December 2004

Like a lot of other Americans, I once had a big beef with the U.S. cable industry. Limited channel capacity and poor quality service were the primary reasons for my discontent. I remember the cable system my family subscribed to in the mid-1980s. It was like a Third World government operation at times. And I think we only had about 20 channels.

Jokes about “the cable guy” were common for a long time, of course. This made it easy for DBS providers like DirecTV and EchoStar to come in and pick off a lot of customers like me throughout the 1990s. By 1996, I had two satellite dishes on my roof and three DirecTV set-top boxes throughout my house. I thought I’d never talk to “the cable guy” again.

Continue reading →

The family of a soldier killed in Iraq wants access to his e-mail. Yahoo! says no. Yahoo! is right. Their Terms of Service don’t allow them to give family access to an account after a user dies. Period. And there’s no “really sympathetic requester” exception. Stick to your guns, Yahoo!

Self-styled Internet lawyer Ira Rothken has gotten a settlement from software companies and retailers that should reform the shrink-wrap license conundrum.

When the terms of a shrink-wrap license make the license enforceable upon opening the package and include a return policy you don’t accept, how do you decline the terms and return the product? If there ever was a conundrum, this is one, folks.

In Washington, lots of complaints about EULAs (End-User License Agreements) are addressed to regulators and politicians. But EULAs are contracts. The resolution to problems with EULAs lies in contract law – like the doctrine of adhesion contracts, about which I was expert in my law school contracts class. (Um, I’m not any more.) Many terms in EULAs may ultimately be stricken under this doctrine. So, good for you, Ira, and watch out, EULA-writers!

The Federal Trade Commission has issued regulations fleshing out the CAN-SPAM Act. Given the impotence of CAN-SPAM to reduce spam, this weighty document can be regarded as regulation without a reason. Indeed, if, like me, you don’t buy the Supreme Court’s commerial speech doctrine, this is not just regulation without a reason, this is speech regulation without a reason.

There is (or may someday be) an argument that CAN-SPAM has (or will) reduce spam, but the recent successful spam lawsuits I’ve seen have gone off on laws other than CAN-SPAM or at least CAN-SPAM plus other laws. A full study of what laws are actually used against spammers, and perhaps an attempt to measure their deterrent effect, is needed. Volunteers?

Wow, check this out. Ed Felten of the “Freedom to Tinker” blog has written a new P2P program called “Tiny P2P” that is made up of just 15 lines of code! And no single line has more than 80 characters. How in the world is the industry gunna stop this one?

Seriously, think about this. Regardless of what you think of the music and movie industry lawsuits against P2P providers, there’s a very good chance they will all succeed. Napster and Aimster were already taken down via contributory liability lawsuits and the Supreme Court is set to hear the Grokster case soon. The Supreme Court will almost certainly reverse the Ninth Circuit’s decision and hold Grokster liable for contributory copyright infringement. Again, I’m not making a case one way or the other, I’m just saying that it’s highly likely there will be 5 votes on the Court to hold Grokster liable.

OK, assuming that happens, what’s next? Well, I guess the industry can sue E-Donkey and the handfull of other big P2P players that remain out there, but at some point the market evolves to the point were everyone is just using freeware like Felton’s “Tiny P2P” code. What then? I guess the industry could go after Ed, but what’s the point. The cat is out of the bag and many more imitators will follow. Pretty soon there will just be no one left to sue.

So what’s the industry going to do then? Who knows. In my opinion, they should just stick to suing individuals for direct infringement and concentrate on creating new business reponses to this rapidly evolving marketplace. Because at some point very soon, “The Matrix” that is the World Wide Web will be all around them and P2P will be so ingrained in it that there will be no way to use the law to stop it. Felton’s “Tiny P2P” shows us that this day may be upon us already.

The state of Illinois wants to regulate the sale of video games to minors. I have written about this issue elsewhere, but in general, the problem with measures such as these is that it requires someone in government to define what constitutes “violent” or “sexually explicit” games. Thus, there will certainly be an element of censorship involved here.

Previous enactments such as this have already been tested in the courts and found to be unconstitutional. But without getting into the legal issues, I think the real question here is whether government or parents should be primarily responsible for what children watch or play. I grew up playing hundreds of video games on several different platforms (starting with Atari 2600 back in the late 70s). And I am now am a parent myself of two small children, one of which has already started playing some interactive computer games. As with anything else in this world, the answer here lies in moderation and parental guidance. When my kids are confronted by troubling themes or images, I will talk to them about it just as my parents talked to me. I will explain the difference between fantasy and reality. In some cases I might restrict their access to some of these games, or prohibit them from being in my house altogether. And, most of all, I will encourage my kids to do something more with their free time than sit on their butts in front of the television all day! I’ll give them good books, read to them, take them to the park, throw a ball with them, etc., etc.,…

Regardless, this is my business and the business of the millions of other parents out there–not the government. Quit telling me how to raise my children and quit acting as if I’m not capable enough to do this job myself. And shame on any parent out there who is lazy and runs to the government asking them to play the role of surrogate parent for them. If you just hand you kid $50 bucks and let them go buy any game they want and then let them play it without any supervision whatsover, then that’s your own damn problem. That video game console didn’t just walk into your house uninvited after all. Someone had to shell out the $200 bucks to put it there.

For those of you who can’t imagine Christmas without a good dose of telecom policy, you should know about the Heartland Institute’s Telecom Reform Conference tomorrow and Saturday at the Hilton O’Hare. It promises to be a good one, with a focus on developments in the states. I’ll be there, speaking on a panel on Saturday, but this should be an interesting event nonetheless.

The media seemed flummoxed yesterday on the FCC’s order on UNE’s. Certainly not an easy thing to digest, and a scan of headlines shows them all over the board. Typical of the dueling headlines: CBS Marketwatch’s “FCC ruling seen benefiting Bells; critics blast decision“, vs. Forbes’ “FCC Decision ‘Slight Negative’ For Baby Bells“.

The substance here is a bit complex, and will take a while to sort out. (The full text hasn’t been released yet.) But the short story is that the FCC did significantly cut back its rules on telephone companies yesterday, most notably taking mass-market switches off the shared assets table. This means telco’s will not have be forced to share their assets as much as before, meaning MORE investment, and MORE real competition, as others build their own networks.

The flip side is that the FCC KEPT far more rules in place they they should have. Most controversially: lines used to serve big office buildings in downtown areas. Although most downtown areas are intensely competitive–remember all those streets being torn up a few years ago? –the FCC will still force telcos to share their high-capacity lines with competitors in 99.5 percent of line centers.

Thus a mixed bag. Expect more litigation.

Well it seems like UNE-P – that wonderfully hyphenated acronym that in non-telecom speak stands for “pure reselling” – is on its way out. Today’s FCC press release gave us a teaser of the rules that the Commission adopted for network unbundling “open access” mandates. While there was some small reform of access rules for providers who are merely resellers, the Commission still hasn’t embraced the market alternatives available, leaving a narrow and misleading picture of the overall telecom marketplace.

Competition is much broader than just wireline vs. wireline. Indeed, CEI released a study today that finds that for every 1% increase in local phone rates, demand for wireless services increases by nearly 2%. Thus it concludes that there is true intermodal competition, despite the fact that the FCC rules do not acknowledge this. There is a check on wireline phone rates from going sky-high in the absence of UNE rules from cable, wireless and VoIP.

I think that the paper would be a good reference in light of the FCC Order, especially to refute the dissents of Copps and Adelstein, who proclaim that the sky is falling (and prices rising) for consumers. And long-term, the study will be important ammunition in the debate over telecom reform and how to think of “competition.”

MPAA vs. BitTorrent

by on December 15, 2004

The Washington Post reports that the MPAA is launching a legal campaign against three file-sharing networks, eDonkey, Direct Connect, and BitTorrent.

The Post makes a pretty basic error: BitTorrent is not a company. This should have been obvious from its minimalist web site. They’re an open source project widely popular in the open source community.

Moreover, unlike with traditional P2P networks, not just any client can upload a BitTorrent file. Instead, you have to run a “tracker” on a server somewhere to coordinate the downloading of files– or ask the operator of another tracker to serve your file. What that means is that trackers operators have considerable control over which files are offered, and different BitTorrent servers will have different mixes of files on offer.

What will be interesting about this case is that many BitTorrent downloads are entirely legal. Open source projects are typically distributed for free over the Internet, and it takes gobs of bandwidth to do so. Many open source projects are available for download via BitTorrent to save themselves bandwidth.

What this means is that, to an extent not true in the Grokster case, there really are “substantial non-infringing uses” to the BitTorrent application, as required by the landmark Sony Betamax case. The argument used against Grokster–that the company’s business model depended on pirated files, and the few legitimate downloads were just window dressing–just won’t stick against BitTorrent.

The MPAA’s lawyers seem to understand this, because they’re targetting trackers rather than the developers of BitTorrent itself. And I assume they understand it well enough to focus their attacks on those trackers that offer little else but copyrighted content.

The Post’s David McGuire, on the other hand, doesn’t seem to understand the technology involved. That’s not actually too surprising. Reporters often mangle technical details. But this is a case where the technical details matter, and so it’s hard to understand what the legal battle is about if they get mangled.