By Brent Skorup & Connor Haaland

We think drones are exciting technology with the potential to improve medical logistics, agriculture, transportation, and other industries. But drones fly at low altitudes and, to many Americans, drones represent a nuisance, trespasser, or privacy invasion when they fly over private property. This is why we think the FAA and states should work together to lease airspace above public roads—it would free up millions of miles of low-altitude airspace for operations while avoiding many lawsuits from public and private landowners.

In the meantime, states and landowners are pushing back on certain drone activities. Per Prof. Stephen Migala, about 10 states have created “no-fly zones” for drones, prohibiting flights over government property, state forests, or sensitive areas. Most state airspace rules prohibit drones at low-altitudes over “critical infrastructure” like nuclear, gas and electric facilities, bridges, dams, and communication networks. Some states prohibit drones over jails, prisons, and schools.

In Texas, in fact, there is litigation over a state ban on photography drones above critical infrastructure, sports venues, and prisons. One of the legal issues is whether state police powers over trespass, nuisance, and privacy allow states to exclude drones from low-altitude airspace. As we’ve pointed out in a GovTech piece, this is a festering issue in drone regulation—no one knows at what altitude private property (and state police powers) begins.

For private property owners who don’t want drones flying over their property, they might be able to bring a trespass lawsuit under existing state law. Around 20 states expressly vest air rights with landowners. However, many states also recognize a privilege of non-disruptive flight, so it’s unclear if a landowner would win a lawsuit in those states. We’re unaware of the issue being litigated.

Unfortunately, many landowners and annoyed neighbors are taking matters into their own hands and shooting drones out of the sky. We’ve identified over a dozen such encounters in the past eight years, though there are likely some near-misses and unreported cases out there.  (Don’t shoot a drone–it’s dangerous and, as the cases below show, you risk being arrested and convicted for criminal mischief or some other crime.)

1. In November of 2012, unknown shooters in Bucks County, Pennsylvania shot down a drone that was flying over their hunt club. The drone was flown by an animal rights group to bring scrutiny to pigeon shooting and this was the fourth time the activists’ drone had been shot down. No criminal charges appear to have been filed.
2. In October of 2014, a man shot down a drone in Lower Township, New Jersey. It’s unclear if the drone was hovering over his property or a neighbor’s. The man plead guilty to criminal mischief. 
3. In November 2014 in Modesto, California, a man allegedly instructed his minor son to shoot his neighbor’s drone out of the sky, and the drone was destroyed. The neighbor claims the drone was not over the man’s property and won $850 in small claims court from the man for damages and costs.
4. In July of 2015 in Bullitt County, Kentucky, William Meredith,  annoyed at a drone flying over his backyard while grilling with friends, shot the drone when it flew over his property. The drone’s owner, a neighbor, called the police upon discovering his destroyed drone. Meredith was arrested and charged under local law for firing a gun in a populated area. At the highly publicized trial in state court, the judge dismissed the charges with a brief statement that Meredith was justified in shooting because of the invasion of privacy.
5. In April of 2016, an unnamed woman shot down a drone in Edmond, Oklahoma. The drone was flown by a construction company employee who was inspecting gutters in the neighborhood. It’s unclear if the drone was flying over the woman’s property. The case was investigated by the police, who said that they did not expect to file charges
6. An unknown shooter in Aspen, Colorado shot down a drone during 4^th of July fireworks in 2016. It’s unclear if the drone was over the shooter’s property. The pilot of the fallen drone filed a report with local police and the FAA but the shooter remains a mystery.
7. In August of 2016, a woman allegedly shot down a drone in The Plains, Virginia with her 20-gauge shotgun. The woman alleged that the drone hovered 25 to 30 feet above her property and she believed it was being used to spy on her movie-star neighbor, Robert Duvall. The two men flying the drone left the scene when she told them she was calling the police. No charges were filed. 
8. In April of 2017, an unknown person in Morgan County, Georgia shot down a drone with a .22 rifle. It’s unclear whose property the drone was flying over. The drone owner filed a report but a suspect was never identified.
9. In October of 2017, a man allegedly shot down a drone in Jackson County, Oregon with his pellet rifle and later turned himself in for arrest. The photography drone was flying over a state recreation area. The local prosecutor charged the shooter with first degree criminal mischief, a felony in Oregon. (The drone’s owner feels that a felony charge is excessive. With a Google search, it’s unclear whether the man was convicted.)
10. In May of 2018, a man allegedly attempted to shoot down a drone with his handgun in Bradenton, Florida. It was a neighbor’s drone and the man claims it was on his property, hovering a few feet above the ground. Police were called and warned the man about the danger and legal risk of shooting drones. No charges were filed.
11. In February of 2019, a man allegedly shot down a drone in Long Island, New York with a shotgun. The drone was being used by an animal rescue group to find a lost dog. It’s unclear if the drone was flying over the man’s property. He was charged with third-degree criminal mischief and prohibited use of a weapon.
12. In May of 2020, a man allegedly shot down a drone flying over a chicken processing plant in Watonwan County, Minnesota. The drone operator was apparently taking video of the plant as a citizen-journalist. The man was charged with two felonies: criminal damage to property and reckless discharge of a firearm in city limits. 
13. In June 2020, someone shot a drone flying somewhere in western Pennsylvania at 390 feet above the ground. Despite being grazed and damaged, the drone managed to safely operate and land. It’s unclear if the drone was over the shooter’s property. The shooter is unknown and the drone operator contacted state police but has not filed a complaint.

As you can see, the legal penalties for shooting a drone vary based on the circumstances and the prosecutor. Some got off with warnings but a few were charged with a felony under state law. Arguably, someone shooting a drone violates federal law, which imposes penalties on anyone who

willfully . . . damages, destroys, disables, or wrecks . . . any civil aircraft used . . . in interstate . . . commerce.

Federal penalties for willfully damaging an aircraft are stiff—fines and up to 20 years’ imprisonment. We’re unaware of federal prosecutors bringing a case against someone for shooting a drone. Perhaps federal prosecutors feel it’s excessive to use this statute, which was written with passenger planes in mind. Further, it’s unclear when drones are used in interstate commerce. As one federal judge said in a 2016 drone regulation case, Huerta v. Haughwout:

the FAA believes it has regulatory sovereignty over every cubic inch of outdoor air in the United States. . . . [I]t is far from clear that Congress intends—or could constitutionally intend—to regulate all that is airborne on one’s own property and that poses no plausible threat to or substantial effect on air transport or interstate commerce in general.

Hopefully lawmakers will clear up the ambiguity and demarcate where property rights end. As we pointed out in our recent 50-state drone report card, creating drone highways would prevent many issues. Congress should also consider drawing a federal-state dividing line in the sky, much like it drew a dividing line in the ocean in the Submerged Lands Act for energy development. For now, landowners, drone operators, the FAA, and state governments are all trying to determine the limits of their authority.

By Brent Skorup and Melody Calkins

Tech-optimists predict that drones and small aircraft may soon crowd US skies. An FAA administrator predicted that by 2020 tens of thousands of drones would be in US airspace at any one time. Further, over a dozen companies, including Uber, are building vertical takeoff and landing (VTOL) aircraft that could one day shuttle people point-to-point in urban areas. Today, low-altitude airspace use is episodic (helicopters, ultralights, drones) and with such light use, the low-altitude airspace is shared on an ad hoc basis with little air traffic management. Coordinating thousands of aircraft in low-altitude flight, however, demands a new regulatory framework.

Why not auction off low-altitude airspace for exclusive use?

There are two basic paradigms for resource use: open access and exclusive ownership. Most high-altitude airspace is lightly used and the open access regime works tolerably well because there are a small number of players (airline operators and the government) and fixed routes. Similarly, Class G airspace—which varies by geography but is generally the airspace from the surface to 700 feet above ground—is uncontrolled and virtually open access.

Valuable resources vary immensely in their character–taxi medallions, real estate, radio spectrum, intellectual property, water–and a resource use paradigm, once selected requires iteration and modification to ensure productive use. “The trick,” Prof. Richard Epstein notes, “is to pick the right initial point to reduce the stress on making these further adjustments.” If indeed dozens of operators will be vying for variable drone and VTOL routes in hundreds of local markets, exclusive use models could create more social benefits and output than open access and regulatory management. NASA is exploring complex coordination systems in this airspace but, rather than agency permissions, lawmakers should consider using property rights and the price mechanism.

The initial allocation of airspace could be determined by auction. An agency, probably the FAA, would:

1. Identify and define geographic parcels of Class G airspace;
2. Auction off the parcels to any party (private corporations, local governments, non-commercial stakeholders, or individual users) for a term of years with an expectation of renewal; and
3. Permit the sale, combination, and subleasing of those parcels

The likely alternative scenario—regulatory allocation and management of airspace–derives from historical precedent in aviation and spectrum policy:

1. First movers and the politically powerful acquire de facto control of low-altitude airspace,
2. Incumbents and regulators exclude and inhibit newcomers and innovators,
3. The rent-seeking and resource waste becomes unendurable for lawmakers, and
4. Market-based reforms are slowly and haphazardly introduced.

For instance, after demand for commercial flights took off in the 1960s, a command-and-control quota system was created for crowded Northeast airports. Takeoff and landing rights, called “slots,” were assigned to early airlines but regulators did not allow airlines to sell those rights. The anticompetitive concentration and hoarding of airport slots at terminals is still being slowly unraveled by Congress and the FAA to this day. There’s a similar story for government assignment of spectrum over decades, as explained in Thomas Hazlett’s excellent new book, The Political Spectrum.

The benefit of an auction, plus secondary markets, is that the resource is generally put to its highest-valued use. Secondary markets and subleasing also permit latecomers and innovators to gain resource access despite lacking an initial assignment and political power. Further, exclusive use rights would also provide VTOL operators (and passengers) the added assurance that routes would be “clear” of potential collisions. (A more regulatory regime might provide that assurance but likely via complex restrictions on airspace use.) Airspace rights would be a new cost for operators but exclusive use means operators can economize on complex sensors, other safety devices, and lobbying costs. Operators would also possess an asset to sublease and monetize.

Another bonus (from the government’s point of view) is that the sale of Class G airspace can provide government revenue. Revenue would be slight at first but could prove lucrative once there’s substantial commercial interest. The Federal government, for instance, auctions off its usage rights for grazing, oil and gas retrieval, radio spectrum, mineral extraction, and timber harvesting. Spectrum auctions alone have raised over $100 billion for the Treasury since they began in 1994.

Many readers will recall the telecom soap opera featuring the GPS industry and LightSquared and the subsequent bankruptcy of LightSquared. Economist Thomas W. Hazlett (who is now at Clemson, after a long tenure at the GMU School of Law) and I wrote an article published in the Duke Law & Technology Review titled Tragedy of the Regulatory Commons: Lightsquared and the Missing Spectrum Rights. The piece documents LightSquared’s ambitions and dramatic collapse. Contrary to popular reporting on this story, this was not a failure of technology. We make the case that, instead, the FCC’s method of rights assignment led to the demise of LightSquared and deprived American consumers of a new nationwide wireless network. Our analysis has important implications as the FCC and Congress seek to make wide swaths of spectrum available for unlicensed devices. Namely, our paper suggests that the top-down administrative planning model is increasingly harming consumers and delaying new technologies.

Read commentary from the GPS community about LightSquared and you’ll get the impression LightSquared is run by rapacious financiers (namely CEO Phil Falcone) who were willing to flaunt FCC rules and endanger thousands of American lives with their proposed LTE network. LightSquared filings, on the other hand, paint the GPS community as defense-backed dinosaurs who abused the political process to protect their deficient devices from an innovative entrant. As is often the case, it’s more complicated than these morality plays. We don’t find villains in this tale–simply destructive rent-seeking triggered by poor FCC spectrum policy.

We avoid assigning fault to either LightSquared or GPS, but we stipulate that there were serious interference problems between LightSquared’s network and GPS devices. Interference is not an intractable problem, however. Interference is resolved everyday in other circumstances. The problem here was intractable because GPS users are dispersed and unlicensed (including government users), and could not coordinate and bargain with LightSquared when problems arose. There is no feasible way for GPS companies to track down and compel users to use more efficient devices, for instance, if LightSquared compensated them for the hassle. Knowing that GPS mitigation was unfeasible, LightSquared’s only recourse after GPS users objected to the new LTE network was through the political and regulatory process, a fight LightSquared lost badly. The biggest losers, however, were consumers, who were deprived of another wireless broadband network because FCC spectrum assignment prevented win-win bargaining between licensees.

Our paper provides critical background to this dispute. Around 2004, because satellite phone spectrum was underused, the FCC permitted satellite phone licensees flexibility to repurpose some of their spectrum for use in traditional cellular phone networks. (Many people are appalled to learn that spectrum policy still largely resembles Soviet-style command-and-control. The FCC tells the wireless industry, essentially: “You can operate satellite phones only in band X. You can operate satellite TV in band Y. You can operate broadcast TV in band Z.” and assigns spectrum to industry players accordingly.) Seeing this underused satellite phone spectrum, LightSquared acquired some of this flexible satellite spectrum so that LightSquared could deploy a nationwide cellular phone network in competition with Verizon Wireless and AT&T Mobility. LightSquared had spent $4 billion in developing its network and reportedly had plans to spend $10 billion more when things ground to a halt.

In early 2012, the Department of Commerce objected to LightSquared’s network on the grounds that the network would interfere with GPS units (including, reportedly, DOD and FAA instruments). Immediately, the FCC suspended LightSquared’s authorization to deploy a cellular network and backtracked on the 2004 rules permitting cellular phones in that band. Three months later, LightSquared declared bankruptcy. This was a non-market failure, not a market failure. This regulatory failure obtains because virtually any interference to existing wireless operations is prohibited even if the social benefits of a new wireless network are vast.

This analysis is not simply scholarly theory about the nature of regulation and property rights. We provide real-world evidence that supports our notion that, had the FCC assigned flexible, de facto property rights to GPS licensees like the FCC does in some other bands, rather than fragmented unlicensed users, LightSquared might be in operation today serving millions with wireless broadband. Our evidence comes, in fact, from LightSquared’s deals with non-GPS parties. Namely, LightSquared had interference problems with another satellite licensee on adjacent spectrum–Inmarsat.

Inmarsat provides public safety, aviation, and national security applications and hundreds of thousands of devices to government and commercial users. The LightSquared-Inmarsat interference problems were unavoidable but because Inmarsat had de facto property rights to its spectrum, it could internalize financial gains and coordinate with LightSquared. The result was classic Coasian bargaining. The two companies swapped spectrum and activated an agreement in 2010 in which LightSquared would pay Inmarsat over $300 million. Flush with cash and spectrum, Inmarsat could rationalize its spectrum and replace devices that wouldn’t play nicely with LightSquared LTE operations.

These trades avoided the non-market failure the FCC produced by giving GPS users fragmented, non-exclusive property rights. When de facto property rights are assigned to licensees, contentious spectrum border disputes typically give way to private ordering. The result is regular spectrum swaps and sales between competitors. Wireless licensees like Verizon, AT&T, Sprint, and T-Mobile deal with local interference and unauthorized operations daily because they have enforceable, exclusive rights to their spectrum. The FCC, unfortunately, never assigned these kinds of spectrum rights to the GPS industry.

The evaporation of billions of dollars of LightSquared funds was a non-market failure, not a market failure and not a technology failure. The economic loss to consumers was even greater than LightSquared’s. Different FCC rules could have permitted welfare-enhancing coordination between LightSquared and GPS. The FCC’s error was the nature of rights the agency assigned for GPS use. By authorizing the use of millions of unlicensed devices adjacent to LightSquared’s spectrum, the FCC virtually ensured that future attempts to reallocate spectrum in these bands would prove contentious. Going forward, the FCC should think far less about which technologies they want to promote and more about the nature of spectrum rights assigned. For tech entrepreneurs and policy entrepreneurs to create innovative new wireless products, they need well-functioning spectrum markets. The GPS experience shows vividly what to avoid.

In my latest essay for the IAPP “Privacy Perspectives” blog , I ponder the question: Why is it that better methods of digital contracting and data ownership have not yet developed to help us protect our privacy online?  I note that the idea has long been floating around out there, but never gone anywhere. I offer a couple of explanations for why that has likely been the case. But I also note that there may still be some reasons to believe that private data contracting has a future.

Read the whole thing.

(Note: I discuss these issues in greater detail in my forthcoming George Mason Law Review article, “A Framework for Benefit-Cost Analysis in Digital Privacy Debates.” It will be out before the end of the month and I will post it here once it is live.)

The Mercatus Center at George Mason University has just released a new paper by Brent Skorup and me entitled, “A History of Cronyism and Capture in the Information Technology Sector.” In this 73-page working paper, which we hope to place in a law review or political science journal shortly, we document the evolution of government-granted privileges, or “cronyism,” in the information and communications technology marketplace and in the media-producing sectors. Specifically, we offer detailed histories of rent-seeking and regulatory capture in: the early history of the telephony and spectrum licensing in the United States; local cable TV franchising; the universal service system; the digital TV transition in the 1990s; and modern video marketplace regulation (i.e., must-carry and retransmission consent rules, among others.

Our paper also shows how cronyism is slowly creeping into new high-technology sectors.We document how Internet companies and other high-tech giants are among the fastest-growing lobbying shops in Washington these days. According to the Center for Responsive Politics, lobbying spending by information technology sectors has almost doubled since the turn of the century, from roughly $200 million in 2000 to $390 million in 2012.  The computing and Internet sector has been responsible for most of that growth in recent years. Worse yet, we document how many of these high-tech firms are increasingly seeking and receiving government favors, mostly in the form of targeted tax breaks or incentives.

We argue that the creeping cronyism could have two major negative ramifications. First, it could dull entrepreneurialism and competition in this highly innovative sector since time and resources spent on influencing politicians and capturing regulators cannot be spent competing and innovating in the marketplace. Cronyism will also negatively impact consumer welfare by denying consumers more and better products and services. Additionally, consumers might end up paying higher prices or higher taxes due to government privileges for industry.

Second, cronyism also raises the specter of greater government control of the Internet and of the digital economy. When policymakers dispense favors, they usually expect something in return. They also become accustomed to having greater informal powers over the sector receiving favors, and contribute to DC’s infamous “revolving door” problem.

High-tech America’s recent embrace of Washington could take it down the familiar path followed by the agriculture, telecommunications, and automotive sectors (among many others), with government becoming both protector and punisher of industry. Today’s dynamic tech industries will increasingly come under the “Mother, may I?” permission-based regulatory regime that encumbered the older information technology sectors.

Finally, this paper offers strategies for stalling and diminishing the cronyism already taking root in the high-tech sector. We suggest several targeted reforms to limit or undo cronyism. Generally speaking, however, we note that, as economist David R. Henderson argued in an earlier Mercatus Center report, “There is only one way to end, or at least to reduce, the amount of cronyism, and that is to reduce government power.”

The paper can be downloaded from the Mercatus website, SSRN, or Scribd. The Scribd version is embedded down below. (Also, here’s some coverage of the paper over at the Washington Post’s “Wonkblog” from our old colleague Tim Lee. Here’s more coverage from Bloomberg Businessweek and the San Francisco Chronicle. And here’s a U.S. News oped that Brent and I wrote condensing our paper into just 600 words. Finally, a short 3-minute video of me discussing the problem of tech cronyism is also embedded below.)

A History of Cronyism and Capture in the Information Technology Sector [Thierer and Skorup – July 2013] by Adam Thierer

Check out how tribal villagers in parts of India are establishing a basic right that we take for granted. Using GPS and satellite imagery, they’re marking out the plots of land that they have lived on, unrecognized, for decades, and they’re making it their property.

The project is described here, and you can noodle around and find plots that they’ve mapped out here.

Ronald A. Cass, Dean Emeritus of Boston University School of Law, discusses his new book, Laws of Creation: Property Rights in the World of Ideas, which he co-authored with Boston University colleague Keith Hylton. Written as a primer for understanding intellectual property law and a defense of intellectual property, Laws of Creation explains the basis of IP and its justification. 

According to Cass, not all would-be reformers share a similar guiding philosophy, distinguishing between those who support property rights but nevertheless have specific critiques of the intellectual property system as it currently stands, and reformers who do not see a place for property.

Cass explains that the current intellectual property system is neither wholly good nor wholly bad, but is a matter of weighing tradeoffs. On the whole, he argues, intellectual property benefits society. Cass also argues that intellectual property law in the U.S. is still more functional than that in other countries, such as Italy, and that, while it would benefit from some reform, it is fundamentally a workable system.

Download

Related Links

• Laws of Creation: Property Rights in the World of Ideas, Cass and Hylton
• Property Rights Systems and the Rule of Law, Cass
• Tom W. Bell on Laws of Creation, Antitrust & Competition Policy Blog
• Book Talk: Law of Creation: Property Rights in the World of Ideas, The Cato Institute

In an important essay this week entitled “Silicon Valley’s ‘Suicide Impulse’,” Wall Street Journal columnist L. Gordon Crovitz warns that “Silicon Valley has long prided itself on avoiding the lumbering relationship between big government and most industries, but somehow it has become one of the top lobbyists in Washington.” Crovitz is worried that Internet and technology companies are falling prey to what Milton Friedman labeled “The Business Community’s Suicidal Impulse”: the persistent propensity to persecute one’s competitors using regulation or the threat thereof. “Rather than lobby government to go after one another,” Crovitz argues, “Silicon Valley lobbyists should unite to go after overreaching government. Instead of the ‘suicide impulse’ of lobbying for more regulation, Silicon Valley should seek deregulation and a long-overdue freedom to return to its entrepreneurial roots.”

Crovitz’s essay touches upon a dangerous trend I have written about here and elsewhere in the past: the increasing politicization of the Internet and information technology sectors and the gradual rise of rent-seeking (i.e., favor-seeking) over time. I’ve written about this problem in essays like:

• “The Sad State of Cyber-Politics” (Cato, 2010)
• “The Troubling Growth of High-Tech Regulation, Lobbying, and Rent-Seeking” (Dec. 2, 2012)
• “On Facebook ‘Normalizing Relations’ with Washington” (March 29, 2011)
• “DC’s LivingSocial Cronyism Experiment Already Going off the Rails” (Nov. 29, 2012)

These essays have documented how tech companies are increasingly vying for the attention of legislators and regulators in Washington, statehouses, and international capitals across the globe.

Why should we care about the increasing politicization of the information technology sector? In a forthcoming Mercatus Center working paper entitled, “A History of Cronyism & Capture in the Information Technology Sector,” Brent Skorup and I explain how “time and resources spent focusing on influencing politicians and capturing regulators represent time and resources that could better be spent competing and innovating in the marketplace. This can negatively impact consumer welfare in two ways: Not only are consumers denied more and better products and services, but they also may pay higher prices or higher taxes extracted by the corporate-government agreement.”

We document how rent-seeking and cronyism have had a corrupting influence on older information sectors and technologies, especially broadcasting and communications. We develop lengthy case studies from each sector to illustrate the costs that rent-seeking imposes on consumers, competitors, and ongoing innovation.

It’s a miserable history but one that is essential to recount if we hope to avoid it for newer sectors and technologies. That’s why Brent and I devote the closing section of our paper to a list of “Strategies to Limit Cronyism” in the Internet world before things get as bad as they have in the communications and media sectors. We argue that it is essential that we use a combination of institutional safeguards and market/social norms if we hope to head-off incessant rent-seeking and avoid the ‘suicidal impulse’ problem that Milton Friedman and Gordon Crovtiz identified.

Generally speaking, we must begin by acknowledging that, as economist David Henderson correctly notes, “There is only one way to end, or at least to reduce, the amount of cronyism, and that is to reduce government power.” Special interest rent-seeking and the chronic cronyism problems of modern America are fundamentally tied up with the constantly expanding horizons of government power. As Mancur Olson taught us in his 1965 book, The Logic of Collective Action, when benefits are concentrated and costs are dispersed (across all taxpayers or ratepayers, for example), we can expect groups to form to take advantage of those benefits. Those groups have a powerful motivation to create, preserve, and perpetuate government programs that favor their narrow interests at the expense of others, while those bearing the true costs of those policies or programs do not have the same incentive (or resources) to lobby government to reduce or end those burdens.

This leads to what economist Gordon Tullock called the “transitional gains trap”: once a policy or program is put in place to favor a certain interest, most of their gains come upfront and are factored into future earnings. Those benefiting from the policies would face large transitional losses if reform is undertaken, even if these policies impose large deadweight costs on society as a whole. This “trap” can frustrate beneficial reform efforts because the interest benefiting from the cronyist policies and programs will fight to the death to preserve them, no matter how costly or inefficient they may be for society as a whole.

There are several steps we can take if we hope to overcome the collective action problem in the tech sector and avoid Tullock’s transitional gains trap.

First, we must limit the scope of technology regulation whenever possible, and where existing rules open the door to cronyism, streamline or eliminate as many of them as possible. When policymakers deregulated other sectors in past—airlines, railroads, trucking, etc.—it helped eliminate the legal levers that industry could capture or influence. Consequently, deregulation forced companies to spend more time satisfying consumers as opposed to lawmakers and regulators.

Second, whenever possible we should rely on auctions and property rights to ensure that resources are being allocated according to market demand instead of political influence. The ugly history of spectrum cronyism is rooted in the misguided reliance upon the so-called “public interest” theory of regulation, which claimed that supposedly enlightened and benevolent regulators would steer resources and markets in more pro-consumer directions. The reality was just the opposite: the “public interest” became synonymous with the private interest of regulated entities, who largely “gamed” the system for their own ends. It was only when policymakers finally embraced the logic of auctions to allocate spectrum that America began to see cronyism dissipate in this sector. Auctions ensured faster allocation and more efficient distribution and development of this important resource. While full-blown spectrum property rights have not yet taken hold, the gradual movement in that direction helps minimize cronyism opportunities.

Third, the use of vouchers can help limit corporate gaming of social programs that are deemed essential. For example, America’s universal service program, which subsidizes phone and now broadband service, is a permanent fixture of communications policy. Unfortunately, cronyism is a permanent fixture of the system as well. Because the universal service system delivers assistance to end-users indirectly through favored local providers, it limits the potential for new entry and undermines competition. A means-tested voucher could have targeted assistance to those who needed it without creating an inefficient, unsustainable hidden tax or undermining competition.

Fourth, sunsetting provisions for new and existing laws and regulations can greatly limit cronyism opportunities. All new technology proposals should include a provision sunsetting the law or regulation within a few years of enactment and existing technology laws and regulations should be reopened and reassessed on a regular timetable as well to ensure they are not being abused. (Here’s a Forbes column I wrote last year with details about how to do so.)

Fifth, we need serious limits on congressional delegations of power to regulatory bodies and executive branch agencies. Too often, lawmakers “pass the buck” on to agencies and expect them to figure out how to interpret and administer arcane technology policy statutes. The result is abuse both by over-zealous regulators and interests looking to game the system. Congress should be more accountable and, at a minimum, must make their regulatory intent and standards clearer before delegating authority.

Finally, we need to encourage better norms inside the tech industry itself and encourage them to hold themselves to a higher standard. We should ask them to promise not to exploit government power that would discourage innovation or crush competition. Better yet, we should ask them to consider “strategic disengagement” with Washington and politics in general. Yes, I understand that sounds like a pipe dream since where power exists interests will likely look to exploit it. And, again, that’s the best reason for serious deregulation and strong limits on government power to begin with. But social pressure and market norms can also help in the absence of more sweeping reforms. Some firms already adopt the right approach. For example, Apple and Sony have largely shunned political engagement and instead focused on satisfying their customers in the marketplace. While their hands aren’t entirely clean, we should encourage more tech innovators to follow their general lead of not sending small armies of lobbyists to Washington and state capitals.

In the end, there is no silver-bullet solution that can forever cure cronyism. It would be foolish to pretend that we’ll be able to significantly curtail the scope of government powers in the short-term. Nonetheless, there are many sensible institutional reforms and marketplace norms that can help us keep cronyism in check before it begins running rampant in this important sector of our economy.

(Brent and I have just sent our paper on this topic off for peer review from some academic experts in this field, but we welcome thoughts from others about strategies to limit and reduce cronyism in this arena. We hope to publish this paper in a law review or poly sci journal later this Summer or Fall.)

Tom W. Bell, professor of law at Chapman University and author of the concluding essay in Copyright Unbalanced, a new book edited by Surprisingly Free’s own Jerry Brito, discusses the ways in which copyright has evolved over time and why reform is vital.

Bell differentiates copyright from other types of property, arguing that conflating the two terms causes great confusion amongst laypeople and, over time, corrodes the value placed in tangible property rights. According to Bell, copyright is a privilege created by statute that doesn’t exist in a state of nature and is not recognized by common law.

As a special type of economic good, copyright must be treated differently than tangible property rights, according to Bell, who outlines five proposals for copyright reform.

While Bell is not opposed to copyright, he argues that copyright enforcement has gone too far, and lawmakers should structure policies to lead us towards a world in which we conceivably do without it.

Download

Related Links

• Copyright Unbalanced: From Incentive to Excess, by Brito, et al
• Intellectual Privilege: A Libertarian View of Copyright, Bell
• Copyright Duration and the Mickey Mouse Curve, Tech Liberation Front

Andrew Orlowski of The Register (U.K.) recently posted a very interesting essay making the case for treating online copyright and privacy as essentially the same problem in need of the same solution: increased property rights. In his essay (“‘Don’t break the internet’: How an idiot’s slogan stole your privacy“), he argues that, “The absence of permissions on our personal data and the absence of permissions on digital copyright objects are two sides of the same coin. Economically and legally they’re an absence of property rights – and an insistence on preserving the internet as a childlike, utopian world, where nobody owns anything, or ever turns a request down. But as we’ve seen, you can build things like libraries with permissions too – and create new markets.” He argues that “no matter what law you pass, it won’t work unless there’s ownership attached to data, and you, as the individual, are the ultimate owner. From the basis of ownership, we can then agree what kind of rights are associated with the data – eg, the right to exclude people from it, the right to sell it or exchange it – and then build a permission-based world on top of that.”

And so, he concludes, we should set aside concerns about Internet regulation and information control and get down to the business of engineering solutions that would help us property-tize both intangible creations and intangible facts about ourselves to better shield our intellectual creations and our privacy in the information age. He builds on the thoughts of Mark Bide, a tech consultant:

For Bide, privacy and content markets are just a technical challenges that need to be addressed intelligently.”You can take two views,” he told me. “One is that every piece of information flowing around a network is a good thing, and we should know everything about everybody, and have no constraints on access to it all.” People who believe this, he added, tend to be inflexible – there is no half-way house. “The alternative view is that we can take the technology to make privacy and intellectual property work on the network. The function of copyright is to allow creators and people who invest in creation to define how it can be used. That’s the purpose of it. “So which way do we want to do it?” he asks. “Do we want to throw up our hands and do nothing? The workings of a civilised society need both privacy and creator’s rights.”  But this a new way of thinking about things: it will be met with cognitive dissonance. Copyright activists who fight property rights on the internet and have never seen a copyright law they like, generally do like their privacy. They want to preserve it, and will support laws that do. But to succeed, they’ll need to argue for stronger property rights. They have yet to realise that their opponents in the copyright wars have been arguing for those too, for years. Both sides of the copyright “fight” actually need the same thing. This is odd, I said to Bide. How can he account for this irony? “Ah,” says Bide. “Privacy and copyright are two things nobody cares about unless it’s their own privacy, and their own copyright.”

These are important insights that get at a fundamental truth that all too many people ignore today: At root, most information control efforts are related and solutions for one problem can often be used to address others. But there’s another insight that Orlowski ignores: Whether we are discussing copyright, privacy, online speech and child safety, or cybersecurity, all these efforts to control the free flow of digitized bits over decentralized global networks will be increasingly complex, costly, and riddled with myriad unintended consequences. Importantly, that is true whether you seek to control information flows through top-down administrative regulation or by assigning and enforcing property rights in intellectual creations or private information.

Let me elaborate a bit (and I apologize for the rambling mess of rant that follows).

Parallels in Debates over Copyright & Privacy Protection

In several essays here over the past few years I have attempted to draw parallels between the battles over protecting digital copyright and online privacy, as well as battle over online safety/speech and cybersecurity. Here are a few of those essays in case you’re interested in seeing the evolution of my thinking about this:

• When It Comes to Information Control, Everybody Has a Pet Issue & Everyone Will Be Disappointed
• And so the IP & Porn Wars Give Way to the Privacy & Cybersecurity Wars
• SOPA & Selective Memory about a Technologically Incompetent Congress
• Privacy as an Information Control Regime: The Challenges Ahead
• Isn’t “Do Not Track” Just a “Broadcast Flag” Mandate for Privacy?

In those essays I have argued that a combination of selective morality and wishful thinking are at work in the information policy world these days. In essence, people hate Internet regulation… until they love it! Here’s how I summarized that fact during the debate over SOPA:

… conservatives rush out and breathlessly denounce each and every effort to impose Net neutrality regulation because of the danger of empowering an already over-zealous bunch of bumbling bureaucrats at the FCC. (And I agree with them.) Yet, with their next breath many conservatives praise SOPA even though it also empowers government to muck with the inner workings of the Internet. Some of those conservatives are also turning a blind eye to the growing appetite of the defense/security community to meddle with the Net’s architecture in the name of avoiding any number of non-catastrophes. Meanwhile, the liberals decry SOPA and want it stopped at all costs. There’s never been a copyright protection measure they liked, of course, but each time one pops up we hear them claim that our analog era Congress is not well-positioned to be designing industrial policy schemes for the Internet. (And I generally agree with them.) But most liberals do a complete 180 whenever online privacy or Net neutrality regulations are the subject of congressional inquiry. Suddenly, the cyber-oafs in Congress are considered veritable technocratic philosopher kings who we should trust to guard our cyber-freedoms to lead us to the digital promised land.

Again, it’s both selective morality and wishful thinking. It’s selective morality in that some folks think certain values are sacrosanct and deserving of a “by-any-means-necessary” enforcement attitude, yet they are often just as likely to denounce similar information control efforts when it comes to issues or values they don’t give a damn about.  And it is wishful thinking in that you can’t run around insisting that “information wants to be free” in some contexts but then express outrage when something that you want to bottle up turns out to “just want to be free” as well!

But the important takeaway here is that, consistent with what Orlowski argues, I believe that online copyright and privacy are essentially the same problem: It’s an information control problem.

Potential Costs of Control

Once you start thinking about Internet policy debates as a single issue — namely, information control — you can begin to investigate the potential costs of control in a somewhat more objective fashion. Of course, challenging issues remain:

1. Which method of control should we choose? On one hand, there are many varieties of administrative regulation, technical infrastructure controls, and device mandates. On the other hand, there are property rights and liability / tort schemes. And there are many hybrid enforcement models, such as increasingly popular “co-regulation” models, government standard-setting, and “nudging” of system defaults. Each method will entail different costs and trade-offs.
2. What metric(s) should we use when attempting to determine whether the benefits of control exceed the costs? Ask any advocate of information control about whether the costs might exceed the benefits of regulation for their pet issue and they will typically suggest that either (a) there are no costs or that (b) the benefits dwarf any costs that may exist. But all too often the benefits they identify are extremely subjective and amorphous in character (“privacy,” “safety,” and “security” are hard to quantify, after all) while the costs are very real and increasingly substantial.

In my view, these practical questions are increasingly the most interesting issues to explore in the field of cyberlaw and digital economics. We can debate the normative or ethical considerations until we’re all blue in the face and ready to rip each other’s heads off, but I am less and less interested in such squabbles. Instead, I keep coming back to the question of how we’ll go about controlling info flows and how much effort and resources it makes sense to expend in pursuit of each of the values identified above. Some of the specific considerations I find myself asking in every paper I write these days include:

(A) Will the proposed form of information control tie us up in the courts forever, lead to increasingly onerous and unworkable liability norms, and end up yielding outrageous litigation costs?

(B) Will the proposed form of information control require a significant increase in regulatory bureaucracy? How many levels of government will need to be involved in the proposed enforcement scheme? How many new offices and officials will need to be empowered in the hope of achieving some measure of control?

(C) What are the alternatives to the proposed form of information control? Are there less costly or less restrictive means of addressing the concern in question? For example, education and empowerment effort are often an effective way to address many online safety and digital privacy concerns. Can we use those methods in conjunction with social norms, public pressure, self-regulation, informal contracting, and other methods to address these and other concerns?

For me, the costs associated with the A & B are increasing so rapidly that I almost always default to C as the better approach. Importantly, although A & B will be less onerous or costly when the solution is of the increased property-ization variety than of the administrative regulation variety, that does not mean property rights-based solutions for information are costless. Indeed, I increasingly find myself concluding that C solutions are more cost-effective even compared to increased property rights.

Practical Advice Once You Accept the Increasing Costs & Complications of Control

At this point, readers may be thinking: “Wait a minute, this dude is just some kooky libertarian who doesn’t want any form of information control, so he’s just trying to rationalize anarchy here.” No, I’m not. I certainly favor less control across the board than most people, but I also understand that there are times, at the margin, when some forms of “control” are necessary. But my views on the wisdom of control are heavily influenced by the costs of control. The costs of control — broadly defined — are a key factor in every cost-benefit analysis I do related to the wisdom of Net regulation and information control methods — even when one of those methods is increased “property-ization.” And because I have come to believe that those costs are going up and that most information control efforts will not work well in practice, I have boiled down my advice on this front to two simple principles:

1. Choose your info control battles wisely. Figure out where the most serious harms or threats lie and then target the info control solution accordingly and forget about the rest. For example, in child safety debates, that would mean going after child porn rings but leaving run-of-the-mill adult porn alone entirely. In copyright, it would mean nailing the largest commercial mass piracy sites but accepting a certain amount of casual sharing. In the field of personal info, it means singling out health and financial information and data for special protections and likely giving up on most other forms of info control. And so on. In essence, these are where the greatest potential harms lie that most people would consider intolerable. As you move further away from such issues, the case for control becomes harder and harder and the costs will almost certainly exceed the benefits.
2. Have a good backup plan in mind when those info control plans fail anyway. That backup plan should generally be based on education, empowerment, coping strategies, and resiliency. Again, these are the “C” solutions mentioned above. [I developed this model more robustly in the second half of this recent paper.] This approach won’t be perfect but it will likely be what you’ll end up relying on anyway, so you better start thinking about plowing more resources into this alternative approach even while you’re trying to devise info control mechanisms.

Let me just say a brief word to my market-oriented friends who are dismayed by my inclusion of property rights in the mix of “information control” efforts. I’m a big believer in the importance of property rights in many contexts, but context does matter. More specifically, physicality matters. It is easy to create property rights in tangible goods and almost always right to do so. Property rights in intangible ideas and creations raise special issues, however. Because ideas are non-rivalrous and have public good qualities, it makes property-ization more complicated and less effective. Property rights in facts can also come into conflict with other values and more well-established rights, especially freedom of speech and expression.

On the privacy front, Eugene Volokh made this point in his famous 2000 law review article, “Freedom of Speech, Information Privacy, and the Troubling Implications of a Right to Stop People from Speaking About You,” when he noted that, “The difficulty[with] the right to information privacy — the right to control other people’s communication of personally identifiable information about you — is a right to have the government stop people from speaking about you. And the First Amendment (which is already our basic code of “fair information practices”) generally bars the government from “control[ling the communication] of information,” either by direct regulation or through the authorization of private lawsuits.” That doesn’t mean free speech values should always trump privacy values, but denying this tension is just plain silly. If you want to propertytize all personal information, then you better be prepared to explain how that plays out in practice. How far are you prepared to go to ban the dissemination of facts? Would you place prior restraint on the press to accomplish it? Would you ban a historian from writing a biographies that reveal intimate facts about the subject? Would you shut down all the online sites and services that rely on a certain amount of personal information to fuel their free offerings?

Likewise, copyright law was far more effective in the analog age when we were still pressing music on vinyl and plastic. As soon as digitization become widespread, it was pretty much game over for traditional copyright law and now we are off and running with all sorts of convoluted and increasingly costly regulatory regimes. It’s not that I don’t want these some of these schemes to work — I’ve been a long-time copyright defender — but, again, the practicality of control simply must be considered here. I am not will to “pay any price, bear any burden” in defense of protecting intellectual property rights even as I remain outraged by the staggering amount of free-riding at work every single second of the day on the Internet. So, adopting the framework I outlined about, we might try targeted solutions to go after the biggest of those freeloaders — commercial mass piracy hubs — but we should generally avoid the sort of ham-handed technical control methods we saw in SOPA and other fights, like the broadcast flag battle among others. But, generally speaking, property rights just aren’t going to work as well in this space going forward. I’ve come to believe that the best hope lies in massive consolidation of content and conduit. In other words, pipe and device owners need to buy out all the content-creating industries and just embed a small fee in their monthly services to cross-subsidize content. This is essentially a private collective licensing solution and it is not unprecedented. Nor is it perfect. It will be very leaky. Plenty of piracy will still take place. But it will probably offer creators a better chance of finding a sustainable revenue stream than the current system does. The old copyright system that served them and us so well is dying and they had better start thinking of alternatives like this. Of course, antitrust law may never allow it, so I could be wasting my breath here. (Just look at all the grief that antitrust officials both here and abroad are giving Apple and eBook sellers for working together even though that it probably the best scheme devised in recent memory to sustain publishing in an age of mass piracy. Policymakers should be encouraging more of that sort of thing, not punishing it.)

An Uncertain Future

So, to wrap up… I can imagine a future in which both heavy-handed, top-down info control efforts and property / liability solutions are failing almost universally because of the ubiquitous, instantaneous, quicksilver-like flow of information across decentralized digital networks. Some utopians will argue that such a world will be better in every way than the one we live in today. I do not share such hyper-optimism. While I believe that, on balance, the free flow if information generally benefits society, I also understand how it creates enormous angst and intractable challenges for many. It’s a world in which copyright is a hollow shell of its former self that offers creators very little protection for their expressive works. And it’s a world in which personal privacy is harder to safeguard with each passing day because no matter how hard we try to property-tize facts about ourselves, that enforcement model simply breaks down at some point or becomes socially and economically intolerable. As with copyright, efforts to property-tize personal information will lose the battle against data sharing. As computer scientist Ben Adida argued in his essay, “(Your) Information Wants to be Free,” “unfortunately, information replication doesn’t discriminate: your personal data, credit cards and medical problems alike, also want to be free. Keeping it secret is really, really hard.”

Indeed, and it is growing harder by the day. Contrary to what Orlowski suggests, therefore, this isn’t a simple engineering problem. I wish it were as easy as he suggests to build “permissions-based markets” because they could have real benefits for individuals and society. But it is most certainly not that simple. It is far more costly and complicated than ever to devise workable information control schemes on one hand and “permissions-based” property rights schemes on the other. In some cases, I might still be willing to try the latter, but unlike Orlowski, I just don’t place much faith in the success of the endeavor.

by Adam Thierer & Berin Szoka — (Ver. 1.0 — Summer 2009)

We are attempting to articulate the core principles of cyber-libertarianism to provide the public and policymakers with a better understanding of this alternative vision for ordering the affairs of cyberspace. We invite comments and suggestions regarding how we should refine and build-out this outline. We hope this outline serves as the foundation of a book we eventually want to pen defending what we regard as “Real Internet Freedom.” [Note:  Here’s a printer-friendly version, which we also have embedded down below as a Scribd document.]

I. What is Cyber-Libertarianism?

Cyber-libertarianism refers to the belief that individuals—acting in whatever capacity they choose (as citizens, consumers, companies, or collectives)—should be at liberty to pursue their own tastes and interests online.

Generally speaking, the cyber-libertarian’s motto is “Live & Let Live” and “Hands Off the Internet!”  The cyber-libertarian aims to minimize the scope of state coercion in solving social and economic problems and looks instead to voluntary solutions and mutual consent-based arrangements.

Cyber-libertarians believe true “Internet freedom” is freedom from state action; not freedom for the State to reorder our affairs to supposedly make certain people or groups better off or to improve some amorphous “public interest”—an all-to convenient facade behind which unaccountable elites can impose their will on the rest of us.

B.  Application in Social & Economic Contexts

The cyber-libertarian draws no distinction between social and economic freedom when applying this vision:

• Social Freedom: Individuals should be granted liberty of conscience, thought, opinion, speech, and expression in online environments.
• Economic Freedom: Individuals should be granted liberty of contract, innovation, and exchange in online environments.

Cyber-libertarians also argue that social and economic freedoms are inextricably intertwined:  It is not enough to support liberty of action in one sphere; foreclosing freedom in one sphere will eventually affect freedom in the other.

C.  How “Code Failures” Are to Be Addressed

The cyber-libertarian believes that “code failures” (the digital equivalent of so-called “market failures”) are better addressed by voluntary, spontaneous, bottom-up, marketplace responses than by coerced, top-down, governmental solutions.   From a practical perspective, the decisive advantage of the market-driven approach to correcting code failure comes down to the rapidity and nimbleness of those responses.  Stated differently, cyber-libertarians have a strong aversion to the politicization of technology issues and efforts to replace market processes with bureaucratic processes.

Importantly, the cyber-libertarian defines “markets” broadly to include monetary and non-monetary transactions as well as proprietary and non-proprietary modes of production.  To be clear, collaborative, non-proprietary technologies and efforts ( e.g., Wikipedia and open source software) are not at odds with cyber-libertarianism.  But the cyber-libertarian does reject the notion these models are the only acceptable model or that they should be imposed on us by law.  The proper policy position with regards to the “open vs. closed” or “proprietary vs. non-proprietary” debate should be one of techno-agnosticism.  Lawmakers and courts should not be tilting the balance in one direction or the other.

More generally speaking, instead of seeking to define or impose a single utopian vision, the cyber-libertarian seeks to enable what libertarian philosopher Robert Nozick called a “Utopia of Utopias:” a framework within which many different models of organizing commerce and community can flourish alongside, and in competition with, each other.

D.  General Relationship to “Internet Exceptionalism”

Internet exceptionalists are first cousins to cyber-libertarians:  They believe that the Internet has changed culture and history profoundly and is deserving of special care before governments intervene.  [See Section IV for an expanded discussion.]

II. The Intellectual Foundations of Cyber-Libertarianism

A.  Traditional Libertarian Philosophy

• Natural Rights philosophers –John Locke, Ayn Rand, The Founders
• Utilitarian philosophers – John Stuart Mill (On Liberty), Herbert Spencer
• “Austrian School” of Economics – Ludwig von Mises, F.A.  Hayek, Murray Rothbard
• Milton Friedman (Free to Choose)
• Robert Nozick – argument for a minimalist state; “utopia of utopias” notion
• Thomas Sowell – critique of “The Vision of the Anointed”
• Richard Epstein – vision of “Simple Rules for a Complex World

B.  Modern Cyber-Libertarian Theorists

• Ithiel de Sola Pool (Technologies of Freedom)
• Alvin Toffler (The Third Wave , Future Shock)
• George Gilder (Microcosm , Telecosm)
• Peter Huber (Law & Disorder in Cyberspace)
• Tom W.  Bell
• Technology Liberation Front bloggers

C.  Internet Exceptionalists[see Sec.  IV below]

• Nicholas Negroponte (Being Digital)
• John Perry Barlow (“Declaration of the Independence of Cyberspace”)
• David Post
• Eric Goldman
• H.  Brian Holland

III. The Contrast with Cyber-Collectivism

A.  Cyber-Collectivism Defined

Cyber-collectivism is the opposite of cyber-libertarianism.  Cyber-collectivism refers to the general belief that cyber-choices should be guided by the State or an elite class according to some amorphous “general will” or “public interest.”  The distant influence of Plato, Rousseau, and Marx can often been seen in the work of cyber-collectivists.

Cyber-collectivism comes in many flavors, however.  “Left”-leaning cyber-collectivists, for example, are more focused on social concerns than economic ones.  Some “Right”-leaning cyber-collectivists are focused on controlling the impact of the Internet on culture or security.  In other words, cyber-collectivism is not as philosophically coherent as cyber-libertarianism—which, though it comes in many flavors, shares a larger core of common agreement

B.  General Relationship to “Information Commons” Movement

There is a close relationship between the Leftist variant of cyber-collectivism and the “digital commons” or “information commons” movement, which generally refers to the belief that digital resources should be shared or perhaps commonly owned instead of held privately—both because cyber-collectivists think this is more equitable and because they generally think such arrangements will ultimately work better.

Cyber-collectivists are typically not Marxists; few of them call for state ownership of the information means of production.  Rather, cyber-collectivists might better be thought of a “cyber social Democrats” (in a European sense) or “Digital New Dealers” (in the American tradition).  They advocate a generous role for law and regulation in many online matters, but do not typically resort to full-blown nationalization.

C. Exponents of Cyber-Collectivism

Some notable cyber-collectivists or information commons adherents (and their key works):

• Lawrence Lessig (Code , Free Culture)
• Tim Wu (Who Controls the Internet?)
• Yochai Benkler (The Wealth of Networks)
• Jonathan Zittrain (The Future of the Internet & How to Stop It)
• David Bollier (Viral Spiral)
• Harvard Berkman Center*
• New America Foundation*
• Public Knowledge*

(*We are, of course, generalizing a bit here. Not everyone in these institutions is a cyber-collectivist and, again, there are many flavors of cyber-collectivism, just as there are many flavors of cyber-libertarianism. Individuals in some of these organizations diverge significantly in attitudes towards technological change and the proper scope of government influence throughout the high-tech sector.)

IV. Relationship Between Cyber-Libertarianism & Internet Exceptionalism

Some non-libertarians occasionally join ranks with cyber-libertarians out of a belief that the Internet is different and deserving of special consideration and care. This is commonly referred to as “Cyber-Exceptionalism” or “Internet Exceptionalism.” John Perry Barlow’s 1996 “Declaration of the Independence of Cyberspace” was probably the earliest (and most extreme) articulation of “Internet Exceptionalism”:

Governments of the Industrial World, you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the past to leave us alone. You are not welcome among us. You have no sovereignty where we gather. We have no elected government, nor are we likely to have one, so I address you with no greater authority than that with which liberty itself always speaks. I declare the global social space we are building to be naturally independent of the tyrannies you seek to impose on us. You have no moral right to rule us nor do you possess any methods of enforcement we have true reason to fear. Governments derive their just powers from the consent of the governed. You have neither solicited nor received ours. We did not invite you. You do not know us, nor do you know our world. Cyberspace does not lie within your borders. Do not think that you can build it, as though it were a public construction project. You cannot. It is an act of nature and it grows itself through our collective actions. You have not engaged in our great and gathering conversation, nor did you create the wealth of our marketplaces. You do not know our culture, our ethics, or the unwritten codes that already provide our society more order than could be obtained by any of your impositions. You claim there are problems among us that you need to solve. You use this claim as an excuse to invade our precincts. Many of these problems don’t exist. Where there are real conflicts, where there are wrongs, we will identify them and address them by our means. We are forming our own Social Contract. This governance will arise according to the conditions of our world, not yours. Our world is different.

Similarly, in 1994, The Progress & Freedom Foundation brought together four leading technology visionaries (Esther Dyson, George Gilder, George Keyworth, and Alvin Toffler) to pen A Magna Carta for the Knowledge Age. In that manifesto, the authors argued:

Cyberspace is the land of knowledge, and the exploration of that land can be a civilization’s truest, highest calling. The opportunity is now before us to empower every person to pursue that calling in his or her own way. The challenge is as daunting as the opportunity is great. The Third Wave has profound implications for the nature and meaning of property, of the marketplace, of community and of individual freedom. As it emerges, it shapes new codes of behavior that move each organism and institution—family, neighborhood, church group, company, government, nation—inexorably beyond standardization and centralization, as well as beyond the materialist’s obsession with energy, money and control. Turning the economics of mass-production inside out, new information technologies are driving the financial costs of diversity—both product and personal—down toward zero, “demassifying” our institutions and our culture. Accelerating demassification creates the potential for vastly increased human freedom. It also spells the death of the central institutional paradigm of modern life, the bureaucratic organization. (Governments, including the American government, are the last great redoubt of bureaucratic power on the face of the planet, and for them the coming change will be profound and probably traumatic.)

As that last paragraph suggests, this “Magna Carta” for cyberspace contained some hints of cyber-libertarian thinking, but the general thrust of the document was more generally of the Internet Exceptionalist school of thought.

Internet Exceptionalists are sometime critiqued for sounding like techno-utopians, but it is a mistake to conflate the two. There are not always synonymous.

V. Cyber-Libertarianism’s Early Legal Foundations & Victories

• Section 230 of the Communications Decency Act of 1996 is probably the best example of cyber-exceptionalism in practice. It grants broad immunity to online intermediaries for third party content except for criminal and IP law—breaking with traditional tort liability standards. Specifically, Sec. 230 rejected the “deputization of the middleman” model of liability.
• Overturning of the Communications Decency Act’s indecency & obscenity provisions in Reno v. ACLU decision
• Various court decisions blocking enforcement of the Child Online Protection Act (COPA) of 1999
• The encryption wars & the defeat of the “Clipper Chip”
• The Internet Tax Freedom Act of 1998

VI. Applications: How Cyber-Libertarians Think about Various Policy Issues

• Free speech & online child safety: Favor parental empowerment and industry self-regulation over censorship. “Household standards” should trump “community standards.”
• Privacy policy & online advertising: Privacy is a subjective condition and efforts to regulate to “protect privacy” could have unintended consequences for freedom of speech and the growth of online content and commerce. User empowerment and industry self-regulation represent the superior way to address privacy concerns.
• Net neutrality / infrastructure regulation: “Open access” regulation is nothing more the infrastructure socialism. Network operators should be free to own, operate, and price their systems and services as they see fit, subject only to enforcement of their terms of service and other voluntary disclosures as contracts with their users. New entry and innovation are better alternative to regulating yesterday’s networks and technologies.
• Internet taxation: No special taxes should be imposed on online services or Internet access. To the extent the Net disrupts traditional tax bases that should be seen as an opportunity to reform those tax systems.
• Online gambling: People should be free to do what they want with their money and Internet gambling is likely impossible to shut down entirely anyway, given the nature of the Internet.
• Antitrust: “Market power” and “code failures” are best dealt with by spontaneous evolution of markets and new entry, not bureaucratic micro-management of old technologies or market structures. Regulation often creates, or tends to foster, most monopolies. As Ithiel de Sola Pool once noted, “The force that preserves most monopoly privilege is law… most would vanish in the absence of enforcement.”
• IP issues: Cyber-libertarians are deeply divided over IP issues (especially copyright) and this reflects a long-standing division within libertarian ranks on these issues more generally. Some believe IP rights are a natural extension of traditional property rights and/or a sensible way to incentivize scientific and artistic creativity. Others believe no one has a right to “property-tize” intangible creations or that copyright is simply industrial protectionism. And there are many views in between.

VII. Prospects for Cyber-Libertarianism

A. The Pessimistic View

• Government’s will quash online freedom and bring the Internet under their thumbs.
• Regulatory efforts are expanding at a breathtaking pace and will not slow anytime soon.

B. The Optimistic View

• “Technologies of Freedom” (tools and methods to avoid online regulation, censorship and control) will ultimately triumph.
• Technology is evolving faster than government’s ability to regulate it.

VIII. Related Reading on Cyber-Libertarianism & Internet Exceptionalism

• John Perry Barlow, Declaration of the Independence of Cyberspace (1996).
• Tom W. Bell, Free Speech, Strict Scrutiny, and Self-Help: How Technology Upgrades Constitutional Jurisprudence , 87 U. Minn. L. Rev. 743 (2003).
• Esther Dyson, George Gilder, George Keyworth, & Alvin Toffler, The Progress & Freedom Foundation, A Magna Carta for the Knowledge Age (1994).
• Eric Goldman, The Third Wave of Internet Exceptionalism, Santa Clara Magazine (Winter 2008).
• H. Brian Holland, In Defense of Online Intermediary Immunity: Facilitating Communities of Modified Exceptionalism, Kansas L. Rev. (2007).
• Peter Huber, Law & Disorder in Cyberspace: Abolish the FCC and Let Common Law Rule the Telecosm (1997).
• Ithiel de Sola Pool, Technologies of Freedom (1983).
• David Post, In Search of Jefferson’s Moose: Notes on the State of Cyberspace (2009).
• Adam Thierer, The Pragmatic Internet Optimist’s Creed, Technology Liberation Front Blog (Nov. 11, 2008).
• Technology Liberation Front Blog, About the Technology Liberation Front (August 2004, revised 2008).

Cyber-Libertarianism: The Case for Real Internet Freedom [Ver 1.0 – Thierer & Szoka] http://d.scribd.com/ScribdViewer.swf?document_id=18490847&access_key=key-14tt6eb4f2cdcil8wnf2&page=1&version=1&viewMode=

Ben Klemens, whose work I’ve praised in this space in the past, has a new essay up that I found a little bit aggravating. It’s on the perennial question of whether it makes sense to describe patents and copyrights as property. I’ve been a critic of the term “intellectual property” for a few years. Ben’s on the other side.

What I disliked most about Ben’s piece was the condescending tone he takes toward property rights activists (like me). Klemens has little patience for property rights activists whose websites have “lots of clip art of flags and eagles,” and who are under the delusion that the holders of property rights have some kind of moral claim against government interference with those rights. Klemens also critiques neoclassical scholars who “will try to trip you up into thinking that society is built around natural, objective property rights rather than social construction.” Klemens concludes by arguing that “Sure, IP law is artificial, but physical property law is equally artificial; we’re just so used to it that we’ve forgotten.”

Now look, on some level this is indisputably correct. God doesn’t strike trespassers down with lightning; property rights are defined and enforced by fallible human beings. The problem is that Klemens argument proves too much. The same reasoning can undermine any moral or legal rights. On some level a woman’s right not to be raped is a “social construction,” but I don’t think that in any way diminishes the strong moral claim that each and every woman has not to be raped, regardless of what the rest of us regard as “socially optimal.”

The crack about the eagles and American flags seems to imply that only ignorant rubes believe that property rights could have a moral dimension. Sophisticated thinkers know that property rights exist by the grace of the legislature, and so if the government decides that the “socially optimal allocation of rights” involves taking your house and giving it to a wealthy developer so he can build a shopping mall, that’s too bad for you but it doesn’t raise any more profound moral issues.

The problem with this is that it completely ignores how our actual system of property rights came into being. Ben’s right that most people have forgotten how we got our modern system of property rights, but the things we’ve forgotten are almost precisely the opposite of what he imagines them to be. Traditional property rights are not and never have been the creation of governments. Indeed, government efforts to create new property systems from whole cloth tend to be abject failures. People ignore them, and the government lacks the resources to impose them on an unwilling population. This is the situation you saw on the American frontier during the 19th century, and it’s the situation you see today in many third-world countries with dysfunctional property systems. The formal property rules were and are radically out of step with the informal property rules that actually govern the day-to-day lives of ordinary people.

In contrast, successful systems of property rights tend to emerge spontaneously from the bottom up, and are simply recognized and reinforced by the government. Over time, consensus emerges among neighbors about who owns what and what people may do with their properties. The job of the courts and the legislature isn’t so much to decide who owns what (ordinary people already know that) but simply to record and ratify the already-existing social consensus and handle disputes at the margin.

To bring things back to the patent and copyright debates, I think the right lesson from the analogy to physical property rights is exactly the opposite of the legal positivism Ben seems to be defending. In reality, legislatures have very limited powers to impose property-like systems on an unwilling populace. When a property-like legal regime is widely ignored or evaded (think software patents or peer-to-peer file sharing) that’s a strong signal that the legislature needs to re-write the law to make it work “with the grain” of peoples’ existing attitudes and expectations.

In contrast, when the formal law is well-aligned with peoples’ expectations, it tends to attract the passionate support of ordinary citizens—the kind of people who like to adorn their websites with clip art of eagles and American flags. It’s not a coincidence that there are thousands of passionate property rights activists who are mobilizing against eminent domain and asset forfeiture, but surpassingly few pro-copyright or pro-patent activists who are mobilizing against fair use and the Bilski decision. (Patrick Ross doesn’t count.) Traditional property rights are an organic legal institution that emerge spontaneously from peoples’ day-to-day interactions. Software patents are an invention of the patent bar that has been vigorously rejected by rank and file software developers. I think it’s both philosophically misguided and rhetorically counterproductive to equate the two.

My Romanian space lawyer (and improbably-named) friend Virgiliu Pop has made the front page of Space.com today in a great interview with leading space journalist Leonard David about his new book Who Owns the Moon?: Extraterrestrial Aspects of Land and Mineral Resources Ownership.  Virgil slams the “Common Heritage of Mankind” socialism behind the 1979 Moon Treaty, which was killed in the U.S. Senate by the free-market space movement, which later gave birth to the Space Frontier Foundation (which I chair).

Virgil once famously claimed ownership of the sun to demonstrate the absurdity of serious assertions made by a number of charlatans to ownership of lunar territory (Dennis Hope) or the entire Eros asteroid (Greg Nemitz).  Virgil’s point was “to show how ridiculous a property rights system in outer space would be if it were to be based solely on claim unsubstantiated by any actual possession.”

I’m looking forward to reading Virgil’s book–and to writing a proper review.  For now, I’ll just say that I think Virgil and I see eye-to-eye on three key premises (something of a rarity among space lawyers on the ultra-contentious issue of property rights):

1. The Outer Space Treaty of 1967 prohibits nations from appropriating territory in space and also prohibits individuals from asserting any territorial claims (generally accepted) except to a narrowly-limited area under actual use (not accepted by all space lawyers).
2. The Outer Space Treaty, properly understood, does not bar claims to ownership of movable objects such as extracted resources or even (if they can be moved in a meaningful way) entire asteroids or comets.
3. Securing such property rights is essential to the economic development of space.

Here are a few choice excerpts from Virgil’s new book on the big picture of property rights in space:

Outer space needs to be spared the painful experience of the former Eastern Block. Despite the noble ideals of equity and care for the have-nots, the CHM paradigm has more faults than merits. A refutation of the Common Heritage principle does not mean, however, that the developing world will, or should, be left behind in the space era. China, India and Brazil are living proofs that a developing country can, through its own effort, join the spacefaring club. Instead of freeloading on the efforts of the older spacefarers, the have-nots should pool their meagre financial resources into a common space agency or into regional ones, and proceed at exploiting the riches of outer space for themselves. The rallying cry of Marxism – “Proletarians of all countries, unite; you have nothing to lose but your chains” should evolve into “Countries of the world unite – you have nothing to lose but the chains of gravity”. The skies are open. “

…

The frontier paradigm has proven its worth on our planet, and it most likely will do so in the extraterrestrial realms. Homesteading is likely to transform the lunar desert in the same manner as it transformed the 19th Century United States. Space is indeed a new frontier calling for individualism rather than collectivism, and its challenges need to be addressed with a legal regime favourable to property rights. Such a regime is seen by many authors as not only useful, but also as the only means of opening the extraterrestrial realms to settlement, given the reluctance of most industrialists to invest money in an endeavour without having the security that they will enjoy the benefits. It may also occur that a minority of investors, with a bigger tolerance to risk, would adopt an anarcho-capitalist approach and “cross the Alleghenies” without backing from a sovereign State.

Given the abundance of extraterrestrial resources, it would be nonsensical to forbid their private appropriation. Securing property rights would be a small price to pay, and more beneficial to humankind, compared to the alternative of keeping the extraterrestrial realms undeveloped. The practical arguments against the Frontier paradigm may have merit, but the issues raised can be tackled. The ideological arguments, nonetheless, are emotional rather than rational.

Whereas the frontier paradigm is outlawed in the current incarnation of the international law of outer space, law is a dynamic phenomenon and it may evolve towards a regime supportive of property rights in outer space. A shift from the res publica approach may be in the cards, given the official support of the Aldridge commission for property rights. Until this shift happens, the non-appropriation principle remains nonetheless the lex lata in the extraterrestrial realms.

The white space debate has been the subject of much attention lately, with Microsoft, Dell, and Google pitted against the CTIA on the question of how to allocate white spaces between UHF channels. The two competing proposals are 1) auction off white spaces, similar to the 700mhz auction, or 2) leave them unlicensed and managed (like 2.4Ghz) but allow devices which don’t cause interference.

This controversy again raises the issue of the desirability of unlicensed spectrum. I’ve been reading about the merits of unlicensed spectrum, inspired by a 2006 exchange between Jerry Brito and Mike Masnick on TLF and TechDirt. Jerry makes a compelling argument that command-and-control commons rules might hinder the emergence of superior networks operating with devices emitting greater than 4w EIRP.

The public interest is to allocate the spectrum in the most economically efficient manner, so if unlicensed spectrum uses do not make the best use of scarce airwaves, unlicensed bands should be auctioned off. Tim envisions privately managed commons that would provide for much the same openness now offered by unlicensed spectrum, but without a monolithic regulator imposing centralized rules.

Privately managed commons are naturally appealing to libertarians, as they accomplish the virtue of openness and participation without the need for government intervention. But there’s the question of whether a spectrum commons would actually emerge. With the immense profit potential that comes with owning even a tiny chunk of spectrum and offering restricted communications services, it’s not easy to imagine firms ponying up billions simply to manage spectrum for open, unrestricted use—unless each user must pay to become a commons member. Supporters of licensed spectrum suggest that wireless device manufacturers could confer spectrum usage rights to the end user for a small fee, rolled up in the cost of the product. But with myriad small wireless devices now on the market made by upstart overseas companies, abolishing unlicensed spectrum would necessitate that each device have some privately granted right to broadcast, possibly adding new entry barriers. And what about the geek who wants to build a low-power, home wireless device with off-the-shelf parts from Radio Shack? Does she have to buy spectrum rights from a third-party in order to broadcast in her own home without facing “spectrum infringement” litigation? If so, perhaps Faraday Cages will one day become a nerd luxury.

Currently, mobile phone services run fairly well using licensed frequencies. People spend hundreds (if not thousands) of dollars a year for wireless service plans. Perhaps the ability of unlicensed spectrum to greatly reduce transaction costs explains its appeal to consumers and producers alike. According to the Coase theorem, unhindered market allocation of property rights should generate a Pareto optimal outcome. But that outcome might be skewed if transaction costs eat up a huge portion of consumer and producer surplus. The ability to broadcast a Bluetooth signal ten or fifteen feet, for example, is far less valuable than mobile phone service.

The amazing success of the unlicensed 2.4Ghz band, even compared to widely deployed 3G networks like EVDO, suggests there’s something to the argument for unlicensed, lightly regulated spectrum. Who would have envisioned a mere 73mhz chunk of spectrum playing such a major role in technology?

Unfortunately for unlicensed spectrum management, the economic calculation problem is unavoidable. The FCC cannot possibly ascertain the socially optimal rule-making scheme for unlicensed spectrum. Who knows if 4W EIRP is too much, or too little? Despite this problem, 2.4 Ghz has still arguably resulted in a hotbed of innovation rivaling the achievements of any other band on a megahertz-for-megahertz basis.

To be sure, spectrum rights should be sold on the free market, with the federal government acting as a registrar of spectrum deeds. The real question is, should every last bit of the spectrum be licensed, or is there a valid case for setting aside a small portion of the airwaves for open, unlicensed, government-regulated use?