Articles by Tim Lee

Timothy B. Lee (Contributor, 2004-2009) is an adjunct scholar at the Cato Institute. He is currently a PhD student and a member of the Center for Information Technology Policy at Princeton University. He contributes regularly to a variety of online publications, including Ars Technica, Techdirt, Cato @ Liberty, and The Angry Blog. He has been a Mac bigot since 1984, a Unix, vi, and Perl bigot since 1998, and a sworn enemy of HTML-formatted email for as long as certain companies have thought that was a good idea. You can reach him by email at leex1008@umn.edu.


Telecom Reform: Just Say No

by on January 17, 2006 · 2 comments

Over at Brainwash, I argue that the best outcome libertarians can hope for from the telecom reform debate is probably for Congress to do nothing.

The question Congress ought to be asking is: “why are we regulating these industries at all?” Telecommunications regulations are traditionally justified as a way to limit “natural monopolies,” but there don’t seem to be any monopolies left. A sensible telecom reform would repeal the anachronistic regulations that draw increasingly meaningless distinctions among voice, video and data services. Instead, Congress is headed in precisely the opposite direction. In September, the House released a draft of proposed telecom legislation that would create three new categories of service: Broadband Internet Transmission Service (BITS), Broadband Video Service (BVS), and Voice Over Internet Protocol Service (VoIP). Each of these services would be subject to its own set of arcane regulations, which are largely focused on shoehorning 21st-century services into a 20th-century regulatory framework.

Obviously, it would be great if Congress saw the light and passed genuine deregulation. But I think the odds of that are very, very low. And as I argue in the essay, the 1996 Telecom Act is now so out of touch with reality that it amounts to de facto deregulation, as the FCC just doesn’t have the authority to regulate the latest technologies. Let’s hope it stays that way.

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Can You Copyright Viagra?

by on January 12, 2006

James DeLong analogizes pharmaceutical and software patents:

The general principle is that if governments remove the incentives for invention and innovation, then (surprise!) it does not happen. This applies to software and other creative products as well as pharma.

This is a plausible point until you realize that software is already protected by copyright law. And for a variety of reasons I’ve argued before, software patents have a lot more flaws than software copyright. I have yet to see anyone explain why software patents are necessary, given that copyright law appears to give plenty of protection for precisely the same investments.

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More on Google Video

by on January 11, 2006

What’s really frustrating about Google’s decision to include DRM in its new video software is how unnecessary it was. Look at the content they’re offering: basketball games, reruns of “I Love Lucy” and “The Brady Bunch,” and music videos. This isn’t content for which there’s a strong aftermarket at present. People don’t, as a general rule, cruise eDonkey looking for copies of last year’s basketball game. Music videos are mostly played for free on cable. Shows like “I Love Lucy” have been available on Nick at Night for decades.

Moreover, these video files are too big to be easily and casually swapped among friends. It seems unlikely that very many people would download a 200 MB basketball game and then try to email it to their friends. Sure, a few would probably upload them to P2P networks, but much of this content was on P2P networks already, and it’s only a matter of time before someone hacks Google’s DRM and puts this content up anyway.

So exactly how would it have hurt CBS or the NBA’ bottom line to offer some of this content in a DRM-free format? My guess is: not one bit. They’d have lost a few sales to people who share the content with friends, but this would likely have been a small fraction of the overall sales. On the other hand, they’d increase customer satisfaction by allowing users the freedom to freely make legal uses of their content. Without the impediment of DRM, Google could easily implement seamless transfer of videos to iPods and other portable devices. Geeks like me would feel more comfortable knowing we could watch the videos with third-party video players.

Perhaps most importantly, in a year or two when consumers start to realize that they’re being locked into proprietary formats by Apple, Microsoft, and their ilk, it would be a fantastic marketing opportuinty to be able to point out that their products, in contrast, don’t lock them into one company’s proprietary products.

Unfortunately, Google instead took the easy way out and acquiesced to Hollywood’s demands. Google, Hollywood, and consumers will all be worse off for it.

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The End is Near! (for CDs)

by on January 11, 2006 · 6 comments

Ars Technica crunches the numbers and finds that the end of the CD era is fast approaching:

Sticking with twelve tracks to an album, 16 million full albums equal 192 million tracks, or 35 percent of all paid downloads. Also, remember that album sales figures lump the downloads in with the regular CD sales, and 2.6 percent of all album sales were really downloads, just not on a piecemeal basis. With all of these numbers in hand, we can calculate the total market share downloads enjoy today, and it’s a healthy 7.3 percent. If we can assume that the ratio of full-album to single-track downloads stays relatively stable over time, the online market share was 2.3 percent in 2004. The 149 percent sales growth sounds good all right, but it’s nothing compared to a 220 percent market share gain from one year to the next.

So online downloading’s share of the overall music market tripled between 2004 and 2005. If growth comtinues at that pace, online download revenue should outpace physical CDs sometime in 2008, and CDs are likely to be an inconsequential fraction of the overall music market by the end of the decade.

The record industry would do well to think hard about how this tidal wave will affect their business strategies. In particular, they should be careful not to hand technology companies like Apple a dominant position in their industry using a misguided DRM strategy. If they think negotiating with Steve Jobs was tough last year, when he was generating 5% of their revenue, it will be much worse next year when it’s 25%!

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Google Becomes Part of the Problem

by on January 10, 2006 · 2 comments

I’m with Mike:

Google’s copy protection scheme sounds just as bad as we feared. It is their very own, and it will limit what you can do with the video significantly. You can’t transfer the video to mobile devices. It doesn’t work on a Mac. And, you can only view the video when you’re online, as the copy protection obviously is calling home first (which, of course, opens up the potential of security holes). On the flip side, Google will (I’m sure) quickly point out that their DRM offers more “flexibility” than others, in that you don’t have to use it, and if you do, you have choices about how restrictive it is. In other words, Google is basically going to say that they built the locks, but it’s up to the content provider to be evil with those locks. As part of this whole offering of letting anyone sell videos through their system, they’re also offering more payment options so that (unlike iTunes) content providers can choose how much things cost, and even allows some variability (for example, Charlie Rose will offer free streaming for a day after his shows air, and then unencumbered downloads for $0.99 after that). Google takes a 30% cut of any sale. It’s nice that they’re giving content providers some choice, but it’s still quite worrisome that there’s now yet another incompatible copy protection scheme that will be making the rounds. This isn’t good for anyone and shrinks the overall market. Google may think that it was “necessary” to simply give content providers the option to hang themselves with bad copy protection, but it’s a cop out position. Google, at this point, should have a strong enough market position to let content providers know that there’s a better way to offer content without copy protection–and if content providers are too scared, that’s their problem. Eventually they would come around when they saw success stories without copy protection.

So now if I want to build a personal library of legally-purchased digital video, I have to decide whether to buy them in iTunes, Windows Media, or Google formats. Whichever company I choose, I can only play my videos on that company’s proprietary products. If I choose iTunes, then I can’t play it on a PSP, and I’m subject to the whims of Steve Jobs. If I choose Google or Windows Media, I can’t play videos on my Mac or my iPod. None of them will work with Linux. And if I ever decide I’m fed up with Apple, Microsoft, or Google, and want to switch to a different platform, that’s tough: I can’t take my videos with me.

This is progress?

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Confessions of a Voting-Machine Neanderthal

by on January 9, 2006

I’m going to respectfully disagree with Sonia Arrison, and agree with Mike over at Techdirt: voting machine manufacturers should be required to make their source code–all of it–available for public inspection, and a mandatory paper trail (in which each vote is recorded on paper as it’s made) is a good idea as well.

The issue seems pretty simple to me: by far the most important concern when it comes to voting machines is transparency. I want to be sure that my vote will be counted fairly. The more people who inspect the machine’s code to make sure it works as it should, the more confidence I’m going to have in the process.

It’s not clear to me what the counterargument is. The source code for a voting machine isn’t particularly valuable. More to the point, publicly available code doesn’t have to mean open source in the traditional sense: the source can easily be licensed for public inspection, but not for use in competing products.

Moreover, it’s not like we need to worry about stifling innovation in the voting machine industry–voting machines perform a relatively simple task, and I don’t particularly want them to innovate, if “innovation” involves rapid technological change. Stability, predictability, and security are far more important considerations, and those requrements don’t change very much over time. It seems unlikely that the quality of our voting machines will suffer if voting machine companies are required to disclose

As for the paper trail issue, the key issue is that it’s important that as many people as possible have confidence in the integrity of the voting process. While advanced cryptographic methods might be more reliable in a theoretical sense, their very complexity makes it difficult for ordinary voters (most of whom are not computer experts) to have confidence in them. Moreover, there’s always a possibility that the technological wizards will overlook something–that some key component will fail that will lead to votes being lost, or to confusion over the final vote total. If that happens, the existence of paper records, which are freely available for public inspection, will be crucial to establishing the credibility of the voting process.

I’m actually sympathetic to the view that switching to electronic voting machines at all is a bad idea, at least for the near future. Although there have been problems with punch-card ballots, and those should be replaced, the latest optical-scan voting systems seem to work just fine, and I don’t see any compelling reason to change them. Why fix what’s not broken, especially when the integrity of our elections are at stake? Why not stick with small-scale trials of e-voting for the next decade, to make sure the kinks have been worked out?

But if we are going to adopt electronic machines on a wide scale, we should do so cautiously and transparently. Publicly available source code and a mandatory paper trail are sensible steps in that direction.

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Patent Trolling for Cheap Phone Calls

by on January 6, 2006

Here is yet another example of software patent abuse. A patent trolling firm called Rates Technology is suing Google alleging patent infringement by its Google Talk program.

I haven’t found a copy of the lawsuit, but according to the Register, one of the two patents at issue is Patent Number 5,519,769, “Method and system for updating a call rating database”:

The advantages and features of the present invention now allows the database that stores billing rate parameters in a rate table for call rating devices to be updated. The call rating device is connected at a predetermined time and date via a data transfer line to a rate provider having billing rate parameters for a plurality of calling stations. Indicia identifying the call rating device and the date and time of the last update of the billing rate parameters is transmitted over the data transfer line to the rate provider. The rate provider verifies that the billing rate parameters should be updated, and it transmits to the call rating device the updated billing rate parameters when the rate provider determines that an update is required.

It goes on in this vein for paragraphs and paragraphs. Skimming the entire patent, I don’t really understand how this could be considered an “invention.” Obviously, if you wanted to find the lowest-cost route for a particular call, you would poll each possible service provider seeking their rates, and then store their answers in a database, which would be updated periodically. If any idea is “obvious,” that surely is.

I’m also bewildered about how Google Talk could be considered to have infringed this patent, unless anyone who routes calls over a switched network is considered to be an infringer. If that’s what’s going on, then this is a pretty good example of why a “no software patents” rule would good policy: whatever the merits of this patent as applied to telecommunications hardware, it’s pretty clearly an impediment to innovation when applied to a software-only product like Google Talk.

Update: Here is the complaint. It doesn’t appear to give any details about how Google Talk infringes the patents.

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Does HR 1201 overrule Grokster?

by on January 6, 2006 · 2 comments

Richard Epstein has a new essay on the DMCRA, Rep. Boucher’s DMCA-reform legislation:

But means as well as ends matter in the constant struggle to deal with copyright piracy. In looking at the structural problem, the key question is just how much noninfringing use is there relative to the torrent of illegal copying. In answering this question, it’s not appropriate to look at the issue of interoperability, because that has already been dealt with first by the DMCA and second by the standard end user licenses. So it is not likely that there is much fair use to worry about. Once the first of these two provisions is in place, then someone can circumvent the device for the appropriate purpose. But unfortunately H.R. 1201 does not say one word about how the circumvention in question will be limited just to those cases. Nor does it indicate what penalties will be given to individuals who first circumvent for fair use and then proceed, as is likely to be the norm, to circumvent for all other purposes. So if equipment can be sold for good purposes, then it can be used for bad ones, and the DMCA has lost its teeth. It is not too much to say that this stealth provision, which is never referred to in the findings of the act could work a comprehensive repeal of the DMCA. Much too much is lost, and very little is gained.

He’s wrong about interoperability: although the DMCA does purport to carve out an exemption for interoperability, that exception is of virtually no help in practice. The reasons are a bit complex, and I deal with them extensively in my forthcoming Cato Policy Analysis, so I won’t rehash them here. Suffice it to say that despite the reverse-engineering exception, the DMCA effectively makes it illegal to interoperate with DRMed products, and that’s a very bad thing.

I think the professor is being a bit too clever with his mock surprise at the “stealth provision” repealing the DMCA. I was under the impression that everyone understood that was its purpose. Indeed, I’ve heard that the primary reason that the labeling provisions were included were so that the bill could be considered in the Commerce Committee, chaired by a sympathetic Rep. Barton, rather than the Judiciary committee, which is less friendly to DMCA reform. If the Judiciary Committee were more sympathetic, Boucher would doubtless be happy to introduce just the DMCA-reform portions of his legislation there. There’s certainly nothing “stealth” about the bill, given that commentators routinely cite Boucher’s bill as effectively repealing the DMCA’s anti-circumvention provisions.

He does, however, have an interesting point about the section that codifies the Betamax rule:

Continue reading →

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Monopolistic Pressures?

by on January 4, 2006

Ars Technica reports on the release of a full suite of open source VOIP software. This has some interesting policy implications. So far, regulators have been focused on getting large, commercial VOIP providers like Vonage to comply with the various tax and regulatory requirements. But as free VOIP solutions become ever more available and accessible, there won’t be anybody to tax and regulate. If I set up VOIP server in my basement, something I can probably do for a few hundred dollars, do I have to register with the FCC and my state regulatory agency as a telecom company? Or am I only required to comply with regulatory requirement if I connect to the PSTN?

Ars has a pretty consistently anti-corporate editorial stance, and I think their conclusion on the implications for net neutrality regulations gets the situation rather backwards:

The unwavering avarice of big telecom has also become an impediment, with at least one major ISP publicly asserting that it will not allow competing VoIP services to operate over its lines. In response to the blatantly anti-competitive sentiment of such ISPs, House Energy and Commerce Committe Chairman Joe Barton has proposed a network neutrality law that will prevent monopolistic pressure from devesting VoIP innovation. VoIP technology is increasingly important in our highly connected world, and the availability of open source VoIP solutions will help popularize the technology in less developed countries where organizations can’t afford the proprietary alternatives.

What the existence of open-source VOIP software means is that it’s going to be increasingly difficult for the Baby Bells to control its use. If it were just Vonage, the Baby Bells would simply need to figure out how to detect and block traffic for that one application. But if there are thousands of geeks tinkering with an free VOIP networking stack, there will be a proliferation of new VOIP applications that circumvent the Bells’ restrictions in different ways. Rather than fighting an arms race with a handful of easy-to-identify software companies, they’ll be fighting it with hundreds of geeks scattered around the world. It’s a battle they’re certain to lose. And that makes network neutrality legislation less, not more, necessary.

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Creative Commons

by on December 29, 2005

Larry Lessig has spent the last week exhorting people to contribute to Creative Commons, the organization responsible for the Creative Commons license.

The CC license is a concept that every libertarian–regardless of their views on intellectual property–should be excited about. Sometimes, an author, artists, or musician chooses to market his or her products commercially. But other times, for a variety of reasons, a creator would simply like his or her works to be widely available. The creative commons license is a convenient and efficient means for copyright holders to make their works available to the public while placing various conditions on the way those rights are used. So, for example, a musician might release a song under a CC license that’s free for non-commercial use, but requires his permission before the song is used for commercial purposes.

Copyright is all about putting creators in control of their creations. The right of control includes the right to relinquish that control, or to relinquish some rights (such as the right to non-commercial use) while reserving others (such as the right to attribution and commercial exploitation). Thus, CC extends the power of copyright by giving authors finer-grained control over their rights under copyright.

I’d been aware of the CC license for a long time. What I didn’t realize, until recently, that Creative Commons, the organization, has about 20 employees and are involved in a wide variety of exciting projects. Lessig described the organization’s current activities in a series of emails over the last few weeks. They’re well worth reading to understand what the CC project is, what it’s trying to accomplish, and where it’s heading in the coming years.

Anyway, until now CC has been supported primarily by a handful of generous foundations. But they’re currently undergoing a public fundraising campaign in order to preserve their status as a publicly-supported non-profit organization–and the deadline is this Saturday! So check out his most recent appeal, which answers some common questions, and perhaps you’ll be persuaded that they’re an organization worthy of your support. I was.

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