November 24, 2024

Posts Comments

Net Neutrality: Strike While the Iron Is Hot?

July 13, 2006 by

Bill Herman at the Public Knowledge blog has an interesting response to my net neutrality paper. As he notes, my paper was mostly about the technical details surrounding neutrality, with a short policy recommendation at the end. Here’s the last paragraph of my paper:

There is a good policy argument in favor of doing nothing and letting the situation develop further. The present situation, with the network neutrality issue on the table in Washington but no rules yet adopted, is in many ways ideal. ISPs, knowing that discriminating now would make regulation seem more necessary, are on their best behavior; and with no rules yet adopted we don’t have to face the difficult issues of line-drawing and enforcement. Enacting strong regulation now would risk side-effects, and passing toothless regulation now would remove the threat of regulation. If it is possible to maintain the threat of regulation while leaving the issue unresolved, time will teach us more about what regulation, if any, is needed.

Herman argues that waiting is a mistake, because the neutrality issue is in play now and that can’t continue for long. Normally, issues like these are controlled by a small group of legislative committee members, staffers, interest groups and lobbyists, but rarely an issue will open up for wider debate, giving broader constituencies influence over what happens. That’s when most of the important policy changes happen. Herman argues that the net neutrality issue is open now, and if we don’t act it will close again and we (the public) will lose our influence on the issue.

He makes a good point: the issue won’t stay in the public eye forever, and when it leaves the public eye change will be more difficult. But I don’t think it follows that we should enact strong neutrality regulation now. There are several reasons for this.

Tim Lee offers one reason in his response to Herman. Here’s Tim:

So let’s say Herman is right and the good guys have limited resources with which to wage this fight. What happens once network neutrality is the law of the land, Public Knowledge has moved onto its next legislative issue, and the only guys in the room at FCC hearings on network neutrality implementation are telco lawyers and lobbyists? The FCC will interpret the statute in a way that’s friendly to the telecom industry, for precisely the reasons Herman identifies. Over time, “network neutrality” will be redefined and reinterpreted to mean something the telcos can live with.

But it’s worse than that, because the telcos aren’t likely to stop at rendering the law toothless. They’re likely to continue lobbying for additional changes to the rules—by the FCC or Congress—that helps them exclude new competitors and cement their monopoly power? Don’t believe me? Look at the history of cable franchising. Look at the way the CAB helped cartelize the airline industry, and the ICC cartelized surface transportation. Look at FCC regulation of telephone service and the broadcast spectrum. All of those regulatory regimes were initially designed to control oligopolistic industries too, and each of them ended up becoming part of the problem.

I’m wary of Herman’s argument for other reasons too. Most of all, I’m not sure we know how to write neutrality regulations that will have the effects we want. I’m all in favor of neutrality as a principle, but it’s one thing to have a goal and another thing entirely to know how to write rules that will achieve that goal in practice. I worry that we’ll adopt well-intentioned neutrality regulations that we’ll regret later – and if the issue is frozen later it will be even harder to undo our mistakes. Waiting will help us learn more about the problem and how to fix it.

Finally, I worry that Congress will enact toothless rules or vague statements of principle, and then declare that the issue has been taken care of. That’s not what I’m advocating; but I’m afraid it’s what we’ll get if insist that Congress pass a net neutrality bill this year.

In any case, odds are good that the issue will be stalemated, and we’ll have to wait for the new Congress, next year, before anything happens.

Filed Under: Broadband Tagged With: , ,

New Net Neutrality Paper

July 11, 2006 by

I just released a new paper on net neutrality, called Nuts and Bolts of Network Neutrality. It’s based on several of my earlier blog posts, with some new material.

Filed Under: Broadband Tagged With: , ,

CleanFlicks Ruled an Infringer

July 10, 2006 by

Joe Gratz writes,

Judge Richard P. Matsch of the United States District Court for the District of Colorado [on] Wednesday filed this opinion granting partial summary judgment in favor of the movie studios, finding that CleanFlicks infringes copyright. This is not a terribly surprising result; CleanFlicks’ business involves selling edited DVD-Rs of Hollywood movies, buying and warehousing one authorized DVD of the movie for each edited copy it sells.

CleanFlicks edited the movies by bleeping out strong language, and removing or obscuring depictions of explicit sex and violence. (Tim Lee also has interesting commentary: 1 2 3.)

The opinion is relatively short, and worth reading if you’re interested in copyright. The judge ruled that CleanFlicks violated the studios’ exclusive rights to make copies of the movies, and to distribute copies to the public. He said that what CleanFlicks did was not fair use.

There are at least four interesting aspects to the opinion.

First, the judge utterly rejected CleanFlicks’s public policy argument. CleanFlicks had argued that public policy should favor allowing its business, because it enables people with different moral standards to watch movies, and it lets people compare the redacted and unredacted versions to decide whether the language, sex, and violence are really necessary to the films. The judge noted that Congress, in debating and passing the Family Movie Act, during the pendency of this lawsuit, had chosen to legalize redaction technologies that didn’t make a new DVD copy, but had not legalized those like CleanFlicks that did make a copy. He said, reasonably, that he did not want to overrule Congress on this policy issue. But he went farther, saying that this public policy argument is “inconsequential to copyright law” (page 7).

Second, the judge ruled that the redacted copies of the movies are not derivative works. His reasoning here strikes me as odd. He says first that the redaction is not a transformative use, because it removes material but doesn’t add anything. He then says that because the redacted version is not transformative, it is not a derivative work (page 11). If it is true in general that redaction does not create a derivative work, this has interesting consequences for commercial-skipping technologies – my understanding is that the main copyright-law objection to commercial-skipping is that it creates an unauthorized derivative work by redacting the commercials.

Third, the judge was unimpressed with CleanFlicks’s argument that it wasn’t reducing the studios’ profits, and was possibly even increasing them by bringing the movie to people who wouldn’t have bought it otherwise. (Recall that for every redacted copy it sold, CleanFlicks bought and warehoused one ordinary studio-issued DVD; so every CleanFlicks sale generated a sale for the studio.) The judge didn’t much engage this economic argument but instead stuck to a moral-rights view that CleanFlicks was injuring the artistic integrity of the films:

The argument [that CleanFlicks has no impact or a positive impact on studio revenues] has superficial appeal but it ignores the intrinsic value of the right to control the content of the copyrighted work which is the essence of the law of copyright.

(page 11)

Finally, the judge notes that the studios did not make a DMCA claim, even though CleanFlicks was circumventing the encryption on DVDs into order to enable its editing. (The studios say they could have brought such a claim but chose not to.) Why they chose not to is an interesting question. I think Tim Lee is probably right here: the studios were feeling defensive about the overbreadth of the DMCA, so they didn’t want to generate more conservative opponents of the DMCA by winning this case on DMCA grounds.

There also seems to have been no claim that CleanFlicks fostered infringement by releasing its copies as unencrypted DVDs, when the original studio DVDs had been encrypted with CSS (the standard, laughably weak DVD encryption scheme). The judge takes care to note that CleanFlicks and its co-parties all release their edited DVDs in unencrypted form, but his ruling doesn’t seem to rely on this fact. Presumably the studios chose not to make this argument either, perhaps for reasons similar to their DMCA non-claim.

In theory CleanFlicks can appeal this decision, but my guess is that they’ll run out of money and fold before any appeal can happen.

Filed Under: Uncategorized Tagged With: , ,

University-Purchased Music Services a Bust

July 7, 2006 by

When universities buy music service subscriptions for their students, few students use them, according to Nick Timiraos’s story in yesterday’s Wall Street Journal. Students tend to download music illegally, or buy it from iTunes instead.

In explaining the popularity of Napster and other file-sharing systems, commentators have often overemphasized the price factor and underestimated convenience. Here we see students given the option of a free subscription service, and passing it up to use another free (though illegal) system, or a for-pay system that is more convenient than the free one. (These systems are free to the students, in the sense that using them costs no more than not using them.)

This error was particularly common when the original Napster was new. Before Napster, many people knew how to distribute music conveniently online, but licensing and payment issues were holding up the development of useful online music services. Napster cut the Gordian knot by building the distribution infrastructure and skipping the licensing and payment part. For Napster users, payment was not optional – there was no way to pay, even if the user wanted to. Napster users were choosing convenience, as much as they were choosing not to pay.

Thanks to the record companies’ insistence on intrusive DRM, most of today’s authorized online music services suffer from incompatibility and user frustration. iTunes offers the least intrusive DRM, and unsurprisingly it is by far the most successful online music store. Music fans want music they can actually listen to.

(link via Doug Tygar)

Filed Under: Uncategorized Tagged With: ,

Why Do Innovation Clusters Form?

July 3, 2006 by

Recently I attended a very interesting conference about high-tech innovation and public policy, with experts in various fields. (Such a conference will be either boring or fascinating, depending on who exactly is invited. This one was great.)

One topic of discussion was how innovation clusters form. “Innovation cluster” is the rather awkward term for a place where high-tech companies are concentrated. Silicon Valley is the biggest and best-known example.

It’s easy to understand why innovative people and companies tend to cluster. Companies spin out of other companies. People who move to an area to work for one company can easily jump to another one that forms nearby. Support services develop, such as law firms that specialize in supporting start-up companies or certain industries. Nerds like to live near other nerds. So once a cluster gets going, it tends to grow.

But why do clusters form in certain places and not others? We can study existing clusters to see what makes them different. For example, we know that clusters have more patent lawyers and fewer bowling alleys, per capita, than other places. But that doesn’t answer the question. Thinking that patent lawyers cause innovation is like thinking that ants cause picnics. What we want to know is not how existing clusters look, but how the birth of a cluster looks.

So what causes clusters to be born? Various arguments have been advanced. Technical universities can be catalysts, like Stanford in Silicon Valley. Weather and quality of life matter. Cheap land helps. Some argue that goverment-funded technology companies can be a nucleus – and perhaps funding cuts force previously government-funded engineers to improvise. Cultural factors, such as a general tolerance for experimentation and failure, can make a difference.

Simple luck plays a role, too. Even if all else is equal, a cluster will start forming somewhere first. The feedback cycle will start there, pulling resources away from other places. And that one place will pull ahead, for no particular reason except that it happened to reach critical mass first.

We like to have explanations for everything that happens. So naturally we’ll find it easy to discount the role of luck, and give credit instead to other factors. But I suspect that luck is more important than most people think.

Filed Under: Uncategorized Tagged With: , ,