August 2012

In the worlds of technology and government, I’m fond of joking, paranoia is just having a long time-horizon. Advances in data processing will make identifiable what is now anonymous. That “voluntary” pilot program will become full-fledged and mandatory.

But we need not apply the paranoid principle to the White House’s handling of the petition I started a few weeks ago asking the White House to have TSA follow the law. The petition ended on time. There’s no good evidence that its ending was hastened to cut off a late run at getting to 25,000 signatures.

Some folks had gotten the idea that we would have until midnight last Thursday, but it expired around mid-day. That’s about the same time that I created the petition weeks earlier, which is consistent with my assumption that the system is designed to expire petitions automatically when the time allowed for them to run has elapsed.

We could kvetch about losing some momentum when the petition function went down for a few hours around the time a great story came out on Wired’s Threat Level blog. But the folks at added a full day to all petitions to make up for the maintenance outage. The time to complain was then, and I didn’t, so that complaint has expired.

There’s lots of other stuff that is interesting about all this. Continue reading →

A reporter recently interviewed me for a story and asked a terrific question: Why is it that business model disruption and creative destruction seem to have sped up in recent times?  My guess — and excuse me if this seems too obvious — is that it must have something to do with the very nature of intangible, digital technologies of the new economy versus the tangible, analog technologies of the old economy. That is, in markets built largely upon binary code, the pace and nature of change becomes relentlessly hyper-Schumpeterian precisely because digital technologies and platforms are more easily disintermediated and leap-frogged than earlier tangible technologies and platforms were.  And so we get creative destruction on steroids.

Consider, for example, what constituted a “social networking site” in the old days versus today. Our old social networking sites and services in the past were town squares, parks, school parking lots, shopping malls, as well as media like newspapers, magazines, and even the mail. When we socially networked in those environments, we were creatures of our fixed, “real-space” environments as well as their many natural constraints. Disrupting, replacing, or even replicating those environments, technologies, or platforms was a monumental undertaking precisely because of the enormous costs associated with doing so. Continue reading →

It was my honor today to be a panelist at a Hill event on “Apps, Ads, Kids & COPPA: Implications of the FTC’s Additional Proposed Revisions,” which was co-sponsored by the Family Online Safety Institute and the Association for Competitive Technology. It was a free-wheeling discussion, but I prepared some talking points for the event that I thought I would share here for anyone interested in my views about the Federal Trade Commission’s latest proposed revisions to the Children’s Online Privacy Protection Act (COPPA).


The Commission deserves credit for very wisely ignoring calls by some to extend the coverage of COPPA’s regulatory provisions from children under 13 all the way up to teens up to 18.

  • that would have been a constitutional and technical enforcement nightmare. But the FTC realized that long ago and abandoned any thought of doing that. So that is a huge win since we won’t be revisiting the COPA age verification wars.
  • That being said, each tweak or expansion of COPPA, the FTC opens the door a bit wider to a discussion of some sort age verification or age stratification scheme for the Internet.
  • And we know from recent AG activity (recall old MySpace age verification battle) and Hill activity (i.e. Markey-Barton bill) that there remains an appetite for doing something more to age-segment Internet populations

Continue reading →

Those of you who spend a lot of time thinking about public choice economics and the problem of cronyism more generally might appreciate this little blurb I found today about the Universal Service Fund (USF).

It goes without saying that America’s “universal service” (telephone subsidy) system is a cesspool of cronyism, favoring some companies over others and grotesquely distorting economic incentives in the process. And the costs just keep growing without any end in sight. Just go to any FCC meeting or congressional hearing about universal service policy and listen to all the companies insisting that they need the subsidy gravy trail to keep on rolling and you’ll understand why that is the case. But plenty of policymakers (especially rural lawmakers) love the system, too, since it allows them to dispense targeted favors.

Anyway, I was flipping through the latest copy of “The RCA Voice” which is the quarterly newsletter of what used to be called the Rural Cellular Association, but now just goes by RCA.  RCA represents rural wireless carriers who, among other things, would like increased government subsidies for–you guessed it–rural wireless services. Their latest newsletter includes an interview with Rep. Don Young (R-AK) who was applauded by RCA for launching the Congressional Universal Service Fund Caucus, whose members basically want to steer even more money into the USF system (and their congressional districts). Here’s the relevant part of the Q&A with Rep. Young:

RCA VOICE: “How important is it for carriers serving rural areas to be engaged with their members of Congress on USF issues?”

REP. DON YOUNG (R-AK): “The more carriers engage with both their Representatives and Senators, the better. While the early bird may get the worm, the bird that doesn’t even try definitely won’t get any worms. The same applies to Congress.”

Well, you gotta admire chutzpah like that! It pretty much perfectly sums up why universal service has always been a textbook case study of public choice dynamics in action. Sadly, it also explains why there isn’t a snowball’s chance in hell that this racket will be cleaned up any time soon.

Google’s first lesson for building affordable, one Gbps fiber networks with private capital is crystal clear: If government wants private companies to build ultra high-speed networks, it should start by waiving regulations, fees, and bureaucracy.

Executive Summary

For three years now the Obama Administration and the Federal Communications Commission (FCC) have been pushing for national broadband connectivity as a way to strengthen our economy, spur innovation, and create new jobs across the country. They know that America requires more private investment to achieve their vision. But, despite their good intentions, their policies haven’t encouraged substantial private investment in communications infrastructure. That’s why the launch of Google Fiber is so critical to policymakers who are seeking to promote investment in next generation networks.

The Google Fiber deployment offers policymakers a rare opportunity to examine policies that successfully spurred new investment in America’s broadband infrastructure. Google’s intent was to “learn how to bring faster and better broadband access to more people.” Over the two years it planned, developed, and built its ultra high-speed fiber network, Google learned a number of valuable lessons for broadband deployment – lessons that policymakers can apply across America to meet our national broadband goals.

To my surprise, however, the policy response to the Google Fiber launch has been tepid. After reviewing Google’s deployment plans, I expected to hear the usual chorus of Rage Against the ISP from Public KnowledgeFree Press, and others from the left-of-center, so-called “public interest” community (PIC) who seek regulation of the Internet as a public utility. Instead, they responded to the launch with deafening silence.

Maybe they were stunned into silence. Google’s deployment is a real-world rejection of the public interest community’s regulatory agenda more powerful than any hypothetical. Google is building fiber in Kansas City because its officials were willing to waive regulatory barriers to entry that have discouraged broadband deployments in other cities. Google’s first lesson for building affordable, one Gbps fiber networks with private capital is crystal clear: If government wants private companies to build ultra high-speed networks, it should start by waiving regulations, fees, and bureaucracy. Continue reading →

Facebook has quietly launched a real-money online gambling application in the U.K., marking a major thrust of the social networking site into online gambling.

The Financial Times is reporting that starting today, Facebook will offer users in the U.K. ages 18 and over online bingo and slots for cash prizes.  picked up the story this afternoon.

“Gambling is very popular and well regulated in the U.K. For millions of bingo users it’s already a social experience [so] it makes sense [for us] to offer that as well,” Julien Codorniou, Facebook’s head of gaming for Europe, Middle East and Africa, told the Financial Times.

It’s telling in and of itself that Facebook has a gaming chief for the EMEA region. The synergies of social media and gambling has been seriously discussed for several years, mostly in foreign venues,  as the U.S. government until recently, has been hostile toward Internet gambling.

However, the recent thaw on the part of the Department of Justice, seen most recently in its settlement (don’t-call-it-an-exoneration) with PokerStars, plus state action toward legalization in in states such as Nevada and Delaware, point to eventual legalization of Internet gambling in the U.S.

Continue reading →

Stefan Krappitz, writer of the book Troll Culture: A Comprehensive Guide, discusses the phenomenon of internet trolling. For Krappitz trolling is disrupting people for personal amusement. Trolling is largely a positive phenomenon argues Krappitz. While it can become very negative in some cases, for the most part trolling is simply an amusing practice that is no different than playing practical jokes. Krappitz believes that trolling has been around since before the age of the internet. He notes that the behavior of Socrates is reminiscent of trolling because he pretended to be a student and then used his questioning to mock people who did not know what they were talking about. Krappitz also discusses anonymity and how it contributes and takes away from trolling as well as discussing where the line is between good trolling and cyber-bullying.


Related Links

Some 77 percent of wireless phone users who use their phones for online access say slow download speeds plague their mobile applications, according to a new survey from the Pew Internet and American Life Project. Of the same user group, 46 percent said they experienced slow download speeds at least once a week or more frequently (see chart below).












While the report, published last week, does not delve into the reasons behind the service problems, it does offer evidence that users are noticing the quality issues wireless congestion is creating. Slow download speeds are a function of available bandwidth for mobile data services. Bandwidth requires spectrum. The iPhone, for instance, uses 24 times as much spectrum as a conventional cell phone, and the iPad uses 122 120 times as much, according to the Federal Communications Commission FCC Chairman Julius Genachowski.  As more smartphones contend for more bandwidth within a given coverage area, connections slow or time out. Service providers and analysts have warned that the growing use of wireless smartphones and tablets, without an increase in spectrum, would begin to degrade service. There have been plenty of anecdotal instances of this. Pew offers some quantitative measurement.

While technologies such from cell-splitting to 4G offer temporary fixes, the quality issue will not be fully addressed until the government frees up more spectrum. While the FCC hasn’t helped much by blocking the AT&T-T-Mobile merger and joining with the Department of Justice in delaying the Verizon deal to lease unused spectrum from the cable companies, at least the agency has acknowledged the problem. Right now, as Larry Downes reported last week, the National Telecommunications and Information Agency (NTIA), which has been charged with the task of identifying spectrum the government can vacate, is stalling.  It would be nice to see the FCC apply the aggressiveness it brings to industry regulation to getting NTIA off the schneid. At the same time, the Commission needs to put aside its ideological bent and do what it can to make more spectrum available in the short term.

On Forbes today, I have a long article on the progress being made to build gigabit Internet testbeds in the U.S., particularly by Gig.U.

Gig.U is a consortium of research universities and their surrounding communities created a year ago by Blair Levin, an Aspen Institute Fellow and, recently, the principal architect of the FCC’s National Broadband Plan.  Its goal is to work with private companies to build ultra high-speed broadband networks with sustainable business models .

Gig.U, along with Google Fiber’s Kansas City project and the White House’s recently-announced US Ignite project, spring from similar origins and have similar goals.  Their general belief is that by building ultra high-speed broadband in selected communities, consumers, developers, network operators and investors will get a clear sense of the true value of Internet speeds that are 100 times as fast as those available today through high-speed cable-based networks.  And then go build a lot more of them.

Google Fiber, for example, announced last week that it would be offering fully-symmetrical 1 Gbps connections in Kansas City, perhaps as soon as next year.  (By comparison, my home broadband service from Xfinity is 10 Mbps download and considerably slower going up.)

US Ignite is encouraging public-private partnerships to build demonstration applications that could take advantage of next generation networks and near-universal adoption.  It is also looking at the most obvious regulatory impediments at the federal level that make fiber deployments unnecessarily complicated, painfully slow, and unduly expensive.

I think these projects are encouraging signs of native entrepreneurship focused on solving a worrisome problem:  the U.S. is nearing a dangerous stalemate in its communications infrastructure.  We have the technology and scale necessary to replace much of our legacy wireline phone networks with native IP broadband.  Right now, ultra high-speed broadband is technically possible by running fiber to the home.  Indeed, Verizon’s FiOS network currently delivers 300 Mbps broadband and is available to some 15 million homes.

Continue reading →

Yesterday brought a spate of news reports, many of them inaccurate or oversimplified, about a settlement the U.S. Attorney’s office in Manhattan reached with two major international Internet poker sites—PokerStars and  Full Tilt Poker.

The buried lead–and very good news for online poker players–is that Internet poker site PokerStars is back in business. Manhattan U.S. Attorney Preet Bharara ended his case against the site and it is now free to re-enter the U.S. market when states begin permitting Internet gambling, which could start as early as this year in states such as Nevada and Delaware.

The three-way settlement itself  is rather complicated. Full Tilt Poker will have to forfeit all of its assets, at this point mostly property, to the U.S. government. PokerStars will then acquire those forfeited Full Tilt Poker assets from the feds in return for its own forfeiture of $547 million. PokerStars also agreed to make available $184 million in funds in deposits held by non-U.S. Full Tilt players, money players believed was lost.

The U.S. government seized these funds on April 15, 2011 when it shut down Full Tilt, PokerStars and a third site, Absolute Poker, on charges of money laundering. The date has become known as Black Friday in the poker community. Specifically, the three sites were charged with violation of the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA), which prohibited U.S. banks from transferring funds to off-shore Internet poker and gambling sites. To combat the measure, sites such as PokerStars and Full Tilt began using payment processors that allegedly lied to U.S. banks about their ties to gambling sites. Although this would be fraud under the letter of the law, the U.S. government never claimed payment processors stole money from players or banks and no evidence suggests they did.

Continue reading →