December 2005

Creative Commons

by on December 29, 2005

Larry Lessig has spent the last week exhorting people to contribute to Creative Commons, the organization responsible for the Creative Commons license.

The CC license is a concept that every libertarian–regardless of their views on intellectual property–should be excited about. Sometimes, an author, artists, or musician chooses to market his or her products commercially. But other times, for a variety of reasons, a creator would simply like his or her works to be widely available. The creative commons license is a convenient and efficient means for copyright holders to make their works available to the public while placing various conditions on the way those rights are used. So, for example, a musician might release a song under a CC license that’s free for non-commercial use, but requires his permission before the song is used for commercial purposes.

Copyright is all about putting creators in control of their creations. The right of control includes the right to relinquish that control, or to relinquish some rights (such as the right to non-commercial use) while reserving others (such as the right to attribution and commercial exploitation). Thus, CC extends the power of copyright by giving authors finer-grained control over their rights under copyright.

I’d been aware of the CC license for a long time. What I didn’t realize, until recently, that Creative Commons, the organization, has about 20 employees and are involved in a wide variety of exciting projects. Lessig described the organization’s current activities in a series of emails over the last few weeks. They’re well worth reading to understand what the CC project is, what it’s trying to accomplish, and where it’s heading in the coming years.

Anyway, until now CC has been supported primarily by a handful of generous foundations. But they’re currently undergoing a public fundraising campaign in order to preserve their status as a publicly-supported non-profit organization–and the deadline is this Saturday! So check out his most recent appeal, which answers some common questions, and perhaps you’ll be persuaded that they’re an organization worthy of your support. I was.

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Hands Off the Net!

by on December 29, 2005

I’m rather confused about what exactly the network neutrality folks want. Because it’s hard to believe they’re really looking for what they seem to want in this article.

The draft bill, floated recently by Republicans on the House Energy and Commerce Committee, contains “network neutrality” provisions intended to prohibit telecom and cable companies from blocking or impeding competitors on their high-speed networks. But the draft makes an exception for companies to offer multiple tiers, resulting in potentially faster transmission rates for them and slower speeds for competitors.

Comcast, Time Warner and other major cable providers oppose all mandatory neutrality restrictions but abide by voluntary guidelines. “Network neutrality is a solution in search of a problem,” said Brian Dietz, spokesman for the National Cable and Telecommunications Association.

Those stances are drawing fire from Amazon.com, eBay, Google, Microsoft, Yahoo and other Internet players that fear the carriers will serve as gatekeepers. “Do you want the Internet … of the last 10 years, or do you want it to look like a cable system?” asked Gerry Waldron, an attorney representing a coalition of Internet companies.

“They’re fooling around with the basic DNA of the Internet here,” added Art Brodsky, a spokesman for Public Knowledge. “What they’re trying to do is make it their Internet.”

The coalition members said they recognize that communications carriers have a right to manage their networks to carry bandwidth-hungry video without interruption. “We don’t want to take them out of [that] business,” a source privately said, but added that carriers should not “pick and choose” who provides Internet video.

Now from a technical perspective, I sympathize with these guys. The layered, end-to-end nature of the Internet is an important design principle that deserves to be defended. But what they’re trying to do strikes me as more sweeping than merely ensuring that consumers have unfettered access to content on the web. The next-generation fiber networks being built by the Baby Bells are expensive, and if they want to set aside some portion of their bandwidth to provide premium services, that seems like a perfectly reasonable idea. Now, I suspect that from a business perspective, they’ll find that consumer will pay more for unfettered high-speed Internet access, especially once there are thousands of Internet-based TV channels not available through their IPTV service. But the fact is that without the investments the Baby Bells are making, those Internet TV channels might not even be possible.

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Whose A La Carte Is It, Anyway?

by on December 22, 2005 · 24 comments

James’s post in defense of a la carte makes me think that a big part of what’s going on in this debate is ambiguity and confusion regarding what exactly counts as “a la carte.” As my recent article suggests, most a la carte activists seem to imagine that, if the standard cable tier gives you 50 channels for $50/month, then you should be able to buy 10 channels for $10/month, or one channel for $1/month.

That is, of course, absurd. It would be great for consumers if it were possible, but the problem is that the cable companies would go bankrupt. It costs a lot more than $1 to deliver that one channel to the customer’s home. That’s why, if forced to adopt a “pure” a la carte model, channels would have to set the per-channel cost much higher than $1–probably more like $5-10 per channel. It should be obvious that consumers wouldn’t benefit from that.

But if we relax our definition of “a la carte,” it’s possible to imagine a model that could work. Consider a world in which every subscriber pays a $40 access fee, and then chooses channels “a la carte” for 25 cents apiece. This is, technically speaking, an a la carte system, and it would probably work just fine: at 25 cents apiece, most consumers would probably take 30 or 40 channels, roughly approximating the status quo. This could plausibly be called an “a la carte system,” and it might work just fine.

Now consider a third system, with one minor change: the cable company decides to throw C-SPAN into the basic package for free, and tacks on 6 cents to cover the subscriber fee. (If I remember correctly, this is what C-SPAN charges per subscriber) My question is: has this ceased to be an a la carte system? After all, consumers are now being “forced” to buy C-SPAN in order to get other cable channels. But it’s hard to imagine cable customer being outraged at a 6-cent hike in their bills.

What’s going on is that your monthly cable bill is actually paying for two things: the programming and the infrastrcture necessary to deliver the programming. What people don’t seem to understand is that the infrastructure is by far the largest fraction of the bill. According to this article, the average cable bill is $45 for 64 channels. Of that, $45, only $14 goes to cable networks for the cost of content. The remainder, $31, goes to cover the cable company’s own costs.

To bring this back to James’s article, I suspect the systems the Baby Bells are rolling out will be “a la carte” only in the third sense described above. There will doubtless be a basic access fee that will apply to everyone who gets the service. There’s also likely to be some content, such as C-SPAN and PBS, included for free with the basic IPTV service.

But the fact is, the current cable industry is already a la carte in this sense. There’s some content available with the basic package, and then there is other content–“premium” channels, pay-per-view content, on demand movies–that is offered “a la carte.” The only difference is a matter of degree: the Baby Bells might be putting less content in the “basic” bundle, while the cable companies are putting more.

If that’s how we’re defining the terms, it’s not clear what’s being argued about. Of course a la carte, defined in this loose sense, “works.” No sane person would claim otherwise. The debate is whether “pure” a la carte, in which there is no “basic” bundle, can “work.” I think the answer to that is clearly no, and I’ll be shocked if the Baby Bells ever offer such a pricing structure.

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Some Heresy on A La Carte: Could it Work After All?

by on December 22, 2005 · 2 comments

The idea of a la carte pricing for cable television has taken a beating since Kevin Martin suggested it in a congressional forum a few weeks ago. (For some good pieces by my TLF colleagues, look here, here, and here. It’s clear that a la carte pricing is no free lunch for consumers (no pun), and that there have long been good business reasons for maintaining a system of packaging channels. But nothing ever stays the same in fast-changing tech markets, and that may apply to cable pricing as well. In a just-released Heritage Foundation paper, I argue that while regulation to force a la carte would be unwise, there’s a good possibility that the markeplace–without regulation–may soon provide it. Specifically, new competition by former phone companies Verizon and AT&T could upset the cable pricing applecart, and perhaps lead to a la carte pricing–or something close to it. As explained in the paper:

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Big Brother (UK edition)

by on December 21, 2005

Just in time for the holidays, British officials have announced that Santa will no longer be the only one who can find out if you’ve been naughty or nice. The Independent reports the imminent creation of a nationwide network of road, convenience store and other cameras that will be tied into a central database equipped with license plate reading technology. The movements of all cars will be recorded and stored for a period of two years. The ostensible purpose is to gather intelligence and fight terrorism, of course. Truly frightening.

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Patent Office Saves the Day

by on December 21, 2005 · 2 comments

It’s good to see that the Patent Office has come to RIM’s rescue by hinting that it will be rejecting all of NTP’s patents in February. It seems that RIM’s gamble paid off. At this point, it would be an extremely boneheaded judge who would issue an injunction given that NTP now looks almost certain to lose on the merits. And that means that RIM has little reason to settle, and it’s looking increasingly likely that NTP won’t get a dime.

That’s heartening, but I hope this isn’t the end of the story. Policymakers ought to take this as an object lesson in the problems with the patent status quo. If NTP’s patents were invalid, then RIM shouldn’t have had to spend 4 years in court defending itself against charges of infringing them. Something’s busted and needs to be fixed.

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Will the Internet Destroy the Foreign/Domestic Distinction?

by on December 21, 2005 · 2 comments

Overall, I’m extremely critical of the Bush administration’s flagrant disregard for civil liberties in the wiretapping controversy. But I think this is an entirely understandable mistake. The New York Times reports that the NSA sometimes accidentally listens in on a domestic call because they mistakenly believe that it to be a foreign call.

As electronic networks become ever more sophisticated and globalized, policymakers are going to face more and more thorny challenges when it comes to regulations that are tied to the “location” where a particular action is taken. Already we see this with telecom regulation, where technologies like VoIP are allowing people to do an end run around 20th century regulations based on the physical location of someone’s phone line. I imagine that sorting out other laws–copyright, fourth amendment, privacy regulations, etc–will become equally difficult as the Internet continues to extend its reach into every aspect of our lives.

Indeed, in the long run, the traditional distinction between domestic and foreign surveillance may be complete eviscerated by the march of technology. After all, it’s trivial to disguise the true origins of a network connection. if terrorists know the NSA isn’t allowed to eavesdrop on domestic communication, they could easily set up a tunnel so that their communications appear to originate on a U.S. network. In that case, would it count as domestic surveillance to eavesdrop on their conversation?

I’m not sure what the right answer is, but it’s a type of question we’re going to hear a lot in the next few years.

(Hat Tip: Julian over at Andrew Sulivan’s blog)

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Is the FCC getting desperate?

by on December 20, 2005 · 8 comments

So I’m working on a paper on cable franchising and was reading the FCC’s latest proposed rulemaking on the topic (PDF). In it they claim the authority to preempt local franchise regulations that are barriers to entry. They FCC finds authority to do this in Section 621(a)(1) of the Communications Act, which states that local authorities “may not unreasonably refuse to award an additional competitive franchise.” So far so good.

I get to the last item in their “authority” section and there they ask, “Finally, we seek comment on possible sources of Commission authority, other than Section 621(a)(1), to address problems caused by the local franchising process. For example … could the Commission take action to address franchise-related concerns pursuant to Section 706?” So I ask myself, what’s Section 706? Imagine my surprise when I turned to that section and found, “SEC. 706. [47 U.S.C. 606] WAR EMERGENCY–POWERS OF PRESIDENT.” The section goes on to say that in time of war the president can commandeer the airwaves and other communications facilities, etc.

This has got to be a typo. Right?

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Let’s hope the Blackberry patent dispute doesn’t take this long to resolve!

by on December 20, 2005

News.com reports that after more than 25 years of battling with Sony Corp. and others in court, Andreas Pavel has finally won the right to say that he was the man who invented the Walkman.

What blew my mind away when I read this is that I can distinctly recall getting one of those very first Walkmen for an X-Mas gift back in the early 80s. What a hunk of junk it was. It only received FM radio, and didn’t even do a very good job of that. They got much better in subsequent years, of course, until they were finaly replaced by portable CD players and now iPods and MP3 players. But, amazingly, this entire time, this Andreas Pavel guy has been engaged in a patent dispute about a long-dead technology. Amazing. Hopefully the Blackberry dispute doesn’t take this long to settle!

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Second Class Citizens

by on December 19, 2005 · 4 comments

Perhaps the most striking thing about the Sensenbrenner bill is this passage:

PROFESSIONAL DEVICE.–(A) The term”professional device” means a device that is designed, manufactured, marketed, and intended for use by a person who regularly employs such a device for lawful business or industrial purposes, such as making, performing, displaying, distributing, or transmitting copies of audiovisual works on a commercial scale at the request of, or with the explicit permission of, the copyright owner.

(B) If a device is marketed to or is commonly purchased by persons other than those described in subparagraph (A), then such device shall not be considered to be a ”professional device”.

“Professional” devices, you see, are exempt from the restrictions that apply to all other audiovisual products. This raises some obvious questions: is it the responsibility of a “professional device” maker to ensure that too many “non-professionals” don’t purchase their product? If a company lowers its price too much, thereby allowing too many of the riffraff to buy it, does the company become guilty of distributing a piracy device? Perhaps the government needs to start issueing “video professional” licenses so we know who’s allowed to be part of this elite class?

I think this legislative strategy is extremely revealing. Clearly, Sensenbrenner’s Hollywood allies realized that all this copy-protection nonsense could cause problems for their own employees, who obviously need the unfettered ability to create, manipulate, and convert analog and digital content. This is quite a reasonable fear: if you require all devices to recognize and respect encoded copy-protection information, you might discover that content which you have a legitimate right to access has been locked out of reach by over-zealous hardware. But rather than taking that as a hint that there’s something wrong with the whole concept of legislatively-mandated copy-protection technology, Hollywood’s lobbyists took the easy way out: they got themselves exempted from the reach of the legislation.

This reminds me of nothing so much as the McCain-Feingold campaign finance law. McCain and Feingold, like Sensenbrenner, faced a difficult problem: a straightforward reading of their legislation, which prohibited people from spending large sums of money on political advocacy, would seem to prevent corporate entities like the New York Times and Fox News from talking about politics in the closing weeks of the election. Clearly, that wouldn’t do. But rather than taking this as evidence that there was something fundamentally wrong with their approach, they simply created a class of journalists to whom the rules did not apply. If Michael Moore wants to spend a million dollars promoting John Kerry’s election, that’s free speech. But if you or I spent a million dollars on anti-Bush ads in the closing weeks of the election, we could wind up in jail.

Like McCain and Feingold, Sensenbrenner demonstrates a profound contempt for ordinary Americans, whom his legislation literally makes second-class citizens. It seems that he can’t imagine that ordinary consumers might ever have legitimate reasons to use “professional” video editing tools for personal projects. Consumers, after all, are just that–passive recipients of the culture made for them by the professional magic-makers of Hollywood. We wouldn’t want the riffraff to make culture of their own.

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