January 2009

Cable Companies to Log Viewing Habits–Is Privacy at Risk?

by Ryan Radia on January 12, 2009 · 25 comments

According to Investor’s Business Daily, several major cable companies have launched an advertising start-up called Canoe Ventures that is developing the technology to record and analyze cable subscribers’ viewing metrics. As part of this plan, Comcast is reportedly building a “500 TB TV Warehouse” to store the aggregate habits of its 16.8 million digital cable customers.

Canoe has the potential to bring television advertising techniques up to par with their online counterparts, which have for years enabled websites to tailor ads to individual visitors. While cable companies haven’t used digital set-top boxes to collect viewing metrics until fairly recently, the concept of tracking television viewing habits isn’t new. For several years, TiVO set-top boxes have logged these habits without any ensuing privacy violations. And last May, Charter Communications began selling set-top box data to Nielsen Media Research so it could analyze the viewing statistics of Charter’s Los Angeles-area cable customers.

It’s a near-certainty that Canoe will have privacy activists up in arms, warning us that consumer privacy is under siege and calling for regulators—or Congress—to act. But as always, privacy risks must be balanced with the wealth-creating upside of targeted marketing. Data mining can indeed co-exist with effective privacy safeguards, and disciplined firms must be allowed to experiment with intelligent methods of matching buyers with sellers.

Continue reading →

25 comments

Ars on “Better FCC Indecency Complaints”

by Adam Thierer on January 12, 2009 · 15 comments

Over at Ars, Matt Lasar has a piece about the need for better FCC indecency complaint statistics. He has been monitoring the wild fluctuations in indecency complaint tallies in recent years and wonders:

whether the agency’s indecency/obscenity statistics reflect spontaneous viewer response to the level of erotic/linguistic friskiness on TV or solely on the power of coordinated campaigns launched by groups like the Parents Television Council.

Indeed, PTC is the primary culprit. As I noted in my big 2005 PFF report “Examining the FCC’s Complaint-Driven Broadcast Indecency Enforcement Process”, “The PTC’s increasingly effective use of computer-generated campaigns against specific TV programs is a leading factor in explaining the large jump in indecency complaints in recent years.” The PTC has even taken credit for it themselves, as I noted in the paper.

How did the FCC’s indecency process get so screwy, and how did the PTC come to influence it so greatly? As I noted in that paper (as well as a Supreme Court filing with my friends at CDT), in recent years the FCC has quietly and without major notice made two methodological changes to its tallying of broadcast indecency complaints, both changes urged upon the FCC by a single advocacy group — the PTC — targeting broadcast indecency:
Continue reading →

15 comments

Cellular Socialism

by Berin Szoka on January 12, 2009 · 15 comments

A regular communist—I mean, columnist—for the Toronto Star, Canada’s largest daily newspaper, asks in an op/ed: “Is a cellphone a basic human right?” Shockingly, her answer is… yes!

She’s green with envy that, for once, the U.S. has out-socialism-ed Canada (the land of polite, democratic socialism) with SafeLink Wireless, “a program that provides eligible people with a free cellphone and 68 minutes a month of free airtime for the period of one year. It includes texting, voicemail, call waiting and caller ID.”

SafeLink was the brainchild of Miami-based TracFone Wireless Inc., the largest prepaid cellphone company in the U.S. As a purely prepaid provider, TracFone has always aimed at the market’s lower end.

“A telephone service, just in general, is not a privilege, it’s a right, and we feel it’s a corporate responsibility to provide it,” says José Fuentes, TracFone’s director of government relations. “Everyone should be in contact, should have the opportunity to get a phone call, especially if it’s an employer.”

Someone might want to tell the saintly José that his company isn’t offering SafeLink out of the goodness of their collective, corporate heart, or because they feel a moral obligation to do so. Nope, they’re sucking at the teet of the FCC’s great hidden welfare fund:

SafeLink is subsidized by the FCC’s Universal Service Fund, which requires all phone companies – or their customers, if they pass it on to them – to contribute via a monthly $1.25 to $1.50 addition to their bill, like the new 25-cent 911 fee in Canada. The fund reimburses TracFone $10 of the $13.50-per-user monthly cost.

I’d bet good money that SafeLink will make a lot more than $3.50 per user each monthly by selling additional airtime.

One might think that subsidizing cell phone service is good public policy. Indeed, direct subsidies probably do less to distort the market than, say, requiring private companies to cross-subsidize free service for some users at the expense of others. But, please, if you’re going add to my cell phone bill for your pet welfare projects, spare me the sanctimonious nonsense about cell phone service being a “right” like, say, life, liberty or the pursuit of happiness. Continue reading →

15 comments

Me in DC

by Tim Lee on January 12, 2009 · 5 comments

If you’re in the DC area (and not at Cato’s important counter-terrorism conference that starts this morning) I hope you’ll consider attending two DC-area events I’ll be participating in. First, tomorrow I’ll be tag-teaming with fellow TLFer Jerry Brito to give a Hill Briefing on network neutrality. The talk will be designed for Hill staffers, but it’s open to the public and you’re encouraged to come and ask us softball questions.

Then on Wednesday, I’m going to be a panelist at a Brookings Institution conference on the limits of abstract patents. Also on panels will be some of my favorite patent law scholars, including Ben Klemens (an organizer of the conference whose excellent book I discussed here), Jim Bessen (whose book I reviewed here), Peter Menell (whose Regulation article I discussed here), and John Duffy (with whom I often disagree: I criticized him here but loved his work on appellate competition). It promises to be a great conference on an important topic.

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Google’s Growing Advertiser Base

by Berin Szoka on January 11, 2009 · 6 comments

The NYT reports that Google has recently disclosed in an SEC filing that it had 1 million advertisers as of 2007. Some analysts suggest that Google’s growing scale will lead to higher ad prices:

Ben Schachter, an analyst with UBS, said he expects the current number is likely to be between 1.3 million and 1.5 million. Google declined to comment on the current size of its advertising base.

“It is a number that people have wanted to know for a long time,” Mr. Schachter said. More advertisers means more revenue — and more revenue, on average, for every search query — for a couple of reasons: a larger number of queries will have ads matched against them; and on popular queries, competition for placement will be more intense, and as a result, ad prices, which are set by auction, will be higher.

But is Google’s success really driving up ad prices? The same piece also notes that:

Interestingly, each advertiser, on average, spent a little more than $16,000 a year on Google. That figure changed little between 2003 and 2007.

As one of the commenters on the piece noted:

If average advertiser expenses hasn’t really changed in the last 5 years, maybe Google’s argument that it’s not a monopoly because prices are determined by ad auctions, not Google’s search share, holds some weight.

Meanwhile, Google Watch notes Microsoft’s recent success in signing up Verizon, Dell, Sun and Hewlett-Packard as partners for Microsoft’s Live Search engine and asks whether Google’s success is driving potential partners into Microsoft’s arms, as Microsoft appears to be working harder to gain market share for its own search and advertising products. So can Microsoft—and Yahoo!—regain momentum?

Perhaps 2009 will bring some answers to these questions—and more hard data about ad prices. But whatever happens, it’s a safe bet that speculation and fierce argument will abound with every new development in the search/advertising wars.

6 comments

Is the DTV Transition Dog About to Jump its Leash?

by Berin Szoka on January 10, 2009 · 10 comments

PFF’s President Ken Ferree wrote a great piece over on the PFF blog (reprinted below) calling for Obama to stay the course on the DTV transition. Always quick with the bon mot, Ken makes particularly apt use of a very funny anecdote from David Hackett Fischer’s excellent new biography of Samuel Champlain, the fascinating founder of Quebec.

* * *

The Obama Transition Team apparently has asked Congress to postpone the long-planned, and long-overdue, DTV transition beyond February 17th. It is not clear, at least to your humble correspondent, whether the request is intended primarily to provide political cover to the new Administration in the event the transition does not proceed smoothly, or whether this is a serious effort to delay the recovery of a large swath of analog television spectrum. If it is the former, the effort is completely understandable and likely prudent. If the latter, however, the request is misguided and counterproductive at a time when technology policy should be driven by the needs of the Twenty-First Century rather than those of the last. In either case, however, Congress should abjure any inclination to accede to the Team Obama’s request.

In the 16th Century French Court, there was a titled position known as the “Picqueur de Chiens de la Chambre du Roy” – roughly, “Chief Whipper of Dogs in the Royal Kennel.” As one of the early advocates for bringing the DTV transition to a speedy and firm conclusion, I feel obliged to serve a function akin to Picqueur de Chiens de la Chambre du Roy and use the cane to make sure the DTV dog does not break heel and bolt. Continue reading →

10 comments

Will 2009 Be the Year of Multiple Digital Identities?

by Sonia Arrison on January 9, 2009 · 10 comments

Here’s an excerpt from my column at TNW today:

Currently, 60 percent of Facebook’s teen users have implemented privacy controls, compared with only 25 percent to 30 percent of adult users. This is an interesting statistic, given the common assumption that members of the younger generation don’t care who sees their data. It is probably also a sign to entrepreneurs that there will be greater demand in the future for people to do more with their profiles, meaning more than one. That particular question brought up more controversy than one might expect.

If people could have more than one profile, argued Facebook’s Chris Kelly, the user experience would break down.

“It is important to have a single identity, and you may want to show different parts to different people,” he said.

Not everyone was convinced. Indeed, as Jim Dempsey pointed out, in real life people often showcase very distinct identities in different situations.

When at work, for example, people have a career persona. When at a spouse’s event, they don their spouse persona, and when picking up their children from school, they show their parent persona. Many people like to keep these personas separate. Now, of course, people often tell coworkers about their kids, but they don’t necessarily want to be defined that way in the context of their workplace. Being able to keep these identities apart in a more convenient way may very well be the next big social network innovation that consumers can’t wait to embrace.

[…]

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Yet Another Reason to Oppose REAL ID

by Jim Harper on January 9, 2009 · 8 comments

heather-garcia You’d have to get your picture taken at the DMV.

“It’s stressful and degrading and my nose and chin look shiny,” says a one-time TLF blogger (not pictured here).

The woman pictured here was arrested for driving without a license. Perhaps because she didn’t want to get her picture taken at the DMV.

Say No to the national ID law – and to those trips to the DMV!

8 comments

The Right Way to Allow Cell Phone Jammers – And the FCC’s Way

by Berin Szoka on January 8, 2009 · 40 comments

Adam Thierer noted in mid-December that the FCC was considering allowing the experimental use of cellphone jammers in prison. The FCC just issued (PDF) a Special Temporary Authorization to allow the DC Department of Corrections to test a cell phone jamming technology.

This technology sounds like an excellent solution to a serious problem: The illicit use of cell phones inside correctional facilities by prisoners across the country. In particular, the technology appears to be “directional,” meaning that unlike traditional jammers, which simply block signals within a certain radius around the jammer, this technology appears to be capable of blocking signals inside the confines of a particular room or building. In fact, I’m sure millions of Americans would love to see such technologies implemented in cinemas, theatres, and other performing arts venues across the country. I, for one, am tired of having the exquisite acoustic delicacies of Bach interrupted by annoying ring tones, such as the (painfully) immortal “Who Let the Dogs Out?”

So Much for The Rule of Law

But there’s one important problem: The FCC isn’t waiving a rule here against cell phone jammer. unless I’m missing some subtle statutory quirk, they’re essentially “waiving” a statute—specifically 47 U.S.C. 333:

No person shall willfully or maliciously interfere with or cause interference to any radio communications of any station licensed or authorized by or under this chapter or operated by the United States Government.

You don’t need to be an administrative lawyer to know that agencies can’t just ignore acts of Congress—no matter how good the policy reason for the waiver is. That’s a big part of what the “rule of law” means. Period. Do not pass ‘Go’. Do not collect $3,101.09 (today’s equivalent of $200 in 1935, when Monopoly debuted).

Fortunately, as noted in the WSJ article Adam cited, at least one legislator realizes this and thinks it’s worth fixing: U.S. Rep. Kevin Brady (R., Texas) told the Journal that his office is “drafting the necessary legislation to remove this outdated FCC roadblock.” The FCC, of course, sped right past that particular roadblock. But then, what should we expect from an agency that has, under its outgoing (and none-too-soon!) chairman Kevin Martin, simply disregarded statutory limits on its authority when it found Comcast in violation of the agency’s non-binding net neutrality principles this summer? (My PFF colleague Barbara Esbin has eloquently condemned this violation of the rule of law in, “The Law is Whatever the Nobles Do: Undue Process at the FCC” (PDF).)

Now, when Congress considers this question, let us hope that they draw the right lesson from this episode: Whatever the wisdom of outright bans on particular technologies, writing such bans into statutes is a really bad idea. At least if such decisions were left up to regulatory agencies, they would have the flexibility to decide when to depart from a general ban. Thus, the best approach would be to repeal the ban altogether. Continue reading →

40 comments

The Most Important Number for Technology Policy in 2009

by Berin Szoka on January 8, 2009 · 19 comments

Is $1,200,000,000,000.00. That’s the expected 2009 Federal budget deficit. Since the current Federal debt is estimated at a “mere” $10.6 trillion, this means that we’re expected to add nearly 9% in a single year to a debt accumulated over 233 years (since 1774). This number also amounts to more than 8% of the U.S. economy.

So what does this have to do with technology policy? To start with, this figure comes from Congressional Budget Office estimates, which “don’t account for the huge economic stimulus bill Obama is expected to propose soon to try to jolt the economy.” So, while the Obama team has talked about big “public works” and “infrastructure” spending (which used to be called, variously, “make-work,” “pork barrel” and “corporate welfare”), there’s sure to be huge pressure not to waste more taxpayer money on top of this staggering figure. Whatever blame Bush deserves, Obama probably doesn’t want to go down in history as the man who finally caused the U.S. government to default on its unmanageable debt burden.

One certainly could make an argument that the kind of technology-related “infrastructure” stimulus Obama has talked about (e.g., broadband subsidies) would be less of a waste of money than, say, simply building more bridges (as Japan did in the 1990s, its “lost decade”) or other reflexively Keynesian responses. But even so, I suspect that the total amount of funding made available for such projects won’t be anywhere near enough to satisfy the technology policy Left.

This could result in increased pressure on the Administration to increase regulation of the technology sector in order to implement tech-leftist ideas about “protecting” users’ privacy, promoting media diversity or “fairness”, mandating net “neutrality,” “opening up” spectrum, etc. Such proposals might seem attractive precisely because they generally wouldn’t require increased Federal expenditures other than the cost of hiring more bureaucrats (which means more government employee union jobs anyway—hardly a bad thing for Democrats)—while the economic consequences of such proposals for companies and consumers will probably surely be trivialized. For example, if the advocates of government control at the so-called “Free Press” can’t get universal broadband, they’ll probably press that much harder to cripple online advertising and traffic management by ISPs, just to name two popular bogeymen.

One might think that a sharp economic decline would cause policy-makers to think twice before undermining the business models that have supported IT innovation and real infrastructure investment. But one has only to look at the policies of FDR’s first two terms to see how even an amiable, soft-spoken president elected on a mantra of change and “uniting” the nation in a time of crisis could consistently choose to place “Reform” (i.e., increased regulation) over “Recovery” (i.e., the health of the economy)—with devastating economic consequences.

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