May 2010

While police and prosecutors have encouraged the growth of a surveillance state, they don’t seem so enthusiastic about the growth of a surveillance citizenry. Maryland and other states have recently seen privacy laws invoked to squelch the unauthorized recording of public officers performing public duties in public areas. Until courts put an end to those bogus claims, we should make sure that police officers know that we may monitor traffic stops to protect our rights; I below offer a bumper sticker and magnetic door sign that ought to help on that front.

Radley Balko recently reported on the latest attempt to use privacy laws to punish citizens for recording police misconduct. In this case, Anthony Graber was arrested for posting on YouTube a video he’d captured on an un-uniformed Maryland state trooper, driving an unmarked car, pulling over and rushing at Graber with a drawn handgun. Soon after Graber posted the video, he was charged for violating the Maryland Wiretapping and Electronic Surveillance Act, Md. Code Ann., Cts. & Jud. Proc. § 10-401 et seq. (2010), which basically outlaws secretly recording a private conversation.

Maryland’s police must be feeling a bit testy, these days, about getting recorded on-the-job by uppity citizens. Earlier this spring, an inconvenient video of the beating of Jack McKenna put the lie to the claims of Maryland police that McKenna had provoked the incident by attacking the officers and their horses. State and federal officials have since launched “excessive force” inquiries.

Did that video violate the privacy of the three officers, clad in riot gear and swinging batons, who surrounded and beat the unarmed McKenna? No. Neither did the video that Graber shot of the Maryland trooper strutting towards him with a drawn handgun. Courts have already explained that wrongs under the Maryland Wiretapping and Electronic Surveillance Act require a showing that someone’s reasonable expectation of privacy has suffered violation (see Fearnow v. C & P Tel. Co., 104 Md. App. 1, 655 A.2d 1 (1995), rev’d on other grounds, 342 Md. 363, 676 A.2d 65 (1996)), and no officer can have a reasonable expectation of privacy while on a public street, performing public duties. Continue reading →

In my recent testimony before the House Commerce Committee on a proposal to require event data recorders in all new cars sold in the United States, I pointed out that the mandate would go far beyond what is needed to ensure safety. Indeed, the cost of EDRs raises the prices of new cars, marginally reducing the pool of used cars and keeping lower income drivers in older used cars which are less safe.

The demand for EDRs in all cars, collecting and transmitting data about all crashes, suggests that something more than statistically relevant safety data is what advocates of this mandate want. I put a finer point on these issues today in answers to questions propounded to me after the hearing.

The proposed EDR mandate includes controls on the use of EDR information, a nominal protection for privacy, but the EDR mandate “sets the stage for migration away from consumer privacy toward serving the goals of government and industry related not only to safety but also to general law enforcement, taxation, and surveillance.”

The bill is H.R. 5381, the Motor Vehicle Safety Act of 2010. Other bills with EDR mandates include H.R. 5169, H.R. 5345, and S. 3271.

We all pay “universal service” assessments on our phone bills.  It’s even broken out separately; go look. It’s probably just a matter of time before the Federal Communications Commission proposes to slap universal service assessments on broadband service to help pay for universal service subsidies for broadband service. The national broadband plan, after all, calls for “broadening” the universal service funding base.

If the commission reclassifies broadband as a “Title II” telecommunications service, this will be virtually automatic because the Telecommunications Act of 1996 says telecommunications providers must contribute toward the FCC’s universal service fund. If the commission doesn’t reclassify broadband, it could still require contributions — just like it imposed universal service assessments on VOIP without classifying VOIP as telecommunications.

After the FCC starts using universal service funds to subsidize broadband for poor people and rural households, the logic will be seductively compelling: “Broadband receives subsidies, so it’s only fair that broadband pays into the fund.”

Forget the ensuing howls about “taxing the Internet.”  I want to talk about another aspect of this.  Would imposing universal service assessments on broadband actually further the FCC’s goals in its national broadband plan?

Irish Setter Chasing Tail

Photo by nawtydawg.

The FCC wants to make broadband available to all Americans, regardless of where they live. Ideally, the FCC would like us all to subscribe, regardless of our income or where we live. The problem with imposing universal service assessments on broadband is that this would increase the price, leading subscribership to be lower than it would otherwise be.

This effect might be big or it might be little. But before making a decision about imposing universal service assessments on broadband, the FCC ought to know the size of the effect and how it compares to the increase in subscribership that would result from the subsidies.

To figure out how universal service assessments might affect broadband subscribership, we need to know how responsive broadband subscription is to changes in price. Economists call this the “price elasticity of demand.” The most recent study I’ve seen — and the only one cited in the FCC’s technical paper underlying the national broadband plan — estimates the elasticity of broadband demand was about -0.69 in 2008. That means a 1 percent increase in price would lead to a 0.69 percent decrease in subscribership. Other, earlier studies find much higher demand elasticities. But to be conservative, let’s use -0.69.

Current universal service assessments on interstate telecommunications are about 15 percent.  About 66.6 million households had broadband in 2008. A 15 percent increase in the price of broadband would reduce subscribership by about 6.9 million households (15% times -0.69 times 66.6 million.)

If the FCC imposed universal service assessments on broadband, it might be able to lower the rate since it would be collecting assessments from a broader base than just telephone service. Suppose the FCC could lower the assessment to 10 percent, more in line with the historical norm.  A 10 percent increase in the price of broadband would reduce subscribership by 4.6 million households (10% times -0.69 times 66.6 million).

So we’re going to reduce broadband subscribership by 4.6-6.9 million households in order to provide subsidies to increase broadband subscribership.  If the funds currently spent to subsidize phone service in rural areas were spent on broadband, that would be enough money to close the “funding gap” and make broadband available to the 7 million homes the FCC  says currently are unserved or under-served. 

Not all of them will susbcribe, so we can’t assume these subsidies will increase subscribership by 7 million.  About 65 percent of Americans currently have broadband at home.  If 65 percent of unserved or underserved households choose to subscribe once broadband becomes available, that would be  4.55 million new subscribers.

In short, it looks like subjecting all broadband to universal service assessments to pay for rural broadband subsidies would either be a wash or reduce subscribership on net. Paying for universal broadband service with assessments on broadband service will give the FCC a lot to do, but it won’t advance the subscribership goals of the national broadband plan. 

There are other ways to raise the money without this perverse effect. Historically, local telephone subscription has been very insensitive to price, so one option would be for the FCC to simply impose a universal service charge per phone number instead of the current percentage fee.  (Low-income households who have “Lifeline” service or use low-cost prepaid wireless plans could be charged a lower fee without sacrificing much revenue.)

Another option would be for Congress to earmark some revenues from upcoming spectrum auctions to fund universal broadband service, and reduce the universal service assessments on our phone bills accordingly.

Reasonable people can differ on whether, or by how much, the federal government should subsidize broadband where it is not currently available. But if we’re gonna do it, there’s no sense in funding it with a mechanism that reduces broadband subscription elsewhere.

David Leonhardt of The New York Times penned an interesting essay a few days ago entitled, “Do Video Games Equal Less Crime?” reflecting upon the same FBI crime data I wrote about earlier this week, which showed rapid drops in violent crime last year (on top of years of steady declines).  Crimes of all sorts plummeted last year despite the serious economic recession we find ourselves in.  Downturns in the economy are typically followed by upticks in crime. Not so this time.  Which leads Leonhardt to wonder if perhaps exposure to violent media (especially violent video games) could have played a positive role in tempering criminal activity in some fashion:

Video games can not only provide hours of entertainment. They can also give people — especially young men, who play more than their fair share of video games and commit more than their fair share of crimes — an outlet for frustration that doesn’t involve actual violence. Video games obviously have many unfortunate side effects. They can promote obsessive, antisocial behavior and can make violent situations seem ordinary. But might video games also have an upside? I’m willing to consider the idea.

Go Back to the Greeks

What Leonhardt is suggesting here goes by the name “cathartic effect hypothesis” and debates have raged over it for centuries.  Seriously, the fight goes all the way back to the great Greek philosophers Plato and Aristotle. And, as with everything else, Aristotle had it right! Well, at least in my opinion he did, but I am a rabid Aristotealian.  While Plato thought the media of his day (poetry, plays & music) had a deleterious impact on culture and humanity, Aristotle took a very different view. Indeed, most historians believe it was Aristotle who first used the term katharsis when discussing the importance of Greek tragedies, which often contained violent overtones and action. He suggested that these tragedies helped the audience, “through pity and fear effecting the proper purgation of these emotions.” (See Part IV of Aristotle’s Poetics,) Aristotle spoke highly of tragedies that used provocative or titillating storytelling to its fullest effect:

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Many of my free market friends have been making the case that government action is unnecessary to address the privacy trouble in which Facebook has recently found itself. I agree with them completely. The reason is that I believe that the given choice, individuals acting in the market will act to discipline unscrupulous or stupid companies. This is precisely what we’ve begun to see happen to Facebook.

It therefore bothers me when folks go beyond mere defense of free market to pretending that corporations can do no wrong. Facebook, for example, has committed a terrible breach of trust against its users, and it should pay the price. Still, on the NetChoice blog, Steve DelBianco writes this about Facebook’s new privacy options:

Facebook is making these moves partly to placate a handful of professional privacy critics, as we described on our post this week.  But as with most moves made in reaction to critics, there’s a chance Facebook might have moved too far.

As part of this change, Facebook is making it trivial for users to stop applications and websites from knowing anything about you.  If lots of users select this option, I’m afraid it could restrict Facebook’s use of targeted advertising (those ads on the right side of your Facebook pages) and their new instant personalization program.  Here’s why we should all be concerned if everyone opts-out of sharing anything:

First, we’ll still see ads, only they won’t be so relevant[.] … Second, and far more concerning, is the effect on Facebook’s ad revenue[.]

I’m not a “professional privacy critic,” yet I know I’ll never trust Facebook with any of my data ever again. I hear the same sentiment from many of my friends, acquaintances, and other regular folks I follow online. Sometimes, companies react because they made a dumb mistake (or perhaps in this case a repeated one that makes one wonder whether it’s a mistake at all), not only in response to privacy advocates. I know Steve’s saying Facebook’s only partly reacting to critics, but I believe that any such fraction is very small. Continue reading →

In a nod to the popular Dos Equis commercials, Steve DelBianco blogs about the new Facebook privacy controls and says “Stay thirsty, Facebook.  We need you guys to keep innovating.”

Right now you might not care much about Facebook’s ad revenue.  But you might start caring if falling ad revenue forced Facebook to cut spending on things like server capacity and speed, content vetting, quality control, or development of new features and access for mobile devices.

You’d also start caring if Facebook over-reacted to privacy critics by slowing-down its innovation.  I’m talking about innovations like “instant personalization“, which helps selected websites customize your content based on your Facebook profile.   And innovation like a social plugin for content websites, which makes it so easy for you to refer articles or news to your Facebook friends.  Both of these innovations help create a personal, social Internet experience, and they do it though sharing of information.

As I’ve previously blogged, we’re just at the tip of the iceberg when it comes to socializing the web. Whether it’s over beers or on the Internet, users want to be social — even if we’re not the most interesting guy in the world. So keep innovating, Facebook.

Today, Facebook announced significant improvements to its privacy management tools. As explained in the new Privacy Guide, this upgrade allows users to exercise greater and easier choice over sharing of their information on the site and through the site to third party applications and external websites.

By giving users powerful new tools to further protect their privacy, Facebook has employed a potent weapon to deal with marketplace apprehensions: self-regulation. Government intervention stands little chance in acting as swiftly or as effectively to tackle such matters. Rather than short-circuiting the self-regulatory process, we should trust that users are capable of choosing for themselves if given the right tools, and that companies like Facebook will respond to reputational pressure to develop, and constantly improve, those tools. That approach is far more likely to move us towards the ideal of user empowerment than is heavy-handed government regulation, which would override marketplace experimentation and have many unintended consequences for free online sites and services like Facebook.

Today’s announcement represents a major leap forward for privacy controls, but of course the company will have to keep innovating in this area as it does in others. In particular, I hope Facebook and other social networking services like MySpace, Buzz, LinkedIn and Flickr will all work on the next logical step forward: building Applications Programming Interfaces (API) that will allow third party tools to tap into each site’s unique privacy settings so that users can have a single “dashboard” for controlling how they share data across platforms. Continue reading →

There’s an inherent paradox in the Federal Communications Commission’s (FCC) media ownership regulations and the new Notice of Inquiry that the agency has just launched looking into those rules. Like everything else the FCC has been doing lately, this NOI poses hundreds of questions about the topic at hand. In this case, the agency is interested in knowing what the impact of its byzantine regulatory regime for media ownership has been. Complicating matters even more is that fact that the FCC wants people to provide detailed answers about the impact of these rules on amorphous values like “diversity” and “localism.” So, the agency asks, what has been the impact of the local TV ownership rule, the local radio ownership rule, the newspaper/broadcast cross-ownership rule, the radio/TV cross-ownership rule, the dual network rule, and so on, on the marketplace, competition, diversity, localism, etc.

But therein lies the fundamental paradox of the FCC’s inquiry and the media ownership regulations in general: So long as the rules are preemptive and prophylactic in character, we will never get clear answers to the questions the agency poses. By definition, the agency’s media ownership rules make experimentation with new business models illegal. It is per se criminal to enter into combinations that the agency has presumptively divined to be counter to “the public interest,” whatever that means.   Thus, we can never get definitive answers to the questions the agency poses when “the marketplace” isn’t a truly free marketplace at all.  It is a regulatory construct artificially constrained in countless ways.

So, what’s the answer here? In a word: Antitrust. While I’m no fan of over-zealous antitrust regulation, it has one huge advantage over the media ownership regime that the FCC enforces: It doesn’t preemptively seek to determine supposedly sensible market structures or ownership patterns. The threat of antitrust intervention can be a very dangerous thing, and wrecking-ball style antitrust interventions are rarely sensible, but at least the DOJ and FTC aren’t turning the regulatory dials on a massive media marketplace industrial policy the way the Federal Communications Commission does with its media ownership regulations. Continue reading →

Facebook has had a tough month. The site’s latest round of privacy changes, implemented last month, spurred stiff backlash — not just from so-called privacy advocates, but also from several U.S. Senators. Facebook CEO Mark Zuckerberg shot back with an op-ed in The Washington Post, as Braden discussed here yesterday.

I’ve had much to say about Facebook’s past privacy controversies (1, 2, 3, 4, 5), but what really sticks out about the latest anti-Facebook backlash is who’s leading the charge: U.S. Senator Chuck Schumer.

Seriously, of all people, Chuck Schumer should be the last to criticize Facebook’s privacy practices. That’s because Schumer is leading the push in Congress to establish a biometric national identification regime. If Schumer had his way, all Americans, including U.S. citizens, wishing to legally work in this country would be required by law to obtain a national ID card! Compared to this highly invasive potential exercise of the state’s coercive power, concerns about Facebook’s privacy practices seem downright trivial.

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In this week’s episode of the Surprisingly Free Podcast, I talk to TLF’s very own Adam Thierer, president of The Progress & Freedom Foundation and the Director of its Center for Digital Media Freedom. We discuss the future of media and Adam explains recent proposals to subsidize journalists and media companies.  He outlines problems with the proposals, such as threats to free speech and separation of press and state.  He also addresses newspapers as non-profits, shared experiences vs. diversity, and journalism ethics in the context of the recently scooped iPhone.

Do check out the interview, and consider subscribing to the show on iTunes. Past guests have included James Grimmelman on online harassment and the Google Books case, Michael Geist on ACTA, Tom Hazlett on spectrum reform, and Tyler Cowen on just about everything.

Coming up in the next few weeks we’ll have Adrian Johns, Nick Carr, Clay Shirky, Gina Trapani, and many more great guests! So what are you waiting for? Subscribe!