July 2013

Over at The Switch, the Washington Post’s excellent new technology policy blog, Brian Fung has an interesting post about tethering and Google Glass, but I think he perpetuates a common misconception:

Carriers have all sorts of rules about tethering, and sorting through them can be like feeling your way down a dark alley. Verizon used to charge $20 a month for tethering before the FCC ruled it had to allow tethering for free. Now, any data you use comes out of your cellular plan’s overall data allowance. AT&T gives you a separate pool of data for tethering plans, but charges up to $50 a month for the right, much as Verizon once did.

Fung claims that due to the likely increase in tethering as devices like Google Glass come to market, “assuming the FCC didn’t require all wireless carriers to make tethering free, it’d be a huge source of potential revenue for companies like AT&T.”

In fact, the cost of tethering on AT&T is not very different from the cost of doing so on Verizon, which means by definition that AT&T is not likely to get a windfall from increased use of tethering. It’s also evidence that the FCC tethering rule for Verizon doesn’t matter very much.

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Jerry Ellig, senior research fellow at the Mercatus Center at George Mason University, discusses the the FCC’s lifeline assistance benefit funded through the Universal Service Fund (USF). The program, created in 1997, subsidizes phone services for low-income households. The USF is not funded through the federal budget, rather via a fee from monthly phone bills — reaching an all-time high of 17% of telecomm companies’ revenues last year. Ellig discusses the similarities between the USF fee and a tax, how the fee fluctuates, how subsidies to the telecomm industry have boomed in recent years, and how to curb the waste, fraud and abuse that comes as a result of the lifeline assistance benefit.

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The 600 MHz spectrum auction “represents the last best chance to promote competition” among mobile wireless service providers, according to the written testimony of T-Mobile executive who appeared before a congressional subcommittee Jul. 23 and testified in rhetoric that is reminiscent of a bygone era.

The idea that an activist Federal Communications Commission is necessary to preserve and promote competition is a throwback to the government-sanctioned Ma Bell monopoly era.  Sprint still uses the term “Twin Bells” in its FCC pleadings to refer to AT&T and Verizon Wireless in the hope that, for those who can remember the Bell System, the incantation will elicit a visceral response.  The fact is most of the FCC’s efforts to preserve and promote competition have failed, entailed serious collateral damage, or both.

Unless Congress and the FCC get the details right, the implementation of an innovative auction that will free up spectrum that is currently underutilized for broadcasting and make it available for mobile communications could fail to raise in excess of $7 billion for building a nationwide public safety network and making a down payment on the national debt.  Aside from ensuring that broadcasting is not disrupted in the process, one important detail concerns whether the auctioning will be open to every qualified bidder, or whether government officials will, in effect, pick winners and losers before the auctioning begins. Continue reading →

Nobel laureate Gary Becker and I are on the same page. He says patent terms should be short:

Major reforms to reduce these unproductive opportunities would include lowering typical patent length and the scope of innovations that are eligible for patents. The current patent length of 20 years (longer for drug companies) from the date of filing for a patent can be cut in half without greatly discouraging innovation. One obvious advantage of cutting patent length in half is that the economic cost from the temporary monopoly power given to patent holders would be made much more temporary. In addition, a shorter patent length gives patent holders less of an effective head start in developing follow on patents that can greatly extend the effective length of an original patent.

More importantly, he says we should carve out particularly troublesome areas, like software, from the patent system:

In narrowing the type of innovations that are patentable, one can start by eliminating the patenting of software. Disputes over software patents are among the most common, expensive, and counterproductive. Their exclusion from the patent system would discourage some software innovations, but the saving from litigation costs over disputed patent rights would more than compensate the economy for that cost. Moreover, some software innovations would be encouraged because the inability to patent software will eliminate uncertainty over whether someone else with a similar patent will sue and do battle in the courts.

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In addition to eliminating patents on software, no patents should be allowed on DNA, such as identification of genes that appear to cause particular diseases. Instead, they should be treated as other scientific discoveries, and be in the public domain. The Supreme Court recently considered a dispute over whether the genes that cause BRCA1 and BRCA2 deviations and greatly raises the risk of breast cancer is patentable. Their ruling banned patenting of human DNA, and this is an important step in the right direction.

Other categories of innovations should also be excluded from the patent system. Essentially, patents should be considered a last resort, not a first resort, to be used only when market-based methods of encouraging innovations are likely to be insufficient, and when litigation costs will be manageable. With such a “minimalist” patent system, patent intermediaries would have a legitimate and possibly important role to play in helping innovators get and protect their patent rights.

It’s good to see a consensus for major reform developing among economists. I hope that legal scholars and policymakers will start to listen.

It was my pleasure last night to take part in an hour-long conversation on “Privacy, Security, and the Digital Age,” which was co-sponsored by Mediaite and the Koch Institute. The discussion focused on a wide range of issues related to government surveillance powers, Big Data, and the future of privacy. It opened with dueling remarks from former U.S. Ambassador to the U.N. John Bolton and Ben Wizner of the ACLU. You can view their respective remarks here.

I then sat on a panel that included Atlantic Media CTO Tom Cochrane and Michael R. Nelson, who is affiliated with with Bloomberg Government and Georgetown University. The entire session was expertly moderated by Andrew Kirell of Mediaite. He did an amazing job facilitating the discussion. Anyway, the videos for my panel are below, split into two parts.  My comments focused heavily on the importance of separating the government uses of data from private sector uses and explaining the need to create a high and tight firewall between State and Industry when it comes to information sharing. I also argued that we will never get a handle on government-related privacy concerns until we get control of the scope of government power. I used the example of the drug war and our government’s constantly-expanding militaristic activities both abroad and here at home. So long as government is expanding without any rational, constitutional constraint, we are going to have serious surveillance and privacy problems. (See this essay, “It’s About Power, not Privacy,” by my colleague Eli Dourado for more on that theme.)

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Jane Yakowitz Bambauer, associate professor of law at the University of Arizona, discusses her forthcoming paper in the Stanford Law Review titled Is Data Speech? How do we define “data” and can it be protected in the same way as free speech? She examines current privacy laws and regulations as they pertain to data creation and collection, including whether collecting data should be protected under the First Amendment.

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crystal ballFew modern intellectuals gave more serious thought to forecasting the future than Herman Kahn. He wrote several books and essays imagining what the future might look like. But he was also a profoundly humble man who understood the limits of forecasting the future. On that point, I am reminded of my favorite Herman Kahn quote:

History is likely to write scenarios that most observers would find implausible not only prospectively but sometimes, even in retrospect. Many sequences of events seem plausible now only because they have actually occurred; a man who knew no history might not believe any. Future events may not be drawn from the restricted list of those we have learned are possible; we should expect to go on being surprised.[1]

I have always loved that phrase, “a man who knew no history might not believe any.” Indeed, sometimes the truth (how history actually unfolds) really is stranger than fiction (or the hypothetical forecasts that came before it.)

This insight has profound ramifications for public policy and efforts to “plan progress,” something that typically ends badly. Continue reading →

Last month, it was my great pleasure to serve as a “provocateur” at the IAPP’s (Int’l Assoc. of Privacy Professionals) annual “Navigate” conference. The event brought together a diverse audience and set of speakers from across the globe to discuss how to deal with the various privacy concerns associated with current and emerging technologies.

My remarks focused on a theme I have developed here for years: There are no simple, silver-bullet solutions to complex problems such as online safety, security, and privacy. Instead, only a “layered” approach incorporating many different solutions–education, media literacy, digital citizenship, evolving society norms, self-regulation, and targeted enforcement of existing legal standards–can really help us solve these problems. Even then, new challenges will present themselves as technology continues to evolve and evade traditional controls, solutions, or norms. It’s a never-ending game, and that’s why education must be our first-order solution. It better prepares us for an uncertain future. (I explained this approach in far more detail in this law review article.)

Anyway, if you’re interested in an 11-minute video of me saying all that, here ya go. Also, down below I have listed several of the recent essays, papers, and law review articles I have done on this issue.


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The Progressive Policy Institute has released a new and remarkable broadband report. In it, PPI explicitly distances itself from the Crawford/Wu wing of the left-of-center telecommunications conversation. A money quote from the introduction:

What should the progressive agenda be? Are our choices either to embrace this aggressive regulatory agenda or to accede to conservative laissez-faire? This essay argues that there is a third, and far more promising, option for such a progressive broadband policy agenda. It balances respect for the private investment that has built the nation’s broadband infrastructure with the need to realize the Internet’s full promise as a form of social infrastructure and a tool for individual empowerment. It turns away from problems we may reasonably fear but that simply do not exist—most importantly, the idea that the provision of broadband services is dominated by an anti-competitive “duopoly” that stifles the broad dissemination of content.

On “cage match” competition in the telecom sector:

So perhaps the greatest paradox inherent in “cage match” competition is that, while advocates champion more intrusive regulation, the signal providers are in the fight of their business lives. The benefits of their innovation and investment are being appropriated by the devices and services that use the signal; their stock values and capitalizations are listless compared to the companies that make devices and applications; they have made commitments in the tens of billions to build infrastructure that cannot be reversed. And they are trapped in a vicious circle: they innovate to improve signal quality and availability, these innovations make possible new devices, applications, and services that capture consumer allegiance, these other aspects of the broadband experience appropriate value and make signal more commodity-like in the eyes of consumers, which forces the providers to further improve their product, perpetuating the cycle. They are the economy’s front line for investing in and innovating for our broadband infrastructure, and perhaps they benefit from that investment and innovation the least.

From the section entitled “Neutrality,” “Unbundling,” and other progressive policy failures:

The weight of the evidence, therefore, suggests the activist agenda leads progressives to a dead end. It addresses a problem that doesn’t exist—the absence of competition in broadband—and compromises another and more important objective—investment in broadband leading to ubiquitous broadband access. In reality, access providers have made massive investments in high-fixed cost broadband wired and wireless capacity that they can only justify by competing for market share and that are continually improving. The case that they are suppressing or might suppress content—either editorially or competitively—is virtually nonexistent.

This analysis is spot on. While I don’t agree with every policy proposal in the report (though I do agree with some, such as liberating spectrum from the broadcasters and DoD), PPI deserves a lot of credit for its excellent study of the state of telecommunications competition.

The suicide of Aaron Swartz earlier this year has sparked a national debate about reforming the Computer Fraud and Abuse Act (CFAA). Most notably, in June, Reps. Zoe Lofgren and Jim Sensenbrenner joined Sen. Ron Wyden to introduce Aaron’s Law, which aims to rein in the excesses of the federal computer fraud law and ensure it targets real criminals, rather than researchers or tinkerers.

Would this bipartisan reform go far enough — or too far? Would Aaron’s Law preserve the government’s ability to prosecute harmful hacking? What can activists do to promote CFAA reform in Congress?

These are some of the questions that will be explored in a panel discussion hosted by TechFreedom and the Electronic Frontier Foundation at CNET’s San Francisco Headquarters on July 22. RSVP here. Continue reading →