May 2012

You won’t find the words ‘government’ or ‘regulation’ in [this post at EFF’s blog]( by Micah Lee and Peter Eckersley. They’re just appealing to Apple’s better angels to drop its closed ways. I’ve explained before why that’s [a rational thing to do]( But will the EFF assure supporters like me that it will never endorse government enforcement of a “bill of rights” like the one Lee and Eckersley propose today?

What I like about EFF is that it is a pro-liberty group, but I hope I’m not wrong in assuming that they view liberty as I do: as [a negative concept]( They never come out and say it, but it sure sounds like the authors believe that if Apple doesn’t come around to seeing the virtues of openness and provide an escape hatch, then maybe they should be forced to. I get that impression from passages like this:

>When technology and phone companies defend the restrictions that they are imposing on their customers, the most frequent defense they offer is that it’s actually in their customers’ interest to be deprived of liberty: “If we let people do what they want with their pocket computers, they will do stupid things with them. You will be safer and happier in our walled compound than you would be outside.”

Imposing on their customers? Seems to me like the vast majority of Apple’s customers are *choosing* these restrictions. It’s not Apple that thinks its customers are stupid, and is therefore “imposing” a locked phone on them, it’s Lee and Eckersley who seem to have a low regard for customers’ preferences and want to impose an open device on them.

We can of course debate [whether customers are being short-sighted]( in the choice they’re making, whether the benefits of closed platforms [outweigh the costs](, and whether we have the best of [both]( [worlds]( right now, but you can’t say that customers are being “deprived of their liberty.” What liberty are they being deprived of? Does the EFF believe there is a positive right to mobile computers that run arbitrary code?

I repeat my plea: Can EFF assure us that it will not support government regulation of computer manufacturers?

This Book is NOT about the Net

My latest Forbes column takes a look at Andrew Keen’s latest book, Digital Vertigo: How Today’s Online Social Revolution Is Dividing, Diminishing, and Disorienting Us. It’s an interesting book, and a much better one than his previous screed, Cult of the Amateur. Andrew raises valid concerns about the sheer volume of over-sharing taking place online today. As I note in my review:

Keen is on solid ground when outlining the many downsides of over-sharing, beginning with the privacy and reputational consequences for each of us. “Social media is the confessional novel that we are not only all writing but also collectively publishing for everyone else to read,” he says. That can be a problem because the Internet has a very long memory. A youngster’s silly pranks or soul-searching self-revelations may seem like a fun thing to upload when such juvenile antics or angst will win praise (and plenty of pageviews) from teen peers. Your 34-year-old self, however, will likely have a very different view of that same rant, picture, or video. Yet, that content will likely still be around for the world to see when you do reach adulthood.

And Keen offers many other reasons why we should be concerned about a world of over-sharing and “hypervisibility.” The problem is that Keen drowns out these valid concerns by assaulting the reader with layers of over-the-top pessimistic prognostications and apocalyptic rhetoric. In particular, again and again and again in the book he comes back to George Orwell and his dystopian novel, 1984. Keen insists that some sort of Orwellian catastrophe is set to befall humanity because of social media over-sharing. (See this other Forbes column on Keen’s book, “Why 1984 Is Upon Us,” to see just how far this theme can be pushed). Continue reading →

I’m pleased to report that the Mercatus Center at George Mason University has just released a new white paper on video marketplace regulation and the ongoing  “retrans” wars by one of America’s leading media economists, Bruce M. Owen.  Owen’s new paper, “Consumer Welfare and TV Program Regulation,” examines the lamentable history of misguided federal interventions into America’s video marketplace. Owen also explores to possibility of deregulating this marketplace via the important new Scalise-DeMint bill, “The Next Generation Television Marketplace Act.” If you’re following these issues, Owen’s paper is must-reading. Here’s the abstract:

Getting rid of obsolete regulation of the broadcast and distribution of video programming is essential to the efficient operation of a market that has the potential to greatly increase the benefits to consumers. Services that increase video program distribution capacity have been delayed and suppressed for many years, and consumer benefits were lost as the Federal Communications Commission (FCC) pursued ill-defined and ephemeral “public interest” and “localism” objectives.

It is past time to stop extending interventions originally intended for old technology to a range of new competitive media. No longer is there any rational public policy basis for a government agency to dictate how much or what content the viewing public can see, any more than there ever has been for printed media. There is no market failure to which the current regulatory framework is responding and no longer any reason for FCC bureaucrats to decide how much of the spectrum should be used for each of many existing and future commercial services. Spectrum reform, along with the repeal of other broadcast programming restrictions contained in the proposed Scalise-DeMint Next Generation Television Marketplace Act, provide a roadmap for the necessary reform. With an adequate supply of tradable rights in spectrum, we will find out how much additional competition is possible among traditional wired and wireless, analog and digital, and fixed and mobile delivery services.

Read the entire thing here [PDF], and you might also be interested in this Forbes column (“Toward a True Free Market in Television Programming“) and these two blog posts of mine (1, 2) on the retrans wars.

 (Adapted from Bloomberg BNA Daily Report for Executives, May 16th, 2012.)

Two years ago, the Federal Communications Commission’s National Broadband Plan raised alarms about the future of mobile broadband. Given unprecedented increases in consumer demand for new devices and new services, the agency said, network operators would need far more radio frequency assigned to them, and soon. Without additional spectrum, the report noted ominously, mobile networks could grind to a halt, hitting a wall as soon as 2015.

That’s one reason President Obama used last year’s State of the Union address to renew calls for the FCC and the National Telecommunications and Information Administration (NTIA) to take bold action, and to do so quickly. The White House, after all, had set an ambitious goal of making mobile broadband available to 98 percent of all Americans by 2016. To support that objective, the president told the agencies to identify quickly an additional 500 MHz of spectrum for mobile networks.

By auctioning that spectrum to network operators, the president noted, the deficit could be reduced by nearly $10 billion. That way, the Internet economy could not only be accelerated, but taxpayers would actually save money in the process.

A good plan. So how is it working out?

Unfortunately, the short answer is:  Not well.  Speaking this week at the annual meeting of the mobile trade group CTIA, FCC Chairman Julius Genachowski had to acknowledge the sad truth:  “the overall amount of spectrum available has not changed, except for steps we’re taking to
add new spectrum on the market.” Continue reading →

Tim Lee and I are narrowing in on our core disagreement (or, at any rate, one of them) with respect to cable broadband regulation. I argued that certain unpopular price discrimination techniques, such as broadband caps, have efficiency rationales. After some apparent talking past each other, Tim has clarified that he agrees with my argument as far as it goes, but his real concern is that cable companies will prevent new forms of content from emerging.

Internet video isn’t just a lower-cost source for the same kind of video content you can get from Comcast. Internet video has the potential to offer totally new kinds of video content that wouldn’t be available on Comcast at any price.

As Tim put it in a comment on my last post,

Continue reading →

Lafayette, La., like a number of U.S. municipalities, is facing a recession-driven budget crunch, largely due to health care and retirement costs. Unlike most municipalities, however, Lafayette faces a $140-million reckoning in the form a municipal fiber to the home system.

After an auditor’s report raised some flags about the extent city’s been dipping into its reserve savings, Lorrie Toups, Lafayette Consolidated Government’s chief financial officer said $5 million in reductions might be needed to maintain a status quo budget.

This might not be so bad save for the loans that start to come due in 2013 on Lafayette municipal FTTH system, which, according to the auditor’s report, is costing the city of Lafayette $45,000 a day. Thus far, the city has issued the full $125 million in bonds authorized for construction and operation of LUS Fiber. In addition, LUS Fiber has borrowed $15 million from its parent, Lafayette Utilities System, the city’s municipally-owned water and power utility. (One reason LUS is so flush is that in 2009 it received $11.6 million as part of the Obama stimulus, ostensibly to fund a smart grid electricity system.)

Andrew Moylan at the National Taxpayers Union picked up the item from the Lafayette Advertiser:

In sum, LUS Fiber is losing boatloads of money and exacerbating an already-difficult budget situation in the area. There is a silver lining though! According to LUS’s own numbers, the project might break even by the time 2014 or 2015 roll around. Or maybe not…you know, whatever.

The Advertiser reports that Toups defended LUS Fiber as a start-up enterprise that “budgeted for losses and expected to incur them in its early years.”

That’s true–to an extent. LUS launched in 2009, and is only half-way through its fourth year of operation. The original feasibility report on the Lafayette FTTH system, produced by CCG Consulting in 2004, projected net losses of $7.1 million and $4.9 million in years two and three of operation. The recent audit, however, showed LUS Fiber ended the 2010 fiscal year, its second year of operation, with a net loss of $12.3 million. In 2011, its third year, LUS Fiber reported a loss of $16.5 million–more than three times the deficit projected in the business plan.

Of course, this is exactly what I warned about when I analyzed the CCG plan back in 2005.

Lafayette is now in the running to be the country’s biggest municipal broadband failure–a fact made worse its diving in headfirst despite the documented financial messes of those cities that went before it.


Boy, the symposium on “Competition in Online Search” that Daniel Sokol threw together this week over at the Antitrust & Competition Policy Blog could not have been better timed! As most of you know, the European Commission stepped up its attack on Google this week and all signs are that a lot more antitrust activity is on the way on this front.

Anyway, all the entries in the symposium are in and a few rebuttals have followed, including one by me. In my response, I took on Frank Pasquale and Eric Clemons, who were the most aggressive in their calls for search regulation. I thought I would just re-post it here to complement my early entry in the symposium on Monday.


I enjoyed the entries in this symposium and learned something from each of them. I have a few things to say in response to both Frank Pasquale and Eric Clemons and their sweeping indictments of not just Google but seemingly the entire modern information economy.

Everywhere they look, it seems, Pasquale and Clemons see villainy. Someone completely alien to the modern online ecosystem would read Pasquale’s description of it — “digital feudalism,” “absolute sovereignty,” “opaque technologies,” “leaving users in the dark,” etc., etc. — and likely conclude that a catastrophe had befallen modern man. Of course, Pasquale’s narrative is missing any reference to the unparalleled expansion in the stock of knowledge and human choices that has been made possible by Google and the others companies he castigates (Apple, Facebook, Twitter, and Amazon). Meanwhile, Clemons wants to group Google in with supposed Wall Street robber barons as well as characters from Sinclair’s “The Jungle.” It’s all a bit much. Continue reading →

May 2012

The ACLU of Washington (ACLU-WA) seeks a self-motivated public policy advocate to lead its work to protect civil liberties in the face of society’s increasingly advanced technologies. The ACLU-WA’s staff of 30 employees and numerous volunteers work in a fast-paced, friendly and professional office in downtown Seattle. Continue reading →

On the podcast this week, Michael Burstein, assistant professor of law at the Benjamin N. Cardozo School of Law, discusses his paper entitled, Exchanging Information Without Intellectual Property. Burstein begins by discussing theories behind IP law and why it exists. According to Burstein, IP law incentivizes creation of intellectual works because it protects the creator’s investment by preventing others from copying the work and obtaining a benefit without any effort. He then goes on to discuss the critiques of these theories, the costs that are involved in protecting intellectual works, and the effect IP law has on innovation. Burstein then discusses practical examples in the pharmaceutical and biotech industry where actors structure the flow of information in a way that is reciprocal but only requires a small role from IP law. According to Burstein, norms protect intellectual works. He believes these norms allow disclosure of intellectual works in stages and facilitate a trusting relationship between two firms. Burstein ends the discussion by addressing policy conclusions surrounding IP law and what role it should play in information exchange.

Related Links

To keep the conversation around this episode in one place, we’d like to ask you to comment at the webpage for this episode on Surprisingly Free. Also, why not subscribe to the podcast on iTunes?

It’s my great pleasure this week to be participating in a 2-day symposium on “Competition in Online Search” that is being hosted by the Antitrust & Competition Policy Blog.  Daniel Sokol, Associate Professor of Law at the University of Florida Levin College of Law, was kind enough to invite me to join the fun. Professor Sokol is the editor of the Antitrust & Competition Policy Blog. Others participating in this symposium include: James Grimmelman (NY Law); Eugene Volokh (UCLA); Marvin Ammori (Stanford Law); Mark Jamison (Univ. of Florida); Eric Clemons (Wharton School); Dan Crane (Michigan Law); and both Marina Lao and Frank Pasquale (Seton Hall); and more.

My entry is now live. In it, I focus on how dynamically competitive and innovative the digital economy has been over the past 15 years and question to need for intervention at this time, especially of the “public utility” variety. I’ve re-posted my entry below, but make sure to head over to the Antitrust & Competition Policy Blog to read all the contributions to this excellent symposium. Continue reading →