March 2008

The Newspaper Association of America reported on Friday that print ad revenue for the industry fell by 9.4 percent last year, the biggest decline since it started keeping records in 1950. Within this total, classified ad revenue was hit even harder, down by some 17 percent. The figures show an accelerating decline in newspapers fortunes.

The figures were widely reported newspapers across the country, from the Wall Street Journal to the New York Times to the Chicago Tribune. And I didn’t read it in any of them. Like an increasing number of Americans I read the stories only in electronic form, learning about the development initially through an e-mail.

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Better late than never, here are my thoughts on the FCC’s auction for the D Block public safety band. There was only one bid for the block, Frontline Wireless to shut down, and some are even suggesting improprieties. Sadly, we’ve got a long way to go before we have an operating public safety network. Why did the D Block auction fail? I think at root the problem is that the FCC simply placed too many restrictions on the would-be licensee, and that’s something the FCC should keep in mind as it considers what to do next.

Under the D Block’s service rules the commercial licensee must come to an agreement with the Public Safety Spectrum Trust (which is the licensee for the adjacent public safety spectrum) about the details of the network to be built. If it doesn’t come to an agreement, the FCC can impose whatever requirements it sees fit on the licensee, and if the licensee surrenders its license or has it taken away, they must pay a forfeiture penalty that can run into the millions. Because there are no similar penalties for the non-profit PSST to come to agreement, this allows the PSST to basically dictate the terms of the network. Why would anyone bid for the privilege to be a part of that deal?

Sadly, Chairman Martin doesn’t seem to get this. He recently lamented the fate of the D Block:

“Did we get everything perfect in it? Obviously not because no one was willing to end up taking on that burden,” Martin conceded. “So, do I wish that someone was willing to take on that burden? Yes. And do we need to restructure it in such a way that someone is willing to take on that burden? Absolutely. But absent somebody else coming up with some idea to solve this, this is the only way to solve what’s really a public-safety crisis.”

Instead of expecting some selfless corporation to “take on the burden” of such a thankless deal, why not try instead to create a license aligned with the interests of both the private sector (profit) and public safety (cheap and interoperable communications solutions)? Here’s my recipe:

  1. Get rid of the PSST, a bureaucracy more than prone to capture that will do nothing but hold a commercial licensee hostage.
  2. Take the spectrum now held by the PSST and combine it with the D Block. Create two national licenses on the combined spectrum so as to inject competition and avoid a monopoly provider.
  3. Place public safety obligations on each of those licenses but allow the licensees to lease excess capacity. What sort of obligations? Obviously public safety should have priority, and leased access would only be secondary. Beyond that, the FCC could include minimum performance standards in the licenses to ensure that the networks are built to public safety standards without having to prescribe specific technologies or methods.
  4. Auction the licenses without reserve prices.

There are no doubt more than a few hurdles for such a plan to overcome, but I think it makes sense to allow market forces develop public safety networks. I’d love to hear any critiques of this idea. No doubt I’ll be submitting a comment to the inevitable rulemaking on this issue and it would help me to figure out the weaknesses of this scheme.

Here is one of the two patents that the nation’s major banks have been “stealing” from DataTreasury. The first claim is as follows:

A system for central management, storage and report generation of remotely captured paper transactions from documents and receipts comprising: one or more remote data access subsystems for capturing and sending paper transaction data and subsystem identification information comprising at least one imaging subsystem for capturing the documents and receipts and at least one data access controller for managing the capturing and sending of the transaction data; at least one central data processing subsystem for processing, sending, verifying and storing the paper transaction data and the subsystem identification information comprising a management subsystem for managing the processing, sending and storing of the of the transaction data; and at least one communication network for the transmission of the transaction data within and between said one or more data access subsystems and said at least one data processing subsystem, with the data access subsystem providing encrypted subsystem identification information and encrypted paper transaction data to the data processing subsystem.

As near as I can tell, this patent covers the concept of scanning and security transmitting paper documents. If you build a system for scanning and securely transmitting images of paper documents, you’re probably infringing on this patent. Or to put it a different way, this patent would, if strictly enforced give DataTreasury a 20-year monopoly on the concept of electronic check clearing.

It’s absurd that our legal system allows companies to engage in this kind of rent-seeking. It’s even more absurd that people invoke the concept of property rights to justify it. Property rights do not and should not give companies monopolies over entire industries.

You may have read Tom Giovanetti’s piece on the plight of DataTreasury Corp. The op-ed is remarkable for its lack of specificity. For example, we’re informed that:

Worse, these banks also are asking Congress to make taxpayers pay the patent holder for their illegal actions. According to the Congressional Budget Office, the bailout would cost the federal government at least a billion dollars.

But Giovanetti never bothers to explain how this “bailout” would work, whose patents would be affected, or who would control the allocation of “taxpayer dollars” to patent holders. I’ve read quite a bit about the major provisions of the pending patent reform bill, and none of the coverage I’ve read mentioned any program that would allocate a billion dollars to pay off patent holders so that banks could infringe their patents. It’s possible that this provision has slipped below the radar. It’s also possible that Giovanetti is describing the debate in a somewhat misleading fashion. Any body know what he might be referring to?

In any event, here is a New York Times article that gives a more nuanced account of DataTreasury’s situation. We learn, for example, that “it is a company whose only business, other than one client, appears to be suing other companies.” It appears that they managed to get a broad patent on fundamental concepts in digital check-clearing, making it impossible for banks to participate in the new “Check 21″ check-clearing process Congress approved in 2003. In other words, the story may not be so much about banks “using” DataTreasury’s “technology” as it is about extortion on DataTreasury’s part.

Some thoughts from Tom Giovanetti.

Quote of the Day

by on March 31, 2008 · 0 comments

Don Marti:

“Tags are keywords that you type into a pastel box, and keywords are tags that you type into a green-screen application”

Over at Ars, I beg to differ with Eric Alterman’s concerns that Web-based journalism will be somehow inferior to the 20th-century variety:

Looking at the broader media world, it’s true that the majority of high-quality journalism still happens in traditional mainstream media outlets. It would surprising if this were not the case, since they still control a majority of eyeballs and advertising dollars. But the idea that the web is, or is likely to become, a journalistic wasteland doesn’t make a lot of sense. As the reader attention—and with it, advertising dollars—shift to the web, web-based publications (along with those mainstream publications that successfully navigate the transition to the web) will have the resources to recruit the best journalists to work for them. High-quality reporting draws eyeballs, and eyeballs generate advertising revenue, so talented writers will continue to be in demand regardless of the medium.

One of the big challenges that mainstream media outlets will face is that their size and bureaucracy makes it difficult for them to experiment with new news gathering techniques. As we’ve seen here at Ars, one of the big advantages of web-based publishing is that it’s possible to draw on contributions from a broader range of professional writers, bloggers, and amateurs with subject matter expertise. Large, monolithic news organizations, which rely on full-time employees for the bulk of their writing, may have difficulty exploiting this model. If a natural disaster occurs, for example, a news organization that flies a professional reporter to the scene of the tragedy will likely get scooped by a news organization that has an existing network of freelancers in the area who can cover the story without leaving their home towns. What those writers lose in writing skills they are likely to make up in timeliness and depth of local knowledge.

One other criticism Alterman makes that seems off base to me is that at one point he faults the web-based publications like the Huffington Post for failing to be “full service” media outlets–lacking a sports section, say, or book reviews. But this is actually a strength, not a weakness, of the web model. I’m not at all interested in the sports section of my local paper, and if I took the paper that section would have been nothing but landfill. More to the point, there’s no particular reason to think the same hierarchical organization that brings you your technology or political news is also the best qualified to deliver you book reviews or sports news.

Anyone who’s upset that the Huffington Post doesn’t have a sports section should learn to use an RSS reader and subscribe to any of the hundreds of excellent
sports blogs and news sites out on the web, just as anyone who wants more technology news than the Huffington Post has to offer can subscribe to Ars or the Technology Liberation Front. The “one stop shopping” model of 20th-century media was a reflection of the limitations of 20th-century communications technologies. It wasn’t, in and of itself, anything to celebrate or emulate.

I originally found the link to the New Yorker via Yglesias, who made some additional good points on the subject, especially that the 20th century American model of “objectivity,” in which reporters pretend not to have opinions about the subjects they’re covering, is far from universal and not necessarily superior to the more adversarial model that prevailed in the 19th century and still prevails in parts of Europe.

[Note: You might want to first read my review of Jonathan Zittrain’s book to give this essay some context.]

Jonathan Zittrain must have been smiling as he read Leander Kahney’s excellent Wired cover story this month, “How Apple Got Everything Right By Doing Everything Wrong.” In a sense, the article vindicates Zittrain’s thesis in The Future of the Internet–And How to Stop It.
Apple Jobs soviet art style
Again, in his provocative book, Zittrain argues that, for a variety of reasons, the glorious days of the generative, open Internet and general-purpose PCs are supposedly giving way to closed networks and a world of what he contemptuously calls “sterile, tethered devices.” And Apple products such as the iPhone, the iPod, and iTunes serve as prime examples of the troubling world that await us. And Kahney’s article confirms that Apple is every bit as closed and insular as Zittrain suggests. Kahney nicely contrasts Apple with Google, a company that “embraces openness,” trusts “the wisdom of crowds,” and has its famous “Don’t be evil” philosophy:

It’s ironic, then, that one of the Valley’s most successful companies ignored all of these tenets. Google and Apple may have a friendly relationship — Google CEO Eric Schmidt sits on Apple’s board, after all — but by Google’s definition, Apple is irredeemably evil, behaving more like an old-fashioned industrial titan than a different-thinking business of the future. Apple operates with a level of secrecy that makes Thomas Pynchon look like Paris Hilton. It locks consumers into a proprietary ecosystem. And as for treating employees like gods? Yeah, Apple doesn’t do that either.

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Guerilla Fingerprinting

by on March 30, 2008 · 2 comments

Awesome:

A number of readers let us know about the Chaos Computer Club’s latest caper: they published the fingerprint of German Secretary of the Interior Wolfgang Schäuble (link is to a Google translation of the German original). The club has been active in opposition to Germany’s increasing push to use biometrics in, for example, e-passports. Someone friendly to the club’s aims captured Schäuble’s fingerprint from a glass he drank from at a panel discussion. The club published 4,000 copies of their magazine Die Datenschleuder including a plastic foil reproducing the minister’s fingerprint — ready to glue to someone else’s finger to provide a false biometric reading. The CCC has a page on their site detailing how to make such a fake fingerprint. The article says a ministry spokesman alluded to possible legal action against the club.

Any TLF readers going to have the opportunity to go drinking with Sec. Chertoff?

Luis Villa has an interesting write-up of his week at the Microsoft Tech Summit. The explicit goal of the summit, apparently, was to bring together the two major worldviews in the software development world: the “cathedral” model, represented by Microsoft’s own top-down software development process, and the “bazaar” model of the typical open source/web 2.0 project. I’m not sure what Microsoft was hoping to get out of this, but I can think of a couple of likely answers: to soften up the antagonism toward Microsoft in some corners of the open source world, and to keep their own people on their toes by learning more about the types of criticisms they’re likely to encounter on the other side of the fence.

This is something that Microsoft, to its credit, has put an impressive amount of effort into. Way back when I was in college, almost a decade ago now, Microsoft hired a friend of mine to be Microsoft’s official campus evangelist. Basically he got paid $15/hour to hold meetings where he’d tout (and in some cases give away) Microsoft products. They were totally up front about it, and I think it was pretty effective. Lots of us still disliked Microsoft’s products for various reasons, but it definitely took the edge off of anti-Microsoft attitudes. More recently, Microsoft hired prominent blogger Robert Scoble (who has since left to help evangelize Microsoft’s products. This sort of thing has helped to counteract the negative publicity the company has gotten from its more open-source-hostile actions.

I also think it’s interesting to reflect on the fact that the software industry is virtually unique in even having these kinds of distinct, well-defined ideological camps. Maybe I just don’t know other industries well enough, but I can’t think of any other examples. The philosophical distinctions here are totally orthogonal to conventional ideological categories. Yet they attract similar levels of fervor from their adherents as do liberalism, conservatism, or libertarianism. Geeks like to half-jokingly refer to these kinds of disagreements as religious difference, and they really are only half joking. Questions about software licenses and project organization do, in fact, inspire exactly the same kind of passion as debates over theology.