comment on how it might respond to Verizon's move, but defended exclusive deals.

"Without question exclusive handset deals have given America's wireless customers big benefits, including more choices, lower prices, and a level of innovation that is the best in the world," he said in an emailed statement.

Sprint declined immediate comment and a spokesperson for the FCC was not immediately available for comment.

Arbogast said AT&T, Sprint and T-Mobile USA, the No. 4 U.S. mobile service owned by Deutsche Telekom <DTEGn.DE>, would come under pressure to follow suit.

The letter was sent to Senate Commerce Committee Chairman John Rockefeller, a West Virginia Democrat, and committee members John Kerry of Massachusetts and Republican Kay Bailey Hutchison of Texas. The letter also was sent to Representatives Rick Boucher, Henry Waxman, Joe Barton and Cliff Stearns.

Boucher, chairman of the House Energy and Commerce Subcommittee on Communications, who met with McAdam on Friday, praised Verizon's actions.

"Verizon has taken an important and forward-looking step. I think it does ensure that smaller carriers get rapid access to the latest devices," Boucher told Reuters.

Smaller telecommunications companies and consumer advocacy groups also have complained that bigger companies use their size to squeeze out smaller rivals by refusing roaming deals, or block applications like the Skype Web-based phone service.

(Additional reporting John Poirier; Editing by Phil Berlowitz, Tiffany Wu, Richard Chang and Carol Bishopric)