Plus: FCC bans mobile spam, allows VoIP wiretapping; AOL buys Mailblocks; Microsoft says Windows XP Service Pack 2 is nigh - reallyFindings of collusion between the city of San Jose and\u00a0Cisco\u00a0over an $8 million network installation contract is causing controversy for the network vendor. According to stories published in the San Jose Mercury News last week, an audit by the city found that Cisco was the only vendor considered to build a converged IP voice and data network in San Jose's new $388 million city hall. As a result, only resellers of Cisco gear were allowed to bid on the project. Now the city will have to restart the bidding process for the project and give Cisco competitors a chance. A Cisco spokeswoman told the Mercury News that the vendor is cooperating fully with the city's audit and investigation. The newspaper also reported that a major sticking point with the Cisco deal was that the Cisco IP telephone system would not be compatible with other vendors' products, forcing the city to only buy Cisco gear in the future - a violation of city requirements on technology projects.The FCC voted last week to outlaw all unauthorized text messages to\u00a0mobile phones\u00a0and pagers unless the owner has given permission. Congress required the FCC to adopt rules for mobile-phone\u00a0spam\u00a0when passing the CAN-SPAM law last year. CAN-SPAM lets spammers send unsolicited commercial e-mail to computer e-mail accounts until the recipient opts out of receiving e-mail from that sender, but the FCC's action last week requires that commercial entities sending text messages to mobile phones and pagers get customers' opt-in permission before sending messages. Commissioners argued mobile-phone spam is harmful to consumers because they often have to pay for the time it takes to delete the message. Violators of the FCC regulations would be subject to penalties under CAN-SPAM, which allows fines of up to $6 million and up to a year in jail for some spamming activities.The FCC last week took the first step toward requiring\u00a0VoIP\u00a0providers to comply with law enforcement wiretapping requests. The FCC voted to begin an examination of the policies needed to ensure that VoIP providers comply with the 1994 Communications Assistance for Law Enforcement Act, which lets U.S. law enforcement agencies listen in on telephone conversations. The commission's decision included a tentative finding that communications services offered over broadband pipes, including VoIP, are subject to CALEA requirements to comply with law enforcement wiretap requests. The tentative rules also would cover managed communications services offered over broadband connections, including managed instant message or video services, says Ed Thomas, chief of the FCC Office of Engineering and Technology. Nonmanaged peer-to-peer services, including consumer-grade instant-messaging services and noncommercial VoIP services, likely would not be subject to CALEA regulations under the proposed order, FCC staff members say.AOL\u00a0has snapped up Web-based e-mail company Mailblocks to improve its own e-mail services with greater anti-spam protection, mail management and interface improvements, it said last week. AOL did not specify the terms of the deal but said the buy of privately held Mailblocks was aimed at gaining its challenge\/response technology for fighting spam and authenticating legitimate e-mail senders. Mailblocks' technology works by whitelisting everyone in a user's address book as a legitimate e-mail sender and challenging any unknown senders. When a user receives an e-mail from an unknown sender, the service holds the mail and sends back an automatically generated message, asking the sender to type in the seven-digit code they see on the screen. Once the sender enters the code, the message is delivered to the recipient, and that sender will not be challenged again.Microsoft\u00a0expects to finalize work on Service Pack 2 for Windows XP in the coming days. The much-anticipated security-focused update should be available to users shortly after that, a company spokesman said last week. Microsoft had hoped to wrap up work on SP2 last week. However, the plans changed to ensure that the software meets quality standards, the company said. The delay of the release turned into a public relations snafu for Microsoft. Apparently unaware of the change of plans, Microsoft Australia last week issued a statement announcing the release. The statement was later retracted, with company officials saying the announcement was premature. SP2 will be available through downloads, retail distribution and free CDs, and on new PCs. For most users, the download will be between 80M and 100M bytes in size, according to Microsoft. To facilitate the large download, Microsoft also is updating its Windows Update service.Peer-to-peer software vendors must re-engineer their products to prevent illegal file trading, and they must do a better job of warning users of the dangers of trading illegal files, said in a letter sent by attorneys general from 47 U.S. states and territories to peer-to-peer vendors last week. The letter calls for peer-to-peer vendors to also warn users about the amount of pornography traded through peer-to-peer software, including child pornography. The attorneys general also accuse peer-to-peer software of hurting their economies by encouraging illegal file trading. The letter notes that some peer-to-peer vendors have taken steps to warn users about using the software to illegally trade files. Representatives of peer-to-peer vendors took issue with parts of the letter. The letter's call for peer-to-peer vendors to redesign their software, such as including centralized content filters, would cause the "neutering" of the potential of peer to peer, one said. "That cannot be done without radically changing the innovative nature of this software."