Media Regulation

Future of Video Forecast: Sunny, With a Chance of Regulation

by on June 26, 2012 · 0 comments

On Wednesday morning, the U.S. House of Representatives Energy & Commerce Subcommittee on Communications and Technology will hold a hearing on “The Future of Video.”

As we Tech Liberators have long argued on these pages (1, 2, 3, 4, 5, 6, 7), government’s hands have been all over the video market since its inception, primarily in the form of the FCC’s rulemaking and enforcement enabled by the Communications Act. While the 1996 Telecommunications Act scrapped some obsolete video regulations, volumes of outdated rules remain law, and the FCC wields vast and largely unchecked authority to regulate video providers of all shapes and sizes. Wednesday’s hearing offers members an excellent opportunity to question each and every law that enables governmental intervention—and restricts liberty in—the television market.

It’s high time for Congress to free up America’s video marketplace and unleash the forces of innovation. Internet entrepreneurs should be free to experiment with novel approaches to creating, distributing, and monetizing video content without fear of FCC regulatory intervention. At the same time, established media businesses—including cable operators, satellite providers, telecom companies, broadcast networks and affiliates, and studios—should compete on a level playing field, free from both federal mandates and special regulatory treatment.

The Committee should closely examine the Communications and Copyright Acts, and rewrite or repeal outright provisions of law that inhibit a free video marketplace. Adam Thierer has chronicled many such laws. The Committee should, among other reforms, consider:

Here’s to the success of Sen. Jim DeMint, Rep. Steve Scalise, and other members of Congress who are working to achieve real reform and ensure that the future of video is bounded only by the dreams of entrepreneurs.

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UMG-EMI Deal Is No Threat To Innovation In Music Distribution

by on June 20, 2012 · 1 comment

By Geoffrey Manne and Berin Szoka

Everyone loves to hate record labels. For years, copyright-bashers have ranted about the “Big Labels” trying to thwart new models for distributing music in terms that would make JFK assassination conspiracy theorists blush. Now they’ve turned their sites on the pending merger between Universal Music Group and EMI, insisting the deal would be bad for consumers. There’s even a Senate Antitrust Subcommittee hearing tomorrow, led by Senator Herb “Big is Bad” Kohl.

But this is a merger users of Spotify, Apple’s iTunes and the wide range of other digital services ought to love. UMG has done more than any other label to support the growth of such services, cutting licensing deals with hundreds of distribution outlets—often well before other labels. Piracy has been a significant concern for the industry, and UMG seems to recognize that only “easy” can compete with “free.” The company has embraced the reality that music distribution paradigms are changing rapidly to keep up with consumer demand. So why are groups like Public Knowledge opposing the merger?

Critics contend that the merger will elevate UMG’s already substantial market share and “give it the power to distort or even determine the fate of digital distribution models.” For these critics, the only record labels that matter are the four majors, and four is simply better than three. But this assessment hews to the outmoded, “big is bad” structural analysis that has been consistently demolished by economists since the 1970s. Instead, the relevant touchstone for all merger analysis is whether the merger would give the merged firm a new incentive and ability to engage in anticompetitive conduct. But there’s nothing UMG can do with EMI’s catalogue under its control that it can’t do now. If anything, UMG’s ownership of EMI should accelerate the availability of digitally distributed music.

To see why this is so, consider what digital distributors—whether of the pay-as-you-go, iTunes type, or the all-you-can-eat, Spotify type—most want: Access to as much music as possible on terms on par with those of other distribution channels. For the all-you-can-eat distributors this is a sine qua non: their business models depend on being able to distribute as close as possible to all the music every potential customer could want. But given UMG’s current catalogue, it already has the ability, if it wanted to exercise it, to extract monopoly profits from these distributors, as they simply can’t offer a viable product without UMG’s catalogue. Continue reading →

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New Paper by Bruce Owen on Video Regulation & the Retrans Wars

by on May 30, 2012 · 6 comments

I’m pleased to report that the Mercatus Center at George Mason University has just released a new white paper on video marketplace regulation and the ongoing  “retrans” wars by one of America’s leading media economists, Bruce M. Owen.  Owen’s new paper, “Consumer Welfare and TV Program Regulation,” examines the lamentable history of misguided federal interventions into America’s video marketplace. Owen also explores to possibility of deregulating this marketplace via the important new Scalise-DeMint bill, “The Next Generation Television Marketplace Act.” If you’re following these issues, Owen’s paper is must-reading. Here’s the abstract:

Getting rid of obsolete regulation of the broadcast and distribution of video programming is essential to the efficient operation of a market that has the potential to greatly increase the benefits to consumers. Services that increase video program distribution capacity have been delayed and suppressed for many years, and consumer benefits were lost as the Federal Communications Commission (FCC) pursued ill-defined and ephemeral “public interest” and “localism” objectives.

It is past time to stop extending interventions originally intended for old technology to a range of new competitive media. No longer is there any rational public policy basis for a government agency to dictate how much or what content the viewing public can see, any more than there ever has been for printed media. There is no market failure to which the current regulatory framework is responding and no longer any reason for FCC bureaucrats to decide how much of the spectrum should be used for each of many existing and future commercial services. Spectrum reform, along with the repeal of other broadcast programming restrictions contained in the proposed Scalise-DeMint Next Generation Television Marketplace Act, provide a roadmap for the necessary reform. With an adequate supply of tradable rights in spectrum, we will find out how much additional competition is possible among traditional wired and wireless, analog and digital, and fixed and mobile delivery services.

Read the entire thing here [PDF], and you might also be interested in this Forbes column (“Toward a True Free Market in Television Programming“) and these two blog posts of mine (1, 2) on the retrans wars.

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Still More Confusion in the Debate over Retrans & Video Marketplace Deregulation

by on May 15, 2012 · 0 comments

Writing over at the conservative Big Government blog (part of the Breitbart.com network of blogs), someone who goes by the pseudonym “Capitol Connection” has posted an editorial about the debate over retransmission consent reform that is full of misinformation and misguided policy prescriptions, at least if you believe is truly limited government. The piece is entitled, “Big Cable Would Prefer if You Paid Their Bills,” and the problems are almost immediately evident from that headline alone.  First, what is a supposedly small government-oriented blog doing using a silly label like “Big Cable” to describe a vigorously competitive sector of our capitalist economy? Using terms like “Big Cable” is a silly lefty tactic. Second, no one in the cable industry is proposing anyone “pay their bills” except for the customers who enjoy their services. Isn’t a fee for service part of capitalism?

Anyway, that’s just the problem with the title of the essay. Sadly, the rest of the piece is filled with even more erroneous information and arguments about the retransmission consent regulatory process as well as the bill that aims to reform that process, “The Next Generation Television Marketplace Act” (H.R. 3675 and S. 2008). That bill, which is sponsored by Senator Jim DeMint (R-SC) and Rep. Steve Scalise (R-LA), represents a comprehensive attempt to deregulate America’s heavily regulated video marketplace. In a recent Forbes oped, I argued that the DeMint-Scalise effort would take us “Toward a True Free Market in Television Programming” by eliminating a litany of archaic media regulations that should have never been on the books to begin with. The measure would:

  • eliminate: “retransmission consent” regulations (rules governing contractual negotiations for content);
  • end “must carry” mandates (the requirement that video distributors carry broadcast signals even if they don’t want to);
  • repeal “network non-duplication” and “syndicated exclusivity” regulations (rules that prohibit distributors from striking deals with broadcasters outside their local communities);
  • end various media ownership regulations; and
  • end the compulsory licensing requirements of the Copyright Act of 1976, which essentially forced a “duty to deal” upon content owners to the benefit of video distributors.

This represents genuine and much-needed deregulation of a market that has been encumbered with far too much top-down control and micro-management by the FCC over the past several decades. To be clear, none of these rules apply to any other segment of our modern information economy. Every day of the week, deals are cut between content creators and distributors in many other segments of the media industry without these rules encumbering the process. The DeMint-Scalise bill is an attempt to get big government out of the way and let these deals be cut in a truly free market without regulators putting their thumb on the scale in one direction or the other. Continue reading →

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A Free Market Defense of Retransmission Consent

by on April 11, 2012 · 2 comments

Unshackling a market from obsolete, protectionist regulations can be a very challenging undertaking, especially when the lifeblood of a regulated industry is at stake. The latest push for regulatory reform to encounter the murky waters of modernization is the “Next Generation Television Marketplace Act.” The ambitious and comprehensive bill, introduced by Rep. Steve Scalise and Sen. Jim DeMint in their respective chambers of Congress, aims to free up the broadcast television market. The federal government’s hands have been all over this market since its inception, overseen primarily by the FCC, pursuant to the Communications Act.

The Next Generation Television Marketplace Act (“DeMint/Scalise”) is a bold and laudable bill that would, on the whole, substantially free up America’s television marketplace. But one aspect of the bill—its abolition of the retransmission consent regime—has sparked a vigorous debate among free marketers. This essay will explain what this debate is all about and why policymakers should think twice before getting rid of retransmission consent.

Toward a Free Market in Television

The DeMint/Scalise bill takes an axe to many of the myriad rules that stand in the way of a free market in television programming. As Co-Liberator Adam Thierer recently explained on these pages, the bill’s many provisions would among other things get rid of the compulsory licensing provisions in the Copyright Act that empower government to set the rates cable and satellite (“pay-TV”) providers must pay to retransmit distant broadcast signals. It would eliminate the “network non-duplication” rule, which generally bars pay-TV providers from carrying out-of-market signals that offer the same programs as local broadcasters. The bill would also end the “must-carry” rule that forces pay-TV providers to retransmit certain local broadcast signals without receiving any compensation.

These are just a few of the many provisions of the DeMint/Scalise bill that would substantially reform the Communications and Copyright Acts to foster a free video marketplace and bring television regulation into the 21st century. (For a more in-depth assessment of the positive aspects of the DeMint/Scalise proposal, see Adam’s informative Forbes.com essay, Toward a True Free Market in Television Programming; Randy May’s superb Free State Foundation Perspectives essay, Broadcast Retransmission Negotiations and Free Markets;” and Bruce Owen’s FSF essay, The FCC and the Unfree Market for TV Program Rights.)

Continue reading →

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Continuing Confusion in the Debate over Retrans & Video Marketplace Deregulation

by on March 29, 2012 · 3 comments

Imagine the following scenario. The government passes a law that includes regulations governing “transactional consent” for retail commerce. These regulations stipulate how buyers and sellers of various goods shall do business. Some of the rules give the sellers special rights to demand that the stores carry some of their goods as well as rules stipulating that stores not carry the goods of competing sellers from other markets. On the flip side, other preexisting rules give buyers the right to demand that certain sellers deal their goods to them at regulated rates.

Now, it’s true that a contractual negotiation takes place in this “marketplace” governed by “transactional consent” regulations, but does this sound like a truly free market to you? Most of us would say No.

Regrettably, that’s the essential error that the American Conservative Union (ACU) makes in a letter they sent to members of Congress this week in which they made the case against H.R. 3675 and S. 2008, “The Next Generation Television Marketplace Act.” That bill, which is sponsored by Senator Jim DeMint (R-SC) and Rep. Steve Scalise (R-LA), represents a comprehensive attempt to deregulate America’s heavily regulated video marketplace. In a recent Forbes oped, I argued that the DeMint-Scalise effort would take us “Toward a True Free Market in Television Programming” by eliminating a litany of archaic media regulations that should have never been on the books to begin with. The measure would:

  • eliminate: “retransmission consent” regulations (rules governing contractual negotiations for content);
  • end “must carry” mandates (the requirement that video distributors carry broadcast signals even if they don’t want to);
  • repeal “network non-duplication” and “syndicated exclusivity” regulations (rules that prohibit distributors from striking deals with broadcasters outside their local communities);
  • end various media ownership regulations; and
  • end the compulsory licensing requirements of the Copyright Act of 1976, which essentially forced a “duty to deal” upon content owners to the benefit of video distributors.

Despite these clearly deregulatory provisions, in its letter to Capitol Hill, the ACU argues that the DeMint-Scalise bill would somehow interfere with what they regard as a free market in video programming. The ACU writes: Continue reading →

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danah boyd’s “Culture of Fear” Talk

by on March 26, 2012 · 0 comments

I want to highly recommend everyone watch this interesting new talk by danah boyd on “Culture of Fear + Attention Economy = ?!?!” In her talk, danah discusses “how fear gets people into a frenzy” or panic about new technologies and new forms of culture. “The culture of fear is the idea that fear can be employed by marketers, politicians, the media, and the public to really regulate the public… such that they can be controlled,” she argues. “Fear isn’t simply the product of natural forces. It can systematically be generated to entice, motivate, or suppress. It can be leveraged as a political tool and those in power have long used fear for precisely these goals.”  I discuss many of these issues in my new 80-page white paper, “Technopanics, Threat Inflation, and the Danger of an Information Technology Precautionary Principle.”

Webstock ’12: danah boyd – Culture of Fear + Attention Economy = ?!?! from Webstock on Vimeo.

danah points out that new media is often leveraged to generate fear and so we should not be surprised when the Internet and digital technologies are used in much the same way. She also correctly notes that our cluttered, cacophonous information age might also be causing an escalation of fear-based tactics. “The more there are stimuli competing for your attention, the more likely it is that fear is going to be the thing that will drive your attention” to the things that some want you to notice or worry about.

I spent some time in my technopanics paper discussing this point in Section III.C (“Bad News Sells: The Role of the Media, Advocates, and the Listener.”) Here’s the relevant passage: Continue reading →

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The DOJ’s Problematic Attack on Property Rights Through Merger Review

by on March 14, 2012 · 1 comment

The DOJ’s recent press release on the Google/Motorola, Rockstar Bidco, and Apple/ Novell transactions struck me as a bit odd when I read it.  As I’ve now had a bit of time to digest it, I’ve grown to really dislike it.  For those who have not followed Jorge Contreras had an excellent summary of events at Patently-O.

For those of us who have been following the telecom patent battles, something remarkable happened a couple of weeks ago.  On February 7, the Wall St. Journal reported that, back in November, Apple sent a letter[1] to the European Telecommunications Standards Institute (ETSI) setting forth Apple’s position regarding its commitment to license patents essential to ETSI standards.  In particular, Apple’s letter clarified its interpretation of the so-called “FRAND” (fair, reasonable and non-discriminatory) licensing terms that ETSI participants are required to use when licensing standards-essential patents.  As one might imagine, the actual scope and contours of FRAND licenses have puzzled lawyers, regulators and courts for years, and past efforts at clarification have never been very successful.  The next day, on February 8, Google released a letter[2] that it sent to the Institute for Electrical and Electronics Engineers (IEEE), ETSI and several other standards organizations.  Like Apple, Google sought to clarify its position on FRAND licensing.  And just hours after Google’s announcement, Microsoft posted a statement of “Support for Industry Standards”[3] on its web site, laying out its own gloss on FRAND licensing.  For those who were left wondering what instigated this flurry of corporate “clarification”, the answer arrived a few days later when, on February 13, the Antitrust Division of the U.S. Department of Justice (DOJ) released its decision[4] to close the investigation of three significant patent-based transactions:  the acquisition of Motorola Mobility by Google, the acquisition of a large patent portfolio formerly held by Nortel Networks by “Rockstar Bidco” (a group including Microsoft, Apple, RIM and others), and the acquisition by Apple of certain Linux-related patents formerly held by Novell.  In its decision, the DOJ noted with approval the public statements by Apple and Microsoft, while expressing some concern with Google’s FRAND approach.  The European Commission approved Google’s acquisition of Motorola Mobility on the same day.
Continue reading →

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new paper: Technopanics, Threat Inflation & an Info-Tech Precautionary Principle

by on February 28, 2012 · 3 comments

[UPDATE: 2/14/2013: As noted here, this paper was published by the Minnesota Journal of Law, Science & Technology in their Winter 2013 edition. Please refer to that post for more details and cite this final version of the paper going forward.]

I’m pleased to report that the Mercatus Center at George Mason University has just released my huge new white paper, “Technopanics, Threat Inflation, and the Danger of an Information Technology Precautionary Principle.” I’ve been working on this paper for a long time and look forward to finding it a home in a law journal some time soon.  Here’s the summary of this 80-page paper:

Fear is an extremely powerful motivating force, especially in public policy debates where it is used in an attempt to sway opinion or bolster the case for action. Often, this action involves preemptive regulation based on false assumptions and evidence. Such fears are frequently on display in the Internet policy arena and take the form of full-blown “technopanic,” or real-world manifestations of this illogical fear. While it’s true that cyberspace has its fair share of troublemakers, there is no evidence that the Internet is leading to greater problems for society.

This paper considers the structure of fear appeal arguments in technology policy debates and then outlines how those arguments can be deconstructed and refuted in both cultural and economic contexts. Several examples of fear appeal arguments are offered with a particular focus on online child safety, digital privacy, and cybersecurity. The  various  factors  contributing  to  “fear  cycles”  in these policy areas are documented.

To the extent that these concerns are valid, they are best addressed by ongoing societal learning, experimentation, resiliency, and coping strategies rather than by regulation. If steps must be taken to address these concerns, education and empowerment-based solutions represent superior approaches to dealing with them compared to a precautionary principle approach, which would limit beneficial learning opportunities and retard technological progress.

The complete paper can be found on the Mercatus site here, on SSRN, or on Scribd.  I’ve also embedded it below in a Scribd reader. Continue reading →

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A Mantra for Tech Policy in the New Year

by on January 3, 2012 · 0 comments

[Cross posted at TechFreedom.org]

It’s hard to believe TechFreedom launched just last January. As we begin 2012, let me share with you the mantra that continues to guide our work: “Technology expands the capacity to choose; and it denies the potential of this revolution if we assume the Government is best positioned to make these choices for us.”

That’s how Justice Kennedy explained the Supreme Court’s 2000 decision to strike down cable television censorship: better that parents choose for themselves what media are appropriate for their children. In short, as technology empowers, regulation should recede.

But except where courts impose this standard, the presumption in most tech policy debates is just the opposite: only government can protect us. In 1999, Larry Lessig predicted that “Cyberspace, left to itself, will not fulfill the promise of freedom. It will become a perfect tool of control.”  That pessimism shapes how most advocates, commentators, regulators, lawmakers, and even judges think about tech policy.

It’s a seductive idea: If only the right policy “levers” can be pulled, in the right way, at the right time, perhaps cyberspace can come closer to fulfilling that “promise of freedom.” Give me a lever large enough, some regulators seem to think, and I’ll free the world!

We’re skeptical—not of their motives, but of their ability to plan a free and thriving Internet.  Just as Hayek said about the “curious task” of economics, we aim “to demonstrate to men how little they really know about what they imagine they can design.” Will those policy levers really do what those pulling them think?  What else will they do? Will cyberspace really turn out better than if it had been left to itself?

This isn’t an merely an argument for self-regulation, but for the broader, more complex process by which market forces check corporate power.   Continue reading →

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