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The Internet, “Openness” & Commercialization

by on December 22, 2010 · 10 comments

I’m always entertained by the talk among the Twitterati — especially those who seem to permanently reside in the #NetNeutrality and #FCC hashtags — about how the Internet’s “openness” is at risk, and that steps must be taken to preserve it.  Regulatory regimes are often birthed by myths, and this one is no different.  Contrary to what the regulation-happy worry-warts suggest, the Internet has never been more “open” than it is today. After all, as Geert Lovink reminded us in his 2008 critique of Jonathan Zittrain’s thinking about the decline of online openness:

[In] [t]he first decades[,] the Internet was a closed world, only accessible to (Western) academics and the U.S. military. In order to access the Internet one had to be an academic computer scientist or a physicist. Until the early nineties it was not possible for ordinary citizens, artists, business[es] or activists, in the USA or elsewhere, to obtain an email address and make use of the rudimentary UNIX-based applications. … It was a network of networks—but still a closed one.

And even though it will probably make the folks at Free Press and Public Knowledge have an aneurysm, it’s abundantly clear what shook-up this sleepy, closed model: commercialization.  That’s right, those evil folks who had the audacity to want to make a dollar online were the ones who brought us the “open” Internet we know and love today!  Continue reading →

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Now back to the National Broadband Plan…

by on December 21, 2010 · 0 comments

I recorded a commentary today  for KQED–NPR in the Bay Area–on the importance of the National Broadband Plan.  In the wake of tumult over net neutrality, Title II, and other regulatory gibberish, the important goals of the NBP, published in March of 2010, have been lost.  That’s unfortunate, because the authors did a great job of setting out ambitious goals essential to maintain U.S. competitiveness.  The plan also relies for funding on private investment and incentives, giving it a realistic chance of success.

While recent polls indicate that few Americans want the government involved in encouraging adoption of broadband, I believe this is one example where intervention–if only of the cheerleading and goal-setting variety–is appropriate.  As I’ve written extensively elsewhere, the Internet’s success is a function of network effects, as succinctly described by Metcalfe’s Law.  The more people who have broadband access, the more valuable the network is for everyone.  And the better the chances for serendipitous new uses and applications to flourish.

Those of us who already have broadband access, in other words, would benefit just as much from getting non-users online as those users themselves.

Perhaps even more.

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Net Neutrality Regulation, Accountability & Democracy

by on November 24, 2010 · 14 comments

Proponents of Net neutrality regulation continue their full-court press to get the Federal Communications Commission (FCC) and its chairman, Julius Genachowski, to unilaterally push through a new industrial policy regime for the Internet. The latest word, according to Politico, is that the agency is pushing back its scheduled December open meeting from Dec. 15 to Dec. 21 to give the agency more time to plot its next move.  There’s no word yet what the agency’s regulatory blueprint will look like, so it’s impossible to critique the agency’s plan at this point.  I’ve made the case against Net neutrality regulation here before, however, and I’m sure those same concerns and critiques will apply to whatever the agency ends up adopting.

What’s most concerning about the way this process is playing out currently is just how anti-democratic it is.  I understand the zeal of the pro-regulatory forces on this issue, but there is simply no good excuse for advocating that 3 unelected officials at an independent regulatory agency rush through a vote to regulate a such a massive and important sector of the American economy.

It used to be the case that a broad and non-partisan coalition of academics and organizations supported the non-delegation principle, which, generally speaking, refers to the notion that only democratically elected officials should be in a position to pass laws and make the really important decisions about the future course of our polity and its economy.  Of course, when it comes to the economy, I’d prefer most of those decisions be left to marketplace experimentation.  However, to the extent regulation is deemed necessary and that regulation governs such a massively important portion of the American economy, that determination should definitely be made by elected leaders in Congress and not delegated to bureaucrats who would ram through regulations with 3 votes and sketchy plan for reordering that sector. Continue reading →

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Thoughts on Wu’s Master Switch, Part 6 (His Audacious Information Industrial Policy)

by on November 2, 2010 · 602 comments

I’m going to close out my series of essays about Tim Wu’s new book, The Master Switch: The Rise and Fall of Information Empires, by discussing his proposed solutions.  In the first five essays in the series, [1, 2, 3, 4, 5] I’ve critiqued Wu’s look at information history as well as his use of terms like “market failure,” “laissez-faire” and “open” vs. “closed.”  I argued there’s a great deal of over-simplification, even outright distortion, in his use of those terms throughout the book.

Anyway, let’s run through the basics of the book once more before getting to Wu’s proposed solutions.  By my reading of The Master Switch, Wu’s argument essentially goes something like this:

  • Information industries go through cycles. After a period of “openness” and competition, they tend to drift toward “closed,” corporate-controlled, anti-consumer models and outcomes.
  • The resulting “monopolists” then block much innovation, competition, and free speech.
  • Consequently, “the purely economic laissez-faire approach… is no longer feasible.”
  • Moreover, information industries are more important than all others (“information industries… can never be properly understood as ‘normal’ industries”) and even traditional forms of regulation, including antitrust, “are clearly inadequate for the regulation of information industries.” (p. 303).
  • Thus, special rules should apply to information-related sectors of our economy.

Again, I’ve challenged some of these assertions in my previous essays, specifically, Wu’s incomplete history of cycles and the fact that he greatly underplays the role of governments in “locking-in” sub-optimal market structures or, worse yet, creating those structures through misguided public policies or regulatory capture.  Wu discusses some of those factors in his book, but he tends to regard them as secondary to the inquiry, whereas I believe they are crucial to understanding how most “closed” or anti-competitive scenarios develop or endure. Instead, Wu simplistically suggests that “the purely economic laissez-faire approach… is no longer feasible,” even though no such state of affairs has ever existed within communications or media industries. They have been subjected to varying levels of indirect influence or direct control almost since their inception.

Regardless, what does Tim Wu want done about the problems he has (mis-)diagnosed? Continue reading →

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Violent Video Games Head to Supreme Court

by on November 1, 2010 · 3 comments

Today, the U.S. Supreme Court will hear arguments in Schwarzenegger v. EMA, a case that challenges California’s 2005 law banning the sale of “violent” video games to minors. The law has yet to take effect, as rulings by lower federal courts have found the law to be an unconstitutional violation of the First Amendment.

There’s little doubt that banning the sale of nearly any content to adults violates the protections of Free Speech, including, as decided last year, video depictions of cruelty to animals.

But over the years the Court has ruled that minors do not stand equal to adults when it comes to the First Amendment. The Court has upheld restrictions on the speech of students in and out of the classroom, for example, in the interest of preserving order in public schools.

Continue reading →

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Private Media Providers Shouldn’t Be Forced to Fund Public Media

by on October 31, 2010 · 2 comments

I sincerely hope it was a Washington Post editor, and not New America Foundation president Steve Coll, who picked the title for his editorial today, “Why Fox News Should Help Fund NPR.”  After all, Coll certainly must be smart enough to know that there is no law or regulation on the books today that gives the Federal Communications Commission (FCC) or any other agency the ability to force private media providers to fund their public media competitors.  Moreover, it takes a lot of chutzpah to try to spin NPR’s recent Juan Williams fiasco into an excuse for private media providers like Fox News to fund NPR, but, shockingly, that’s exactly what Coll does. “The Williams imbroglio is teachable, but its lessons actually point in the opposite direction: America’s public media system, including NPR, requires more funding, not less.”  Hmm… that’s not exactly the lesson most of the rest of the world took away from this episode!

Coll first argues it makes sense for private media funds to be transferred to NPR becuase “In this time of niche publications and cable networks that thrive on ideological anger, we should be seeking to strengthen NPR’s role as a convener of the public square, a demagogue-free zone where all political and social groups — including conservatives and others opposed to federal funding of public media — should be welcome on equal terms.”  This is indicative of the all-too-common “progressive” impulse to force media upon us that we don’t want or even find offensive.  To be clear, I am not one of those people who finds NPR to be a hopelessly biased bastion of Leftist thinking.  While I think it’s clear to everyone that many of NPR’s stories and reporters do lean that direction, I also think there’s some outstanding reporting to be found there.  But if Steve Coll and his colleagues at the New America Foundation want to see NPR get more funding, they should do the same thing I do:  Open up their wallets and make the voluntary choice to fund it. To force everyone else to do so is despicable.

Continue reading →

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FCC and its Technological Advisory Council: Shut Them Down and Use the Money to Reduce Debt

by on October 22, 2010 · 10 comments

The Federal Communications Commission has established a new advisory group called the “Technological Advisory Council.” Among other things it will advise the agency on “how broadband communications can be part of the solution for the delivery and cost containment of health care, for energy and environmental conservation, for education innovation and in the creation of jobs.”

This is an agency that is radically overspilling its bounds. It has established goals that it has no proper role in fulfilling and that it has no idea how to fulfill. As we look for cost-cutting measures at the federal level, we could end the pretense that communications industry should be regulated as a public utility. Shuttering the FCC would free up funds for better purposes such as lowering the national debt or reducing taxes.

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Fox-Cablevision and the Net Neutrality Hammer

by on October 19, 2010 · 9 comments

When the only tool you have is a hammer, as the old cliché goes, everything looks like a nail.

Net neutrality, as I first wrote in 2006, is a complicated issue at the accident-prone intersection of technology and policy.  But some of its most determined—one might say desperate—proponents are increasingly anxious to simplify the problem into political slogans with no melody and sound bites with no nutritional value.  Even as—perhaps precisely because—a “win-win-win” compromise seems imminent, the rhetorical excess is being amplified.  The feedback is deafening.

In one of the most bizarre efforts yet to make everything be about net neutrality, Public Knowledge issued several statements this week “condemning” Fox’s decision to prohibit access to its online programming from Cablevision internet users.  In doing so, the organization claims, Fox has committed “the grossest violations of the open Internet committed by a U.S. company.”

This despite the fact that the open Internet rules (pick whatever version you like) apply only to Internet access providers.  Indeed, the rules are understood principally as a protection for content providers.  You know, like Fox. Continue reading →

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Bill Shock Shouldn’t Be a Federal Issue

by on October 14, 2010 · 1 comment

The FCC proposed new rules today aimed at combating wireless “bill shock,” a term that describes mobile subscribers getting hit with overage charges they didn’t anticipate. The proposed rules would require wireless providers to create a system for alerting customers when they are about to incur extra usage charges for voice, text, data, or roaming.

I can certainly see why some consumers may be frustrated with wireless pricing practices. But this frustration hardly constitutes evidence that the mobile marketplace is actually failing. Yes, mobile carriers sometimes make mistakes, and they probably need to do more to ensure their customers understand how overage charges work.

Competitive forces, however, are far better equipped than federal regulators to punish providers that engage in
genuinely harmful practices. And if the federal government must “do something” about bill shock, educating mobile subscribers about where to locate and track their usage information is a far better approach than prescriptive, burdensome federal regulation.

Hypocritically, even as the FCC tries to reign in bill shock, its own policies are harming consumers far more than any wireless industry practices. The FCC has again and again put off spectrum auctions that would enable mobile providers to offer better services at lower prices. As a result, consumers are suffering to the tune of billions of dollars each year. Economists Thomas Hazlett and Roberto Munoz published a study last year in which they concluded that U.S. wireless prices would decline by 8% if the FCC were to allocate an additional 60mhz of spectrum to mobile telephony.

If the FCC truly cares about wireless subscribers, rather than simply grandstanding against competitive (if imperfect) mobile carriers, the Commission’s top priority should be to aggressively free up the airwaves.

But analysts at the Competitive Enterprise Institute urged the FCC not to interfere with market disputes and to instead turn its focus to the real obstacle to the wireless marketplace – the FCC’s own anti-consumer approach to spectrum allocation. “Educating mobile subscribers about where to locate their up-to-date usage information – which all major wireless providers make available – is a far better solution to ‘bill shock’ than prescriptive federal regulation,” argued Ryan Radia, CEI Associate Director of Technology Studies. Radia pointed out that some consumers’ frustration with current wireless pricing practices is hardly evidence that the mobile marketplace is failing. “To be sure, mobile carriers make occasional mistakes, and they need to work harder to ensure their customers stay well-informed,” Radia said. “But competitive forces are far better equipped than federal regulators to punish providers that engage in genuinely harmful practices or fail to satisfy consumers’ evolving preferences.” In its efforts to address wireless bill disputes, the FCC purports to represent consumers’ interests; yet, Radia argued, the agency is harming consumers by delaying action to free up radio spectrum — the lifeblood of wireless communications. “Consumers are suffering to the tune of billions of dollars each year on account of the FCC’s failure to free up radio spectrum for mobile communications,” Radia said. “Economists Thomas Hazlett and Roberto Munoz recently published a study finding that U.S. wireless prices would decline by 8% if the FCC were to allocate an additional 60mhz of spectrum to mobile telephony.” “If the FCC genuinely cares about wireless subscribers, it should focus on aggressively freeing up the airwaves instead of comparatively trivial issues like bill shock.”

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Privacy Polls & Real-World Trade-Offs Revisited

by on October 13, 2010 · 0 comments

By Adam Thierer & Berin Szoka

Last Friday, Common Sense Media (CSM) held an event  (video) at the National Press Club featuring the chairmen of the Federal Communications Commission (FCC) and the Federal Trade Commission (FTC). The regulatory activist group released a new poll on children and privacy (Exec Summary & Full Survey). Unfortunately, like almost every other privacy-related poll, theirs is more geared towards fueling a privacy panic than on exploring the real-world trade-offs between legislating “greater privacy” (a hopelessly abstract concept in most conversations) and losing the consumer benefits of data sharing: innovation in online services and the quality and quantity of services and content supported by data-driven advertising.

What better way to drum up Congressional support for paternalistic privacy legislation (restrictions on online data use) than by asserting that this is what the electorate already wants? The poll asks whether “Congress should update laws that relate to online privacy and security for children and teens.”  Three-fifths (61% of parents, 62% of adults) said yes. But earlier in the survey, only 16% knew that the Children Online Privacy Protection Act of 1998 already prohibits “online companies… from collecting or using personal information from children under the age of thirteen without a parent’s permission.” (53% weren’t sure.) If parents don’t know what Congress has already done, how meaningful is it for them to say they think Congress needs to do more? (There’s a reason we don’t have direct democracy.)

Indeed, how useful are such polls, anyway? Ultimately, what such polls really tell us is that, if you ask parents—or adults in general—whether they’re concerned about protecting kids, of course most will say yes, because nobody wants to think of themselves as the kind of person who doesn’t care about kids.

This bias becomes even more problematic when the choice at issue involves such stark trade-offs—especially when we’re talking about throwing a wrench (restrictions on data use and collection) in the economic engine that has again and again provided funding for media and services that users just won’t pay for. As we’ve noted here before, privacy polls and surveys reveal only what the public will tell pollsters in response to the particular questions asked. On privacy, those questions are almost invariably designed to solicit responses suggesting an urgent need for more laws and government action. Even the fairest of these surveys is no substitute for real-world experiments in which people make real choices, in real time, often with real money, and face many real trade-offs. Continue reading →

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