Keeping politicians' hands off the Net & everything else related to technology
Senior Fellow in Technology & Innovation at the R Street Institute in Washington, DC. Formerly a senior research fellow at the Mercatus Center at George Mason University, President of the Progress & Freedom Foundation, Director of Telecommunications Studies at the Cato Institute, and a Fellow in Economic Policy at the Heritage Foundation.
This week I appeared on C-SPAN’s weekly program “The Communicators” and discussed a wide variety of communications and media policy issues including: the outlook for telecom & media legislation in the new Democratic Congress, the First Amendment treatment of new media technologies, Net neutrality regulation and the need for universal service and spectrum policy reform.
The video can be viewed here and I apologize in advance if I put you to sleep!
When are state and local lawmakers going to stop wasting taxpayer dollars with unnecessary regulatory enactments and fruitless lawsuits aimed at censoring video games? I ask because this week the video game industry added yet another slam dunk victory to its growing string of impressive First Amendment wins. For those of you keeping track at home, this brings the tally to 10 major court wins for the video game industry versus zero wins for would-be government regulators. With a track record like that you would think that government officials would get the point. But the censorial tendencies of public officials have once again trumped common sense.
This week’s win came in the 7th Circuit Court of Appeals in the case of Entertainment Software Association v. Blagojevich. (Full decision here.) The case dealt with an Illinois statute that would have required that video game retailers to affix a 4-square-inch sticker with the numerals “18” on any “sexually explicit” game. It also would have imposed criminal penalties on any retailer who sold or rented a game with that designation to a minor. The statute also included signage and brochure requirements that would have forced retailers to place certain displays in their stores and provide all customers with brochures about game ratings.
The court’s decision overturning the law was written by Judge Ann Claire Williams and it echoed what every previous decision on this front has held, namely:
I’ve just finished reading a new report by a research firm called Ramp Rate about Net neutrality and the online gaming market. Now I’m accustomed to Net neutrality supporters employing gloom-and-doom, Chicken Little-esque rhetoric in support of government regulation of broadband networks, but I was shocked to see the same rhetoric laid on so thick in a study by industry consultants.
The sky-is-falling rhetoric kicks off with the very title of their piece: “Every Time You Vote against Net Neutrality, Your ISP Kills a Night Elf.” The authors go on to paint a picture of the coming apocalypse if we do not adopt Net neutrality regs right away:
“What will be murdered with no fallback or replacement is the nascent market of interactive entertainment–particularly online gaming. Companies like Blizzard Entertainment, Electronic Arts, Sony Online Entertainment, and countless others, have built a business on the fundamental assumption of relatively low latency bandwidth being available to large numbers of consumers. … Killing off these blossoming networks, with their own economies (potentially taxable when converted into real-world cash), would result in drastic, irreparable harm to consumers, technology developers, the economy and tax revenue–and even the ISPs themselves.”
Murdered? Killed off? Oh my, who knew the end was so near?! Of course, the end is not upon us and the online gaming market is not about to be “murdered” because of a lack of Net neutrality regulation. In fact, just the opposite could be the case as I will explain below the fold.
Back in Part 5 of this series last April, I discussed the looming breakup of radio giant Clear Channel. And now that day is here. According to Frank Ahrens of the Washington Post, Clear Channel “has agreed to sell the company to a consortium of private-equity firms and plans to shear off more than one-third of its 1,150 radio stations, dismantling a giant that dominated the industry and became the bogyman of media consolidation for the past half-decade.” Moreover, “In a separate transaction also announced yesterday, Clear Channel said it would seek buyers for all of its television stations and 448 of its smaller radio stations,” mostly in smaller markets.
Again, don’t expect the Chicken Little media critics to acknowledge any of this. As I’ve said again and again in this ongoing series, this is an example of a well-functioning, competitive marketplace at work. Media critics think every merger or acquisition is all just part of some sort of grand conspiracy to destroy democracy or competition. But when the opposite happens and firms reorganize or downsize, the critics never say a peep.
In the end, regardless of what ownership patterns and structures look like, markets sort things out and we end up with an ever-expanding universe of media options at our disposal. In sum, despite what the Chicken Littles predict, the sky never falls. Seriously, ask yourself a simple question: Do you have more media options and outlets at your disposal today than you did 5 to 10 years ago? Read my last book if you want to see the evidence.
Tim, Steve and others go after me below in an interesting exchange on compatibility and standards. I thought I’d start a new post on this to highlight this exchange and let people really sink their fangs into me since I’m taking the provocative position (at least for this board) that everyone is blowing these compatibility and DRM issues a bit out of proportion. Specifically, in my response to Tim’s “DRM Train Wreck” post below, in which he bemoaned the lack of file compatibility in the digital music world, I argued:
“Could it not be the case that THE LACK OF compatibility between players and file formats actually encourages MORE innovation and competition in some ways? I fully know, for example, that it is impossible for me to play my Xbox games on my PlayStation console or a Nintendo console. Would we be better off if perfect compatibility existed among all the games and consoles? Would 3 major gaming platforms exist at all if we could simply play all game titles on just one of those boxes? I doubt it. I think it would be more likely that only one console would prevail and the other two would disappear. And I think that would leave us worse off as a result. Same goes for music players, in my opinion. I fully know that I can’t play all my WMA files on an Apple Ipod. But that keeps me (and millions of others) buying non-Apple players. As a result, there’s a fairly diverse and growing market of Apple competitors. Would all those competitors be viable if we could all just play our digital music on an Ipod? Again, I wonder.”
Tim responded that he “[didn’t] understand why incompatibility would cause more competition.” And Steve, one of our most frequent and thoughtful commentators here on the TLF, responded that I am “overlooking a critical point concerning incompatibility” regarding “unintentional” vs. “intentional” variations thereof.
Knowledge is a wonderful thing, and the more we can do to give people access to knowledge the better off the world will be. That’s always been the vision underlying Nicholas Negroponte’s bold “One Laptop Per Child” (OLPC) Initiative, which aims to put $100 laptops in the hands of people across the globe (especially in less-developed countries).
It’s a noble goal and one that’s almost impossible to argue with in theory. But, like everything else in this world that begins with good intentions, at some point you have to get around to dealing with basic economics, political realities and other technical issues. And those are the sort of growing pains that the OLPC project is experiencing right now. James Surowiecki brilliantly documents all this in an excellent article in this month’s MIT Technology Review entitled “Philanthropy’s New Prototype.”
Surowiecki provides a short history of other philanthropic endeavors from the past century, such as Andrew Carnegie’s remarkably successful campaign to bring public libraries to even the smallest American communities. He then compares Negroponte’s OLPC Initiative to those efforts. Surowiecki notes that OLPC is ambitious not only in its goal of putting a laptop into the hands of every child, but in the way it proposes to structure the program to make it happen.
There is an absolutely intriguing discussion going on over on the Second Life blog today about a new threat facing this popular virtual reality world. (If you are not familiar with Second Life, see this Wired magazine “travel guide” for this virtual world.)
It seems that Second Life users are growing increasingly concerned about the spread of a program or bot called “CopyBot,” which allows the instantaneous and perfect reproduction of virtual objects / property created inside of Second Life. As Daniel Terdiman points out over on CNet News.com today: “That includes goods such as clothing that people purchase for their in-world avatars, and even the virtual PCs that computer giant Dell announced Tuesday it is going to sell in the digital world.”
The folks at Linden Labs, creators of Second Life, posted a note about all this entitled, “Copyrights and Content Creation in Second Life.” It does a lousy job of trying to explain how copyright law works in the real world but suggests that Second Lifers who feel they have been wronged might want to look into how the DMCA could help them out. The post goes on to note that:
I have come across some very silly applications of antitrust principles in my time, but this one has just moved up to the top of my list. Over on Business Week.com, Jason Brightman argues that video game retailers such as Game Stop are “forcing” consumers to commit to expensive product bundles in order to get their hands on a new PlayStation 3 or Nintendo Wii gaming console.
Mr. Brightman apparently thinks there is some sort of grave cosmic injustice at work when retailers bundle together gaming consoles with games or other products and require that users agree to purchase that bundle in order to be one of the first people to get their hands on a hot new console. He argues:
“Unfortunately it’s become all too common in recent years for retailers, particularly specialty stores like GameStop/EB, to pull a fast one on consumers who are all too eager to get the newest consoles at launch–remember last year’s $1,000+ Xbox 360 bundles? While it’s true that pre-order campaigns for brick-and-mortar locations allowed customers to pre-order nothing but the console, why should online consumers get the shaft? And is this even legal?… [U]nfortunately, it looks like this ‘predatory packaging’ is legal, but why the heck are consumers getting these console bundles shoved down their throats?”
Oh, come on! You have got to be kidding me. This is called capitalism, buddy. You know… supply-and-demand… rationale pricing of scarce goods… efficient market allocation, etc, etc. In fact, I want to make the exact opposite point that Brightman makes: I think the folks that are selling these consoles on a conditional basis or for a large mark-up are doing society a great service because they are ensuring that those of us who really want these scarce consoles the most can get are hands on them right away.
Unless he wants to make the argument that video game consoles have suddenly become life essential goods on par with food and water, his argument is just plain silly. After all, would anyone die if they had to wait a few weeks before they bought a stand-alone video game console at regular retail prices? How spoiled are we as a culture when we’re even having a debate about fair video game console allocation!?!
Incidentally, what about all those people on eBay selling the extra consoles they bought for major mark-ups? Should they all be in jail? Or perhaps the DOJ or FCC should regulate the video game console marketplace to determine fair prices and efficient distribution of video game consoles to the masses. Perhaps the rallying cry for this new regulatory movement can be “From each according to his [gaming] abilities, to each according to his [gaming] needs.”
Ridiculous.
I’ve been neglecting my blogging over the past week since my free time has been occupied with setting up my latest high-tech toy–Sony’s “Location Free TV.” To keep pace with the increasingly popular Slingbox, which also allows consumers to space- or place-shift their TV and other video signals, Sony has just released a new box (the LP-20) that retails for $250 bucks and has more features than their first generation Location Free boxes. As I was setting it up and troubleshooting various connection problems (and I had quite a few), I kept wondering about whether or not this new Sony device would raise any copyright issues.
Like the Sling, Sony’s Location Free box allows you to watch your home TV signals on your personal computer anywhere you want via an Internet connection. An added bonus with the Sony box is the ability to also watch TV remotely on your PlayStation Portable (PSP) gaming device. It’s a very cool feature but my experience with it so far has been a mixed bag. The PSP suffers from more latency issues (probably due to its more limited wireless networking capabilities) and picture quality really becomes unbearable at times as a result.
But watching TV remotely on my laptop looks pretty good and the desktop software that Sony provides makes it very easy to program in my cable set-top box codes and special buttons (like the button I use to call up my PVR archive so I can watch recorded TV shows while I’m on the road). And I can also use the Location Free box to control another video source, such as my DVD player. So, when I’m stuck in an airport trying to keep my kids from melting down, I can remotely access an animated movie sitting in my DVD tray back home. Very, very cool.
I’m getting a lot of calls from reporters this week asking about what the Democratic takeover means for technology policy issues and First Amendment matters. My answer on both counts: Not much.
On the free speech front, the results of this election will probably have very little effect. Democrats and Republicans are now birds of a feather on these matters. Democrats used to be considered the party of the First Amendment, but I have a hard time finding any defenders of the First Amendment left in that party. I spend as much time dealing with new speech regulations from Democrats like Hillary Clinton and Joe Lieberman as I do any Republican in Congress. Thus, I suspect that, despite the shift in power, Congress will continue pushing for more media and Internet regulation just as they have been for the past 10 years. It’s a never-ending cycle and the only competition left between the two parties is the race to see who can regulate faster and more extensively than the other.
On the communications and broadband regulatory front the differences may be a bit more pronounced between the parties, but not too much so. To try to get a better feel for what Democratic rule might bring us I thought I’d take a look at a few items in the “Innovation Agenda” they produced before the election. (It can be found online here and here is the PDF).
From what I see it here, it sounds like the Democrats believe that spending a lot of taxpayer dollars on federal pork projects is the best way to improve America’s technological competitiveness.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.
