Robert McDowell, one of the two Republican Commissioners on the Federal Communications Commission, announced on Wednesday that he would soon resign. In his seven years on the FCC, Commissioner McDowell has been a consistent critic of over-regulation and a champion of both Internet freedom and the rule of law. He’s earned a uniquely loyal following among policymakers and thought leaders alike in the free market tech policy community, not only in the U.S. but around the world. Here are just a few tributes to this remarkably humble and personable regulator—the regulator who, again and again, cried, in the most mild-mannered-but-firm way possible: “Hold on a minute, have we really thought this one through?”
Sen. John Thune (R-SD): “As we have seen with his recent leadership on efforts to prevent foreign government intervention in the operation and use of the Internet, Rob has been a consistent voice cautioning against unnecessary governmental regulations. I hope the president’s nominee to replace him will approach the job with the same passion and energy that Rob exhibited and will be similarly committed to finding market-based solutions to our nation’s communications challenges whenever possible.”
Rep. Fred Upton (R-MI): “At a time when broadband and wireless technology are transforming voice, video, audio and data communications, we could not have asked for a better steward than Commissioner McDowell. With every decision, he has fought to ensure we are creating an environment for investment, innovation, and growth. And he has done so with both eloquence and good humor. No question that he has left the communications landscape better than he found it. We thank him for his service.”
Rep. Greg Walden (R-OR): “For more than a half decade, Robert McDowell has embodied the consummate FCC commissioner. He has kept a steadfast eye on how to foster a vibrant communications marketplace for the American people and the American economy. He has always stood up to protect the freedom of the Internet for all, and at every turn he has made sure to respect good process, good policy, and the rule of law. The country is all the better for his service. With much gratitude, we wish him all the best wherever his path may take him.” Continue reading →
Obama’s talked a big game about online privacy. He promised reform during the 2008 campaign. A year ago, the White House proposed a “Privacy Bill of Rights.” But so far, the Administration’s delivered little more than fine words. Worse, they’ve focused on the wrong problems.
Government has an important role to play in protecting consumer privacy, but its snooping and surveillance are far bigger problems—which have only grown worse. While Washington talks of a new commercial privacy “Bill of Rights,” the real Bill of Rights is in peril.
The American Revolution erupted, in large part, out of seething resentment at British privacy intrusions—without judicial supervision. Virginia adopted its own Bill of Rights shortly before the Declaration of Independence, including what later became Madison’s Fourth Amendment to the Constitution: “the right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated.” Law enforcement must generally obtain a warrant before conducting a search—which means convincing a judge that probable cause exists to believe a crime has been committed. Continue reading →
By Berin Szoka and Ben Sperry
You’d think it would be harder for government to justify regulating the Internet than the offline world, right? Wrong—sadly. And Congress just missed a chance to fix that problem.
For decades, regulators have been required to issue a cost-benefit analysis when issuing new regulations. Some agencies are specifically required to do so by statute, but for most agencies, the requirement comes from executive orders issued by each new President—varying somewhat but each continuing the general principle that regulators bear the burden of showing that each regulation’s benefits outweigh its costs.
But the FCC, FTC and many other regulatory agencies aren’t required to do cost-benefit analysis at all. Because these are “independent agencies”—creatures of Congress rather than part of the Executive Branch (like the Department of Justice)—only Congress can impose cost-benefit analysis on agencies. A bipartisan bill, the Independent Agency Regulatory Analysis Act (S. 3486), would have allowed the President to impose the same kind of cost-benefit analysis on independent regulatory agencies as on Executive Branch agencies, including review by the Office of Information and Regulatory Affairs (OIRA) for “significant” rulemakings (those with $100 million or more in economic impact, that adversely affect sectors of the economy in a material way, or that create “serious inconsistency” with other agencies’ actions).
Republican Senators Rob Portman and Susan Collins joined with Democrat Mark Warner in this important cause—yet the bill has apparently died during this lame duck Congress. While some public interest groups have attempted to couch their objection on separation-of-powers grounds, their ultimate objection seems to be with subjecting the regulatory state’s rulemaking process to systematic economic analysis—because, after all, rigor makes regulation harder. But what’s so wrong with a cost-benefit analysis? Continue reading →
By Geoffrey Manne, Matt Starr & Berin Szoka
“Real lawyers read the footnotes!”—thus did Harold Feld chastise Geoff and Berin in a recent blog post about our CNET piece on the Verizon/SpectrumCo transaction. We argued, as did Commissioner Pai in his concurrence, that the FCC provided no legal basis for its claims of authority to review the Commercial Agreements that accompanied Verizon’s purchase of spectrum licenses—and that these agreements for joint marketing, etc. were properly subject only to DOJ review (under antitrust).
Harold insists that the FCC provided “actual analysis of its authority” in footnote 349 of its Order. But real lawyers read the footnotes carefully. That footnote doesn’t provide any legal basis for the FTC to review agreements beyond a license transfer; indeed, the footnote doesn’t even assert such authority. In short, we didn’t cite the footnote because it is irrelevant, not because we forgot to read it.
First, a reminder of what we said:
The FCC’s review of the Commercial Agreements accompanying the spectrum deal exceeded the limits of Section 310(d) of the Communications Act. As Commissioner Pai noted in his concurring statement, “Congress limited the scope of our review to the proposed transfer of spectrum licenses, not to other business agreements that may involve the same parties.” We (and others) raised this concern in public comments filed with the Commission. Here’s the agency’s own legal analysis — in full: “The Commission has authority to review the Commercial Agreements and to impose conditions to protect the public interest.” There’s not even an accompanying footnote.
Even if Harold were correct that footnote 349 provides citations to possible sources of authority for the FCC to review the Commercial Agreements, it remains irrelevant to our claim: The FCC exceeded its authority under 310(d) and asserted its authority under 310(d) without any analysis or citation. Footnote 349 begins with the phrase, “[a]side from Section 310(d)….” It is no surprise, then, that the footnote contains no analysis of the agency’s authority under that section. Continue reading →
The privacy debate has been increasingly shaped by an apparent consensus that de-identifying sets of personally identifying information doesn’t work. In particular, this has led the FTC to abandon the PII/non-PII distinction on the assumption that re-identification is too easy. But a new paper shatters this supposed consensus by rebutting the methodology of Latanya Sweeney’s seminal 1997 study of re-identification risks, which in turn, shaped the HIPAA’s rules for de-identification of health data and the larger privacy debate ever since.
This new critical paper, “The ‘Re-Identification’ of Governor William Weld’s Medical Information: A Critical Re-Examination of Health Data Identification Risks and Privacy Protections, Then and Now” was published by Daniel Barth-Jones, an epidemiologist and statistician at Columbia University. After carefully re-examining the methodology of Sweeney’s 1997 study, he concludes that re-identification attempts will face “far-reaching systemic challenges” that are inherent in the statistical methods used to re-identify. In short, re-identification turns out to be harder than it seemed—so our identity can more easily be obscured in large data sets. This more nuanced story must be understood by privacy law scholars and public policy-makers if they want to realistically assess current privacy risks posed by de-identified data—not just for health data, but for all data.
The importance of Barth-Jones’s paper is underscored by the example of Vioxx, which stayed on the market years longer than it should have because of HIPAA’s privacy rules, thus resulting in 88,000 and 139,000 unnecessary heart attacks, and 27,000-55,000 avoidable deaths—as University of Arizona Law Professor Jane Yakowitz Bambauer explained in a recent Huffington Post piece.
Ultimately, overstating the risk of re-identification causes policymakers to strike the wrong balance in the trade-off of privacy with other competing values. As Barth-Jones and Yakowitz have suggested, policymakers should instead focus on setting standards for proper de-identification of data that are grounded in a rigorous statistical analysis of re-identification risks. A safe harbor for proper de-identification, combined with legal limitations on re-identification, could protect consumers against real privacy harms while still allowing the free flow of data that drives research and innovation throughout the economy.
Unfortunately, the Barth-Jones paper has not received the attention it deserves. So I encourage you consider writing about this, or just take a moment to share this with your friends on Twitter or Facebook.
The Wall Street Journal reports that “The Justice Department is conducting a wide-ranging antitrust investigation into whether cable companies are acting improperly to quash nascent competition from online video.” In particular, the DOJ is concerned that data caps may discourage consumers from switching to online video providers like Hulu and Netflix. The following statement can be attributed to Berin Szoka, President of TechFreedom:
It’s hard to see how tiered broadband pricing keeps users tethered to their cable service. Even watching ten hours of Hulu or Netflix a day wouldn’t exceed Comcast’s 300 GB basic data tier. And Comcast customers can buy additional blocks of 50 GB for just $10/month—enough for nearly two more hours a day of streamed video. Such tiers provide a much-needed incentive for online content providers to economize on bandwidth. They also allow ISPs to offer fairer broadband pricing, charging light users less than heavy users. Consumers might have been better off if cable companies could have simply charged online video providers for wholesale bandwidth use, but the FCC’s net neutrality rules bar that.
Counting cable content against caps might seem more fair, but it’s not necessarily something the law should mandate. Discriminating against a competitor isn’t a problem under antitrust law unless, on net, it harms consumers. Would consumers really be better off if their cable viewing reduced the amount of data available for streaming competing online video services? As long as the basic tier’s cap is high enough, few users will ever exceed it anyway—leaving consumers free to experiment with alternatives to cable subscriptions, just as cable providers are experimenting with new ways of offering cable content on multiple devices at no extra charge. Continue reading →
In the lead essay for the “Cato Unbound” symposium this month, I analyze recent political movements that have been aided by Internet-based communication by positing a set of questions,
Activists played important roles in bringing down dictators in the Arab world, stopping the Stop Online Piracy Act (SOPA) in Congress and electing Barack Obama—just to name a few examples. But how much did the Internet matter in making these watershed events possible? How effective is it likely to be in the future? And how would we measure whether activism “works” for society—not just the activists?
I respond to the concerns raised by Evgeny Morozov in his iconoclastic 2010 book, The Net Delusion: The Dark Side of Internet Freedom (summarized in his short essay in TechFreedom’s free ebook The Next Digital Decade: Essays on the Future of the Internet). In general, I suggest that we simply do not yet understand the Internet’s effect on activism well enough to make strong normative judgments about it. But applying Public Choice theory can help us understand how developments in communication technologies are changing the relationship between an individual and the group in social movements. A few highlights:
- Social media lower organizational costs, especially of recruiting members, but also noticeability: “members’ ability to notice each other’s actions.” Even in 2003, there was little way to tell whether your friends actually followed through when you asked them to help join a cause. But today, it’s easy to encourage them to re-share material on Facebook or Twitter—and to “notice” whether they’ve done so.
- Social media allows members of large groups—think Twitter followers—to be continuously bombarded with propaganda about the worthiness of the cause creating social pressures not entirely unlike those that can be generated in a face-to face group.
- The Internet empowers large, dispersed groups (like dedicated Internet users) to organize against small but concentrated interests. As anyone who works in technology policy in Washington can attest, SOPA’s implosion made Congress more cautious—at least about Internet regulation, where fear of a digital activist backlash is greatest. Continue reading →
Today, the FCC issued a Notice of Inquiry, responding to an emergency petition filed last August regarding temporary shutdown of mobile services by officers of the San Francisco Bay Area Rapid Transit (BART) district. The petition asked the FCC to issue a declaratory ruling that the shutdown violated the Communications Act. The following statement can be attributed to Larry Downes, Senior Adjunct Fellow at TechFreedom, and Berin Szoka, President of TechFreedom:
What BART did clearly violated the First Amendment, and needlessly put passengers at risk by cutting off emergency services just when they were needed most. But we need a court to say so, not the FCC.
The FCC has no authority here. The state did not order the shutdown of the network, nor does the state run the network. BART police simply turned off equipment it doesn’t own—a likely violation of its contractual obligations to the carriers. But BART did nothing that violated FCC rules governing network operators. To declare the local government an “agent” of the carriers would set an extremely dangerous precedent for an agency with a long track-record of regulatory creep.
There are other compelling reasons to use the courts and not regulators to enforce free speech rights. Regulatory agencies move far too slowly. Here, it took the FCC six months just to open an inquiry! Worse, today’s Notice of Inquiry will lead, if anything, to more muddled rulings and regulations. These may unintentionally give cover to local authorities trying to parse them for exceptions and exclusions, or at least the pretense of operating within FCC guidelines.
It would have been far better to make clear to BART, either through negotiations or the courts, that their actions were unconstitutional and dangerous. Long before today’s action, BART adopted new policies that better respect First Amendment rights and common sense. But now the regulatory wheels have creaked into motion. Who knows where they’ll take us, or when?
Sen. Carl Levin wants Facebook to pay an extra $3 billion in taxes on its Initial Public Offering (IPO). The Senator claims the Facebook IPO illustrates why we need to close what he calls the “stock-option loophole.” (He explains that “Stock options grants are the only kind of compensation where the tax code allows companies to claim a higher expense for tax purposes than is shown on their books.”) He wants Facebook to pay its “fair share” and insists that “American taxpayers will have to make up for what Facebook’s tax deduction costs the Treasury.”
One could object, on principle, to Levin’s premise that tax deductions “cost” the Treasury money—as if the “national income” were all money that belonged to the government by default. One could also point out that Mark Zuckerberg, will pay something like $2 billion in personal income taxes on money he’ll earn from this stock sale—and that California is counting on the $2.5 billion in tax revenue the IPO is supposed to bring to the state over five years.
But the broader point here is that Sen. Levin wants to increase taxes on IPOs—and any economist will tell you that taxing something will produce less of it. IPOs are the big pay-off that fuels early-stage investment in risky start-ups—you know, those little companies that drive innovation across the economy, but especially in Silicon Valley? So, while Sen. Levin singles out Facebook as an obvious success story, his IPO tax would really hurt countless small start-ups who struggle to attract investors as well as employees with the promise of large pay-offs in the future.
It’s especially ironic that Sen. Levin proposed his IPO tax just a day after GOP Majority Leader Eric Cantor introduced the “JOBS Act,” a compilation of assorted bi-partisan proposals designed to promote job creation by helping small companies attract capital. That’s exactly where we should be heading: doing everything we can to encourage job creation by rewarding entrepreneurship. Sen. Levin would, in the name of fairness do just the opposite—and, in the long-run, almost certainly produce less revenue by slowing economic growth.
And just to underscore the drop-off in tech IPOs since the heydey of the dot-com “bubble” in the late 90s, check out the following BusinessInsider Chart: Continue reading →
The White House’s “Consumer Data Privacy in a Networked World” report outlines a revised framework for consumer privacy, proposes a “Consumer Privacy Bill of Rights,” and calls on Congress to pass new legislation to regulate online businesses. The following statement can be attributed to Berin Szoka, President of TechFreedom, and Larry Downes, TechFreedom Senior Adjunct Fellow:
This Report begins and ends as constitutional sleight-of-hand. President Obama starts by reminding us of the Fourth Amendment’s essential protection against “unlawful intrusion into our homes and our personal papers”—by government. But the Report recommends no reform whatsoever for outdated laws that have facilitated a dangerous expansion of electronic surveillance. That is the true threat to our privacy. The report dismisses it in a footnote.
Instead, the Report calls for extensive new regulation of Internet businesses to address little more than the growing pains of a vibrant emerging economy. “For businesses to succeed online,” President Obama asserts, “consumers must feel secure.” Yet online businesses that rely on data to deliver innovative and generally free services are the one bright spot in a sour economy. Experience has shown consumers ultimately bear the costs of regulations imposed on emerging technologies, no matter how well-intentioned.
The report is a missed opportunity. The Administration should have called for increased protections against government’s privacy intrusions. Focusing on the real Bill of Rights would have respected not only the Fourth Amendment, but also the First Amendment. The Supreme Court made clear last year that the private sector’s use of data is protected speech—an issue also not addressed by this Report.
Szoka and Downes are available for comment at email@example.com.