January 2011

Please join us on January 19, 2011 in Washington, DC for the launch of The Next Digital Decade: Essays on the Future of the Internet, a collection of 31 essays from 26 leading cyber thought leaders, including Tim Wu, Hal Varian, the Hon. Alex Kozinski, Stewart Baker, Jonathan Zittrain, Milton Mueller, Eric Goldman, and Yochai Benkler—as well as the TLF’s own Adam Thierer, Larry Downes and Geoff Manne.

This event will feature panel discussions of several of the book’s organizing questions:

  • Internet Optimism, Pessimism & the Future of Online Culture
  • Internet Exceptionalism & Intermediary Deputization
  • Who Will Govern the Net in 2020?

The January 19 event will run from 12:30pm to 5:30pm immediately following the State of the Net conference in the same location: the Columbia B room at the Hyatt Regency (400 New Jersey Ave NW, Washington DC). The event will begin with lunch and end with a cocktail reception between 5:30pm and 7:00pm. Admission is free but space is limited so RSVP now!

Registered attendees will receive a free copy of the book, which can be read online or downloaded as a PDF, or purchased in hardcover. Free eBook versions are coming soon. To learn more about the book, check out the foreword and introduction, or the table of contents.

Visit NextDigitalDecade.com for details or follow us on Twitter or Facebook for updates!

I published an article for CNET late last night on a spirited debate at CES yesterday over the FCC’s recently-enacted “open Internet” rules, aka net neutrality.  Panelists from the FCC, Congress, AT&T, Verizon, Google and the Center for Democracy and Technology actually agreed on one point, which is that the neutrality saga has only completed its first chapter.

(The session was the most popular of the day.  Several people were turned away from the packed room, and former Congressman Rick Boucher and FCC Commissioner Mignon Clyburn almost didn’t get in!)

While some panelists believe the next step is more regulation, others promised Congressional and perhaps court challenges aimed at undoing the Commission’s “Christmas Surprise.”  As I note in the piece, the new Congress, with its Republican majority in the House, has already taken up reversing the rulemaking as a priority.  Rep. Marsha Blackburn has introduced legislation, signed by 60 other members including at least one Democrat, that would make clear the FCC’s lack of authority over broadband access. Continue reading →

TLF blogger and Heritage Foundation senior fellow James Gattuso gets his 15 seconds of fame — or at least 9 seconds — in this recent clip that appeared on the “Tonight Show with Jay Leno.” Probably not the sort of media impact he was looking for, but I bet he’ll take it!

After a steady relationship that lasted several generations of the Windows operating system, Microsoft has told Intel that it wants to see other chip makers.

In a world where antitrust law was pursued logically, news like this would throw a monkey wrench into the proceedings with which the European Commission has been burdening Intel, starting with 2009’s $1.45 billion fine for providing discounts and rebates to its largest customers—a common business practice in any industry—up to the current obstacles the EC is putting in the way of Intel’s purchase of McAfee, the maker of security software.

On this side of the Atlantic, the Federal Trade Commission piled on with its own inquiry, although its investigation into Intel’s alleged abuse of its sizable market share in PC microprocessors yielded far less: a handful of concessions from Intel, but no fine and no admission of wrongdoing.

It’s unknown whether Intel offered Microsoft discounts, rebates or loyalty incentives to use its chips with its latest version of Windows Mobile, the OS Microsoft developed to run on smartphones and tablet PCs. It doesn’t seem to matter because, in an announcement that flies in the face of trans-Atlantic claims that Intel has an ironclad grip on OS chip market, Microsoft said it will be buying chips from three (count ’em) other manufacturers: Nvidia, Qualcomm and Texas Instruments.

Continue reading →

If you happen to be in Vegas today (Thursday, 1/6) for the Consumer Electronics Show (or gambling or… whatever else floats your boat), join myself and fellow TLFers Larry Downes and Wayne Crews for an impromptu “Alcohol Liberation Front” happy hour starting about 5pm at Parasol Up bar at the Wynn Hotel (3131 Las Vegas Blvd).

If you’re walking over from the Convention Center (where I’ll be till 4 for the Tech Policy Summit), it’s just 1.1 miles along the strip (directions). I’ll tweet (@BerinSzoka) exactly where we wind up in the bar, or you can ask for the TLF gang at the door or email me (bszoka <at> techfreedom <dot> org).

TPS ends at 4pm and there are other event starting at 6, so I figure we’ll just wind up there in the 5-6/6:30 range.

RSVP on Facebook & see who’s coming!

Reading through the respective December 2010 privacy reports from the Federal Trade Commission (FTC) and Department of Commerce (DoC), one cannot help but be struck by the Obama Administration’s seeming desire to make America’s tech sector — and the regulatory regime that governs it — more closely resemble Europe’s.  The push for an ambitious new “privacy framework” and set of “fair information practices” is just a riff borrowed from the EU data directive.  And although the Obama team stops short of calling privacy a “dignity right” as many European policymakers are prone to do, it’s clear from both the FTC and DoC reports that that’s were they want to take us.

It’s interesting to me, though, that the Obama Administration relies on two fundamentally flawed rationales for the “European-ification” of American privacy law.  In this regard, I’ll reference some passages from the DoC’s report that appear in the section on “The Economic Imperative” for a new regime, which appears on pages 13-16 of the report.

Myth #1: Privacy Regs Are Needed to Get More People Online or Using Digital Technology

First, the DoC pulls out the old saw about the need for expanded privacy regs to ensure greater online trust and, as a result, promote increased online interactions.  The report claims that “maintaining consumer trust is vital to the success of the digital economy” and that “an erosion of trust will inhibit the adoption of new technologies” (p. 15)  The problem with the theory that online commerce or consumer interactions online are somehow being thwarted by a lack of more privacy regulation is that it is plainly contradicted by the facts.  Continue reading →

In Part I of this analysis of the FCC’s Report and Order on “Preserving the Open Internet,” I reviewed the Commission’s justification for regulating broadband providers.   In Part II, I looked at the likely costs of the order, in particular the hidden costs of enforcement.  In this part, I compare the text of the final rules with earlier versions.  Next, I’ll look at some of the exceptions and caveats to the rules—and what they say about the true purpose of the regulations

In the end, the FCC voted to approve three new rules that apply to broadband Internet providers.  One (§8.3) requires broadband access providers to disclose their network management practices to consumers.  The second One (§8.4) prohibits blocking of content, applications, services, and non-harmful devices.  The third One (§8.5) forbids fixed broadband providers (cable and telephone, e.g.) from “unreasonable” discrimination in transmitting lawful network traffic to a consumer.

There has of course been a great deal of commentary and criticism of the final rules, much of it reaching fevered pitch before the text was even made public.  At one extreme, advocates for stronger rules have rejected the new rules as meaningless, as “fake net neutrality,” “not neutrality,” or the latest evidence that the FCC has been captured by the industries it regulates.  On the other end, critics decry the new rules as a government takeover of the Internet, censorship, and a dangerous and unnecessary interference with a healthy digital economy.  (I agree with that last one.)

One thing that has not been seriously discussed, however, is just how little the final text differs from the rules originally proposed by the FCC in October, 2009.  Indeed, many of those critical of the weakness of the final rules seem to forget their enthusiasm for the initial draft, which in key respects has not changed at all in the intervening year of comments, conferences, hearings, and litigation. Continue reading →

In my essay yesterday, “How Federal Accounting & Securities Regs Screw Up Your Chance to Invest in Facebook,” I noted how America’s counter-productive accounting, disclosure, and governance regulations are increasingly thwarting the ability of average Americans to invest in some of the leading capitalist innovators of the Digital Age. In this case it’s Facebook, but there are plenty of other innovative companies out there sticking with private shareholders so as not to trigger burdensome securities and accounting regs.  In my essay, I also noted how this represented another prime example of well-intentioned regulation having profoundly unintended, anti-consumer, anti-competitive consequences.  America’s convoluted and onerous securities regulations are choking off capital infusions into innovative companies and denying average investors a chance to own a share a piece of the American dream.

So, what does the Securities and Exchange Commission (SEC) plan to do about this fine mess?  Regulate more, of course!  As The Wall Street Journal reports today:

The Securities and Exchange Commission has begun examining whether disclosure rules for privately held firms need to be rewritten as a result of recent deals allowing investors to buy shares in Internet companies such as Facebook Inc. and Twitter Inc., according to people familiar with the situation.  The review is at an early stage, these people cautioned, and SEC officials looking at the recent deals haven’t concluded that any of them run afoul of the 47-year-old rules governing private companies. The rules require firms with 500 or more shareholders of record in a given type of stock to publicly disclose certain financial information. The requirement is designed to protect investors from risking money on companies that say little about their operations and performance.

Yes, but that requirement can also trigger an onslaught of new regulatory burdens, as the Journal story continues on to note: Continue reading →

Back in 2007 I penned a law review article, “Why Regulate Broadcasting: Toward a Consistent First Amendment Standard for the Information Age” in which I argued that “If America is to have a consistent First Amendment in the Information Age, efforts to extend the broadcast regulatory regime must be halted and that regime must be relegated to the ash heap of history.” I made that argument based not only upon the fundamental bankruptcy of the rationales supporting the old broadcast regulatory regime, or its unfairness to broadcasters relative to other media competitors, but also because such asymmetrical regulations no longer make sense — and are increasingly impractical to enforce — in an age of technological convergence and media abundance.

The good news is that, slowly but surely, the courts are coming around to this logic, at least as it pertains to speech controls.  We saw that again today with a ruling by the Second Circuit Court of Appeals that held as unconstitutional $1.2 million in fines that the Federal Communications Commission (FCC) levied on ABC broadcast affiliates seven years ago for airing a brief glimpse of Charlotte Ross’ bare buttocks on the cop drama “NYPD Blue.”   As the Wall Street Journal’s Amy Schatz notes, “Broadcasters have now won a series of court victories against government efforts to police airwaves and fine stations for airing risqué content. The Supreme Court could soon get a chance to review the issue. In the meantime, the FCC’s campaign to enforce indecency rules has ground to a halt.”

It remains to be seen whether the Supreme Court will throw the whole regime out, but I can’t help but think that’s where we are headed. Continue reading →

As Henry Blodget explained in his excellent Business Insider column yesterday, “Goldman Sachs Clients Can Invest In Facebook’s IPO — But You Can’t,” America’s increasingly counter-productive accounting, disclosure, and governance regulations are increasingly thwarting the ability of average Americans to invest in the leading capitalist companies of the Digital Age:

in an effort to protect investors from fraud (which is actually not the reason most IPOs fail), the government erected huge new barriers to going public, making it prohibitively expensive for most small companies to IPO.  So now small, speculative companies generally don’t IPO.  Instead, they stay private. And/or they do what Facebook just did, which was do a “private IPO” with Goldman Sachs. What’s a private IPO?  It’s a mechanism in which Goldman’s rich clients can invest in Facebook. But you can’t.  Seriously!

And that’s why Facebook, among others, don’t want to go public. Over at the Truth on the Market Blog, Larry Ribstein elaborates on the insanity of this: Continue reading →