Reuters is reporting that the European Commission is launching an antitrust investigation into a plan by Microsoft Corp. and Time Warner Inc. to acquire joint control of U.S. ContentGuard Holdings, a firm that makes digital rights management (DRM) technologies to help protect copyrighted files from unauthorized use.
This is foolish. Most IP providers today are struggling to win a technological arms race against users who are hell-bent on devising ways around most forms of content protection. My own view of this technological arms race is that it is a good thing overall and that government shouldn’t enter the debate and try to tilt the balance one way or the other. Generally, therefore, I oppose new laws like the DMCA and the Induce Act, but I also oppose laws cutting the other way, like proposals to expand compulsory licensing. When I see an announcement that government is taking steps to limit collaborative efforts by industry to create new DRM techniques or products, I view it as an unnecessary government barrier to the marketplace’s ability to protect intellectual property. (See this intro to the “Copy Fights” book I co-edited with Wayne Crews for additional details).
To elaborate, if two or more content providers want to get together and try to devise new DRM systems to protect their content, power to them. They should have every right and freedom to do so without being subject to government interference (including antitrust which hunts like this latest EU case). On the other hand, if someone out there circumvents their new DRM scheme the day after it hits the market, those companies should not come running to government seeking redress. Let the technological arms race continue I say! I’ll be expanding upon this theme in an upcoming blog entitled Is DRM the Devil?
An important component of Apple’s iTunes Music Store and competitors from Microsoft, Real, and Sony, is “digital rights management.” Under DRM schemes, music or other content purchased online is encrypted in a way that only authorized devices or programs can read it, and tagged with rules indicating who the rightful owner is and what may be done with it. If it works as advertised, such schemes allow copyright holders complete control over how their content is used, even after that content is sold to consumers. In the case of iTMS, Apple limits how many computers are allowed to have a copy of each song, how many CDs with a given playlist can be burned, and which devices I’m allowed to offload my songs to (at present, only iPods).
Many analysts on both sides of the intellectual property debate blithely assume that DRM works, both from a technological and a business perspective. They assume that DRM can prevent unauthorized copying of protected works, and (more crucially, in my view) that doing so makes business sense. I’m going to argue that both of those propositions are wrong.
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An interesting contrast to Tom Hazlett’s excellent article on Korean broadband (see Adam’s post below), comes from this week’s Economist magazine. “Europe’s coming leader in broadband is France,” the article proclaims, pointing out that French broadband growth was the highest in Europe last year. The piece credits France’s extensive unbundling regime (it has the second-largest number of unbundled loops in Europe). It doesn’t mention however, that France’s penetration rates have been well below most others in Europe, never mind Korea. Despite the Economist’s breathless support of French policy (unusual for this London-based magazine), I still wouldn’t bet on the land of the Minitel becoming the broadband leader anytime soon.
Tom Hazlett has a nice piece on page A12 of the Wall Street Journal today explaining why South Korea is kicking everyone else’s butt when it comes to broadband connectivity and speed. Surprise, surprise, it comes down to their reliance on facilities-based competition instead of regulatory micromanagement. Hazlett notes that “Korea’s policy has proved a smashing success… (because) the government ended regulation of advanced telecom applications. The result: While competitors largely avoided (regulated) voice services, they invested billions to create new (unregulated) high-speed Internet networks. The broadband technologies unleashed by telecom rivals forced (Korea Telecom) to modernize its network, which now serves just half of the high-speed market.”
As a result, 78 percent of Koreans now have broadband access, the highest penetration rate in the world and double that of the U.S.
The bottom line: “forced access” infrastructure sharing regulation cannot deliver the goods. Only true, facilities-based competition, brought on by comprehensive market liberalization, will bring about the investment and innovation this country so desperately needs. John Wohlstetter of the Discovery Institute has come to the same conclusion in a recent piece.
There’s a whiff of the bizarre in the FCC’s new unbundling decision (see Wayne’s excellent post below). Let’s recap: in 1999, the Supreme Court threw out the FCC’s first stab at unbundling rules. The Commission changed them slightly, but the DC Circuit threw these out in 2002. The FCC’s third try was also thrown out in March. A clearly agitated court gave the FCC a deadline: 60 days to fix the problems, or the rules are gone. That seemed pretty clear. But the process goes on!
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CNet News is reporting that the another chapter has been added to the ongoing saga between Yahoo and French regulators over what can be viewed or sold over online networks. You may remember that several years ago the French got angry because some knuckleheads were selling Nazi memorabilia over the Net via Yahoo’s site.
Consequently, a French court ordered Yahoo to find a way to prevent French citizens from accessing auctions of Nazi memorabilia. Yahoo asked a U.S. federal judge to block the French court’s ruling – – citing not only its free speech rights both also the impossible hassle associated with trying to quarantine French citizens from the rest of the world – – and the company eventually prevailed.
But, on procedural grounds, the Ninth Circuit Court of Appeals overturned that decision yesterday. Basically the court said that the California judge who issued the previous ruling didn’t have the right to hear the case.
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Last Friday the FCC quietly released the interim rule on unbundling and UNE-P pricing, claiming that if they failed to act, the $127 billion local telecommunications market would be placed at risk. Yet it’s not clear how the interim rule calms this market. The rule extends the current UNE-P price freeze for six months, which is longer than the local phone companies would like (they had agreed to freeze rates through the end of the year). It also provides for an additional six-month transition period, should a final rule not be ready. USTA and two local phone companies have already asked the court to intervene and force the FCC to comply with previous decisions. They are requesting permanent rules from the FCC by the end of the year. It seems this latest effort does little to resolve the uncertainties surrounding this market. On a positive note, the FCC does reiterate support for facilities-based competition, a goal that will be pursued in the final rule (whenever that happens).
Today at a conference in Aspen, FCC Chairman Michael Powell made some thoughtful comments including this one: “VOIP is the killer app for legal policy change.” What he meant is that the technology forces regulators to see “telephone service” in an entirely new light. Let’s just hope policymakers are smart enough to see that convergence of technologies means changing regulations to fit tech rather than trying to force tech into an old, outdated, and harmful framework.
That’s the question one online casino (Casino City, Inc.) is asking a federal district court to answer. Page C3 of today’s New York Times features an interesting story about the case, which Casino City filed in response to Department of Justice threats against publishers and broadcasters warning them to not print or display ads for online casinos. Casino City is seeking a declaratory judgment that Internet gambling advertising is constitutionally protected commercial free speech under the First Amendment.
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The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.