June 2008

Sovereign Wealth Funds – Nothing to See Here, Move On

by Braden Cox on June 11, 2008 · 4 comments

This morning the Senate Committee on Foreign Relations held a hearing on Sovereign Wealth Funds–those growing state-owned investment funds (often invested in the tech sector) causing a political stir as of late.

The panelists differed at the margins, but all agreed that sovereign wealth funds are a good thing for the U.S. economy. We need the money! The thought that foreign governments would invest in the U.S. to surreptitiously bring down the U.S. is nil, as it’s a mutually assured destruction strategy. There’s just too much money being invested in the U.S. so even some Arab and Asian countries have an interest in seeing our economy prosper.

ACT released a paper on foreign direct investment earlier this year, where my coauthor Nora von Ingersleben and I conclude that there are processes already in place–namely CFIUS review–that will account for any national security threats. I wrote in a past blog post that Congress should refrain from politicizing foreign investment, including the proposed acquisition of 3Com.

Congress is right to be involved, and CFIUS keeps them involved. Congress receives reports from the CFIUS committee that does a national security review of foreign transactions to ensure transparency in the process.

David Marchick of the Carlyle Group was one of the witnesses, and last month he was a panelist at an event on foreign investment that ACT sponsored in the Capitol Building.

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Michael Powell and Reed Hundt Find Their Inner Politico

by Drew Clark on June 10, 2008 · 3 comments

Michael Powell seems to have finally found his political voice. Reed Hundt probably never lost his. But both former FCC chairmen got into the spirit of debate at the Federalist Society gathering today at the National Press Club. Reporters William Korver and Cassandre Durocher, of BroadbandCensus.com, were present to record the exchange.

The story is just the most recent of a stream of news articles on broadband-related subject available for free at BroadbandCensus.com. As TLF readers may be aware, the goal of BroadbandCensus.com is to collect user-generated data — otherwise known as “crowdsourcing” — through inviting individual Internet users’ to contribute to our publicly-available database of local broadband information, all sorted by ZIP code.

Now, we’re pleased to announce that we are also following technology and communications policy news in Washington, and elsewhere, through daily reporting. If you haven’t been to BroadbandCensus.com, I encourage you to do so. And don’t forget to Take the Broadband Census!

Read Net Neutrality Disagreement Between Two Former FCC Chairmen at BroadbandCensus.com

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Exclusive Handset Prohibitions: Should the FCC Kill the Goose that Laid the Golden iPhone?

by Berin Szoka on June 10, 2008 · 17 comments

Goose that lays golden eggs In a new PFF essay, my colleague Barbara Esbin and I address a recent petition filed by the Rural Cellular Association (RCA) asking the FCC to prohibit exclusive arrangements between wireless handset producers and carriers. The RCA petition claims that large wireless companies have an unfair market advantage by giving their customers exclusive access to certain advanced smart phones, such as the Apple/AT&T iPhone—and that this anticompetitive practice is harmful to rural consumers served by RCA members.

In the piece, we debunk RCA’s arguments premised on a supposed lack of competition in wireless markets. RCA will likely now redouble these arguments by pointing to Verizon’s planned acquisition of Alltel (by far the smallest of the “Big 5” carriers), which was announced the day our piece was published. But even with four large carriers instead of five, the wireless market remains vibrantly competitive—especially as compared to 1992, when the FCC decided that even the two-carrier market was “extremely competitive,” and rejecting arguments that it ban exclusive handset arrangements. Continue reading →

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File-sharing at Cato Unbound

by Tim Lee on June 10, 2008 · 13 comments

Every month, the Cato Institute has an online symposium on an important public policy issue. This month, the focus is on copyright law, and they’re kicking things off with a fascinating piece by copyright activist Rasmus Fleischer arguing that technological progress will make it impossible for the state to prevent people from sharing copyrighted works:

Record industry lobbyists smell the danger, and now they are urging governments to criminalize [stream ripping]. On their orders the so-called PERFORM Act (”Platform Equality and Remedies for Rights Holders in Music Act”) was introduced in the U.S. Senate last year. [4] The proposed law would force every Internet radio station to encrypt the transmission of file information, such as the name of the song. Yet anything visible on the screen can still be easily obtained by special software, encryption notwithstanding, and such restrictions would therefore be ridiculously easy to circumvent. Thus the PERFORM Act includes a follow-up clause banning the distribution of this class of software.

People with some programming skills, however, won’t need to do much more than combining a few readily available and otherwise perfectly legal code libraries to compile their own streamripping tool, one that would circumvent the PERFORM Act. For regulations like these to be effective, it is necessary also to censor the sharing of skills that potentially can be useful for coding illegal software. The circle of prohibition grows still larger: Acoustic fingerprinting technologies, which have nothing copyright-infringing to them, but which can be used for the same feared identification of individual tracks, must probably also be restricted.

This domino effect captures the essence of copyright maximalism: Every broken regulation brings a cry for at least one new regulation even more sweepingly worded than the last. Copyright law in the 21st century tends to be less concerned about concrete cases of infringement, and more about criminalizing entire technologies because of their potential uses. This development undermines the freedom of choice that Creative Commons licenses are meant to realize. It will also have seriously chilling effects on innovation, as the legal status of new technologies will always be uncertain under ever more invasive rules.

Tomorrow I’ll be offering my reaction to Rasmus’s essay. I don’t want to steal my own thunder, but in a nutshell, my take is that Rasmus is basically right to predict that copyright will grow increasingly difficult to enforce as technology continues to reduce the cost of storing and transmitting information. However, I think it’s a mistake to view this as the end of copyright. Even if the war on file sharing is hopeless, copyright can and should adapt to continue serving its essential function, which is not to stop all copying, but rather to reward the creation of creative works. Watch the site tomorrow to see my suggestions for how copyright law can adapt to the stresses placed on it by digital technologies.

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The Future of News

by Jim Harper on June 10, 2008 · 8 comments

If you’re reading this, you know that access to news and information is changing.

Steve Boriss of The Future of News expands on this theme in a Cato TechKnowledge called “The Future of News: A Golden Age for Free Speech?“

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Seasteading

by Tim Lee on June 10, 2008 · 4 comments

Don’t miss my Ars interview with Patri Friedman:

An audacious new project aims to create new competition for the world’s sovereign nations. The Seasteading Institute, the brainchild of two Silicon Valley software developers, aims to develop self-sufficient deep-sea platforms that would empower individuals to break free of the cozy cartel of 190-odd world governments and start their own autonomous societies. They envision a future in which any group of people dissatisfied with its current government would be able to start a new one by purchasing some floating platforms—called seasteads—and build a new community in the open ocean.

History is littered with utopian schemes that petered out after an initial burst of enthusiasm, something the Seasteading Institute’s founders readily acknowledge. Indeed, they chronicle these failures in depressing detail on their website. With names like the Freedom Ship, the Aquarius Project, and Laissez-Faire City, most of these projects accomplished little more than receiving a burst of publicity (and in some cases, raising funds that were squandered) before collapsing under the weight of their inflated expectations.

There are many reasons to doubt that the Seasteading Institute will realize its vision of floating cities in the sea; but there are at least two reasons to think that seasteading may prove to be more successful than past efforts to escape the grasp of the world’s governments. First, the project’s planners are pragmatic—at least by the standards of their predecessors—pursuing an incrementalist strategy and focusing primarily on solving short-term engineering problems. Second, they recently announced a half-million dollar pledge from PayPal co-founder Peter Thiel, giving them the resources to begin serious engineering and design work. While there are many obstacles to be overcome before they will have even a functioning prototype—to say nothing of a floating metropolis—their project doesn’t seem as obviously hopeless as most of the efforts that have preceded it.

I go into some detail about the project and the challenges they’re likely to face. In my judgment, the really difficult problems aren’t engineering or (as a lot of people seem to assume) pirates, but the world’s governments. The moment they got big enough to pose a serious threat to governments’ control over their citizens, the US Navy (or some other navy, depending on where it was located) is likely to come up with a pretext to invade and forcibly impose American jurisdiction over them. This might be technically illegal under international law, but international law has never had sufficient teeth to restrain a world power

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Google CEO Says the Future Belongs to ‘Cloud Computing’

by Drew Clark on June 10, 2008 · 3 comments

WASHINGTON, June 9 – High-speed Internet connections, social networks like Facebook and MySpace, and the concept of “cloud computing” make it possible to “live a lot of your lives online,” Google CEO Eric Schmidt said Monday.

Schmidt said that the ability to transfer and run computer programs, data, and individual software customization temporarily to any computer — a concept known as “cloud computing” — is an important example of how new developments in Internet access facilitate a mobile lifestyle.

“There is a shift from traditional PC computing to cloud computing,” Schmidt said. “That is where the servers are somewhere else, and the servers are always just there.”

Continue reading Google CEO Says the Future Belongs to ‘Cloud Computing’

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FCC targets long-term service plans

by Ryan Radia on June 9, 2008 · 8 comments

Are you a mobile phone user, FiOS TV subscriber, or DirecTV customer who’s happy with your service and bound by a long-term contract? If so, then brace for higher prices thanks to a multifaceted regulatory assault on voluntary contracts.

On June 12, the FCC will hold a hearing to consider imposing regulations on early termination fees, which are the charges that customers who’ve entered into long-term service agreements must pay if they choose to end service prior to the culmination of their contract term.

The FCC isn’t alone in its push to regulate early termination fees. Bills that would limit wireless contract terms have been drafted in both the Senate (by Sens. Klobuchar and Rockefeller) and in the House (by Rep. Markey). And Verizon, among other carriers, faces a $1 billion class-action lawsuit arguing its early termination fees are illegal.

While the bills pending in Congress focus solely on early termination fees for mobile service, the Washington Post reports that the FCC’s upcoming hearing will encompass early termination fees offered by all kinds of consumer telecom services. In addition to wireless companies, many broadband and video providers including DirecTV, Verizon, RCN, and Comcast also offer long-term service plans with cancellation charges levied on customers who end service early.

In late 2007, when the early termination fee debate began heating up, many providers changed their policies to address complaints against wireless contract provisions. Now, AT&T Mobility, Verizon Wireless, and Sprint all prorate early termination fees for wireless subscribers, so users who cancel service in the middle of the contract term don’t have to pay the full $175 early termination fee. The three carriers have also begun allowing customers to change calling plans without affecting their contract end date.

Despite intensifying opposition to early termination fees, these fees are really nothing new. Outside of high-tech services, consumers have long had the choice of signing long-term contracts that involve early cancellation charges. Renters typically sign 12-month apartment leases, and are usually required to pay a breakage fee if they back out of their lease early. Similar contract clauses are often found in fitness center memberships and automobile leases. Are all these incarnations of early termination fees fair game for government regulation, too?

Dictating the terms of telecommunications service contracts runs the risk of depressing investment in network modernization, ultimately harming consumers. At a time when Sprint is building a high-speed wireless network from the ground up, Verizon is laying fiber to millions of homes across the nation, and DirecTV is expanding its fleet of geosynchronous orbital satellites, government-imposed revenue volatility would delay next-generation telecom services that promise faster broadband speeds and more high-def programming.

Continue reading →

8 comments

ID Checks are About Control, Not Security

by Jim Harper on June 9, 2008 · 40 comments

If there was ever any doubt that ID checks at airports are about control and not security, the Transportation Security Administration is clearing that up. Starting June 21, it says, “passengers that willfully refuse to provide identification at security checkpoint [sic] will be denied access to the secure area of airports.”

The claim is that this initiative is “the latest in a series designed to facilitate travel for legitimate passengers while enhancing the agency’s risk-based focus – on people, not things.” So let’s take a moment to look at how refusing airport access to the willful enhances security.

. . . OK! We’re done!

No terrorist or criminal would draw attention to him or herself by obstinately refusing an ID check. This is only done by the small coterie of civil libertarians and security experts who can’t stand the security pantomime that is airport identification checking. The rest of the people traveling without ID have lost theirs – and TSA officials at airports have no way of knowing which is which.

This new rule will do nothing to improve airport security, but watch for the incident when a TSA agent “doesn’t believe” someone who has truly lost his or her driver’s license and tries to strand a traveler in a faraway city.

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Zuneral

by Tim Lee on June 8, 2008 · 10 comments

Awesome…

One of the cool things I noticed about this is that the guy whose blog post brought this to my attention is an English major. Back in 2001 when I was trying to organize an anti-DMCA organization, I don’t think I found anyone who even knew what DRM was, to say nothing of being excited about the issue, who wasn’t a CS major. This is progress.

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