April 2008

There’s been quite a bit of discussion on this forum recently about whether vacant television channels — also called “white spaces” — should be licensed or unlicensed. Currently, of course, most of us experience Wi-Fi as a form of unlicensed wireless, as in the 2.4 Gigahertz bands.

Last year, I wrote about the issue of white spaces, mainly in the context of the National Association of Broadcasters:

…[B]roadcasters lost the spectrum wars – or at least the first spectrum war of the 21st Century. In early 2006, Congress said enough: broadcasters weren’t effectively using channels 52 to 69, and certainly wouldn’t need them after the transition to digital television (DTV) was completed. Television stations will be forced off those channels, corresponding to 698-806 MHz, on February 17, 2009.

That’s 700 MHz. But what about 500 MHz and 600 MHz? All told, there are 294 MHz of frequencies that broadcasters will continue to occupy ever after the DTV switchover. If more than 85 percent of Americans receive television from cable or satellite, as they do, what sense does it make to reserve these choice frequencies for broadcasters’ exclusive use?

Not very much. [more…]

Now, the broadcasters are basically out of the picture, and the battle is shaping up more pointedly: the wireless carriers in the wireless association formerly known as Cellular Telecommunications and Internet Association, and the high-tech titans like Dell, Google, Microsoft, Philips, etc.

Let’s take a step back from the current debate, though.

All of these unlicensed wireless devices in common use today were largely illegal until significant changes were enacted by the Federal Communications Commission the mid-1980s.

While these policy measures unleashing unlicensed have remained largely in the shadows, they’ll be the subject of a half-day conference at the Information Economy Project, at George Mason University School of Law, on Friday, April 4. More information is available at http://iep.gmu.edu.

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Here Comes Clay Shirky

by on April 3, 2008 · 2 comments

Ars has posted my review of Clay Shirky’s Here Comes Everybody, which is coupled with an interview I conducted with him a couple of weeks ago. Shirky’s a fount of interesting ideas. One of the central ideas in Here Comes Everybody is the concept of a Coasean floor:

Coase is the economist who asked and answered one of the most famous questions in all of economics: if markets are such a good idea, why have firms at all? Why do we have these sort of institutional and organizational frameworks? Why can’t you just have everybody offer their services to everybody all the time, and have markets and contracts put it all together? And his answer was that there’s a huge transaction cost in simply finding who’s available, what they offer, making some kind of deal. And so what firms do, in Coase’s answer, is they lower transactions costs for group effort. And that gives them an economic advantage over markets in certain situations.

Everybody has understood since that article was published in the mid-1930s that there’s a Coasean ceiling: a point past which, if a firm grows too large, it just breaks down. And we’ve seen this with giant conglomerates, whether it was ITT in the 1970s or InterActiveCorp today. The question is: when is it too big?

What we all missed, because it was never really an open question until now, is that there’s also a Coasean floor. Which is to say, there’s a set of group activities that would create some value but it isn’t worth forming an institution to create.

Read on to learn how the collapse of the Coasean floor affects abusive priests, Microsoft and Novell, Wikipedia, and businesses trying to make money in a changed technological landscape.

In his characteristically bullying style, Tom Giovanetti sent me this link to a Washington Post write up of the DataTreasury controversy. Apparently banks have, in fact, proposed an amendment to the patent bill that would be narrowly tailored to exempt themselves from DataTreasury’s patents. While I have zero sympathy for patent trolls (and don’t especially care if they “invented” the patents themselves or purchased them from a third party), carving out narrow exceptions for narrow interest groups is the wrong way to go about patent reform. What we need is broad patent reform that protects people in general, large and small, from abusive patents like the DataTreasury patents. To the extent that narrow carve-outs peel off potential supporters for fundamental patent reform, they might even be a bad thing.

Also, somebody from a PR firm sent me this link. (She was cagey about who she works for, but I assume it’s one of the banks behind the amendment—I wish PR people would just give me a straight answer) Apparently the CBO has, in fact, estimated that taxpayers would be on the hook, on the grounds that the amendment would constitute a taking under the Fifth Amendment. This seems wrong to me—narrowing the scope of a government monopoly isn’t the same as taking somebody’s land—but there it is.

Comcast

by on April 3, 2008 · 16 comments

I have said that the threat of regulation is a credible deterrent to prevent unreasonable discrimination by broadband service providers and we don’t need a new regulatory framework with the unintended consequences which always flow from regulation.

And James Gattuso, noting that Comcast and BitTorrent were already working with one another on a solution to their network problems “long before this story broke,” correctly chided me for overlooking how public opinion is also a credible deterrent. James is right, particularly when there is a competitive market. And like it or not, the broadband market is competitive.

A “duopoly,” you say?

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This week’s C:\Spin (#197), CEI’s tech policy newsletter, casts net neutrality in the appropriate light. Calling out proponents of neutrality for what they are–political predators–my colleague Wayne Crews lays bare the misconceptions and wrong-headed thinking that make up the neutrality debate:

“You know who owns your pipes? Your customers. You have no right to set up a tollbooth.”

– Sen. Byron Dorgan (D-ND), September 17, 2007

Sen. Dorgan’s statement refers to the broadband infrastructure built up by the telcos and their rivals. It lays the “net neutrality” issue bare: if you’re an infrastructure owner or Internet service provider, government people like him shall dictate your relationships with the world at large.

Welcome to infrastructure socialism, 21st century style.

Online activists teamed with superstars like Google seek a perpetual “open access” business model imposed on Internet service. Last summer’s master stroke: to link future wireless spectrum auctions to accommodating the policy.

Comcast recently received letters of inquiry from the Federal Communications Commission (FCC) in response to a petition filed by a coalition averse to what it regards as unjustified data discrimination against file-sharers. They seek fines in the millions.

Barack Obama, unveiling his “innovation agenda” late last year, pledged, “I will take a backseat to no one in my commitment to network neutrality. Because once providers start to privilege some applications or web sites over others, then the smaller voices get squeezed out, and we all lose.”

Check out the rest at CEI’s website where you can also read back issues of C:\Spin or sign up to receive them in your email inbox.

Monday’s news indicating that ECMA’s Office Open XML (OOXML) standard will be approved has some people crying foul about the whole thing.

In case you haven’t been following things, OOXML is a document format up for approval before the International Organization for Standardization (ISO). It’s been a wild and politicized process for what one would think would be a relatively objective task of evaluating a technical standard.

OOXML was developed by Microsoft, so obviously Microsoft has been pushing for its approval. Companies like IBM and Sun, which developed ODF, an existing document format standard, have been lobbying against approval.

Nothing new under the sun, as my colleague Morgan Reed writes on the ACT blog. IBM’s been lobbying for state procurement preferences for ODF for the past few years:

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Me on ID

by on April 2, 2008 · 0 comments

The Privacy Symposium has up a video of a speech I gave there last year. It’s a pretty good run-down of my thinking on identity systems, and it’s a wonderful exhibition of my willingness to tell bad jokes and just let them hang out there (shudder).

If you’re not already sick of what I have to say, you might enjoy watching it.

A great comment by Lewis Baumstark:

The current software patents landscape is more akin to Bayer creating a cancer curing-drug and instead of getting a patent on their specific formula, they get a patent covering the general ability to cure cancer. Meaning anyone else who creates a different drug to do the same thing would be infringing.

Quite so. To unpack this analogy a little bit, the analog of the “specific formula” is software’s source code. If we wanted to create a sensible software patent system, the way to do it would be to require software companies to disclose their source code in their patent applications, and then grant patents that prohibit other companies from duplicating that source code, just as drug patents prohibit companies from exactly duplicating drugs. Except that, obviously, source code is already protected by copyright law, so such a patent system would be totally superfluous.

Instead, we have a system where a company with no employees and no products can claim a de facto monopoly on the ability to transmit email wirelessly and use it to extort hundreds of millions of dollars out of companies that are producing useful products. Nobody claims that RIM literally stole the technological designs NTP claimed in its patents. Rather, all NTP claimed was that RIM’s technology fell under the broad category of functionality claimed in NTP’s patents. “Curing cancer” might be a bit broader than “transmitting email wirelessly,” but not much.

Likewise, I have yet to see any evidence that the banks being sued by DataTreasury literally copied DataTreasury’s designs. Rather, DataTreasury’s patents are so broad that it’s simply impossible to develop a digital check-clearing system without running afoul of the patents. I don’t think there’s any serious policy argument for allowing companies to claim such broad patent monopolies.

The white space debate has been the subject of much attention lately, with Microsoft, Dell, and Google pitted against the CTIA on the question of how to allocate white spaces between UHF channels. The two competing proposals are 1) auction off white spaces, similar to the 700mhz auction, or 2) leave them unlicensed and managed (like 2.4Ghz) but allow devices which don’t cause interference.

This controversy again raises the issue of the desirability of unlicensed spectrum. I’ve been reading about the merits of unlicensed spectrum, inspired by a 2006 exchange between Jerry Brito and Mike Masnick on TLF and TechDirt. Jerry makes a compelling argument that command-and-control commons rules might hinder the emergence of superior networks operating with devices emitting greater than 4w EIRP.

The public interest is to allocate the spectrum in the most economically efficient manner, so if unlicensed spectrum uses do not make the best use of scarce airwaves, unlicensed bands should be auctioned off. Tim envisions privately managed commons that would provide for much the same openness now offered by unlicensed spectrum, but without a monolithic regulator imposing centralized rules.

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If you are an tech uber-geek with a particular affinity for spectrum policy, then you need to be reading the Spectrum Talk blog written by Michael Marcus. Anyone who has closely followed spectrum policy and FCC wireless regulation over the past quarter century will recognize Mike’s name because that’s how long he spent at the FCC covering this stuff. He’s covered spectrum policy from just every angle imaginable, and luckily he can now tell it like it is since he retired from the Commission a few years ago to engage in private consulting and writing. So make sure to check out his blog.

Note: Mike is also speaking this Friday at what looks to be a terrific conference on “The Genesis of Unlicensed Wireless Policy” organized by Tom Hazlett of George Mason University Law School. You can contact our own Drew Clark if you are interested in reserving a seat at: iep.gmu@gmail.com