Hollywood vs. Its Customers

by on April 10, 2006 · 2 comments

A couple of months ago, I blogged about the pointless restrictions imposed by the latest video DRM schemes. Today, in the Washington Post, Rob Pegoraro writes about another digital video device that’s getting a “lukewarm reception.” It’s got similarly pointless restrictions:

Eight of these movies were also available in high-definition format for an extra $1 each–making MovieBeam the only way to rent a flick in high-def at the moment.

But you can only see that extra resolution if your HDTV is new enough to provide an HDMI digital input. And if it does, everything MovieBeam rents will look about as good–the receiver automatically “upconverts” every release to a high-definition resolution. (The MovieBeam box also includes analog component-video outputs, plus S-Video and composite jacks for older analog TVs.)

I wish he’d expanded on this a little bit, because the vast majority of HDTVs in homes today are not “new enough to provide an HDMI digital input.” For those poor saps who purchased an older HDTV. (and here “older” means roughly pre-2004), they’ll get no better quality than if they’d bought an old-fashioned low-def TV.

I’m sure the response of the HDMI folks would be that this is just a transitional issue–that once everyone’s upgraded to “secure” digital formats everything will work with everything else. But that’s not the way things are likely to shake out in the real world, at least not if they’re serious about preventing piracy. Because a DRM scheme is only as strong as its weakest link. As soon as someone finds a fatal flaw in a version X of HDMI, it will be necessary to cut off compatibility with that version to prevent that vulnerability from undermining the security of the whole scheme. Yes, there are provisions for firmware updating of compromised devices, but that will only work with certain kinds of security vulnerabilities, and what consumer wants to worry about whether he’s installed the latest firmware upgrade on his Blu-Ray player?

Fortunately, I don’t think Hollywood or the consumer electronics industry has the stomach for that kind of confrontation with their customers. More likely, after a few years of constant compatibility problems, they’ll come to their senses and scale back their DRM schemes to “speedbump” levels. They should focus on deterring casual copying while admitting that they’re not going to be able to slow down determined pirates.

Update: Mike at Techdirt notes that this is the second attempt at launching this service. The first version was a Disney-centric device that had even more irritating restrictions. It folded around this time last year.

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France: Good Intentions, Bad Implementation

by on April 10, 2006 · 2 comments

I’ve got a new article up at Brainwash about the new French copyright legislation:

French legislators were rightly concerned that enacting the EUCD into French law would stifle such intra-platform competition in the market for digital media devices, just as many charge has occurred in the United States. But in stereotypical French fashion, the legislature overreached. The legislation does much more than permit reverse engineering; it requires companies to share the technical details of their software with competitors and vests the French courts with the power to prod recalcitrant companies into disclosing the workings of their software. Such a mandate is likely to have unintended consequences, as the French courts could end up second-guessing the design of Apple’s products. And the rule is also likely to be abused by competitors seeking confidential information about their competitors’ products that isn’t necessary for interoperability…

Libertarians envision the state in the role of an impartial referee. On social issues such as contraceptive sales or the teaching of evolution, liberals and conservatives commonly urge the state to impose their social agenda on society. But libertarians insist that the state ought to remain strictly neutral. The same logic applies in this case. The state ought not to take sides in the debate between open and closed systems. Instead, permit both proprietary technologies and reverse engineering, and let consumers–not judges or bureaucrats–decide which is superior.

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Broadband Competition: An Anecdote

by on April 7, 2006

Who says there’s no broadband competition? While reading up on franchise reform, it occurred to me that I hadn’t tried the “threaten to switch and get a discount” tactic on my broadband provider, Charter. A 10-minute conversation with an extremely helpful gentleman cut my monthly bill nearly in half, from $52.99 to $29.99 in exchange for a one-year contract. And I only paid the $52.99/month for one month, because the first six month I was paying $26.99 in a 6-month introductory offer.

This was for “naked” broadband–I don’t watch TV and I’m cell phone-only. And it’s no doubt a result of AT&T’s aggressive $12.99 DSL offering. Cable Internet is considerably faster than DSL, so I’m happy to pay a moderately higher price for the faster speed. I remember paying over $50/month for a significantly slower DSL connection as recently as 2002.

Could things be even more competitive? Sure. But I think this illustrates that a duopoly is dramatically preferable to a monopoly. The best way to help the consumer is by cutting red tape for cable and telephone companies so they can continue undermining each others’ monopolies in voice, video, and data.

Oh, and if you aren’t currently getting some sort of discount from your broadband provider, give them a call and threaten to switch to the other team. Chances are you’ll get big savings on your monthly bill.

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Selective Morality at PTC?

by on April 7, 2006

This week, the self-appointed moral guardians for the masses over at The Parents Television Council gave its “Seal of Approval” to “The Chronicles of Narnia” even though it contains, in the PTC’s words, “Realistic, graphic and violent King Arthur-like battle scenes with axes, swords, and hatches. Beheadings, stabbing and wounding is rampant during the fight scenes.” Moreover, at one point in the movie the PTC notes that “Susan and Lucy witness Aslan’s murder and go to the body after he is dead. Also, the moments before he is killed are cruel, sadistic and humiliating as his mane is clipped off and he is tied up and dragged up the steps to the stone table where he is killed.”

Despite this, the PTC states that “The over-all and continuously uplifting message of this fine film, far outweighs any negative content” and awards it its Family Seal of Approval. The PTC’s website says that “This award is given to worthy television programs, made-for-TV movies, motion pictures, video games, and advertisers that help parents by providing/sponsoring entertainment suitable for the entire family.”

I’m sorry, but I don’t get it. PTC routinely asks the FCC to censor much less violent fare that appears on network TV, but “beheadings, stabbing and (rampant) wounding” is “suitable for the entire family.” Seems a little inconsistent to me.

You should also check out their review of ABC’s new remake of “The Ten Commandments,” which they blast mostly because it presents a more realistic, faithful interpretation of Biblical events. Here’s my favorite line from the review: “While ABC’s ‘The Ten Commandments’ incorporates incidents normally overlooked and is technically more “accurate” to the details given in the Bible, it completely lacks any sense of respect for or understanding of the Biblical story.”

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A Correction

by on April 7, 2006 · 2 comments

Steve Wildstrom, who to my mind is the savviest tech columnist in the mainstream press, flags an error in my DMCA paper, on page 12:

Did banning DeCSS at least make it more difficult to pirate movies? There’s little reason to think so. The CSS system prevents playback of DVD movies, but it does nothing to prevent duplication of the scrambled data. A pirate can make a perfect copy of a scrambled DVD without ever cracking its encryption. No circumvention software is needed to download CSS-scrambled video, burn it to a DVD-R disc, and play it in any consumer DVD player.

Via email, Wildstrom writes:

This is inaccurate because of a secondary, little-known protection scheme. Writeable DVD media come in two types, designated A (for authoring) and G (for general). A CSS encoded DVD can only be copied bit-for-bit onto Type A media, and by means that I don’t understand, the industry has managed to maintain extremely tight controls on the distribution of Type A disks. That is why commercial DVD copying software like 123 Studio’s DVD X Copy (forced off the market by DMCA litigation) was not able to make exact copies of commercial DVDs. The same is true of the numerous non-commercial programs still available on the Internet. Because CSS is trivially broken, the unavailability of of Type A media has probably done more to prevent amateur copying of DVDs than has CSS.

I did not know about this distinction, but I’m inclined to believe him, especially given that another fellow wrote to make the same point. So my apologies for the error.

I think it’s worth pointing out, however, that (at least based on my admittedly limited knowledge of the underlying technologies) this objection would apply only to burning DVDs, not to pressing them. Commercial pirates are far more likely to use the latter, so CSS isn’t going to prevent commercial piracy. I hope someone will correct me if I screwed that up as well.

Also, while I’m on the subject of Mr. Wildstrom, he’s got a great column up on the mess DRM is making of digital video.

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Is the Internet Apocalypse Near?

by on April 6, 2006

Supporters of network neutrality regulation have been deploying a lot of apocalyptic rhetoric. For example, before yesterday’s Commerce committee vote on network neutrality regulation, Rep. Markey warned, “We’re about to break with the entire history of the Internet.” And in the same article, we learn that Rep. Eshoo thinks that “this walled garden approach that many network providers would like to create would fundamentally change the way the Internet works and undermine the power of the Net as a force of innovation and change.”

This is ridiculous. In the first place, the Internet is much bigger than the American broadband market, to say nothing of any one broadband ISP. Even if all of the major American telcos were to simultaneously cut American broadband users off from the Internet (which would obviously never happen), the rest of the world can perfectly well carry on operating the Internet without us, and we could pass network neutrality legislation at that point to force the telcos to re-connect us to the real Internet.

In the second place, it’s important to keep in mind the kind of network discrimination the telcos are likely to use. They’re not going to block users’ access to the Google website unless Google coughs up an access fee. That would be financial suicide. What they’re interested in doing is setting aside some of the new capacity they’re building to deliver their own services. For example, they might build a 25 Mbit fiber pipe into a consumer’s home, and reserve 20 Mbits of it for their own video applications. Now, I think that would suck. But it doesn’t “change the nature of the Internet,” any more than it changes the nature of the Internet when Comcast uses the bandwidth on its coax pipes to deliver video content to its cable subscribers. In this scenario, I’d still have 5 Mbits of “network neutral” access to the Internet. I could do everything on that pipe that I’m able to do today. So the issue isn’t about “the nature of the Internet.” It’s about whether Comcast has the right to decide how to use the infrastructure it deploys.

Finally, if anything, the apocalyptic scenarios run in the other direction. If Congress does nothing this year, they’ll have every opportunity to step in next year, or the year after, to stop any nightmare scenarios that might unfold. On the other hand, if network neutrality regulations are passed and they turn out to be a disaster, they’re unlikely to be repealed. Bad regulations are never repealed. Instead, they spawn endless litigation and “reform” proposals that are even more intrusive. Once we give the FCC authority to regulate the Internet, there’s no going back.

There’s no looming crisis here requiring Congressional intervention. If the pro-regulatory folks turn out to be right, we can always come back and have this debate again in a couple of years. But it’s extraordinarily premature to create a new regulatory framework for technologies that are barely off the ground.

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Singleton on Build Out Requirements

by on April 6, 2006

Solveig Singleton has a great post over at the PFF blog setting the record straight on build-out requirements. She really should have posted the post here herself, but since she didn’t, I’ll do it for her:

This whole debate is saddening, and a little surreal. Here are some basic realities about build-out:

Whether or not an area can be profitably built out has to do mainly with population density. Low-income areas tend to be high-density (at least in urban centers) and therefore historically the tendency has been that these areas are built out well before more sparsely populated suburban areas. Furthermore, lower-income areas have had a pretty healthy demand for tech services. The odd thing is that legislators such as Rep. Markey, who have been around the tech legislation scene for years, really should know this.

The second fact is that build-out requirements have a rather sad history themselves: As economist Tom Hazlett has thoroughly documented, these requirements were rarely imposed on the first entrant into the cable market. Generally it was rare for such entrants to build out into the entire market immediately, it usually took a few years. The idea that first entrants have labored under such requirements is a myth, a myth fostered largely to present formidable obstances to the entrance of a second competitor in the market.

The more I learn about the issue, the more amazed I become at how weak the arguments of franchise reform opponents are.

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We’re All PC Users Now

by on April 6, 2006 · 14 comments

Apple’s Wednesday announcement of Boot Camp, a utility that allows users to run Windows on their Intel-based Macs, may be the final chapter in the decades-long commodification of the PC industry. “Wintel” PCs were commodified by the rise of “IBM clones” in the early 1980s, and the release of Pentium clones and LInux in the 1990s. By the mid-1990s, virtually every component in a Wintel PC was a commodity with vigorous intra-platform competition.

Apple began joining the commodity hardware party in earnest with the release of the iMac, which abandoned several Apple-only hardware components in favor of PC equivalents. Over the subsequent 8 years, they gradually phased out virtually all of their Mac-specific hardware, culminating in the adoption of Intel processors early this year. And this week they put to rest any notion that a Mac is anything but a glorified PC by giving users an easy way to install Windows on their Macs if they want to.

This is surprising because Steve Jobs is a control freak. When he rejoined Apple in 1997, he killed off the Macintosh clone program, which was beginning to allow third parties to build Mac-compatible computers. Five years ago, it would have been crazy-talk to predict that Jobs would soon transform Macs into glorified PCs with pretty cases.

What has happened, though, is that economies of scale have became such a powerful force that no one, even a closed-platform zealot like Jobs, could resist them. In the last few years, Intel and AMD together have sold more than ten times as many chips as did the PowerPC manufacturers who supplied Apple. As a result, they could afford to spend ten times as much on R&D. No amount of ingenuity or superior processor architecture can make up for such a lopsided funding advantage.

In addition, I suspect the iPod experience has changed Jobs’s perspective. It’s hard to fathom today, but the iPod was originally conceived as a loss-leader to sell more Macs. Only after it became obvious they had a huge hit on their hands did they release a version that would work with Windows. And it took them even longer to release a Windows version of iTunes. Today, the iPod and iTunes are arguably more important to Apple’s future than the Mac is. Tying the iPod to the Mac held back its potential for success. By making it as widely compatible as possible, Apple allowed it to achieve much greater success.

Jobs may have realized that Mac hardware and the Mac OS may be holding each other back as well. There may very well be a lot of customers who love Apple’s superb industrial design but need to run Windows to get work done. There might also be people who would like to try out the Mac OS but don’t want to drop several hundred dollars on a new computer. By de-coupling the two–allowing Windows to run on a Mac and (I hope soon) allowing Mac OS X to run on PCs–Apple allows each to survive on its merits. Perhaps Mac OS X will grab significant market share away from Microsoft. Or maybe Macs will steal market share from HP and Dell.

Either way, the bottom line is that network effects are an irresistible force in the computer industry. No matter how innovative your product might be, it’s not likely to succeed if it’s only used by a small cadre of technological elitists. Bill Gates figured this out in the 1980s, and it made him the richest man in the world. Perhaps Steve Jobs is beginning to figure it out as well. Better late than never.

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Let’s Consider the Facts Before We Call In Government to Regulate Video Games

by on April 5, 2006 · 6 comments

Rebecca Hagelin of the Heritage Foundation recently posted a column about video games on TownHall.com that I think deserves a response. Ms. Hagelin is concerned about video games being “murder simulators” and recounts the story of one youth who killed several people last year and who also happened to play a lot of “Grand Theft Auto”

No doubt, the Devin Moore story that Ms. Hagelin uses to make her case against video games is quite sad and troubling. Before blaming video games for his behavior, however, a serious social analyst needs to weed out a host of other social / environment factors. For example, it was revealed at last week’s hearing on video game regulation that this young man was the product of a broken home and was apparently subjected to severe child abuse. Apparently his father beat both him and his brother several times a week and also forced them to work long shifts (over 16 hours at a time) at his janitorial business. Such factors need to be taken into account when evaluating what made this boy commit such heinous crimes. Yet, Ms. Hagelin ignores these facts in her essay.

But there are other facts ignored here too. I recently penned a study on the many myths and misperceptions driving the push for video game regulation in America today, including Sen. Hillary Clinton’s bill (“The Family Entertainment Protection Act”). The 30-page analysis (“Fact and Fiction in the Debate over Video Game Regulation”) can be found at the Progress & Freedom Foundation website at: http://www.pff.org/issues-pubs/pops/pop13.7videogames.pdf

The general conclusions of my research are as follows:

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Yes, Software Patents are Evil

by on April 5, 2006

Paul Graham’s essays are usually brilliant, but I found this essay on software patents of software patents to be rather short of his usual standard. He actually asks two separate questions: First, given the state of the law, is it evil for companies to seek software patents? And second, is permitting patents on software good policy?

I agree with him on the first question–a technology company that doesn’t play the patent game opens itself up to the risk of extortion by patent trolls. So I don’t blame innovative companies like Microsoft from acquiring software patents in self-defense. And like Graham, I fault companies that attempt to use their software patents offensively against competitors, as Amazon has done.

However, on the merits of software patents as public policy, his defense strikes me as rather weak:

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