Meet Hyv, A Startup That Can’t Wait For Phone Unlocking To Be Made Legal

Editor’s note: Derek Khanna is a technology policy consultant and columnist. He previously worked for the House Republican Study Committee where he authored their report on copyright reform. Hespearheaded the national campaign on cellphone unlocking that resulted in proposed legislation to legalize unlocking your phone. Derek regularly writes for The Atlantic, National Review and Forbes. Follow him on Twitter @DerekKhanna.

On Tuesday, the House of Representatives will vote on legislation on phone unlocking (H.R. 1123). In January 2013, a decision by the Librarian of Congress made it a crime to unlock your phone, with either civil or criminal penalties. Since that time, the resale market has been significantly impacted and websites have shut down that offer unlocking services. In the following month over 114,000 Americans signed a White House petition demanding that this decision be reversed and supported our mass campaign, one of the largest online protests since SOPA/PIPA, and then legislation was introduced that has passed committee.

This legislation cannot be passed soon enough for Alex Koren, an entrepreneur who is attending Johns Hopkins University.

Koren is not your typical college sophomore. After completing his first year at Johns Hopkins, as an intern at Intel, he won a hackathon for designing an iOS application for distributed big data analysis. That app is the basis of an ambitious startup that he claims may solve some of our society’s most vexing problems, such as providing better weather forecasting and even advanced cures to cancer. Koren can be seen here running for student president with a Gangnam Style campaign video:

Koren won for student president but chose to resign to pursue his new venture. He believes that his startup has the potential to revolutionize big data analysis and change how each of us uses our smartphones.

As more Americans are accessing the Internet through their smartphones, web-enabled applications are the new hot commodity in the startup community. Millions of Americans, and soon billions around the world, access the Internet through their phones. Koren saw this as a big opportunity to network those devices into one large networked supercomputer. According to Koren, with such a large networked supercomputer able to utilize the resources of thousands or even millions of devices, it would have “the power to solve society’s most computationally demanding provisions.”

As Koren optimistically explains it, Hyv, the company that he co-founded with Sheldon Trotman, “will revolutionize the way we view and utilize big data.” In other words, each of our smartphones is a relatively powerful device, more powerful than the components that got us to the moon and back, and if many of these devices can all be networked together to operate as a supercomputer, it can create an extremely powerful parallel processing operation.

What could be done with such a massive parallel processing supercomputer? A whole lot. As Koren explains:

Whether we want to better forecast weather patterns, improve the accuracy of medical diagnoses, track the virility of Flappy Bird or analyze financial trends, we have no efficient way of processing the information. Supercomputers aren’t cutting it. They’re a black hole of energy consumption, require hundreds of millions of dollars to build and maintain and are quickly (within half a decade) usurped as new generations of processors are released. Fully understanding our world’s data requires an alternate, more efficient method.

Koren envisions this massive networked supercomputer finding cures for cancer through efficiently distributed protein folding and empowering others to perform advanced genomic research. He explains that “by using the excess processing capabilities in mobile devices, we can crowdsource available research; together, we can actively contribute to a progressive global community.”

Hyv may be able to create a massive parallel processing supercomputer to solve big problems, but it may also invigorate the entire mobile app ecosystem. Currently phone apps have essentially two ways to monetize their products. They can charge either for the applications or their services ( e.g. Uber), or they can give away their services for free and make money through advertising or data acquisition (e.g. Pandora, Facebook, Flipboard, Tinder, Instagram, Snapchat).

But historically, obtaining significant money through advertising on a mobile platform has been tough, there is less screen real estate for advertisements, often users are less willing to engage with advertisements on their phone and advertisements can also use precious data.

Hyv may offer a third model of monetization that could benefit future mobile applications: It could allow users to install an app and, in return, allow for some of their phone’s processing power to be used and sold to compensate the app creator. This form of monetization could supplement advertising revenue to allow new apps to be delivered for free to the consumer.

Does potentially solving some of the world’s most vexing problems and creating entire new mobile app ecosystems sound amazing? Well it was good enough to take first prize with Intel’s hackathon, and now six months later, they are testing a working prototype to ensure Hyv’s efficiency, security and effectiveness. Their idea on using many phones to operate together is not entirely original, but Koren thinks that they have solved the problem. Hyv has analyzed data in battery performance, data usage, computation speed and other key metrics. But a month ago, they hit a roadblock — one that, unlike previous barriers, they couldn’t control.

In order for Hyv to test its technology, it needed to use it on multiple devices and with multiple carriers. In particular, they are paying attention to how much data usage their software would require from users. “Our problem is relatively straightforward,” Koren says. “We must ensure Hyv functions equally well on all mobile phone carriers. However, a recent decision by the Librarian of Congress is barring this necessity.”

Hyv needs to take its devices, unlock them, and test them from one carrier to another. In so doing, the company would still fulfill its contractual obligation with their carriers, continuing to pay month to month, but would be able to see how Hyv operated on each network. As Koren explains it:

For two college students, bootstrapping and developing this colossal product out of our dorm rooms, cross-carrier performance analysis proves too financially demanding. Having the ability to simply unlock our mobile devices would remove our dilemma. Due to the ban on unlocking and unlocking companies, however, we aren’t able to legally do this.

After the campaign on cellphone unlocking, under severe pressure from the FCC, phone carriers agreed to a series of voluntary principles to allow their customers to unlock their devices in certain circumstances. But since Koren was still under contract for a subsidized device, those voluntary principles didn’t apply. So when he contacted his carrier for permission to unlock the device, while still keeping his plan with the carrier intact, they told him no.

Below is an excerpt of that conversation (emphasis and “[AT&T]” added for clarity):

Koren: I’m developing a piece of software that requires me to test across several different carriers. However, I’m on a tight budget and can’t buy devices on each carrier. Is it possible to unlock my phone and switch it to different carriers for testing purposes?
Mark [AT&T]: I understand that your situation Alex and I really appreciate it. Let us check on the account.
Mark [AT&T]: We can request for unlock purposes thru online.
Koren: How is that done?
Mark [AT&T]: http://www.att.com/deviceunlock
Koren: Have I paid for my device in full?
Mark [AT&T]: How much did you get the device [for] Alex?
Koren: I believe I payed around $300 for my Galaxy Note 3
Mark [AT&T]: I understand Alex! It means that you g[o]t it in a full discount price.
Koren: So am I eligible for an unlock?
Mark [AT&T]: Let me explain it Alex! Since your account is still under contract, the process of unlocking your device will not be possible.
Koren: Oh, I understand. Once the contract is over, then I can unlock my device?
Mark [AT&T]: Yes that is correct Alex!
Koren: Which would be October of 2015, correct?

Thus co-founders Alex Koren and Sheldon Trotman are stuck. They would like to continue paying their AT&T bill but also be able to test their devices, including the Galaxy Note 3, on another carrier. And until the law is changed, they can’t do so without facing potential legal liability.

While it should be noted that not all phones are compatible from one carrier to another, many phones and tablets are. While AT&T may not like that he’s taking his device from one carrier to another, that should be between Alex and his carrier, it shouldn’t be a federal, civil or criminal matter – but under Section 1201 of the Digital Millennium Copyright Act, and as a result of the decision by the Librarian of Congress, today it is a federal matter.

While many in the tech community often follow a mantra of asking for forgiveness rather than asking for permission – copyright law is not something to be so cavalierly disregarded; many copyright scholars believe that unlocking could place Hyv in potential criminal liability of up to five years in prison and a $500,000 fine.

While Hyv’s situation may seem unique, many startups launch as apps. Presumably, Hyv’s situation of needing to test its app across platforms is not a unique problem; rather, it is a problem that affects many app creators – which is often college students just like Koren and Trotman. One reason there has been so much entrepreneurship in this sector is because the barrier to entry has been so low, but the restriction on phone unlocking creates a brand new barrier to entry for no cognizable reason.

This week, Congress will have the opportunity to vote on short-term legislation, H.R. 1123, which would allow for consumers to unlock their devices until the Librarian rules again in October, 2015 (see my committee testimony here). This legislation would help entrepreneurs like Koren, Trotman and millions of consumers. Additionally, permanent, bipartisan, widely supported legislation has also been introduced, H.R. 1892, which would make these fixes permanent and provide certainty to the private sector.

On Tuesday, the House of Representatives will vote on legalizing phone unlocking, an issue that affects millions of consumers but also potentially small businesses like Hyv. “This ban, on behalf of the carriers, is standing in the way of our ability to make a significant contribution to the progression of our global society,” Koren says. “For many, the ban on unlocking phones is an inconvenience at most. For us, it has inhibited our ability to bring about positive change.”

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