Articles by Eli Dourado

Eli is a research fellow at the Mercatus Center at George Mason University with the Technology Policy Program. His research focuses on Internet governance, the economics of technology, and political economy. His personal site is elidourado.com.


What to expect at the WTPF

by on May 6, 2013 · 0 comments

Next week, I’ll be in Geneva for the 2013 World Telecommunication/ICT Policy Forum, better known by the acronym WTPF-13. This is the first major ITU conference since the WCIT in December, and the first real test of whether what some are calling the “post-WCIT era” really exists, and if so, what it means. For those just now tuning in, the WCIT was a treaty conference in Dubai in which some ITU member states pushed hard to make elements of the Internet subject to intergovernmental agreement, resulting in the refusal of 55 countries to sign the treaty. I published a retrospective account of my experience at the WCIT at Ars Technica.

The WTPF will be different than the WCIT in several important ways: Continue reading →

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Making airspace available for ‘permissionless innovation’

by on April 23, 2013 · 1 comment

Today, Jerry Brito, Adam Thierer and I filed comments on the FAA’s proposed privacy rules for “test sites” for the integration of commercial drones into domestic airspace. I’ve been excited about this development ever since I learned that Congress had ordered the FAA to complete the integration by September 2015. Airspace is a vastly underutilized resource, and new technologies are just now becoming available that will enable us to make the most of it.

In our comments, we argue that airspace, like the Internet, could be a revolutionary platform for innovation:

Vint Cerf, one of the “fathers of the Internet,” credits “permissionless innovation” for the economic benefits that the Internet has generated. As an open platform, the Internet allows entrepreneurs to try new business models and offer new services without seeking the approval of regulators beforehand. Like the Internet, airspace is a platform for commercial and social innovation. We cannot accurately predict to what uses it will be put when restrictions on commercial use of UASs are lifted. Nevertheless, experience shows that it is vital that innovation and entrepreneurship be allowed to proceed without ex ante barriers imposed by regulators.

And in Wired today, I argue that preemptive privacy regulation is unnecessary and unwise:

Regulation at this juncture requires our over-speculating about which types of privacy violations might arise. Since many of these harms may never materialize, pre-emptive regulation is likely to overprotect privacy at the expense of innovation. Frankly, it wouldn’t even work. Imagine if we had tried to comprehensively regulate online privacy before allowing commercial use of the internet. We wouldn’t have even known how to. We wouldn’t have had the benefit of understanding how online commerce works, nor could we have anticipated the rise of social networking and related phenomena.

I expect us all to hear more about commercial drones in the near future. See Jerry’s piece in Reason last month or Larry Downes’s great post at the HBR blog for more.

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USPTO should step up review of software patents

by on April 17, 2013 · 0 comments

The US Patent and Trademark office is starting to recognize that it has a software patent problem and is soliciting suggestions for how to improve software patent quality. A number of parties such as Google and EFF have filed comments.

I am on record against the idea patenting software at all. I think it is too difficult for programmers, as they are writing code, to constantly check to see if they are violating existing software patents, which are not, after all, easy to identify. Furthermore, any complex piece of software is likely to violate hundreds of patents owned by competitors, which makes license negotiation costly and not straightforward.

However, given that the abolition of software patents seems unlikely in the medium term, there are some good suggestions in the Google and EFF briefs. They both note that the software patents granted to date have been overbroad, equivalent to patenting headache medicine in general rather than patenting a particular molecule for use as a headache drug.

This argument highlights one significant problem with patent systems generally, that they depend on extremely high-quality review of patent applications to function effectively. If we’re going to have patents for software, or anything else, we need to take the review process seriously. Consequently, I would favor whatever increase in patent application fees is necessary to ensure that the quality of review is rock solid. Give USPTO the resources it needs to comply with existing patent law, which seems to preclude such overbroad patents. Simply applying patent law consistently would reduce some of the problems with software patents.

Higher fees would also function as a Pigovian tax on patenting, disincentivizing patent protection for minor innovations. This is desirable because the licensing cost of these minor innovations is likely to exceed the social benefits the patents generate, if any.

While it remains preferable to undertake major patent reform, many of the steps proposed by Google and EFF are good marginal policy improvements. I hope the USPTO considers these proposals carefully.

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Does CDT believe in Internet freedom?

by on April 11, 2013 · 0 comments

Last year, in advance of the World Conference on International Telecommunication, Congress passed a concurrent resolution stating its sense that US officials should promote and articulate the clear and unequivocal “policy of the United States to promote a global Internet free from government control and preserve and advance the successful multistakeholder model that governs the Internet today.” This language sailed through the House on a bipartisan basis with broad support from basically everyone in US civil society.

Now that WCIT is over, and the World Telecommunication/ICT Policy Forum looms, Congress is considering a law that reads:

It is the policy of the United States to promote a global Internet free from government control and to preserve and advance the successful multistakeholder model that governs the Internet.

And suddenly it’s controversial. Democrats are concerned that language about freedom “from government control” would apply to—gasp—the US government.

As Rep. Walden says,

Last Congress, we “talked the talk” and passed a resolution defending a global Internet free from government control. This Congress we must “walk the walk” and make it official U.S. policy. If this is a principle we truly believe in, there is no downside to stating so plainly in U.S. law.

I could not agree more.

I am especially disappointed by our friends at CDT. They are coming out against the bill, with both blog post and letter barrels blazing, after having supported the exact same language last year. Apparently, in CDT’s world: US government regulation of the Internet good, foreign government regulation of the Internet bad.

This episode shows the prescience of my colleagues Jerry Brito and Adam Thierer. As they wrote last year when Congress was considering the joint resolution:

The most serious threat to Internet freedom is not the hypothetical specter of United Nations control, but the very real creeping cyber-statism at work in the legislatures of the United States and other nations.

CDT gets this exactly backwards. Here’s hoping they change their minds yet again.

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What’s Wrong with Intergovernmentalism?

by on April 9, 2013 · 3 comments

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public. — Adam Smith, The Wealth of Nations

As we approach the World Telecommunication/ICT Policy Forum, the debate over whether intergovernmental organizations like the International Telecommunication Union should have a role to play in Internet governance continues. One argument in favor of intergovernmentalism, advanced, for instance, by former ITU Counsellor Richard Hill (now operating his own ITU lobbying organization, delightfully named APIG), goes as follows:

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Shouldn’t We Worry If Patents Are Negatively Correlated With Growth?

by on March 25, 2013 · 1 comment

Last week I attended an event on software patents at GW Law School. The event made me uncomfortable because it was—as one would expect at a law school event—dominated by lawyers. The concerns of the legal academics, practitioners, and lobbyists participating in the round table discussion were very different from those one would expect for a policy audience. For example, the participants agreed that there is no elegant way to partition software patents from other patents under current law and that current Supreme Court jurisprudence is unsophisticated, relying on the wrong sections of the U.S. Code.

Missing from the discussion was the single most important fact about patents: that they are negatively correlated with economic growth.

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Are Mobile Data Caps Really Enemy #1 for Online Education?

by on March 18, 2013 · 1 comment

Benjamin Lennett and Danielle Kehl have an article in the Chronicle of Higher Education that is representative of a genre: worrying about the adverse consequences of mobile data “caps.” In this installment, Lennett and Kehl argue that pricing structures imposed by wireless carriers will limit the future of online education. “As a nation, we should embrace the potential benefits of online education. But we must not ignore the disparities that may keep many from taking advantage of those innovations,” they warn.

But are mobile data caps really what is holding back online education? Let’s take a look. Continue reading →

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Contracting Around Patent Law

by on March 15, 2013 · 0 comments

While there is evidence that patents encourage investment in industries like pharmaceuticals and materials science, their effect on many other industries is markedly negative. In the computing, software, and Internet space, patents represent a serious barrier to innovation, as companies who need to assemble a huge number of licenses are subject to the holdout problem, and as incumbent or has-been firms use patents as weapons against more innovative upstarts. In some cases, these firms deliberately transfer patents to entities known as “trolls,” who exist solely for the purpose of suing the competition.

In theory, it is possible for firms to contract around these problems on a bilateral basis—as a basic reading of Coase suggests, because patents are inefficient in the tech industry, there exists in principle a bargain in which any two firms could agree to ignore patent law. The problem, of course, is the transaction costs. Transaction costs don’t merely add up in the tech industry; they multiply, because of holdout considerations and all the strategic maneuvering associated with firms competing on multiple margins.

I was thrilled, therefore, to see that Google is taking steps to solve this problem. They are proposing to set up a pool which would cross-license their patents to any other firms willing to reciprocate. All members of the pool would receive licenses to all of the patents in the pool. Unlike other existing patent pools, they seem to be interested in achieving the broadest possible participation, and it is being created purely for defensive purposes, not to receive a competitive advantage over firms excluded from the pool.

The proposal is still in a relatively early stage—they are still seeking feedback about which of four licenses the pool should use, which have different features such as permanence of licenses (“sticky” vs. “non-sticky”) and whether firms would be required to license their entire portfolio. For what it’s worth, I hope they choose the Sticky DPL, which seems like the most aggressive of the licenses in terms of taking weapons off the table.

An excellent feature of the pool, particularly if the participants decide to go with the Sticky DPL, is that it would feature very strong network effects. If several firms license their entire patent portfolios to the pool, then that strongly increases the incentive of other firms to join the pool. There is an intriguing tension here between the stated aim of the pool and the incentives pool members have to force other firms to join—by suing non-pool members who infringe on the pool’s patents, they can increase the membership of the pool. I do not strongly oppose this, but I imagine that there will be some philosophical discussion about whether such actions would be right.

Another wrinkle is that firms might transfer several crucial patents to trolls right before they join the pool (keeping a license for themselves, of course). More generally, they may look for legal ways to reap the benefits of the pool while continuing to use trolls to skirmish with their competitors.

But nevertheless, this is an encouraging development that I hope succeeds. If, as I strongly suspect, we are on the wrong side of the Tabarrok curve, the creation of a large cross-licensing pool could increase further the dynamism of our most dynamic industry.

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Do we need a special government program to help cybersecurity supply meet demand?

by on February 26, 2013 · 1 comment

Today, the House Science Committee is holding a hearing on “Cyber R&D Challenges and Solutions.” Under consideration is a bill reintroduced by Rep. Mike McCaul that takes numerous steps purported to increase the network security workforce. The bill passed overwhelmingly last year.

I have no doubt that, as we move more of our lives online, we need to draw more people into computer security. But just as we need more network security professionals, we need more programmers, geneticists, biomedical engineers, statisticians, and countless other professions. We will also continue to need some number of doctors, lawyers, mechanics, plumbers, and grocery clerks. Does it make sense to introduce legislation to fine tune the number of practitioners of every trade?

Of course not. Which raises the question: what is so special about computer security? And the answer, I think, is “nothing is so special about computer security.” More people will get trained in computer security if the returns to doing so are higher, and fewer people will get trained in computer security if the returns to doing so are lower. Entry into the computer security business is simply a function of supply and demand.

The Washington Post reports, “The median salary for a graduate earning a degree in security was $55,000 in 2009, compared with $75,000 for computer engineering.” Is it any surprise, then, that more smart, tech-savvy students have pursued the latter route in recent years?

Intervening in a market that shows no signs of failing can have lots of unintended consequences. Most obviously, subsidies would run the serious risk of drawing too many workers into the computer security workforce. Those workers might find that they spent years investing in specialized skills without as much of a payoff as they expected. Tinkering could also affect the composition of people drawn into the field, with ill effect, for example by lowering the equilibrium salary and reducing the incentive for those with natural talent and without the need for training to work in security.

The bottom line is that a shortage of a particular kind of worker is a problem that solves itself. As salaries for security workers get bid up, more people will get training in security. The supply and demand dynamic is completely sufficient to get people into the correct professions in sufficient numbers.

The McCaul bill works through various subsidies and governmental reports to try to accomplish the same thing that the market would do if left to operate on its own. If the government wants to hire more computer security professionals, let them pay the money needed to draw people into this field. But let’s not jump through needless hoops to accomplish what should really be a straightforward task.

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WCITLeaks is Ready for WTPF-13

by on February 25, 2013 · 0 comments

When Jerry and I started WCITLeaks, we didn’t know if our idea would gain traction. But it did. We made dozens of WCIT-related documents available to civil society and the general public—and in some cases, even to WCIT delegates themselves. We are happy to have played a constructive role, by fostering improved access to the information necessary for the media and global civil society to form opinions on such a vital issue as the future of the Internet. You can read my full retrospective account of WCITLeaks and the WCIT over at Ars Technica.

But now it’s time to look beyond the WCIT. The WCIT revealed substantial international disagreement over the future direction of Internet governance, particularly on the issues of whether the ITU is an appropriate forum to resolve Internet issues and whether Internet companies such as Google and Twitter should be subject to the provisions of ITU treaties. This disagreement led to a split in which 55 countries opted not to sign the revised ITRs, the treaty under negotiation.

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