Articles by Adam Thierer

Avatar photoSenior 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.


Blogging & Campaign Finance Law: A Simple (Probably Too Simple!) Solution

by on May 3, 2005 · 2 comments

[[cross-posted from the PFF blog]]

I want to say a few words about this debate over the application of campaign finance regulations to the Internet and Web blogs in particular, but let me just start by admitting that I’m not an expert on campaign finance law. In fact, I am utterly mystified by this entire body of law, not only in terms of its sheer complexity, but also in terms of what it sometimes hopes to accomplish.

I understand that (at least in theory) the laws are suppose to eliminate “corruption” from our political process. But is it just me or is it not that case that campaign finance laws continue to get more complicated while the political process remains just about as “corrupt” as it has always been?

Well, maybe I’m just a cynic about the political process in general. So, let me instead just focus on all this from the perspective of a guy who cares about new media. The current batch of campaign finance regulations is really geared toward broadcasting and broadcast television in particular. But, as of late, the folks down at the Federal Election Commission (FEC) have discovered this thing called the Internet and this new craze called blogging just might have a little impact on the future of media in this country and, therefore, by extension, our political process.

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Media Deconsolidation, Part 5: “Clear Channel to Dismantle Media Empire”

by on April 29, 2005

“Clear Channel to Dismantle Media Empire.” That’s the headline from pg. B1 of today’s Wall Street Journal. In the article, Sarah McBride reports that the media giant plans to spinoff its entertainment division “in the latest example of a media company deconstructing an empire built during the late 1990s.”

As I’ve noted in previous posts, media deconsolidation is all the rage these days. The list of high-profile media divestitures and divorces continues to grow: AOL-Time Warner, Disney-Miramax, Cablevision, Viacom, Liberty Media, Sony, and on and on. They all have been pondering or carrying out major spin-offs or restructuring plans in recent months. As McBride reports in the Journal today, “Clear Channel is following a media-industry trend of deconsolidation that has picked up steam recently.”

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Will A Wireless Ratings Scheme Be Enough to Head Off Cellphone Censorship?

by on April 25, 2005

As I’ve mentioned in previous posts (here and here), the potential for cell phone content regulation is something worth monitoring. There have been some rumblings in Washington already about the need for the wireless industry to take steps to shield children from potentially objectionable material even before it hits the market. And you’d have to be a fool not to realize that at some point very soon, technological & media convergence is going to bring adult-oriented fare to mobile devices. The question is, once that happens, will regulatory convergence follow technological convergence? More specifically, will broadcast TV and radio “indecency” controls be imposed on wireless content in coming years?

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How Google and the Internet Are Challenging Traditional Media

by on April 22, 2005

[[cross-posted from the PFF Blog]]

There’s a crowd of people out there who still think that nothing has changed in our modern media world. They think that the same old newspapers, television, and radio outlets that dominated the media marketplace 30 years ago are still the only media outlets of importance today.

For example, Farhad Manjoo of Salon claims that “it’s hard to find anyone in the media world… who can furnish proof that new technologies are shaking the foundations beneath entrenched media giants. If anything, the Web and cable and satellite have expanded the reach of media conglomerates.” Using similar conspiratorial rhetoric, FCC Commissioner Michael Copps argues that “those who believe the Internet alone will save us from this fate should realize that the dominating Internet news sources are controlled by the same media giants who control radio, TV, newspapers, and cable.” And the ever-pessimistic Mark Cooper of the Consumers Federation of America has complained that “the Internet has not lived up to its hope or hype. It has become more of an extension of two dominant, 20th century communications media [television and telephony] than a revolutionary new 21st century technology.”

To these critics, left me just respectfully say, get a grip! Wake up and take a whiff of reality because the media world has already changed in amazing ways and the Internet and cyberspace ARE shaking the foundations of traditional media.

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“Hill Ponders Regulating Convergence”: A Note on the Proper Way to Solve “Level Playing Field” Concerns

by on April 21, 2005

Yesterday’s House Telecommunications Subcommittee hearing confirmed some of my worst fears about government regulation of new technologies / media, which I had discussed on Tuesday in this post.

Today’s Broadcasting & Cable includes a story about the hearing with the perfect title: “Hill Ponders Regulating Convergence.” That’s exactly what’s going on here with Congress and the FCC considering how to “level the (regulatory) playing field” as everyone tries to get into everyone else’s business. Illinois Republican John Shimkus is quoted in the story and what he said also frames the issue quite nicely: “How do we restructure the FCC to meet the new technological age. How do we justify different regulatory schemes when you are all competing in broadband.”

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New PFF Analysis of S. 616, the “Indecent and Gratuitous and Excessively Violent Programming Control Act of 2005”

by on April 21, 2005

PFF has just released my new PFF paper on the rising threat of cable and satellite censorship. In the paper, I provide a section-by-section analysis of the leading pro-censorship measure, S. 616, the “Indecent and Gratuitous and Excessively Violent Programming Control Act of 2005.” My analysis of the bill can be summarized as follows:

  • Section 2’s pervasiveness rationale has never been applied to newspapers and the Internet, and would be constitutionally suspect for cable and satellite.

  • Sections 4, 7 and 8 would impose mandates on warning systems and filters deployed voluntarily by programmers. These efforts might best be grouped under the theme ‘hanging the industry with its own rope.’ Ratings systems are subjective, and government shouldn’t have any say over them.

  • Section 5’s significant fines would carry the “clear as mud” indecency enforcement to cable and satellite, expanding the current confusion on what is appropriate.

  • Section 6 would potentially abrogate contracts between national networks and their TV affiliates by forcing networks to expand veto power over programming, despite the fact that local affiliates already have significant influence.

  • Section 10’s proposal of a return of a “voluntary” code of conduct seems far from voluntary, with an implicit “or else” attached.

  • Section 11 would exempt premium and pay-per-view channels, but what happens if S-616 forces popular content onto these networks and viewers follow? Would they then be regulated as well?

Please read the paper for more details. While the entire bill may not pass, given the atmosphere on the Hill and at the FCC today, portions of S. 616 could easily become law in coming months and years.

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More on Cellphone TV Regulation

by on April 20, 2005 · 4 comments

As I mentioned in a previous post, cellphone television is coming and that raises the interesting question of whether cellphone censorship will follow.

The New York Post has a short article today about the new race to develop a standard for cellphone video transmission. The article quotes Neil Strother, an analyst with In-Stat, a Scottsdale, Ariz., tech research firm, saying: “It’s a technology that’s here. But I think it’ll be about four years before it becomes mainstream.”

So cellphone video is coming quicker than anyone expected and the question now is whether the government will attempt to expand “indecency” regulations to cover it, much as they are currently trying to do for cable and satellite television.

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Your Telephone Company Will Be Your Next Cable Company

by on April 19, 2005

[[cross-posted from PFF Blog]]

Verizon announced yesterday that it has struck a major deal with NBC Universal to carry all of NBC’s 12 cable networks on Verizon’s new fiber lines. This comes on the heels of Verizon penning deals with cable giants Discovery Communications and Liberty Media’s Starz Entertainment Group to carry the networks produced by those programmers. Now that they’ve got their foot in the door in a major way, expect Verizon to sign waves of programmers up for carriage on their new fiber networks.

Let’s step back for a moment and think about this. Verizon–one of the nation’s largest and most respected telecom operators–is about to become a full-fledged multichannel video operator. Since the mid-90s, telecom operators have been trying to figure out the best way to bust into the video market, but the numbers (or the technology) just didn’t work out right. Now the stars are aligned properly and telcos like Verizon are itching to jump into this market to justify the billions they are investing in those speed-of-light fiber systems. More importantly, the telcos know they have to do this NOW to stop the further hemorrhaging of customers to cable operators, which can now offer a communications “triple play”: voice, video, and data–all over a single line with a single bill.

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Do Regulators Read the Papers? The Blockbuster Antitrust Fiasco Revisited

by on April 18, 2005

A few weeks ago, video rental giant Blockbuster announced it was abandoning its effort to acquire rival Hollywood Video after Federal Trade Commission (FTC) antitrust officials made it clear they would likely block the deal.

As I mentioned in a post prior to that announcement, this represents a classic example of how backward-looking antitrust policy can be at times. In particular, rarely has a case gotten the “relevant market” for purposes of market power analysis so completely wrong.

The idea that Blockbuster and Hollywood Video only compete against each other is absolutely absurd. To make that claim, antitrust officials are essentially arguing that the relevant market in this case is a niche of a niche of a niche. That is, apparently they believe that the relevant market here is:

(a) the market for video programming; (b) in which you rent the video programming; (c) in which you rent the video programming on a piece of tangible plastic; (d) in which you get in your car and drive to a store to rent the video programming on a piece of tangible plastic.

This is just crazy. Is that really the relevant market in a world in which 85% of all households subscribe to cable and satellite television services and have access to a 500-channel universe of video programming? On those cable and satellite networks, consumers can also gain access to dozens of a la carte video-on-demand (VOD) movies and programs.

The Internet is also increasingly offering an array of video download services, including the popular Movielink.com site. An article on page B1 of today’s Wall Street Journal also mentions how many Bell companies are preparing to roll out IPTV (Internet protocal TV) services with their new fiber networks.

And how about Netflix, which has single-handedly upended this entire business and forced the traditional vendors to abolish late fees? And even if your relevant market is just the good old tangible plastic video store, don’t you think WalMart has a bearing on market price? After all, there are bins of DVDs at WalMart that include new movies for less than $10 bucks. Hell, why rent when you can own for almost the same amount of money?

Don’t these other providers and technologies count as competitors? Why not? As Mr. Spock would say, this is highly illogical.

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From Luxury Item to Disposable Good: The Amazing $29 DVD Player

by on April 16, 2005 · 6 comments

So I drove over to CompUSA late last night for a special 10-till-Midnight sale. (Yes, I’m that big of a dork… but hey, I needed a new laptop and they had some good sales).

When I walked through the door, there was a mob standing around a giant bin fighting each other for a chance to grab one of the DVD players inside. After the commotion died down and all of the DVD players were picked over, I went over to see what the big deal was. Incredibly, CompUSA was selling brand new progressive scan DVD players for $29.99.

Now to explain to you how incredible this was to me, you have to understand that I’m one of those idiots called an “early adopter.” Yes, I’m the guinea pig who buys every new technology right out of the gates for outrageous prices just so I can be the first kid on the block with the hot new toy in town. Back in 1993, I was one of the first people to buy Onkyo’s hot new laser disc player–you remember those old discs that were as big as LP records and that you had to flip them over to continue to watch even short movies? Well, I threw down $1000 bucks on one of those suckers. It was rendered obsolete by the rise of DVDs just a few years later, and yes, I bought one of the first DVD players to hit the market too. This one was around $1000 bucks as well. And later this year I plan to throw down even more insane amounts of cash to be one of the first to grab a Blue-Ray high-def DVD player. So I’m not just the sucker that’s born every minute, I’m a reborn sucker every few years. The industry loves spend-happy idiots like me.

So, anyway, there I am in CompUSA late last night staring at the empty big of $29 DVD players and thinking to myself just how amazing that was. Not just because I paid so much more for my first one a few years ago, but also because of how fast the market had brought the price of these devices down below the cost of a good steak at Morton’s. (I had had a steak at Morton’s earlier in the day that cost $34 bucks. It was the cheapest one on the menu!)

Moreover, at a price of $29, that means that DVD players are now almost as inexpensive as the DVDs that they play! In fact, on a rack right next to this bin of $29 DVD players was a stack of “Lord of the Rings” special edition DVDs that actually cost more than the DVD players. (Also, in another bin, CompUSA was selling brand new LCD computer monitors for $120 bucks. Insane!)

Am I the only person that finds this absolutely amazing? I wonder what all those people who complain about a “digital divide” in this country would say about this.

P.S. Proving yet again what an idiot I am, I bypassed all the great sales on sub-$800 computers last night and shelled out over $2000 bucks on a state-of-the-art new Toshiba multimedia laptop. I’m sure the same model will be selling in a bin next year for $400 bucks. Somewhere in Tokyo, an account executive is laughing about people like me right now.

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