March 2005

That’s not to say we shouldn’t be wary of the abuse of government power, but it is to say that arguments over whether or not we should have a national ID are outdated. The truth is that we already have at least two national IDs: our driver’s license and our social security numbers.

The more important issue Americans face is how to ensure that government is strong enough to fight terrorists but also weak enough to be forced to respect liberty, privacy and the general will of the people. This may mean stronger security on national ID accompanied by stronger constraints on what government can do with the data. For more, see my recent column here.

Competition is heating up in the telecom industry, and not just for customers. Verizon’s bid for MCI–once thought a done deal – is being aggressively challenged by Qwest. After MCI’s board accepted Verizon’s $6.7 billion bid on Valentine’s Day, Qwest sweetened its own bid, offering some $8 billion. MCI’s board met this week to consider the offer, with a decision expected next week. This intra-Bell food fight should put paid to any notion that Bells are too monolithic to ever challenge one another. And it’s a good thing for investors–not least those with MCI stock.

The problem is that both sides are now making this a political issue. Qwest struck first and hardest, with high-profile statements by CEO Dick Notebaert that a Verizon-MCI merger would dangerously increase concentration and threaten competition in telecom. A media and lobbying campaign has followed–urging regulators to scrutinize the deal. Verizon has been much more restrained, although it too has played the political card, arguing that–because Quest owns an Internet backbone already–its deal could decrease competition.

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Yesterday, I was warning of government threats to regulate your i-Pod and video game platforms. Today I’m going to talk about the looming threat of cell phone censorship.

We live in a multi-media, multi-screen world. That is, video content is no longer the exclusive property of the clunky old living room television set. Today, we can view content on numerous types of devices and screens.

If you want to take a DVD on a long plane ride with you, you grab your portable DVD player and watch it on that screen. Or you just watch the in-flight video on the drop-down screen. You want to watch videos in your car? Generally not a good idea if you’re driving, but numerous video devices are on the market for your dashboard (or even your steering wheel) that will allow you to watch TV. And as millions of parents like me can attest, there’s no bigger lifesaver on long road trips than a portable (or built-in) DVD player to keep the kids quiet.

Care to watch video anywhere else? Well, with cell phones quickly becoming an all-purpose, “Swiss Army Knife of consumer electronics,” you can do it. In today’s Wall Street Journal (p. B4), Donna Fuscaldo provides a wonderful overview of all the video services that cell phone providers are currently rolling out to offer on-the-go content along with the other voice and data services we want. She quotes Peter Sharzynski, a senior VP of Samsung, who correctly notes that, “People are looking at entertainment in really broad ways. It’s just not going home and sitting in front of your TV. It’s TV on the go.”

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Monitoring children is difficult business. I should know; I have two little critters who aren’t even 4 years old yet whose eyes and ears I”m already trying to protect from certain material. Millions of other parents share this difficult task with me.

But, thankfully, Hillary Clinton is coming to our rescue.

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[cross-posted from the PFF blog]

On February 28, the FCC released an important decision holding that the film Saving Private Ryan was not “indecent” and could be shown on primetime broadcast television without fear of fines.

The decision was handed down four months after 66 of ABC’s 225 affiliated stations – - covering roughly one-third of the country – - decided not to air the film fearing that they might be caught in the FCC’s growing indecency enforcement net. Several of these affiliates cited the uncertainty surrounding the agency’s stepped-up indecency “crackdown” in the wake of the Janet Jackson episode at last year’s Super Bowl.

The FCC was also compelled to issue a ruling in this case since it received an official complaint from the American Family Association (AFA) asking the agency to pursue sanctions against ABC stations that aired the film.

First, the good news: The FCC denied the AFA complaint and ruled that Saving Private Ryan was not indecent and that no ABC affiliate would be fined for airing the film. But how the FCC arrived at this conclusion is somewhat troubling, or it at least raises as many questions as it answers about how current indecency “standards” will be interpreted by the agency in the future.

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Hey gang, Adam Thierer here… I wanted to let everyone know that I have left the Cato Institute and moved over to the Progress and Freedom Foundation to create PFF’s new Center for Digital Media Freedom.

Allow me to tell you a little more about this project and what we hope to accomplish at the Center.

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“If you are one of the 10 million people who have purchased an Apple iPod, you’ve almost certainly loaded it up with songs from your favorite CDs,” Bob Sullivan writes on MSNBC.com.


But watch out. As the subtitle to his story so ominously puts it, “Database company provides song titles and quietly tracks digital music listener habits.” 


According to Sullivan, Privacy advocates” (not them again!) are concerned that a company called Gracenote is collecting data whenever you load a CD onto your computer and then onto your iPod.


Gracenote, as the article describes, has been doing this for years, whether you’ve noticed it or not. Usually when you insert a CD into your computer for the first time, it will send some information about that disc to Gracenote’s servers, which send back the album information–the artist, album name, track list, etc. That way, you don’t have to type it all in yourself. And after that, your computer stores the information instead of contacting Gracenote.


And Gracenote, as a company, seems to take privacy pretty seriously. To begin with, its network protocol includes no personally identifying information. (I wrote a Gracenote client a few years ago, when it was called CDDB.) It doesn’t even put a cookie on your computer or assign you a serial number. As a result, the company can’t really track what CDs you’ve put on your computer.


And it really doesn’t try to, either. Gracenote spokeswoman tells Sullivan that the company does not even keep users’ IP addresses, a way of identifying computers on the Internet, after they look up an album. But even if the company did, it wouldn’t make much difference: many users are behind firewalls and share a single IP address with dozens or thousands of other users. And among those non-server computers that get their own IP addresses, most only keep a single address for a few days or a week before they are assigned a new one. If Gracenote did log IP addresses, the most it could tell is that some unidentifiable user at a particular network address inserted into his or her computer, for the first time, a certain list of CDs.


What data does Gracenote collect? It can tell what client you’re using–whether it’s iTunes, MusicMatch, or whatever. It can tell, very roughly, what region you’re in–for example, the Washington metropolitan area, but usually not your city and certainly not your neighborhood or street address. And it can tell what the CD you put into your computer is–assuming that you haven’t turned this feature off in your software. (It’s a prominent preference item in iTunes.) That’s about it.


Gracenote can’t even tell if your CD is real or a copy because of the way that it works.


In that context, this seems a bit shrill:



“The user has immediate benefit, but the potential trade-offs are very unclear,” said Alessandro Acquisti, an expert on the economics of privacy at Carnegie Mellon University. “This is a problem for us on the Internet. It is difficult to assign a value to our data… and there is a future cost which is uncertain. Under these conditions, we often opt for immediate gratification.”…


“It is a technology that could be privacy diminishing,” Ponemon said.  “People are starting to become more sensitive to things that relate to your hobbies, interests, your reading habits.  To some people, that’s really sensitive. … What music they listen to may be a surrogate for what political beliefs they have.”…


“If the data is there, at some point, I’d bet somebody would find a way to make use of it in the particular, not just the general,” he said.  While he hasn’t studied Gracenote, O’Harrow is an expert in marketing practices, and fears the chilling effect that could be produced if people know someone else knows their musical tastes.


“Those joyful moments when you are listening to Jimmy Page, maybe they aren’t as carefree anymore,” he said.


So what’s the beef? The real issue is probably that Gracenote sells some aggregate data to marketers. And once again, this raises “privacy advocates’” hackles. It’s not privacy that bothers them so much, it seems, as capitalism. Note that FreeDB, a less-comprehensive and less-reliable Gracenote knockoff run as a non-profit, doesn’t even merit a mention or complaint–even though it publishes pages like this and this!


But in this case, the critics are even more anti-consumer than usual. Think about it this way: Is it to your benefit, as a music listener, for an advertising exec to learn that, say, the Fiery Furnaces are gaining steam in Washington, D.C.?


Think about that the next time you’re watching television and marveling at how tone-deaf all of Madison Avenue must be.

I recently sent an open letter to Michael Powell and the other FCC Commissioners about the Level 3 petition. Level 3 sure has a genius of a petition out there. It is requesting that the FCC not apply access charges on VoIP calls that originate or terminate on the public switched telephone network (PSTN). This forbearance petition touches on key issues of interest regarding the future treatment of IP-based communications.

Under the rubric of “deregulation” Level 3 has created a possible arbitrage bonanza for itself. And the amazing thing is that many policy gurus (including Ray Gifford at PFF and Jeff Pulver) are in favor of it, although they too express reservations. The thought is that having IP traffic pay lower access charge rates (set by the states no less! – don’t we want the states out of this?) will somehow speed things up for broader intercarrier compensation reform. To me, though, it just doesn’t seem fair. And far from speeding up the process, it will entrench those VoIP companies that benefit from regulatory arbitrage and could end up hurting broader efforts at reform. That’s why the Commission should give this one a thumbs down. As I say:

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I just came across this great article from 2000 by Clay Shirky. He argues that micropayments are a bad idea that are doomed to fail because they economize on extremely cheap resources (bandwidth, content) at the expense of a relatively valuable resource–the user’s time. He persuasively argues that there’s no such thing as a no-brainer transaction–if a micropayment is large enough to be worth the bother to the seller, then it’s large enough that the buyer will want to consider it before approving it. But the time and annoyance of having to think before clicking on every link the user encounters might vastly outweigh the value of the penny being transacted.

Another way to put this, I think, is that we already have micropayments: they’re called ads. Users pay for content, not with cash payments, but with their time– giving a split-second of attention to the ads on the page as they read the content. And it turns out that in most cases, advertisers are willing to pay more for ad impressions than users are willing to pay for content. And users prefer ads to micropayments because micropayments take more time and hassle to deal with than ads that can be easily and safely ignored.

I think this is almost certainly a bad thing. As I’ve written before, the idea that a rumor about the general characteristics of an upcoming product is a “trade secret” borders on the absurd. And precedent would seem to show that you can’t be held responsible for the lawbreaking (or in this case, contract breaking) of your sources as long as you obtained the information legally.

On the other hand, I’m not sure I buy this business about giving journalists special exemptions for the confidentiality of their sources. With the explosion of new online media, it’s becoming increasingly unclear who counts as a “real” journalist. Instapundit doubtless gets more Internet traffic than many a small-town newspaper’s web site, and he offers more news than the average tabloid. So by what standard other than prejudice against a new form of media should he receive lesser protections than his print colleagues?

I don’t know enough about this area of law to have a good idea of how things should be changed. But any law attempting to draw sharp distinctions between journalists and everyone else is taking the wrong tack, and will find that position ever more untenable as the line between “the press” and “the people” continues to blur. The law needs to be changed to reflect that fact that nowadays, anyone can become a pseudo-journalist by signing up for a TypePad account.