Archives for May 2006
Competition Works: An Analysis of Competing Cable-Telco “Triple-Play” Packages
I’m lucky enough to live in an area where broadband competition is rapidly intensifying–Fairfax County in Northern Virginia (McLean, VA to be exact). In recent years, the incumbent cable operator Cox Communications has beefed-up its network to offer phone service and high-speed broadband in addition to its growing video programming lineup (which how includes plenty of HDTV and VOD offerings). I’ve been a Cox cable subscriber for many years now and have been very happy with them. In fact, after 7 years with DirecTV prior to that, I’ve never thought about going back to satellite after switching to cable. (Of course, the superior high-speed broadband option that Cox offers had something to do with that.)
Meanwhile, regional telephone giant Verizon Communications has been aggressively deploying new fiber optic lines throughout many Northern Virginia neighborhoods and other Washington, D.C. metro communities in the hope of competing against Cox and Comcast in the race to deliver the complete “triple play” package (voice, video, data) to consumers. Last year, Verizon sent a team of contractors out to my neighborhood to dig up my front yard, lay new fiber lines and install a new box. And then, for reasons I still can’t quite understand, another team came back and dug up my yard again to install more lines and a different box! My wife wasn’t real happy about the mess this created (and all the grass that died as a result), but I just kept telling her that one day it would all be worth it.
And that day has arrived.
Earlier this year, Verizon began dispatching door-to-door salespeople to my neighborhood in an attempt to sign up new subscribers for their new “FIOS” (fiber optic-based) service. I felt sorry for the salespeople who knocked on my door because they had no idea I was going to shower them with a litany of technical questions based on my knowledge of communications markets. But they were always very informative and helpful. And they REALLY wanted my business. Unfortunately, however, they had no control over the pesky city and county regulators who were holding up deployment of FIOS service in the area. In particular, Verzion had to fight for the right to offer consumers video programming services in competition with cable.
Luckily for me, they finally got permission in Fairfax County. (Of course, Verizon and other telcos are still fighting for permission to offer video services in countless other communities across America. And federal legislation is pending that would expedite that process through the use of national franchises). After I received confirmation that Verizon would at least be able to offer me everything I already had in my Cox “triple play” bundle, I finally decided to pull the trigger and sign up for a one-month trial of Verizon’s FIOS service in my home.
Raiding the Pirate Bay
Ars reports that Swedish police have shut down The Pirate Bay, which bills itself as the world’s largest BitTorrent tracker:
The assault on BitTorrent tracker sites began in December 2004. At that time, the MPAA filed a barrage of lawsuits, going after over 100 BitTorrent tracker sites, Direct Connect hubs, and eDonkey servers. Shortly thereafter, some of the more popular torrent sties began going dark. In February 2005, LokiTorrent.com was shut down and its server logs turned over to the MPAA’s attorneys. The MPAA then began going through the logs with an eye towards filing lawsuits against heavy users.
Through all the lawsuits, takedowns, and criminal charges, The Pirate Bay has continued to operate openly and with utter disregard for the MPAA, RIAA, and any other copyright holder. In fact, the site owners have maintained a “Legal” page where they post cease-and-desist letters along with mocking responses.
All along, The Pirate Bay has maintained that its operations are perfectly legal under Swedish law (an argument familiar to Allofmp3.com users). This insistence continued in the wake of a new law passed by the Swedish Parliament in July 2005 that strengthened the country’s copyright enforcement law. As The Pirate Bay only hosts trackers and not the copyrighted material itself, it claims that it has every right to operate in Sweden.
A Different Type of Technological Protection
David Friedman has an insigtful post about the nature of technological protection:
Intellectual property in digital form is easy to copy. In a networked world, it is also easy to distribute. It is therefore likely that copyright enforcement will become increasingly difficult. Tie-ins are a good solution for some forms of intellectual property but not for all. That leaves technological protection, ways of selling access to intellectual property without letting the purchaser reproduce it.
There is an important limit to such protection: It only works for forms of I.P. that are not entirely revealed in one use. However strong the encryption on the digital file containing your song, a customer can still tape record it when he plays it–or record the signals his computer is sending to its speaker, thus eliminating the sonic middleman. However well encrypted your novel, I can still, if I really want to, photograph my screen as I read it and run the pictures through OCR software.
There are other forms of I.P. that are not fully revealed in one use. What I get from Lexis or Westlaw is not a download of their database but the answer to a query. I can make a copy for a colleague but it is unlikely to be of much use to him, since he wants answers to different questions than I do. A computer program can be similarly protected, by running it on a webbed server and selling not copies but access.
I think this last point is very interesting: web-based applications like Google’s search engine don’t have much need for copyright protections, because they have a more direct way of protecting their intellectual property: it never leaves their servers. Moreover, even if an insider did steal their code, it’s complex enough that it would take quite a bit of work to set it up, and it would quickly fall behind Google’s latest version.
Similarly, Google can afford to make its map service freely available without worrying too much about someone ripping off the data because of the sheer size of the database: it would take hours (if not days or weeks) of continuous querying to get all the data, and Google can pretty easily monitor usage and cut off any user who uses too much data.
Friedman finishes his post with some interesting observations on MMORPGs like World of Warcraft as another exemplar of this technique.
(Hat tip: Mike)
Broken Windows on the Internet
Patrick Ross critiques a recent presentation by Yochai Benkler:
To begin with, he praised open source software (not surprisingly) and also the collaborative nature of Wikipedia. He noted that Nature had found it to be comparable to Britannica (no, he didn’t mention the stinging rebuttal later published by Britannica of that article.) He also praised the computational power of SETI@Home, which exceeds the fastest supercomputer by tapping unused computing capacity of volunteers. SETI@Home and Wikipedia don’t contribute in any meaningful way to the US economy, but he ranked them in social importance far higher than any commercial encyclopedia or proprietary supercomputer.
How do we know that Wikipedia and SETI@Home don’t contribute in any meaningful way to the U.S. economy? Apparently, because no money changed hands. By the same logic, the sun and the air don’t contribute in any meaningful way to the U.S. economy.
As PLN pointed out back in March, this is a prime specimen of the broken window fallacy (which was originally described by Bastiat) in action. The resources consumed during the creation of the Encyclop¦dia Britannica are a loss to the rest of society. If society can get an equivalent-quality encyclop¦dia for free (that is, by a process in which each participant finds participation rewarding enough to do so without charge), that benefits all of us, because the resources that would have been spent hiring people to write the Britannica can be deployed for other ends.
Incidentally, Britannica does not appear to have an entry on the broken window fallacy, and the Wikipedia entry on Bastiat is ten times as long as the corresponding Britannica entry. Wikipedia may not be contributing anything to “the economy,” but it’s certainly doing a good job of making a lot of information available to a large number of people. That certainly seems valuable to me!
Is This Where America’s Campaign Finance Laws Are Heading?
As I’ve written before, America’s increasingly heavy-handed, anti-free speech campaign finance laws threaten to eventually ensnare the entire Internet and our new innovative, bottom-up world of organic “we-dia” (WE-MEDIA). Blogs are already in their crosshairs and lawmakers will be targeting other technologies of freedom in coming years.
Want to know where we might be headed? Look at Singapore. They’ve got a long history of stifling political speech and now their drawing up a blueprint to quash dissent via alternative digital outlets.
Lee Boon Yang, Minister for Communications, Information and the Arts (and you thought the FCC was bad!) recently said that “Anyone, anywhere can blog anything, anyhow. We have adopted a light touch approach in dealing with the everyday use of the Internet.” Well, that sounds encouraging, but then… “However, during the election period when such free-for-all may result in undesirable situations, we cannot take a completely hands-off approach,” he said. “We will review our policies on the Internet and new media during the election period bearing in mind the changes taking place.”
According to this AFP story, Singapore has already been criticized by human rights groups and opposition parties for placing restrictions on political discussions on the Internet. The rules apparently already ban the use of use of podcasts and videocasts for advertising during elections.
Whether or not this all works remains to be seen. It’s one thing to regulate the signals being beamed out from a big broadcast tower. (After all, it’s pretty easy to find those towers and their programmers). Internet “broadcasters” are another matter, however, and enforcement will become a nightmare for the regulators as more and more people get online.
But that doesn’t mean the regulators won’t give it their best shot. And while lawmakers here in the States have given blogs and the Internet a reprieve for now, you’d be fooling yourself to believe that that’s the end of the story. Regulation expands. Always and everywhere.
Astro-Spam
The Abstract Factory flags something I’ve begun to notice when I periodically go through our comments to weed out spam: our posts about network neutrality have begun to get a steady stream of highly generic supportive comments: see here, here, here, and here, for example. Cog posits that some PR firm must be paying people $10/hour to troll the web making anti-regulatory comments on blog posts on the subject of network neutrality.
The posts almost never make substantive arguments, and they’re often made days or even weeks after a particular post is made. Moreover, the comments consistently appear only on pages related to network neutrality. Cog’s term fits the bill perfectly: this is astro-spam.
I don’t think I’m going to delete it, though. It’s not clear to me there’s anything unethical about paying someone to post random comments on blogs advocating a point of view. Certainly, people pay others to write press releases and talking points. It’s not clear to me how this is different.
But more importantly, it’s not obvious to me how I’d go about drawing the line here. I have a pretty good hunch about which of the pro-NN comments are paid astro-spam, but I have no way to prove it. And I don’t want to go down the path of trying to decide which comments are “real” and which are not. Ordinary spam is easy to identify: it links to a porn site or a generic viagra store. But I have no way to positively identify astro-spam.
In any event, the far more effective way to deal with the problem is by allowing the spam to stay in place and then make it look ridiculous. So if anyone in the media is reading this, this seems like a great story lead: telcos are so desperate that they’ve resorted to hiring shills to promote their point of view in blog comments.
op-ed on MySpace bill (”DOPA”)
I have an editorial in the Philadelphia Inquirer today about a new federal effort to regulate MySpace.com and other social networking websites. Rep. Michael Fitzpatrick (R., Pa.) and several members of the newly formed congressional “Suburban Caucus” recently introduced H.R. 5319, the “Deleting Online Predators Act (DOPA).” It would require schools and libraries that receive federal funding to block minors’ access to social-networking sites that allow users to create Web pages or profiles or that offer discussion boards, chat rooms or e-mail service.
If you’re interested, the entire editorial is pasted down below…
Lying with Statistics
Glen Whitman points out a great example of misleading statistics on music piracy:
It’s from an article titled, “The Digital Music Blues.” The graph is supposed to demonstrate that, in spite of the growth in legal music downloads, illegal downloads are still cutting into the record industry’s bottom line.
Notice how only a tiny 1% of iPod capacity is filled with legally purchased iTunes songs! I guess the remaining 99% percent must all be illegal downloads, right? That’s certainly the implication of the accompanying article: “What’s filling all that excess capacity? Well, despite the efforts of the Recording Industry Association of America, nearly a billion songs are traded on P2P networks every month.”
I checked my own iPod, and sure enough, the songs I bought on iTunes account for only about 1.5% of the 20GB memory. What’s filling the rest? Turns out 62% of it is filled by, um, nothing. I just haven’t filled it yet. The other 36% or so is almost entirely filled with music I ripped from my own legally purchased CDs or those of my relatives.
(Did I mention that most of the data for the WIRED article came from music industry sources?)
The Mystery of the 99 Cent iTune
Julian Sanchez puzzles out the economics of Steve Jobs’s stubborn insistence on 99 cent music:
One reason is the flip side of an idea Markels broaches: Prices signal quality. People might conclude that an expensive song is likely to be better (because more in demand), and conversely, might be willing to take a chance on an unknown at a lower price. Yet there’s a pheonomenon familiar to marketers where you can sometimes sell more of a product by raising the price, precisely because peoople do sometimes take prices as a proxy for quality. Maybe not for big-ticket items like cars, where you’re going to do a lot of investigating before dropping tens of thousands of dollars, or for items where the quality can be easily measured by casual observation. But I’m willing to bet that, say, for a pair of headphones, a lot of people who want to get good sound but aren’t devoted audiophiles will follow a heuristic like: “Walk into Best Buy and grab the second most expensive pair.” Now music, like a lot of other cultural goods, is a long tail product: Sure, there are those megahits at the top that sell disproportionate numbers, but most of the action and the sales, especially online, where you’ve got a bottomless inventory, is going to be in the aggregate sales of large numbers of smaller niche artists. (This is especially the case as a kind of online feedback effect kicks in, where record industry economics no longer tend to push convergence for most consumers on a relatively narrow mainstream.) If that’s the case, you might not want to signal that a huge portion of your inventory, which when added up actually accounts for most of your sales, is in the digital equivalent of the remainder bin, especially when you’ve got other sophisticated means of suggesting songs tailored to a person’s specific tastes.
Looks Alive to Me
Last week, I criticized Nick Carr’s silly claim that Wikipedia was dead. Or, at least, dead as “the poster child for the brave new world of democratic, citizen media, where quality naturally emerges from the myriad contributions of a crowd.”
So today President Bush nominated a new Treasury secretary, who happened to be Goldman Sach’s CEO. Intrigued by the seemingly endless stream of Goldman Sachs alums who go on to careers in the public sector, I thought I’d check out Wikipedia to learn more about the company.
It crossed my mind that maybe I should do my part to keep Wikipedia updated by adding a mention of his nomination. Then I noticed that someone beat me to it. Intrigued, I clicked on the version history for the article. It seems that between 10:07 and 10:14 Eastern, someone at IP address 140.254.225.82 made seven changes to the article to incorporate news of the treasury nomination.
Now, the AP transcript of the event got posted at 9:55. I assume that means that Bush’s nomination speech probably started at 9 and concluded around 9:15. Which means that the article was out of date for less than an hour.
You can’t tell me there’s nothing new going on here.
Yes, the First Amendment Applies to “Blogs”
EFF reports that a California appeals court has thrown out Apple’s demands for Apple Insider and PowerPage to disclose their sources. As I wrote last year about a different but closely related case, I think it’s a little bit strange that mainstream media reports are describing these as “blogger” cases:
Yet upon closer examination, it’s hard to see what the fuss is about. If anything, the incident reveals more about mainstream journalists’ condescending attitude toward their upstart online competitors than it does about law or technology.
Think Secret is not a “blog.” It is a commercial, advertisement-supported online magazine. It’s run by a college student, and is therefore smaller and less polished than online magazines like Slate or Salon. But the First Amendment’s protections aren’t limited to slick publications with large staffs. Some of the Founding Fathers, after all, were prolific pamphleteers, hardly more polished than Think Secret.
The same is true of Apple Insider and PowerPage. They’ve been in business since before the term “blog” entered our lexicon, and their format is closer to online magazines than it is to blogs.
Not that it matters from a legal point of view. In its decision, the court makes it clear that the law makes no distinctions among journalists based on size or professionalism:
We decline the implicit invitation to embroil ourselves in questions of what constitutes “legitimate journalis[m].” The shield law is intended to protect the gathering and dissemination of news, and that is what petitioners did here. We can think of no workable test or principle that would distinguish “legitimate” from “illegitimate” news. Any attempt by courts to draw such a distinction would imperil a fundamental purpose of the First Amendment, which is to identify the best, most important, and most valuable ideas not by any sociological or economic formula, rule of law, or process of government, but through the rough and tumble competition of the memetic marketplace.
The freedom of the press isn’t a special privilege that applies only to government-recognized journalists. Everyone who’s engaged in the collection and dissemination of newsworthy information is protected. There’s nothing new about any of this, but it’s good to see the courts affirm that the rules don’t change just because journalism is happening on the Internet instead of the printing press.
Common Carrier Regs for the Backbone?
Kevin Drum takes Matt Yglesias to task for suggesting that network neutrality might be new regulations rather than the simple continuation of existing regulations:
The 1996 Telecommunications Act defined two different types of service, information services (IS) and telecommunications services (TS), and cable companies were originally classified as IS and telephone companies as TS. Although both cable companies and telcos provide local internet access, the backbone of the internet is carried exclusively by telcos, which were regulated as common carriers under the tighter TS rules. The common carrier rules effectively enforced the principles of net neutrality on the internet backbone.
Is this right? I’ve always had the impression that peering agreements on the backbone itself have been basically anarchic–you could basically peer with whoever you wanted on whatever terms you wanted. That’s certainly the impression that the Wikipedia article on the subject gives. Can anyone fill me in on the subject?
Update: James Gattuso points to this excellent article by the Progress and Freedom Foundation on the Internet backbone. Some comments on this below the fold.
Our Deadly Organ Donation System
We mostly focus on computer technology here at TLF, but there are other types of technologies that are arguably more important. For all my railing against the DMCA, I have to concede that, as far as I know, it’s never gotten anybody killed. The same can’t be said, unfortunately, of our organ-donation system. AEI’s Sally Satel writes:
When Rob Haneisen, a reporter at the MetroWest Daily News in Framingham, Mass., who has written about people in situations like hers, asked Lisa if he could interview her for a story, she jumped. Perhaps former colleagues, long lost friends, or a Good Samaritan would read about her and volunteer to donate. Lisa had even begun coordinating with Beth Israel Deaconess Medical Center to prepare for a transplant, should a donor come forward as a result of the News article that ran on April 16.
Enter Dr. Douglas Hanto, head of the transplant division at Beth Israel. He had heard about Lisa’s circumstance when Haneisen called him for an interview as part of the story. Before speaking to the reporter, Hanto had his staff phone Lisa right away to deliver shocking news: Beth Israel would flatly refuse to do her transplant if the only donor she could find was a kind-hearted stranger who responded to the article.
“We are in favor of donors coming forward and donating to the next person on the waiting list,” Hanto told Haneisen. And how many have done that so far over the years, the reporter asked? “Just a couple,” Hanto admitted. Also puzzling is Hanto’s assertion: “We have hundreds of people on the waiting list. If we support some favored status for one patient, how can we really say we are being fair and looking out for all our patients?”
The fact is that Lisa harms nobody if a stranger responds to her story and comes to her aid. In fact, she helps people on the list because she is taken out of the cadaver-waiting queue and others can move up.
Transplants in this country are handled by the United Network for Organ Sharing, a non-profit organization with a government-granted monopoly on the distribution of organs. The “bioethicists” at UNOS are obsessed with ensuring that organs are distributed “fairly,” even if fairness leads to fewer donations and more people dying. The system is arbitrary, it’s stupid, and–most importantly–it’s deadly
Pirates in High Places
Last month, Corey Doctorow pointed out that by the RIAA’s reckoning, President Bush is a music thief. As part of the DMCA rule-making proceedings, the RIAA said that ripping a CD to your portable music player without authorization is against the law. And since the Beatles haven’t allowed their music on Apple’s iTunes Music Store, the only other ways to get Beatles music onto your iPod is by ripping a CD (illegal) or using a peer-to-peer downloading service (also illegal).
Now Radley points out that Hillary Clinton’s a lawbreaker too.
Yglesias vs. Google
My old roomie Julian Sanchez and my friend Matt Yglesias go at it over neutrality regulation on Bloggignheads.tv. If you haven’t seen it yet, Bloggingheads.tv is (as its name implies) a site featuring popular bloggers debating the issues of the day on camera. My favorite thing about the Sanchez/Yglesias spot was the fact that Julian was smoking. People haven’t smoked on TV in decades–and especially not talking head pundits! It felt deeply subversive to watch politics being debated in between drags of a cigarette.
Anyway, my sympathies are with Julian’s side of the argument, but I thought Matt’s argument, which he dubbed a vulgar Marxist perspective, is interesting: basically, he doesn’t feel qualified to evaluate the technical merits of the issue, but he figures that given that Google’s interests lie in getting more content to consumers cheaper, their interests are more likely to align with those of consumers. And therefore, for those who aren’t competent to analyze the issue on their merits, it’s best to err on the side of supporting Google and other Internet companies.
In evaluating this argument, I think it’s worth distinguishing the short-term and long-term impacts of regulation. Julian covered the short-term argument pretty well: it might be that without the ability price discriminate, telcos will have less incentive to invest in new infrastructure. That’s clearly bad for consumers, but it might be good for Google if it ensures Google free access to whatever new infrastructrue investment the telcos do make. I don’t think it’s crazy to think that Google’s interests might diverge from those of consumers on this front.
But I think the long-term implications are more interesting, and ultimately a lot more important. Because what network neutrality does, for the first time, is to give the FCC (or some federal agency) authority over the administration of the networks that comprise the Internet. The debate so far has focused on cable and telephone companies, but there’s no reason to think the extension of authority contemplated by the pro-reguatory side would be limited to those networks. University networks, WiFi hotspots, hotel connections, and any new broadband technologies that arise in the future would also be covered.
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