March 2006

Possible Conditions on the AT&T-Bell South Deal

by on March 6, 2006

The AT&T-Bell South deal will be approved, that much is certain. After approving the previous deal between T & SBC, regulators know it would be silly to oppose T’s deal for Bell South. The two firms don’t compete directly and the combination could offer significant scale economies as the telcos continue to dig in for full-fledged trench war with cable operators. On those grounds alone, the deal will get through. The only real question is: What conditions might regulators impose on the deal?

While the so-called “consumer groups” will ask for a litany of restrictions, I want to address just three here:

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AT&T-BellSouth: No Big Deal

by on March 6, 2006

There no doubt will be much gnashing of teeth in the wake of yesterday’s announcement that AT&T (the former SBC) has agreed to buy BellSouth. WIthin hours, to no one’s surprise, old-line consumer groups called for regulators to reject the merger. In truth, however, the acquisition just won’t make that much difference, and to the extent it does, it likely will help consumers in the southeastern states BellSouth serves.

Sure, the deal reduces the number of “Bell” telephone companies to two–down from the original seven created in 1984. But does that mean less choice and less competition for consumers? Far from it. Today’s traditional telephone companies are quickly becoming but one choic among many for consumers wanting to make a telephone call. Cable TV companies alone now provide telephone service for some six million Americans, a number that is rapidly increasing. And that doesn’t include the millions more service by stand-alone Internet telephone companies such as Vonage. Wireless telephone service provides another source of competition to traditional telephoney, with millions of Americans cutting the cord, and dropping their traditional service entirely. And while the merged AT&T-BellSouth will own Cingular, one of the leading wireless firms, the wireless market is still vibrantly competitive.

Perhaps more important for the future is the market for broadband Internet service. The networks that connect Americans to the Internet are increasingly important–serving as the platform for everythng from e-mail to Internet telephony, to (soon) television. Here, however, the traditional telephone companies are even less dominant. In fact, they are the challengers in this market, trailing cable TV firms, who have some 60 percent of the market.

As a result, this merger, like last years mergers before it, is no big deal to consumers. However, at least one area, consumers will likely be better off. BellSouth has trailed AT&T and Verizon in making plans to enter the television market. While the two larger phone companies are already starting to offer TV service in competition with traditional cable firms, BellSouth–with more limited resources – has lagged behind. As a result, while consumers in many areas of the country could soon be enjoying the benefits of more cable TV competition, consumers in the southeastern U.S. were facing a long wait for the same benefits. If the proposed deal goes through, cable competition could come sooner to the South.

Despite the easy rhetoric, this deal does not signal a return to the days of monopoly in telephone service. Instead, it serves as a reminder of how far competition has come, and how choices have increased, for American consumers. And that competition and choice will, if anything, be stronger due to this merger.

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In Defense of “Piggybacking”

by on March 5, 2006 · 12 comments

The quality of mainstream media coverage of wireless “piggybacking” leaves a lot to be desired:

Martha Liliana Ramirez, who lives in Miami, said she had not thought much about securing her $100-a-month Internet connection until recently. Last August, Ms. Ramirez, 31, a real estate agent, discovered a man camped outside her condominium with a laptop pointed at her building.

When Ms. Ramirez asked the man what he was doing, he said he was stealing a wireless Internet connection because he did not have one at home. She was amused but later had an unsettling thought: “Oh my God. He could be stealing my signal.”

Yet some six months later, Ms. Ramirez still has not secured her network.

If you take out the alarmist rhetoric, here’s what happened: Ms. Ramirez purchased a wireless router and made access to her network available to the general public. The gentleman in the car used the connection she made available. What’s the problem?

There are some nuances to the story, obviously. Apparently, Ms. Ramirez would rather that strangers not access her network, although it doesn’t explain why. And it’s possible that securing her network is beyond her technical capability, in which case she is, in a sense, having her network used against her will. But that’s not a terribly good excuse. Setting a wireless network password isn’t that hard. If she doesn’t know how to do it, there is surely at least one computer geek in her life who could show her. And if, after 6 months, she hadn’t gone to the trouble of figuring it out, she can’t possibly be that concerned.

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Gmail Fun

by on March 5, 2006

Gene Weingarten, in a column in today’s Washington Post magazine, has some fun with gmail. Google’s e-mail service, as all loyal TLF readers no doubt know, “reads” the text of messages to provide supposedly relevant advertising to the recipient. Weingarten finds this sometimes just doesn’t work the way it’s intented. Example: he says a colleague e-mailed him for his thoughts on the historical accuracy of Jesus. The message arrived with an solicitation to “Become Legally Ordained Today.” So Weingarten decides to have some fun with Google, writing some faux emails to himself with, well, interesting results. Worth reading, especially on a Sunday when you shouldn’t be doing any heavy policy wonk reading anyway.

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Jupiter Research: Increased Choice a Major Driver for IPTV

by on March 5, 2006

A new Jupiter Research study released recently found, unsurprisingly, that the biggest attraction of Internet Protocol TV for consumers was prices–just over half said that they would switch to IPTV if they could get a lower price. Perhaps more surprisingly, however, was that potential a la carte service came in a close second–with 46 percent of those polled saying they would switch to get a la carte pricing. That number dwarfed features such as high-definition service and video on demand, which excited only six and three percent of consumers.

The lesson for potential IPTV operator, Jupiter says, is that their “services should focus on giving consumers greater choice and control over their television experience, if not true a la carte.” The lesson for policymakers interested in consumer choice is to reduce regulations that hinder IPTV competition, rather than impose new regulations on cable TV.

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A Cheer for Tate: New FCC Member Gets it Right on Cable

by on March 5, 2006

There is always a period of uncertainty whenever a new member of the FCC takes his or her seat. No matter what the background of the individual, no one ever knows how the new commissioner will fill the role. That has been true of Deborah Tate, the newest commissioner–despite her service at the state level, she is not yet well known in the insular world of Washington telecom policy. That’s one reason why some comments she made last week on the cable “a la carte” pricing issue are especially encouraging. At a meeting of the National Association of Broadcasters, she called on cable companies to do more to combat indecent content. But, rather than call for regulation, she indicated that new technology and new competition might be the answer to the problem, making regulation unnecessary. “If IPTV becomes viable, it’s not a problem because you are going to call [up] what you want.”

That point–one I’ve been pounding on for months–may sound obvious, but it’s been strangely overlooked by most policymakers. The next day, for instance, members of the House Appropriations committee, hearing testimony from FCC chair Kevin Martin, showed outright enthusiasm for regulation: “I think you have made such a powerful case for a la carte,” subcommittee chair Frank Wolf told Martin, “[i]t will be shocking if this Congress does not deal with the issue.” If the concept that IPTV and new competition could address the problem better than regulation was apparently not raised.

Tate deserves plaudits for her common-sense, pro-market approach to this issue. Its an encouraging and welcome start on her new job. We are looking forward to more such common-sense in the years to come.

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More Voyeurism

by on March 3, 2006 · 2 comments

Several months ago, I outraged several people by wondering aloud whether video voyeurism should really be illegal. Sure, it’s perverted and wrong, but I’m skeptical of making perverted acts illegal in the absence of harm to an identified person. Non-harmful perversion is probably better left to moral opprobrium. After all, if everyone got to express their moral outrage through law, where would we be?

Perhaps Virginia.

Legislators there are working on a law to ban ‘upskirting’ And ‘downblousing.’ Taking surreptitious pictures of people’s private areas could subject Virginians to a year in jail or a $2,500 fine.

Clearly, this is a response to the advance of technology and the development of miniaturized cameras. But why should technology get the blame? Why aren’t scantily clad people regarded as causing all the problem? I don’t think there’s much to distinguish ‘upskirters’ and ‘downblousers’ from ‘exhibitionists.’ It’s just that, in this case, the exhibitionists were there first.

Amusingly, the story about the Virginia law is accompanied by a picture of a young woman’s mid-section, as if they were half-way to diagramming how ‘upskirting’ is done.

That reminded me of an article I read this morning deriding Fox News for interviewing moralist right-wingers and also doing a disproportionate number of stories about babes and their babeishness. I was amused (and kept interested) by all the screen captures in the Fox-critical piece. I think the tut-tutters were taking a page from the Fox media playbook.

I wonder how many Virginia legislators are looking at upskirt snaps on the Internet ‘for research.’

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Wyden on Net Neutrality: If You Build It, We Will Regulate

by on March 3, 2006 · 2 comments

Sen. Wyden yesterday introduced legislation to mandate “net neutrality” by Internet network operators. the proposal is pretty far ranging, banning everything from “priority lanes” for time-sensitive traffic to requiring transparent rates, terms and conditions for service (one wonders how the famously confidential but sucessful Internet backbone market would fare under such a requirement).

It’s a bad idea–for reasons many have outlined. (For an excellent discussion of the issues, check out this excellent study by Christopher Yoo published by the Progress and Freedom Foundation.)

What particularly got my eye, however, was a comment Wyden made to journalists defending the proposal. He said:

You kind of get the sense big network operators are saying we built he network we own the network. What I am saying no, consumers built network subscribers built the network, they paying for it (sic).

Imagine! Just because the operators built it they think they own it. Amazing. Next thing you know, everyone will be claiming they own what they built.

Wyden’s “this really isn’t private property” argument actually isn’t new. It’s a retread from the battle over forced access to telecom networks, where proponents argued that telephone networks belonged to the public, not to telephone companies. That argument was baseless, as I argued here.

If anything, declaring that privately-built Internet facilities belong to the “public” is less justified. Just because Internet providers get their revenue from customers doesn’t mean the customers “own” the facilities. Otherwise, I’d own vast stakes in everything from Starbucks to my dry cleaner. Moreover, at a time when private investment in the Internet is critically needed, loose talk about the network being socialized is definitely unhelpful, to say the least.

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Opposition to orphan works legislation

by on March 3, 2006 · 9 comments

The American Society of Media Photographers is leading a coalition of organizations opposed to orphan works legislation. I never thought there would be much opposition to legislation that aimed to fix the orphan works problem. “Everybody wins if this is properly fixed,” I thought. In retrospect, it was naive of me to think that there is any issue in this town that doesn’t have at least two sides to it. Concentrated benefits, diffused costs, lesson learned.

It looks like the photographers’ lobby fears that legislation like that proposed by the Copyright Office will allow anyone to use copyrighted works as long as they carry out some perfunctory search. It’s not that simple. Courts will have to be convinced that you couldn’t possibly find the owner before they’ll let you off the hook for infringement. ASMP argues that because photos are often published without attribution, people will be able to claim that they are orphan works and use them with impunity. But just because Time magazine prints a photo without a credit doesn’t meant that it’s an orphan. Before anyone can use it without permission they would have to exhaust all reasonable ways to find the owner. Contacting Time magazine should be my first step, and that should result in finding an owner in most cases. If it doesn’t they’re still not off the hook, they must take every reasonable step possible.

ASMP states, “The bottom line is that, even if you have done everything right, including registering your photographs immediately at the Copyright Office, every photograph that you publish may be up for grabs if it doesn’t have a published credit.” It’s not that clear cut, but even if it were, that’s the beauty of some orphan works proposals, including the one I’ve worked on. Without enacting a new notice formality (that would violate the Berne Convention), it creates a very strong incentive for photographers to include notice on their works and demand that publishers do so as well. Instead of trying to block salutary legislation, photographers should use their lobby to pressure publishers to always give them attribution, which would make everybody’s life easier.

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Another Lousy DRMed Product

by on March 2, 2006

Regular readers of TLF won’t be the least bit suprised to learn that I loved this criticism of DRM by Scott Granneman at Security Focus:

One of my favorite magazines is The New Yorker. I’ve been reading it for years, and it never fails to impress me with its vast subject matter, brilliant writing, and the depth, wit, and attention it brings to important matters. When it was announced over a year ago that The Complete New Yorker: Eighty Years of the Nation’s Greatest Magazine would be released on eight DVDs, I immediately put in my pre-order. After it arrived, I took out the first DVD and stuck it in my Linux box, expecting that I could start looking at the collected issues.

No dice. The issues were available as DjVu files. No problem; there are DjVu readers for Linux, and it’s an open format. Yet none of them worked. It turned out that The New Yorker added DRM to their DjVu files, turning an open format into a closed, proprietary, encrypted format, and forcing consumers to install the special viewer software included on the first DVD. Of course, that software only works on Windows or Mac OS X, so Linux users are out of luck (and no, it doesn’t work under WINE … believe me, I tried).

One of the great things about open standards is that they enable a breathtaking amount of division of labor. If I write this post in HTML format, and you have an HTML-compliant broswer, then I can be assured that you will be able to read my post. Maybe you’re using Internet Explorer on Windows. Maybe you’re using Firefox on Linux. Maybe you’re reading this on a BlackBerry. Doesn’t matter. As long as I follow the HTML spec, you’ll be able to read my post.

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