August 2008

Dish Network ponders merger with DirecTV

by on August 7, 2008 · 11 comments

Just as the 505-day XM Sirius antitrust saga comes to a bittersweet end, reports have resurfaced that a new satellite merger may be in the works. Dish Network is floating the idea of merging with competitor DirecTV. Dish Network and DirecTV, the two largest satellite television providers in the U.S., tried to merge back in 2001. Antitrust officials ultimately blocked that merger, concluding that it would hurt competition in television programming. Naturally, a renewed merger attempt would likely encounter similar obstacles, according to industry observers.

This time around, though, the deal may have a better shot of surviving regulatory scrutiny, buoyed by the approval of the XM-Sirius merger. Compared to 2001, competition among video providers is thriving, and there are more alternatives to satellite television than ever before. Many consumers can now choose from a multitude of terrestrial television providers—phone companies are rapidly rolling out IPTV-based video services like FiOS TV and U-Verse, and cable overbuilders like RCN are gaining momentum in densely populated areas.

In addition, a growing number of viewers are shunning traditional television services entirely, turning to a la carte substitutes like the iTunes episode store, Netflix, and Xbox Live Marketplace. With an $8.99 per month subscription to Netflix, it’s possible to stream instantly a video library eclipsing that available on cable or satellite TV. Ad-supported video websites like Hulu and Comedy Central, which offer hundreds of archived TV shows on the Web for free, may soon render the television channel obsolete.

Dish Network’s talk of a potential merger comes on the heels of the company’s first ever quarterly loss of subscribers, and that may just be the tip of an iceberg. Until recently, television subscribers were largely content with watching programs on a predefined schedule, but on-demand services are changing that. As viewers come to expect the ability to watch any show anytime, without bothering to record it in advance, the lack of bidirectionality inherent in Direct-Broadcast Satellite is a glaring deficiency that cable and telecom firms will exploit at every juncture. Unless satellite providers can negotiate arrangements with broadband carriers, or succeed in building wireless networks with newly acquired spectrum, Dish and DirecTV face a bleak future, especially if they are unable to trim costs and enhance content choice.

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Anti-Spam Laws and the First Amendment

by on August 7, 2008 · 14 comments

I’m reading about the first-ever felony conviction for spamming. While I almost always agree with the ACLU on free speech issues, I found the Virginia ACLU’s amicus brief in the acse totally unpersuasive.

The ACLU argues that the First Amendment protects a right to anonymous speech, which I wholeheartedly agree with. However, I don’t think that right can be stretched so far as to strike down the Virginia anti-spam statute at issue in this case. This statute prohibited the falsification of email headers while sending more than 10,000 pieces of unsolicited bulk email. So this means that under the statute, someone may (a) send out an unlimited number of emails using a real email address, (b) send out 9999 emails per day (99,999 per month, 999,999 per year) while falsifying email headers, or (c) send out an unlimited number of emails with falsified addresses to people who have previously consented to receive them. I find it extremely difficult to imagine a circumstance in which these restrictions would impinge on legitimate exercises of free speech. The activities prohibited by this statute simply don’t include the kinds of situations that motivate the constitutional protection of anonymous speech—defending a point of view or releasing sensitive information without fear of reprisal or public embarrassment. Whistleblowers might want to send falsified emails to a few dozen journalists, legislators, or business leaders, but I’m having trouble thinking of a plausible situation in which a whistle-blower had a genuine need to reach more than 10,000 people.

I find analogies to older technologies—and to 18th-century pamphleteers in particualr—unpersuasive in this case because this case just isn’t like anything that existed in the pre-Internet age. In 1975, there just wasn’t any way to transmit tens of thousands of messages for a fraction of a penny per message. The costliness of information transmission—any available communications technology cost at least a few pennies per message—meant that the law never had to grapple with the possibility that sending messages could become a significant enough nuisance to require regulation. Now we do live in that world, and I think it’s a mistake to put too much weight on misleading analogies to older communications technologies with vastly different properties.

A final reason anti-spam legislation doesn’t bother me from a First Amendment perspective is that I don’t see any slippery slope here. Not only is the activity being targeted unambiguously bad, but there are very few grey areas, and the grey areas are pretty bad themselves. The Virginia statute applies two very clear bright lines—spam must be unsolicited and it must consist of more than 10,000 pieces in a 24-hour period—that make it trivially easy for anyone interested in following the law to do so. Moreover, thanks to the growth of spam filters, there is an enormous gulf between bad spammers and legitimate emails users. Legitimate users who did vaguely spam-like things (say, a non-profit organization that sent out a fundraising appeal to people who hadn’t consented to receive it) would get most of their spam blocked by ISPs’ spam filters and would get contacted by email administrators very promptly to be told to knock it off. It’s hard to imagine such an organization breaking Virginia’s law (sending out 10,000 copies and forging email headers), and even if it did it’s hard to imagine a prosecutor going after them. Which means that only spammers are engaging in spammer-like behavior. It’s pretty easy to write a statute that criminalizes most spammers and few if any legitimate email users. To use the Supreme Court’s lingo, Virginia’s spam law strikes me as “narrowly tailored” to blocking an undisputed evil and is no more restrictive than is necessary to accomplish that objective. If there’s any speech restriction that should pass First Amendment scrutiny, this is it.

Update: None of this is to say that some anti-spam laws can’t be too broad. CAN-SPAM, for example, appears to criminalize the sending of “multiple” deceptive emails or the creation of more than five separate email accounts for sending commercial emails. I can certainly think of grey areas for those kinds of prohibitions, and would have serious doubts about their constitutionality.

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TPW 37: The Comcast Kerfuffle 2: The Chairman Strikes Back

by on August 7, 2008 · 14 comments

On this week’s show, we discuss the implications of the FCC’s controversial recent ruling against Comcast in the BitTorrent controversy. This is a topic we have covered previously on our podcast in episodes 34 and 35, and have been writing extensively about on the Tech Liberation Front blog over the last few days. In its decision last Friday, the FCC held that Comcast had engaged in unreasonable network management practices when it delayed access to BitTorrent traffic. Even though BitTorrent Inc. and Comcast have already settled their dispute and indeed are now working collaboratively together on solutions to these issues, FCC Chairman Kevin Martin said that legal action was necessary because others had complained about the practice.

On today’s show we focus on the implications of the FCC’s decision and what it means for the future of net neutrality regulation and communications policy more generally. Joining us for this week’s show are TLF regular contributors Jerry Brito of the Mercatus Center at George Mason University, Hance Haney of the Discovery Institute, Tim Lee of the Cato Institute, Jim Harper of the Cato Institute, James Gattuso of the Heritage Foundation, and Adam Thierer of the Progress & Freedom Foundation who moderates the discussion.

We’re having a little problem with our podcasting plugin, so here’s a temporary way for you to listen. You can download the MP3 here, or use the online player below.

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Day 505: The XM-Sirius Circus Is Finally Over

by on August 7, 2008 · 9 comments

It’s over.   The FCC, which voted to approve the merger between satellite radio firms XM and Sirius two weeks ago, finally released its formal report on the case on Tuesday, ending the drama 505 days after the firms submitted their application to the Commission.

The episode was not the FCC’s finest hour.  The agencies once-vaunted “shot clock” — by which the FCC pledged to decide on mergers within 180 was left in shreds, with the counter going around almost three times before the circus finally ended.   Even at that, XM and Sirius managed to claw their way to approval only by making an (ever-longer) series of “voluntary” commitments:  including offering “a la carte” programming, capping prices for 36 months, making 8% of its capacity available to others to non-commercial and other entities, and extending service to Puerto Rico.   Even more was being considered when the music stopped, including a proposal to require all satellite radio receivers to have built-in HD broadcast tuners as well. (Apparently, there was concern that broadcasters would be frozen out of the audio market, in which they hold a market share of about 96 percent).

This regulatory free-for-all contrasts with the approach taken by the Department of Justice, which — after a fact-specific inquiry, approved the merger –  without conditions – five months ago. Continue reading →

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Clear Apologizes

by on August 7, 2008 · 2 comments

A friend has forwarded me the apology that Clear apparently sent out to all its members today. A laptop with information about new enrollees went missing for a while. It’s a minor security breach, but these things tend to get overblown, so there’s no alternative but to address it forthrightly. Er, no good alternative . . . .

My reason for not using Clear, by the way, is not the risk of breaches like this. It’s registering with the government (through Clear) for preferential treatment when traveling. Other than that, Clear is a very cool privately issued credentialing system whose virtues I regularly tout.

Clear’s apology, after the break:
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Plaxo’s Social Networking “Bill of Rights”

by on August 6, 2008 · 4 comments

MIT’s Technology Review has some great pieces on social networking in its latest issue.   In particular, I enjoyed reading Erica Naone’s piece “Who Owns Your Friends?”  Immediately this piece appealed to a libeartarian like me who is interested in privacy issues, especially because it framed the issues as one of ownership, not one of privacy rights.

The story begins by recounting the story of blogger Robert Scoble who wanted the emails of all of his Facebook friends in his Outlook address book. Unfortunately, Facebook doesn’t provide an export tool for this sort of thing in order to protect the emails of its users. Being a resourceful guy, Scoble contacted some buddies at Plaxo, a company that specializes in transferring data from one site to another. Plaxo provided Scoble with experimental tool that allowed him to extract email addresses from the profile pages of his Facebook friends. Unfortunately for Scoble, this data scrape triggered alerts at Facebook, shutting down his account.

Scoble later had his account reinstated, but this incident brought up an important question: Should data always be portable, or should some sites, like Facebook, be able to clamp down on portability in the name of privacy?

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Regulate the Internet? FCC.gov Has It Right

by on August 6, 2008 · 8 comments

The FCC last Friday may have jumped with both feet into the business of regulating the Internet, but someone forgot to tell the folks that run the Commission’s website.   “The FCC Does Not Regulate the Internet or Internet Service Providers (ISP)” the “consumer publications” page of FCC.gov is still proudly telling visitors, referring them over to their state consumer protection office or to the Federal Trade Commission as the proper agencies for such things.

In the past, I’ve been critical of the shambolic way in which the FCC’s website is run.  But in this case, the problem isn’t with the web folks – they have the policy exactly right.  It’s the FCC, not FCC.gov, that’s bungled the job.

Someone at the Commission will eventually tell the website folks to fix the error.  But who will get the Commissioners to fix theirs?

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John McCain asks a question on LinkedIn

by on August 6, 2008 · 4 comments

This is nice to see, especially given his recent comments about Internet use…

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Game, Set, and Match: Martin!

by on August 6, 2008 · 16 comments

An ex parte letter submitted to the FCC in the Comcast Kerfuffle – subject of strong criticism by TLF-friend and friendly sparring partner Harold Feld – got me thinking on another level about the FCC’s recent action against Comcast.

Among the accusations against Comcast is that it throttled a P2P conduit for movies because it’s also in the busines of delivering movies. The letter points out that colleges and universities, which have no similar interests, do the same things or take far blunter actions against P2P. It’s not a bad point, and it helps dispell the idea that Comcast was doing anything other than trying to provide good Internet service to the bulk of its customers.

Now, given that the letter summarizes the practices of many top universities, it throws in a provocative line: “If there is to be regulation, therefore, it must apply equally to all providers.” This suggests that the same regulation must apply to universities, which got Harold, Ars Technica, and a few others foaming.

The point of the letter was that network managers who don’t sell video services also degrade P2P. Point made. And from what I’ve seen of the reaction: point conceded. Comcast’s network management wasn’t motivated by an anti-competitive impulse.

But still, Feld seemed to argue, Comcast doesn’t get to do that because . . . it’s Comcast. Or something. It’s this blindness to a real legal justification or a real distinction between Comcast and other Internet service providers that I think has him walking hand-in-hand with the FCC into the NCTA’s trap.

The paragraph prior to the provocative line suggesting regulation of universities contains this sentence: “Allowing some Internet service providers to manage P2P traffic – much less to engage in complete blocking of P2P traffic – while prohibiting others from doing so would be arbitrary and capricious.” This is an administrative-law term of art – “arbitrary and capricious.” The use of it tells us that NCTA or Comcast will challenge the FCC’s decision to regulate only one provider of Internet access without regulating all similarly situated.

But Comcast is under a different regulatory regime!, says Harold and the others. Not in an enforcement of this “broad policy statement” thing-y. The FCC is claming free rein to regulate – not authority based firmly in statute – and if it can throw that rein over cable ISPs, it can throw that rein over universities, over Starbucks, and over the open wi-fi node in Harold’s house.

Now, given the free rein that the FCC is asserting, there is a darn good argument that it’s arbitrary (and “capricious”) to regulate only cable ISPs or commercial ISPs in this way. The FCC has to regulate the whole damn Internet this way if it’s going to regulate Comcast.

Is it the best argument ever? Nope. But it’s good enough for what FCC Chairman Kevin Martin wants to do.

Wait. What Kevin Martin wants to do? No, Jim, it’s the NCTA that’s setting the trap.

Au contraire, my inner voice. It’s Kevin Martin. He’s crafty.

By instituting this weird, weak, and barely legal regulation, Kevin Martin will get ‘net neutrality regulation bottled up in the courts for – what – the next five years? By that time, there’s a decent chance of there being more competition among ISPs. Projects like Broadband Census and NNSquad may have changed the product and market landscape. The political landscape will have shifted in exciting new ways. And when the FCC loses in the D.C. Circuit (yet again), the issue returns to a Congress where advocates of Internet regulation have moved to new issues and gotten rusty on net neutrality regulation. It’ll be another three or four years after the FCC loses before their net neutrality regulation efforts can get a head of steam.

So, has Kevin Martin deftly disposed of the ‘net neutrality issue for the next decade? My theory is plausible, though I know some would dispute it. Adam Thierer would undoubtedly call it “absurd” – but he puts that adjective on just about everything.

Net neutrality regulation wasn’t even close to getting through Congress, Adam argued to me recently, and Martin is motivated by his hatred of Comcast and the cable industry, along with his political aspirations. The former point is the strongest, but it’s a matter of perception. What I know of Chairman Martin is not a wild-eyed zealot or a hater, but a planner and careful thinker. Regulating Comcast doesn’t really redound to his political benefit in any meaningful way, and his political aspirations are doomed if he thinks it does.

So that’s my theory, and I’m stickin’ to it: Kevin Martin has set back net neutrality regulaton by a decade – by letting the camel’s nose under the tent.

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Regulation begets Regulation

by on August 6, 2008 · 17 comments

Ryan does a great job of laying out the issues with the MPAA’s SOC waiver request. He makes two key points—that the FCC shouldn’t be telling cable companies what to do with their networks, and copyright law shouldn’t give the MPAA veto power over the design of technological devices. Ryan spends most of his time arguing the first point, but I think the second point is the really important one.

The thing to understand about DRM is that it’s less a encryption technology than (as Ed Felten puts it) a hook on which to hang lawsuits. Every DRM standard of any significance has been broken within months of its release. Without the DMCA on the books, many consumer electronics manufacturers would simply ignore DRM, reverse-engineering the relevant standards and producing devices that accept DRMed content and convert it to open formats. Knowing that this would happen, Hollywood would long since have given up trying to produce the kind of end-to-end DRM that’s at issue in these proceedings.

Which means that the existence of the cable industry’s Selectable Output Control powers is almost entirely a consequence of bad government policy. In a free market, I’d be able to go down to my local Best Buy and purchase $50 box that would take an HDCP input and output the content in a variety of non-encrypted formats. Such a box is unavailable only because Congress—at the behest of the MPAA—made producing it a felony. That, not anything the FCC has done, is the fundamental issue in this controversy.

Now, it makes me uncomfortable to have the FCC dictate how the cable industry runs its network. But I think the fundamental point that needs to be emphasized is that regulation begets regulation. That is, given that the DMCA has screwed up the consumer electronics industry, it’s not surprising that a lot of people want the FCC to step in to minimize the damage. The solution is to repeal the DMCA and let the free market work. But until that happens, I’m not going to get too outraged at Public Knowledge for asking the FCC to prevent the MPAA from abusing its government-granted veto power over the design of consumer electronics devices. I don’t agree with their solution, but I think their heart is in the right place.

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