What a load of rubbish... internet firms face battle of the bulge

As ISPs try to hold back the rising tide of spam, both their systems and their finances are coming under strain, reports Stephen Pritchard
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On "global anti-spam day" last week, inboxes across the country were deluged with statistics on electronic junk mail. According to internet giant Yahoo!, spam costs the UK economy £6.7bn annually. Microsoft puts the global cost at $20bn (£11bn) a year.

Thus, the owner of internet service provider (ISP) Demon, calculates that it blocks around three million of these unsolicited messages each day. Brightmail, the San Francisco company, reckons that 64 per cent of the messages it processes are spam.

Many IT directors now see it as a greater nuisance than either internet pornography or computer viruses. Not only does it cause thousands of wasted hours a year for business - as staff spend time deleting unwanted emails - but evidence is mounting that spam is putting pressure on the infrastructure of the internet itself.

The increasing take-up of broadband internet is partly to blame. That growth is not just being driven by large companies - such as BT, AOL and Freeserve - but by a host of ISPs that buy wholesale broadband (ADSL) links and sell them on to small businesses and consumers. With a typical connection retailing for under £30 a month, margins in this business are thin, and smaller ISPs can ill afford to invest in anti-spam technologies. But neither can they pay the ever-rising costs for wholesale internet bandwidth and storage systems, in order to process mail that most of their customers would rather not receive. And there is no relief in sight.

"Traffic levels are going up," says Andy Houldsworth, managing director of Digital Ink, a web design and hosting company which runs email services for its customers. "You have to think about the efficiency of your systems, if over half of the traffic is spam."

He adds that ISPs in the UK can pay up to eight times as much for wholesale bandwidth as companies in the US, from where most spam originates.

In a price-sensitive market, smaller internet companies find it hard to pass on the extra cost to their customers. "The knee-jerk reaction is that the ISP should be dealing with spam, but the reality is that [customers] are not paying their ISPs very much at all," says Mr Houldsworth.

Although company directors complain about the cost of spam, in terms of lost time, the greater expense is falling on the internet firms as they rush to improve their spam-filtering and blocking technologies.

Steve Kennedy, head of product futures at Thus, says Demon had to upgrade its filtering system after per- formance on its email servers buckled under pressure from spam. "The mail system was straining severely," he says.

But however effective they are, filtering technologies have little immediate impact on internet spam congestion. Nor do they necessarily cut the amount of mail ISPs have to handle, as most systems still store the spam in a "junk mail" folder for customers. In fact, UK communications laws restrict the ability of ISPs to delete even blatant spam on behalf of customers.

In time, better blocking and filtering systems may make it more difficult and less rewarding to post junk emails, and in turn cut the number of spammers. Companies that run consumer email services - including AOL, Microsoft (through Hotmail) and Yahoo! - argue that their filters are making it harder for spammers to turn a profit.

The growing volumes of junk email could even be evidence to support this, suggests George Webb, group business manager for anti-spam technology at Microsoft. "The spammers are having to send more and more in order to get an economic return," he says. "It's becoming harder to get their mail through." But Mr Webb believes that volumes could continue to grow, before they start to fall back.

Until that happens, pressure will continue to mount on the smaller internet firms, and on businesses that run their own mail servers and have to remove spam before it reaches employees' desktops. And the larger internet companies, which often sell wholesale capacity to smaller firms, have little sympathy for their rivals' plight.

At Microsoft, Mr Webb points out that ISPs could do more to close down the ports on their customers' computers that can be hijacked by people who send junk email. If this happened, there would be far less spam on the internet.

At BT, head of internet operations Mike Galvin argues that the real cost is to end users, who have to deal with obscene or intrusive material and spam emails that are connected to dialler scams (where a program calls a premium-rate number from a consumer's modem).

Mr Galvin suggests that there is another cost, too. He believes consumers and business users are being deterred from using email by spam, and are turning to technologies such as instant messaging and peer-to-peer networks instead. "People find the amount of spam inconvenient, which is why we are working so hard to deal with it."

If all ISPs and email firms agreed on a filtering standard, then spam would tail off as the people behind it found their profit margins under pressure. But the internet industry has yet to agree a universal set of standards.

Sophisticated systems, including the Microsoft-backed Caller ID and the AOL-backed SPF, make life far harder for the spammers. But these are complex solutions which are some way from a commercial launch. There are also worries that, if the standards are not applied efficiently, much of the ease of use of email could be sacrificed as companies try to stop the spammers. And some insiders within the internet industry point out that, as long as there are ISPs that are willing to accept spammers as customers, the problem will remain intractable.

And, as long as junk email can be a profitable business, there will be those who are willing to bypass the latest anti-spam measures. This issue was highlighted last week when US law enforcement officers arrested an AOL employee and charged him with selling a list of 92 million customer names to a junk email company.

According to Brightmail's chief executive, Enrique Salem, the top spammers can make up to $250m from their operations. With sums of this magnitude at stake, even the threat of criminal prosecution - now possible under US law - may not be enough to banish the spammers from the internet.