Last week, I published a short article that used the birthday of the Internet as a hook for saying that 35 years may seem old, but the Internet is still young. Regulators need to remember that internet applications are still developing, and shouldn’t be treated as “mature” akin to a public utility (see VoIP, censorship, etc.). I received some feedback saying that September 2 was really the birthday for ARPANET, created by the United States Defense Advanced Research Project Agency (ARPA) that in 1969 linked universities and research centers. So was I wrong about the birthday?
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The spyware issue on the Hill is heating up. Today the Judiciary Committee held a full committee markup hearing on H.R. 4661, the “Internet Spyware (I-SPY) Prevention Act of 2004.” How does it differ from the H.R. 2929 “SPY ACT” (aka. the Bono bill)?
HR 4661 is in the Judiciary Committee, and carries with it criminal penalties enforceable by DOJ. The Commerce Committee bill HR 2929 imposes civil penalties as enforced by the FTC. The Judiciary bill contains only a few narrow prohibitions, while the Commerce bill has a long list of prohibitions relating to deceptive acts or practices and of collection of certain information (without notice and consent).
Which is the better bill? Do we really need spyware legislation? (this question asks not whether spyware is a problem, but whether legislation will do anything positive to reduce it).
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Why again do we need the Inducing Infringement of Copyrights Act (Induce Act)? Apple’s iTunes service sells about 2.5 million songs a week, while Wal-mart sells around 200,000 and Sony 100,000 songs per week. And soon, enter Yahoo – it’s the second most visited site on the net. And enter Microsoft. Its MSN music service and soon to be released Windows Media Player 10 will add serious competition to this developing market. Microsoft will differentiate itself from the more proprietary downloading services of Apple and Sony by touting its interoperability, using the slogan “Plays for Sure.” And college kids are going back to school and finding that they get access to music downloads (compliments of their tuition of course). Music is for sale! Buy it!
Some economic insight to the post by James on intercarrier compensation is found in a paper by Jay Atkinson and Chris Barnekov, senior economists at the FCC. Don’t let the weighty title of the paper distract you, “A Coasian Alternative to Pigovian Regulation of Network Interconnection” is based on a simple core concept – well-defined property rights. The paper explores what default rules might be appropriate for intercarrier compensation so that interested parties in the market, and not the FCC, can work out efficient resolutions. Earlier this week, the authors received the third annual FCC “Excellence in Economic Analysis” award for their work on this paper. Whatever the resolution regarding the reform plan recently submitted by the Intercarrier Compensation Forum, it will be analyzed in light of the Atkinson and Barnekov analysis. Their proposal:
“The rule is first to identify those facilities that are solely incremental to interconnection, then to split the cost of providing these facilities equally between the two carriers. Each carrier would recover these and all its other costs from end user customers, not from interconnecting networks. For several basic types of networks, we demonstrate below that this simple default rule results in efficient, competitively neutral interconnection. We argue that this result can also be generalized to more complex networks. We believe this rule provides a conceptual solution to the problem of interconnection between dissimilar networks in the presence of market power, and that it provides a default that can enable interconnectors to reach competitively neutral and, with respect to interconnection, efficient outcomes.”
And hey, you have to like any paper that begins with this quote from Ronald Coase:
“The kind of situation which economists are prone to consider as requiring corrective Government action is, in fact, often the result of Government action.” – R.H. Coase, 1960
Here in the U.S. we’re bogged down in determining whether the Communication Assistance for Law Enforcement Act (CALEA) applies to VoIP technology (the FCC unanimously ruled that it does, but a federal court will likely have the final word). In Canada, they’re debating who should pay for wiretapping. The Canadian Association of Chiefs of Police says it should be telephone users.
An article in the Halifax Herald reports that Canadian police want a surcharge of 25 cents on monthly telephone and internet bills. This charge would cover the costs of tapping into communications networks of suspected terrorists and criminals.
At first glance, it doesn’t seem like such a big deal. We already have a federal security surcharge of up to $10 per airline flight (aka the September 11 Security Fee) which serves to fund air travel safety, why not a similar charge on users of communications services to help law enforcement get the bad guys? But there are important differences here. While it may indeed be efficient to place the costs of safety on the user of the service, wiretapping laws do not make telephone users themselves safer – instead, it’s the greater society that purportedly benefits. So this proposal is a tax, not a “user fee.” Economists will tell you that it is inefficient and costly to administer and collect lots of little taxes.
To be sure, taxpayers will pay through general taxes if telephone users do not. But check out this fantastic comment by a Canadian police officer:
“From our perspective, it’s a slippery slope to start paying for the execution of search warrants or any kind of court order.”
Let me get this straight. It’s a burden for your agency to use its own funds for its own activities…to do your job? Should there be a special tax levied on light bulb purchasers for red and blue lights on patrol cars or for consumers of two-way radios so that police forces can upgrade their communications networks?
This is just another example of unfairly burdening a technology. If this proposal gets traction in Canada, it may migrate south to our country (with all the phone taxes already on our bills, who would notice?).
The online libertarian nirvana is no longer. As Adam says in his post introducing this blog, “Today the government has its hands all over the Internet. It’s difficult to name an area where lawmakers and regulators are not currently promulgating or considering rules and regulations for the high-technology and communications sectors.” So it is fitting that Wired News reported that it will no longer capitalize the “I” in internet, the “W” in web or “N” in net. (I’ve felt that this should be the case for years, but the elements of style dictated otherwise). Certainly the backbone of any new technology is the person using it – and through it all, people really don’t change all that much despite the change in technology. Our society has for too long thought of the “internet” as some distant land – and free market advocates have been able to ride the coattails of this perception when telling regulators to keep their “hands off.” As technology transcends socioeconomic barriers and becomes commoditized, this laissez faire argument carries less and less weight with regulators. This just makes our job advocating for market solutions harder, and means we need to focus on why the regulating forces of the market make for better outcomes than government regulation, not just by saying “don’t regulate a new technology” (implying its OK to regulate it once it’s all grown up) or “don’t regulate what you don’t know” (never stopped Congress before!). For better or worse, the “Internet” is no longer a strange land – and is little “i” internet for copy-editors and government regulators alike.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.