In between all the great panels I was covering this week at CES, I spent time on the floor walking endless laps around the massive Las Vegas convention center. (Seriously, I have blisters on my feet right now). There were tons of cools gadgets and new services being showcased. Here are a few things that really stood out for me:
* High-def format war solutions: LG announced a dual format high-def DVD player called the “Super Multi Blue Player” that will play both next-generation high-def DVD formats (HD-DVD & Blu-Ray). I think that’s great news and other dual players are likely to follow now. Also, Warner Brothers will start developing dual-format “Total High Def” hybrid movie discs that have both the Blu-Ray and HD-DVD versions of the movie on them.
* Cell phones that double as TVs: I visited a few wireless booths where manufacturers were highlighting cell phones that could show live TV. At the Qualcomm booth I actually got to play with an upcoming Verizon phone that will be powered by Qualcomm’s MediaFlo technology. The picture looked very good and the channel surfing was on par with what we’ve come to expect from most cable boxes.
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Good news from the Senate:
At first [Hollywood] approached the FCC, and the FCC complied by dutifully trotting out some new broadcast flag regulations. Unfortunately for the content industry, the FCC doesn’t generally have the right to tell manufacturers how to build their products. The rules were thrown out by an appeals court in 2005.
Undaunted, the industry tried again in Congress. Last year, when a rewrite to the 1996 Telecommunications Act was being considered, broadcast flag legislation was in fact attached to the bill and even made it through committee before bogging down.
Sununu’s bill will attempt to rein in the FCC and prevent it from reviving the broadcast flag without Congressional authorization to do so. “The FCC seems to be under the belief that it should occasionally impose technology mandates,” Sununu said in a statement. “These misguided requirements distort the marketplace by forcing industry to adopt agency-blessed solutions rather than allow innovative and competitive approaches to develop. We have seen this happen with the proposed video flag, and interest groups are pushing for an audio flag mandate as well. Whether well-intentioned or not, the FCC has no business interfering in private industry to satisfy select special interests or to impose its own views.”
Whatever your views on DRM more generally, it’s awfully hard to make a libertarian argument for giving the FCC authority to dictate how consumer electronics companies will design their products.
Over at the ACT blog, Mark Blafkin pinpoints what makes the iPhone really great: 200 patents!
The Apple iPhone is the result of tens of millions of dollars in research and development by some of the smartest minds in computing. The investment necessary to develop a radically new interface like Multi-touch requires that Apple have a way to protect that investment. If Nokia, Sony, and Motorola could all simply copy it in their new phones, why would Apple even bother? Besides, I’m sure Apple has had enough of playing R&D Lab for the rest of the industry.
That’s why Mr. Jobs declared, “Boy, have we patented it!” There are a lot of bad software patents out there, but devices like the iPhone make us all realize why we can’t throw the baby out with the bathwater. There are some things so cool, so innovative, they deserve patent protection.
I have yet to see a list of the patents Apple requested, and Blafkin doesn’t provide such a list, so it’s hard to judge how much of them are baby and how much are bathwater. But Blafkin’s supposedly rhetorical questions aren’t actually that hard to answer. Why would Apple bother to develop something like Multitouch without the benefit of patent protection? Quite obviously, it’s because if the product is as good as Uncle Steve’s presentation made it look, Apple is going to make a ton of money on it. And they would be able to make a ton of money even if they hadn’t applied for a single patent.
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This afternoon at the big Consumer Electronics Show in Las Vegas, FCC Chairman Kevin Martin spent an hour talking about his public policy priorities with Gary Shapiro, the head of the Consumer Electronics Association.
The only real news from the discussion was Martin’s disappointing announcement that the Commission would not be granting the cable industry’s request for relief from the set-top box “integration ban,” which prevents cable and telco video providers from providing set-top boxes with integrated security features. (My PFF colleague Tom Lenard penned an excellent essay on this silly regulatory industrial policy if you need more background). These rules just retard sensible market innovation and drive up consumer costs.
Chairman Martin also used the opportunity to put in another plug for a la carte regulation. “It would be positive for consumers” and “a good thing” he said. He cited the FCC’s second report on the matter which he commissioned and ignored the agency’s earlier report which came to opposite conclusion. (Details here).
On other issues, Chairman Martin waffled back-and-forth and didn’t seem to come to any definitive conclusions. For example:
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Congratulations are in order to our friends at Techdirt, who recently raised a round of funding to expand their Insight Community and welcomed Mark Fletcher, founder of Onelist and Bloglines, to their board of directors.
One of the remarkable things about Techdirt is how the Internet has allowed a small number of (exceptionally smart) people to do a lot with a little. According to the article I linked to above, they raised $600,000. That seems like a remarkably small number for a web site that gets more traffic than your average mid-sized newspaper’s website. And of course, Techdirt reached its current level of prominence before raising this round of financing, so I imagine this will allow them to be even more successful in the months ahead.
Over at the EFF blog, Derek Slater makes an excellent point:
Great gadgets for your music collection are all over CES: servers that stream to devices throughout your house, slick portable players and music cell phones, place-shifting software that lets you–and your friends–hear your collection from any computer, and much more. But if you want to do more with your DVD collection, you can basically forget about it.
The reason why is, of course, the DMCA. While anyone can build a device that rips music CDs and make use of your MP3s, no one can build a device that unlocks the DRM on DVDs without getting Hollywood’s permission first. Sure, you can find software online to help you rip your DVDs and put them on your iPod, but you won’t find such features built into consumer products on display here. (Kaleidescape, which offers a high-end multi-thousand dollar DVD server and got sued for it, is the exception that proves the rule.)
This fact is even more striking in light of all the emerging video delivery system here, including Microsoft’s IPTV system, cell phone video services, and movie downloading systems. You don’t have to look hard at CES to find a product that aims to help consumers acquire video on the device of their choice. Yet DVDs remain just as limited as they ever were.
I’ve made this point before. I always get really frustrated when DMCA supporters assert that the DMCA has been on the books for almost a decade and no harm has been done. It’s impossible to predict which specific devices would have been invented without the DMCA. But there’s obviously a Kaleidescape-shaped hole in the consumer electronics market, and I’m having trouble thinking of another explanation.
I have come to the conclusion that the Net neutrality issue has become for tech policy what Angelina Jolie is to the world of Hollywood celebrity: big crowds; a caravan of reporters and photographers; swarms of groupies and gawkers… all these things follow wherever they go. That was the case again today in Las Vegas when a panel discussion took place at CES about Net neutrality.
Before a jam-packed room (many of whom were Washington lobbyists, reporters and analysts), Paul Misener, VP of Public Policy for Amazon, Tom Tauke Executive VP of Public Affairs for Verizon, and Deborah Platt Majoras the Chairman of the Federal Trade Commission debated the future of Net neutrality (NN) regulation. Mike Feazel of Communications Daily moderated.
Feazel began by asking if there will be a Telecom Act in the new Congress and whether NN will be a part of it. Amazon’s Misener said that we will get a Telecom Act in this Congress and NN will be front and center. And it will pass. But Verizon’s Tauke disagreed saying that it is very unlikely we will see passage of a bill this session because “we don’t have the dynamics to pass a Telecom Act.” There is no major issue or compelling reason for action, Tauke said. Moreover, energy and environmental issues will trump telecom policy issues in the relevant committees of Congress now that the Democrats are in charge. And the franchising issue has largely been resolved with the FCC’s latest franchise reform order, he said. Plus, don’t forget about the Iraq debate, he noted. But Paul Misener said that Senators Dorgan and Snowe have already reintroduced their non-partisan NN bill this week and that legislation is expected shortly in the House.
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Via Julian, Christopher Yoo has an interview at Network Performance Daily. Art Brodsky has a rebuttal, and Yoo ripostes.
I have to say I don’t find this argument by Yoo terribly persuasive:
Allowing broadband providers to use different protocols can also expand the number of dimensions along which networks can compete with one another for business. Employing different protocols might permit smaller network players to survive by targeting sub-segments of the larger market, in much the same way that specialty stores do when confronted with competition from a low-cost, mass-market retailer. For example, network diversity might make it possible for three last-mile networks to coexist: one optimized for traditional Internet applications (such as e-mail and website access); a second designed to facilitate time-sensitive applications (such as streaming video and VoIP), and a third incorporating security features to facilitate e-commerce and to guard against viruses, spam, and other undesirable aspects of life on the Internet. By mandating that the entire Internet operate on a single protocol, network neutrality threatens to foreclose this outcome and instead force networks to compete on price and network size-considerations that reinforce the advantages already enjoyed by the largest players.
The whole point of the Internet is that it is (as the name implies) interconnected. An “Internet” service that only connected you to a subset of the world’s computer users would be dramatically less valuable than the current, public Internet.
But for quality of service to work, it would have to work from end to end. Congestion can happen at any point along the network, so it makes little sense to do a lot of work offering performance guarantees for the last mile while the backbone remains a best-effort network. So as far as I can see, any prioritization scheme would have to be adopted by the whole Internet. It wouldn’t make a lot of sense to have different ISPs running different protocols.
I’m also not sure I understand the point of the Akamai example, since I don’t believe anyone thinks that Akamai would become illegal under a network neutrality requirement. Obviously, if there’s language that would inadvertently ban Akamai, that would be something everyone would agree needs to be changed, but I haven’t seen an example of language that would make Akamai illegal.
In an increasingly digital world filled with intangible products and instantaneous downloads, does the world really need packaged media anymore? That was the theme of an interesting panel I sat in on this morning at CES in Las Vegas. Panelists debated the future of packaged, physical media (CDs, DVDs, tapes, etc) and generally concluded that it was not dead just yet.
For example, DVDs as a form of packaged media are not dead but growth is slowing, argued Stephanie Ethier, an analyst with market research firm InStat. As broadband speeds grow, however, this could change. Homes need to have roughly 10 Megs of bandwidth to have a satisfactory movie downloading experience, she said, and that world could be upon us soon. 18% of music will be distributed electronically by 2010, she said, but there is still value in the CD due to the “collection value” many users place on having the actual physical disc in their home somewhere. Don Patrican of Maxell agreed saying that “people are collectors by nature” and that they love the idea of having a small personal and physical library in their home that they can see and feel. I thought that was a very good point which I can certainly relate to since I do that myself.
But I then asked a question about whether or not this was all just a generational thing and wondered if my kids would have ANY physical media / storage devices or formats when they are adults in the 2020’s. In response, Don Patrician said we shouldn’t confuse early adopters with the mass market. “Many demographic groups will not embrace all this new technology for some time.” Rich Lappenbusch of Microsoft generally agreed saying that “Many families still don’t trust technology” and want the security that comes along with a physical backup copy.
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