The Little Hacker's Room

So reports the Wall Street Journal:

Lawmakers working to craft a new comprehensive immigration bill have settled on a way to prevent employers from hiring illegal immigrants: a national biometric identification card all American workers would eventually be required to obtain.

It’s the natural evolution of the policy called “internal enforcement” of immigration law, as I wrote in my Cato Institute paper, “Franz Kafka’s Solution to Illegal Immigration.”

Once in place, watch for this national ID to regulate access to financial services, housing, medical care and prescriptions—and, of course, serve as an internal passport.

Should ISPs be barred under net neutrality from discriminating against illegal content? Not according to the FCC’s draft net neutrality rule, which defines efforts by ISPs to curb the “transfer of unlawful content” as reasonable network management. This exemption is meant to ensure providers have the freedom to filter or block unlawful content like malicious traffic, obscene files, and copyright-infringing data.

EFF and Public Knowledge (PK), both strong advocates of net neutrality, are not happy that about the copyright infringement exemption. The groups have urged the FCC to reconsider what they describe as the “copyright loophole,” arguing that copyright filters amount to “poorly designed fishing nets.”

EFF’s and PK’s concerns about copyright filtering aren’t unreasonable. While filtering technology has come a long way over the last few years, it remains a fairly crude instrument for curbing piracy and suffers from false positives. That’s because it’s remarkably difficult to accurately distinguish between unauthorized copyrighted works and similar non-infringing files. And because filters generally flag unauthorized copies on an automated basis without human intervention, even when filters get it right, they often disrupt legal, non-infringing uses of copyrighted material like fair use.

Despite copyright filtering technology’s imperfections, however, outlawing it is the wrong approach. At its core, ISP copyright filtering represents a purely private, voluntary method of dealing with the great intellectual property challenge. This is exactly the sort of approach advocates of limited government should embrace. As Adam and Wayne argued back in 2001:

To lessen the reliance on traditional copyright protections, policymakers should ensure that government regulations don’t stand in the way of private efforts to protect intellectual property.

That’s exactly right. As digital technology evolves, effectively enforcing intellectual property privileges will grow increasingly difficult for content creators. The traditional model for financing content creation — direct payments from consumers to producers — will remain viable only if there’s an economic incentive for consumers to fork over money in exchange for content. Voluntary filtering arrangements between network providers and content owners may prove valuable to this end because they discourage the unauthorized transfer of copyrighted files.

The best part about copyright filtering? It doesn’t necessitate the exercise of the state’s coercive power. In this way, it has the potential to help us move gradually toward a regime of intellectual property protection that’s reliant on the force of the market rather than the force of government.

Of course, there’s no guarantee that attempts to filter copyrighted content at the ISP level will turn out to be effective. That’s because end-to-end encryption, which enjoys growing popularity among savvy users, renders traffic impossible to digitally “fingerprint.” It amounts to a near-perfect foil to deep-packet filtering technologies. There are alternative methods of identifying infringing files — IP address blacklisting, for instance — but such methods tend to be notoriously imprecise and as such are unlikely to be met with acceptance by consumers.

As with all kinds of unsavory ISP behavior, in the long run, overly blunt copyright filtering is simply not a sustainable business practice. Users tend to expect the Internet will “just work,” and attempts by providers to interfere with access to content are invariably met with swift resistance. Consider the recent 4chan blockages by AT&T and Verizon, both of which lasted for mere hours but immediately sparked outrage that reverberated throughout the tech world.

To be sure, some providers may experiment with ineffective, overly aggressive copyright filters. But this sort of experimentation, while painful for those involved, is crucial if providers are to learn the valuable lessons that will signal to the market how to properly balance consumer interests with content creators’ interests. And since ISP competition is on the rise, as Obama’s Department of Justice recently explained, even in relatively uncompetitive markets like Rochester, New York it’s only a matter of time before some 4G LTE carrier deploys residential-grade broadband and shakes things up.

As I’ve argued before, the best way government can serve consumers in DRM disputes is by steering clear of them entirely. Markets may not be perfect, but they tend to efficiently balance competing concerns in a way government regulators simply cannot. In the same way, network-level copyright filtering should succeed or fail based on its own merits and how it impacts consumer welfare, not on how well it meets the invariably vague criteria of the FCC. If net neutrality rules are enshrined into law — and for the record, I hope they aren’t — regulating ISP efforts to curb illegal content should be off the table.

The Treasury Department today announced that it would grant the State Department’s December request (see the Iran letter here) for a waiver from U.S. embargoes that would allow Iranians, Sudanese and Cubanese to download “free mass market software … necessary for the exchange of personal communications and/or sharing of information over the internet such as instant messaging, chat and email, and social networking.”

I’m delighted to see that the Treasury Department is implementing Secretary Clinton’s pledge to make it easier for citizens of undemocratic regimes to use Internet communications tools like e-mail and social networking services offered by US companies (which Adam discussed here). It has been no small tragedy of mindless bureaucracy that our sanctions on these countries have actually hampered communications and collaboration by dissidents—without doing anything to punish oppressive regimes. So today’s announcement is a great victory for Internet freedom and will go a long way to bringing the kind of free expression we take for granted in America to countries like Iran, Sudan and Cuba.

But I’m at a loss to explain why the Treasury Department’s waiver is limited to free software. The U.S. has long objected when other countries privilege one model of software development over another—and rightly so: Government should remain neutral as between open-source and closed-source, and between free and paid models. This “techno-agnosticism” for government is a core principle of cyber-libertarianism: Let markets work out the right mix of these competing models through user choice!

Why should we allow dissidents to download free “Web 2.0″ software but not paid ones? Not all mass-market tools dissidents would find useful are free. Many “freemium” apps, such as Twitter client software, require purchase to get full functionality, sometimes including privacy and security features that are especially useful for dissidents. To take a very small example that’s hugely important to me as a user, Twitter is really only useful on my Android mobile phone because I run the Twidroid client. But the free version doesn’t support multiple accounts or lists, which are essential functions for a serious Tweeter. The Pro version costs just $4.89—but if I lived in Iran, U.S. sanctions would prevent me from buying this software. More generally, we just don’t know what kind of innovative apps or services might be developed that would be useful to dissidents, so why foreclose the possibility of supporting them through very small purchases?

If Treasury is worried about creating a loophole that could allow evasion of U.S. sanctions, surely there are better ways to prevent such abuse than simply continuing to ban even small software purchases, especially since the purchase price for freemium apps is often just a few dollars. Or the U.S. Government could even negotiate a blanket license for all downloads from embargoed countries with software developers to ensure that our export controls do not deny dissidents the best tools available.

The practictioners at Steptoe & Johnson asked some good questions about this proposal back in December when State sent their request to Treasury.

Just a heads up that on my weekly tech policy podcast, Surprisingly Free Conversations, we’ve just posted an interview with Ethan Zuckerman of Harvard’s Berkman Center for Internet & Society. He recently published an excellent blog post on the limits to internet censorship circumvention technologies, and that’s the topic of our discussion. Ethan writes,

So here’s a provocation: We can’t circumvent our way around internet censorship.

I don’t mean that internet censorship circumvention systems don’t work. They do – our research tested several popular circumvention tools in censored nations and discovered that most can retrieve blocked content from behind the Chinese firewall or a similar system. (There are problems with privacy, data leakage, the rendering of certain types of content, and particularly with usability and performance, but the systems can circumvent censorship.) What I mean is this – we couldn’t afford to scale today’s existing circumvention tools to “liberate” all of China’s internet users even if they all wanted to be liberated.

You can listed to this episode here, and you can subscribe to the show on iTunes or RSS.

The way Ben Kunz puts it in a new Business Week article, “Each device contains its own widening universe of services and applications, many delivered via the Internet. They are designed to keep you wedded to a particular company’s ecosystem and set of products.”

I like Ben’s article a lot because it recognizes that “walling off” and a “widening universe” are not mutually exclusive. If only policymakers and regulators acknowledged that. They must know it, but admitting it means acknowledging their limited relevance to consumer well-being and a need to step aside. So they feign ignorance.

Many claim to worry about the rise of proprietary services (I, as you can probably tell, often doubt their sincerity) but I’ve always regarded a “Splinternet” as a good thing that means more, not less, communications wealth. I first wrote about this in Forbes in 2000 when everyone was fighting over spam, privacy, content regulation, porn and marketing to kids.

Increasing wealth means a copy-and-paste world for content across networks, and it means businesses will benefit from presence across many of tomorrow’s networks, generating more value for future generations of consumers and investors. We won’t likely talk of an “Internet” with a capital-“I” and a reverent tremble the way we do now, because what matters is not the Internet as it happens to look right now, but underlying Internet technology that can just as easily erupt everywhere else, too.

Meanwhile, new application, device and content competition within and across networks disciplines the market process and “regulates” things far better than the FCC can. Yet the FCC’s very function is to administer or artificially direct proprietary business models, which it must continue to attempt to do (and as it pleads for assistance in doing in the net neutrality rulemaking) if it is going to remain relevant. I described the urgency of stopping the agency’s campaign recently in “Splinternets and cyberspaces vs. net neutrality,” and also in the January 2010 comments to the FCC on net neutrality.

Eventually the pro-business and pro-consumer cases for splintering and against artificial openness will prevail, because compulsion and deliberately ignoring free markets in infrastructure undermine communications wealth and content options despite the general view. The question is whether we recognize it now, or decades hence, long after other nations have embraced liberalized communications and bypassed us. Rather than a make-work “National Broadband Plan” like the one being presented to Congress this month, the FCC needs instead to act like Alfred Kahn at the old CAB, and present a case for turning out the lights and ratcheting down most functions over there, since airwave scarcity is increasingly disappearing (or created artificially by the agency itself) and since “public airwaves” don’t mean much in tomorrow’s world of limitless content access, customization and Everybody Tube broadcasting. The case for a ruthless, drastic purging of FCC’s involvement in and oversight of most things communications needs to be made rather than conspiracy in a make-believe, Emperor’s New Clothes broadband plan. The FCC is too much an impediment in too many important respects for the concrete plan in play to be one of adding rather than paring responsibilities. The FCC and a naive Congress are on a path toward turning America’s involvement in the Internet into the C&O Canal of Communications.

Capitalism is still too young historically for us to have had our John Locke for the digital age and its long and thin network (and intangible) properties. The short and fat stuff like houses and cars was far easier. Policymakers already destroyed the prospects of liberalization in the electricity industry by trying to mandate hyper-regulatory “retail wheeling” (same for all intents and purposes as net neutrality) in the name of “competition.” Forced neutrality has wrecked one industry. I hope we don’t do it again, but too many special interests gain from regulation. They don’t, for example, even seem to recognize the ways in which properly liberalized electricity grids would also have turbocharged communications liberalization.

Competition in access to content is only one part of the story; competition in the provision of infrastructure and devices drives communications wealth and free speech, too.

“We’re from government and we’re here to help save journalism.”

That seems to be the hot new meme in media policy circles these days. Last week, it was the Federal Communications Commission (FCC) kicking off their “Future of Media” effort with a workshop on “Serving the Public Interest in the Digital Era.” This week, it’s the Federal Trade Commission’s (FTC) turn as they host the second in their series of workshops on How Will Journalism Survive the Internet Age? Meanwhile, the Senate has already held hearings about “the future of journalism,” and Senator Benjamin L. Cardin (D-MD) recently introduced the “Newspaper Revitalization Act,” which would allow newspapers to become nonprofit organizations in an effort to help them stay afloat.

I have no doubt that many of the public policymakers behind these efforts have the best of intentions and really are concerned about what many believe to be a crisis in the field of journalism. But here are my three primary concerns with Washington’s sudden interest in “saving journalism”:

1. Policymakers are largely ignoring the role they played in created the current mess, and they won’t likely be willing to undo the damage. I’m speaking mostly of the myriad ownership restrictions and assorted other “public interest” regulations that have strangled many traditional media operators over the years and limited their ability to respond to marketplace changes. I documented these rules and their anti-innovative impacts in my 2005 book, Media Myths: Making Sense of the Debate over Media Ownership. I fear that they now won’t be willing to loosen those chains that continue to bind the media sector. Moreover, it may already be too late for some of those players.
2. Many public officials are largely focused on the problems associated with change and are either ignoring–or, through their interventions could thwart–the opportunities associated with change. No doubt, many media operators are struggling. But it is equally true that exciting new media business models and opportunities are developing. As I pointed out in my recent Newseum debate, while we are in a gut-wrenching evolution with a great deal of creative destruction taking place, we should be careful to not to head off potentially advantageous marketplace developments, if even some are highly disruptive.
3. Increased “assistance” from Washington will likely come with strings attached and raise troubling First Amendment implications. Sen. Cardin’s bill, for example, serves as a good example of what makes me so nervous about Washington’s growing interest in “saving journalism.”  As a condition of any any media entity receiving non-profit tax status, the bill would disallow political endorsements on newspaper editorial pages–which, like campaign finance restrictions, would be a boon for incumbents. That should serve as fair warning to journalists about the sort of strings lawmakers will attach to press-welfare efforts going forward. What else might subsidized media entities have to put up with? Free campaign ads for politicians? Fairness Doctrine or mandatory right of reply for printed editorials? Censorship for “negative” political satire or comics? Moreover, how do we define a “media entity” or “journalist” in terms of how is eligible for support?  Taken together, these considerations raise some rather profound First Amendment questions.

Stay tuned because this debate is just getting started. I suspect that policymakers will significantly step up their interest in the issue as more traditional media entities begin failing. What will be interesting is the extent to which some policymakers begin to embrace the “media reformista” agenda of greater public control that some fringe groups like Free Press favor. I’ve documented their radical agenda here before in my essays:

• A “Public Option” for Media? The Free Press Plan to Put Journalists on the Public Dole
• Free Press, Robert McChesney & the “Struggle” for Media
• What the Media Reformistas Really Want
• Socializing Media in Order to Save It

And I’m currently finishing up the new book by Robert McChesney & John Nichols, The Death and Life of American Journalism, which is a blueprint for how to convert media into wards of the State.  As part of their effort to create a massive “public works” program for the press, they advocate that public subsidies for media be funded by everything from a 5% tax on consumer electronics to a 3% tax on monthly ISP & cell phone bills to taxes on commercial advertising.  Truly frightening stuff. Anyway, I’ll have a complete review done shortly.

__________________

Further reading:

• summary of remarks at “Crisis in Journalism” event, by Adam Thierer, Feb. 2010
• Public Option for Press Should Get the Red Pen, by Adam Thierer, The Daily Caller, Jan. 2010
• A “Public Option” for Media? The Free Press Plan to Put Journalists on the Public Dole, by Adam Thierer, Nov. 2009
• Free Press, Robert McChesney & the “Struggle” for Media, by Adam Thierer, Aug. 2009
• What the Media Reformistas Really Want, by Adam Thierer, Aug. 2008
• Socializing Media in Order to Save It, by Adam Thierer, City Journal, March 2009
• Obama Should Just Say No To Newspaper Bailouts, Adam Thierer, Sept. 2009
• The Dangers of Government-Subsidized News, by Adam Thierer, Oct. 2009
• A Bailout For The First Amendment?, by Wayne Crews, Aug. 2009
• testimony at FCC’s Hearing on “Serving the Public Interest in the Digital Era”, by Adam Thierer, March 2010
• A Manifesto for Media Freedom, by Adam Thierer and Brian Anderson, 2008
• Chairman Leibowitz’s Disconnect on Privacy Regulation & the Future of News, by Adam Thierer & Berin Szoka, Progress Snapshot 6.1, January 13, 2010
• Media Ownership Proceedings, by W. Kenneth Ferree, Testimony before the Federal Communications Commission, November 3, 2009
• Media Myths: Making Sense of the Debate over Media Ownership, by Adam Thierer, June 2005

by Adam Thierer & Berin Szoka

We’re hoping that the Government Accountability Office (GAO) has made some sort of mistake, because it’s hard to believe its latest findings about the paperwork burden generated by Federal Communications Commission (FCC) regulatory activity. In late January, the GAO released a report on “Information Collection and Management at the Federal Communications Commission” (GAO-10-249), which examined information collection, management, and reporting practices at the FCC. The GAO noted that the FCC gathers information through 413 collection instruments, which include things like: (1) required company filings, such as the ownership of television stations; (2) applications for FCC licenses; (3) consumer complaints; (4) company financial and accounting performance; and (5) a variety of other issues, such as an annual survey of cable operators.  (Note: This does not include filings and responses done pursuant to other FCC NOIs or NPRMs.)

Regardless, the FCC told the GAO that it receives nearly 385 million responses with an estimated 57 million burden hours associated with the 413 collection instruments. A “burden hour” is defined under the Paperwork Reduction Act as “the time, effort, or financial resources expended by persons to generate, maintain, or provide information to a federal agency.” And the FCC is generating 57 million of ‘em! Even though we are frequently critical of the agency, these numbers are still hard to fathom. Perhaps the GAO has made some sort of mistake here. But here’s what really concerns us if they haven’t made a mistake.

Assuming the GAO got these numbers right, just think of the deadweight economic loss associated with all this paperwork, and think of how it will grow in months and years to come! Can you imagine how much the numbers have likely grown so far this year, with the agency generating so many new public notices, notices of inquiry, requests for information, and more?  And just think what the paperwork burden will look like once the National Broadband Plan and Net neutrality regulations kick in!  Oh my… The agency has already promised lots more notices will flow out of the National Broadband Plan to implement various portions of it.

In terms of the deadweight loss, go back to the numbers Adam cited in his essay last week asking, “Will the FCC’s Nat’l Broadband Plan Be “Full Employment for Lawyers”? As noted there, lawyers were about the only group that did fairly well thanks the FCC’s over-zealous regulatory ways in the post-Telecom Act period. Greg Sidak of Georgetown University Law School found that the number of telecom lawyers–as measured by membership in the Federal Communications Bar Association–grew by a stunning 73% in the late 1990s. That was largely driven by a 37% hike in FCC spending and a tripling of the number of pages of regulations in the FCC Record in the post-Telecom Act period. Sidak argued, “If one assumes (very conservatively) that the average income of an American telecommunications lawyer is $100,000, then the current membership of the FCBA represents an annual expenditure on legal services of at least $340 million.” And we all know that those lawyers were making a heck of lot more than just $100K (and billed even more), so Sidak’s estimates were ultra-conservative: The deadweight loss of all this legal activity was much greater.

Indeed, a very conservative estimate of hourly rates for Washington communications lawyers would be $200/hour, but even at that rate, 57 million burden hours would equate to a total cost of $11.4 billion. In fact, when major Washington law firms use “blended rates” to bill out the time of senior partners, junior associates, and paralegals working in teams on things like regulatory filings, the figure is more like $350-400 (if not more)—which would equate to a deadweight cost of $20-23 billion every year.  To put that staggering number in perspective, leaks about the National Broadband Plan indicate that the FCC might be planning on spending about that much to subsidize broadband deployment over a decade.

Or, to use another comparison, NASA’s 2010 budget is a mere $18.69 billion.  That’s in the same ballpark as what, according to the GAO’s man-hour estimates, the FCC’s reporting requirements cost U.S. industry every year.  As Wernher von Braun famously said about the Apollo program, which he led: “We can lick gravity, but sometimes the paperwork is overwhelming.”

So, “if we can put a man on the moon,” as they say, why can’t we do something about this paperwork burden so America’s communications, media, and high-tech providers can focus on actually providing better, faster, and cheaper service to consumers?

Sorry to use the blog as a job board, but I wanted to let readers know that the Progress & Freedom Foundation (PFF) has a couple of positions we’d like to find good people to fill:

• Senior Economist: PFF is looking for a skilled economist (PhD-level preferred) with experience in the high-tech arena or network-related industries. Our senior economist would be responsible for assisting other PFF analysts on various projects and priorities, but would also be free to pursue other objectives.
• Vice President, Development & Outreach: PFF is looking for development director to oversee outreach to supporters and other third parties, and to help us grow the organization.
• President: Yes, you read that right! After less than 6 months on the job, I’m already tired of management and want to get back to full-time policy wonkery! If you know of someone who would make a great leader, has strong free-market credentials, and extensive experience in the field of high-tech policy and media/communications law, please let me know. I’m quite ready and willing to hand over the keys to someone else so I can spend all my time fighting the good fight to defend free minds, free markets, and free speech!

To apply, please send a resume and cover letter to Adam Thierer (athierer@pff.org). Or, if you have any ideas on good candidates, please let me know that, too.

A couple weeks ago the Google Books Settlement fairness hearing took place in New York City, where Judge Denny Chin heard dozens of oral arguments discussing the settlement’s implications for competition, copyright law, and privacy. The settlement raises a number of very challenging legal questions, and Judge Chin’s decision, expected to come down later this spring, is sure to be a page-turner no matter how he rules.

My work on the Google Books Settlement has focused on reader privacy concerns, which have been a major point of contention between Google and civil liberties groups like EFF, ACLU, and CDT. While I agree with these groups that existing legal protections for sensitive user information stored by cloud computing providers are inadequate, I do not believe that reader privacy should factor into the court’s decision on whether to approve or reject the settlement.

I elaborated on reader privacy in an amicus curiae brief I submitted to the court last September. I argued that because Google Books will likely earn a sizable portion of its revenues from advertising, placing strict limits on data collection (as EFF and others have advocated) would undercut Google’s incentive to scan books, ultimately hurting the very authors whom the settlement is supposed to benefit. While the settlement is not free from privacy risks, such concerns aren’t unique to Google Books nor are they any more serious than the risks surrounding popular Web services like Google search and Gmail. Comparing Google Book Search to brick-and-mortar libraries is inapt, and like all cloud computing providers, Google has a strong incentive to safeguard user data and use it only in ways that benefit users and advertisers.

It’s worth noting that while Google has a reasonably strong track record of preventing data breaches and accidental disclosure of data to untrustworthy parties, Google generally does not challenge court-approved criminal or civil subpoenas of data associated with its users. I didn’t properly articulate this in my amicus brief, in which I stated incorrectly that “Google has a history of vigorously resisting government data requests if it deems them invalid.” In fact, Google usually does not attempt to quash subpoenas, although it has done so at least once before (in 2006, Google successfully fought a request from the U.S. Department of Justice seeking logs containing millions of user search queries).

Upon receiving a subpoena of a user’s data, Google typically informs the user that his or her data will be handed over in 20 days unless the user successfully moves to quash the subpoena. Most other cloud computing providers have similar policies. In certain rare circumstances, however, subpoenas are issued in secret. In such cases, Google is barred from telling the user about the subpoena, so the user doesn’t have a chance to challenge it in court.

While Google’s policy for disclosing user data is perhaps not as protective of privacy as it could be, it’s still quite reasonable in light of the economic realities of cloud computing. Sure, Google could challenge all subpoenas it receives as a matter of course (as CDT and others have urged) but such a policy would be prohibitively expensive considering the fact that Google that likely processes tens of thousands subpoenas each year (Unfortunately, Google does not disclose how many subpoenas it receives each year, much to my chagrin). Remember, the vast majority of Google users aren’t even paying customers! Expecting Google to bear the legal burden of defending its users — some of whom actually are criminals — from legal proceedings is hardly fair.

Instead of trying to persuade Congress, regulatory agencies, and the courts to regulate Google and other online providers, privacy advocates should focus on the underlying deficiencies in U.S. privacy laws. Under the 1986 Electronic Communications Privacy Act (ECPA), many kinds of potentially sensitive user data can be obtained by government authorities with a mere subpoena, rather than a search warrant. Compounding this problem is the refusal of courts to extend Fourth Amendment protections to sensitive information stored in the cloud on the basis of the seriously flawed “third party doctrine”  To remedy this, Congress should amend ECPA to strengthen privacy protections for sensitive data stored by remote computing service providers. Just as authorities are required to obtain a search warrant if they wish to get hold of files stored in one’s home, warrants should also be necessary to compel cloud computing providers to disclose individual information that users very clearly expect to remain private.

In the meantime, let’s not create burdensome new regulations on online data collection. As Berin, Adam, and others have documented with incredible thoroughness (1, 2, 3, 4), smart data mining has myriad benefits for consumers, and targeted advertising is among the most promising avenues for financing future content production.

Yesterday, NetChoice joined the Center for Democracy & Technology and the Maine Civil Liberties Union (and PFF, who submitted written testimony) before the Maine legislature to oppose a bill that would restrict how health-related products can me marketed to minors under age 17.

The bill, LD 1677, is a repeal and replacement for current law passed last year that was strongly opposed by the online industry. As I previously blogged, NetChoice was a lead plaintiff in last year’s lawsuit to enjoin the law. Though well intentioned, this law was overly-broad and wrought with constitutional concerns. As a result, Attorney General Mills agreed not to enforce the statute. In October last year, NetChoice joined others in testifying before Maine Joint Standing Committee on the Judiciary regarding this law. In short, the conclusion of all parties involved was that the current legislation could not stand and that the legislature should move to quickly repeal.

So we all arrived in Augusta, ready for the next round – after all, this bill is #9 on the NetChoice iAWFUL list! But when we arrived, we were treated to a surprise amendment from the bill sponsor and this became the focus for discussion and testimony. Here’s the amended prohibition:

A person may not knowingly collect and use personal information collected on the Internet from a minor residing in this State for the purposes of pharmaceutical marketing prescription drugs to that minor, unless the minor specifically requests that information about the prescription drug be provided to them

John Morris at CDT gave great testimony and generally welcomed the amendment. However, he cautioned the committee that it should make sure that website intermediaries would not have liability for merely displaying ads. Or for displaying ads to minors that have previously registered with the site, and the ad display was unrelated to the information contained in the registration.

While the bill’s language is better for online companies, it remains to be proved why it’s needed in the first place. There seems to be a sweeping fear among many people that advertising is bad and tries to persuade us to do things we don’t need. Magnify this fear times ten when it comes to advertising and children, and pharmaceuticals.

I understand the thoughts that we’re an overly-medicated society, but that view often ignores the many benefits of modern medicine. Regardless, when it comes to prescription drug marketing and children, there are firm checks and balances in place with what parents must consent to and what doctors will ethically prescribe.

Keep your eyes and ears open for next week’s work session on Tuesday. That’s when there will be a vote, and we’ll see whether I need to board another plane to Maine, not that it’s that much of a pain.

I’m quoted briefly in a story today in E-Commerce Times (see “Apple’s Patent Attack:  This Too May be Overhyped” by Erika Morphy) about the patent lawsuit filed this week by Apple against rival mobile device maker HTC.

Apple, of course, produces the iPhone, while HTC makes Google’s Nexus One and other devices that run on Google’s Android operating system.

So right from the start this case looks less like a simple patent dispute and more like a warning shot over Google’s bow.  The two companies are increasingly becoming rivals.  In August of last year, Google CEO Eric Schmidt resigned from Apple’s board.  Apple CEO Steve Jobs wrote at the time, “Unfortunately, as Google enters more of Apple’s core businesses, with Android and now Chrome OS, Eric’s effectiveness as an Apple Board member will be significantly diminished….”

The apocalyptic rhetoric from analysts that accompanied the lawsuit (see Marguerite Reardon’s piece on CNET, “Is Apple Launching a Patent War?”), however, is both under and overselling the story.  It’s both much worse and not as bad as it seems.

The Undersell

The war is actually already going on, and ranges far beyond Apple and HTC.  The mobile device industry is deeply embroiled in prolonged legal battles over patents, with perhaps dozens of complaints and counter-claims flying back and forth.  Nick Bilton of The New York Times this week produced a simplified chart of who is suing whom, which he described as a “patent lawsuit Super Bowl party.”

As I write in Law Eight of The Laws of Disruption, patent litigation has “evolved” from being a last resort in the protection of proprietary technology to the first step in protracted negotiations between industry participants over how to divide up a rapidly-growing pie.  Here’s how it works.  Everyone flood the Patent Office with applications, drafted as broadly as possible.  The over-burdened examiners, who are incentivized to process applications quickly, find it is easier to say yes than to say no, and grant a large percentage of patents that are far too generous and clearly don’t meet the legal requirements for protection.

As I wrote last year in The Big Money, patent grants are out-of-control, one of the many symptoms of what most legal scholars agree is a system that has become utterly broken.  (The U.S. Supreme Court is currently reviewing a case that could see the end of so-called “business method” patents and perhaps even patents for software.  See “Can You Patent a Cat and a Laser Pointer?”)

Meanwhile, the parties all sue each other, and after years of poring over each other’s documents during discovery, figure out, more-or-less, who’s really invented what.  They wind up cross-licensing everything to everybody else and agreeing to mutual defense pacts against future challenges to the good and bad patents.  Apple says it has no interest in licensing its technology, but simply wants to stop competitors from ripping off their property.  We’ll see.

It is very likely that many of these patents, if recent history is any guide, are absurdly overbroad and would not survive full litigation.  (I’ve reviewed none of the patents at issue in this case so far.)  And full litigation is neither likely nor the goal of the parties. The real point of all this legal posturing is to obtain cross-licenses that will ultimately deter new competitors from entering the market.

There is a better way to protect invention without years of expensive litigation.  In some industries, subject to government approval, the major players simply pool their patents and establish open terms under which anyone can license them.  Sprint, Cisco, Intel and Nextel, for example, have pooled their WiMax patents to ensure a single standard emerges.  A mobile device pool would have been harder to fashion, but would also have avoided a lot of bloodshed (and legal fees).  In the end I suspect the results will be the same.

The Oversell

At the same time, the stakes aren’t quite as life-or-death as many commentators believe.  For example, the E-Commerce Times story quotes Greg Sterling on what a loss for Apple in the suit against HTC would mean:  “It would mean open season on any IP — anything could be copied.”  Hardly.  All it would mean is that the particular patents Apple is claiming either don’t hold up under careful scrutiny or, if they do, that HTC is found not to have infringed them.

More to the point, patent protection is only one way—and perhaps the least effective—that competitors secure competitive advantage in rapidly-growing and rapidly-evolving markets for new technology.  Offering superior service, an ever-growing menu of new options and features, and competitive pricing also works just fine.

Apple in particular has a significant advantage that has nothing to do with its patent portfolio:  the thousands of third-party 3G apps it sells to its customers.  The iPhone’s popularity today has little to do with proprietary technology, and everything to do with the enormous network of third-party software developers Apple has wrangled to write apps for its devices.

The apps drives network traffic, of course, but also drives what economists call “network effects.”  The more people use their iPhones the more people who don’t have one feel nudged to get one. Even if Apple loses the litigation, the network is unaffected.

The real winners in the mobile device patent war will be based not on patents but on the ability to build a robust network with compelling consumer offerings.  As it should be.

In interviews last week and this week (see KUOW’s “The Conversation”), I argue that the convictions of three Google executives by an Italian court for “illegal handling of personal data” threaten the future of all hosted content.  More than that, I said that the convictions had a disturbing subtext:  the on-going effort of the Italian government to intimidate the remaining media outlets in that country it doesn’t already control.  (See “Larger Threat is Seen in Google Case” by the New York Times’ Rachel Donadio for the details.)

In Italy and other countries (think of the Twitter revolt following dubious elections in Iran), TCP/IP is quickly becoming the last bastion of a truly free press.   In that sense, the objectionable nature of the video in question made Google an easy target for a prosecutor who wanted to give the appearance of defending human dignity rather than threatening a free press.

In a post that was picked up on Saturday by TechMeme, I explained my position in detail:

The case involved a video uploaded to Google Videos (before the acquisition of YouTube) that showed the bullying of a person with disabilities.

Internet commentators were up-in-arms about the conviction, which can’t possibly be reconciled with European law or common sense.  The convictions won’t survive appeals, and the government knows that as well as anyone.  They neither want to or intend to win this case.  If they did, it would mean the end of the Internet in Italy, if nothing else. Still, the case is worth worrying about, for reasons I’ll make clear in a moment.

But let’s consider the merits of the prosecution. Prosecutors bring criminal actions because they want to change behavior—behavior of the defendant and, more important given the limited resources of the government, others like him.  What behavior did the government want to change here?

The video was posted by a third party. Within a few months, the Italian government reported to Google their belief that it violated the privacy rights of the bullying victim, and Google took it down. They cooperated in helping the government identify who had posted it, which in turn led to the bullies themselves.

The only thing the company did not do was to screen the video before posting it. The Google executives convicted in absentia had no personal involvement in the video. They are being sued for what they did not do, and did not do personally.

So if the prosecution stands, it leads to a new rule for third-party content: to avoid criminal liability, company executives must personally ensure that no hosted content violates the rights of any third party.

In the future, the only thing employees of Internet hosting services of all kinds could do to avoid criminal prosecution would be to pre-screen all user content before putting it on their website.  And pre-screen them for what?  Any possible violation of any possible rights.  So not only would they have to review the contents with an eye toward the laws of every possible jurisdiction, but they would also need to obtain releases from everyone involved, and to ensure those releases were legally binding. For starters.

It’s unlikely that such filtering could be done in an automated fashion. It is true that YouTube, for example, filters user postings for copyright violations, but that is only because the copyright holders give them reference files that can be compared. The only instruction this conviction communicates to service providers is “don’t violate any rights.” You can’t filter for that!

The prosecutor’s position in this case is that criminal liability is strict—that is, that it attaches even to third parties who do nothing beyond hosting the content.

If that were the rule, there would of course be no Internet as we know it. No company could possibly afford to take that level of precaution, particularly not for a service that is largely or entirely free to users. The alternative is to risk prison for any and all employees of the company.

(The Google execs got sentences of six months in prison each, but they won’t serve them no matter how the case comes out. In Italy, sentences of less than three years are automatically suspended.)

And of course that isn’t the rule.  Both the U.S. and the E.U. wisely grant immunity to services that simply host user content, whether it’s videos, photos, blogs, websites, ads, reviews, or comments. That immunity has been settled law in the U.S. since 1996 and the E.U. since 2000. Without that immunity, we simply wouldn’t have–for better or worse–YouTube, Flickr, MySpace, Twitter, Facebook, Craigslist, eBay, blogs, user reviews, comments on articles or other postings, feedback, etc.

(The immunity law, as I write in Law Five of “The Laws of Disruption,” is one of the best examples of the kind of regulating that encourages rather than interferes with emerging technologies and the new forms of interaction they enable.)

Once a hosting service becomes aware of a possible infringement of rights, to preserve immunity most jurisdictions require a reasonable investigation and (assuming there is merit to the complaint), removal of the offending content. That, for example, is the “notice and takedown” regime in the U.S. for content that violates copyright.

The government in this case knows the rule as well as anyone.  This prosecution is entirely cynical—the government neither wants to nor intends to win on appeal.  It was brought to give the appearance of doing something in response to the disturbing contents of the video (the actual perpetrators and the actual poster have already been dealt with). Google in this sense is an easy target, and a safe one in that the company will vigorously fight the convictions until the madness ends.

And not unrelated, it underscores a message the Italian government has been sending any way it can to those forms of media it doesn’t already control—that it will use whatever means at its disposal, including the courts, to intimidate sources it can’t yet regulate.

So in the end it isn’t a case about liability on the Internet so much as a case about the power of new media to challenge governments that aren’t especially interested in free speech.

Internet pundits are right to be outraged and disturbed by the audacious behavior of the government. But they should be more concerned about what this case says about freedom of the press in Italy and less what it says about the future of liability for content hosts.

And what it says about the Internet as a powerful, emerging form of communication that can’t easily be intimidated.

Not surprising, I received a lot of feedback on the post.  In particular, several writers objected to my characterization of the convictions as sending any signal at all.  The judge in the case has yet to publish his findings of fact or his analysis of the law, they argued, so it is premature to say whether the conviction has any implication beyond the need to respond quickly (how quickly?) to takedown requests.

It is true that since the trial details have so far been kept private, it’s unclear what findings the judge made as to how soon Google (the company, by the way, not the executives, who had nothing to do with handling of the video) was informed of the objectionable nature of the video, and by whom, how and when they responded, and how many viewings the video had before being removed.

But those details are irrelevant, as succinctly explained by EFF’s International Outreach Coordinator Danny O’Brien in a piece published on February 27th.   Aside from a non sequitur about Net Neutrality at the end, O’Brien’s article makes a number of excellent points.  In particular, he writes:

The court dismissed the allegation of criminal defamation but upheld a charge of illegally handling personal data on the basis that a video is personal data, and that under EU data protection law, Google needed prior authority before distributing that personal data.

This interpretation of the law means that Google is co-responsible for the legality of content containing the images of persons — before anyone has complained about the content. That effectively means to comply with the decision, any intermediary working within Italy must now pre-screen every piece of video with anyone who appears within it, or risk prosecution. As the judgment stands, it also presents such a wide definition of personal data that it might effectively require that all hosts pre-screen all content be it video, text, audio or data.

(emphasis added)

It is indeed hard to see how the contents of a video can satisfy the definition of personally-identifiable information.  Absent explicitly identifying tags or other meta-data associated with uploaded videos that named the individuals, or the location of the incident being filmed, etc., only those who already know the people in a video could identify them by watching it.  If the contents of raw video are themselves the private information of everyone who appears in them, it’s clear as O’Brien says that there’s no practical way any video or photo-sharing service can maintain its immunity under U.S. or E.U. law.

And that’s game over for the sensible rule that content hosts have any immunity at all.  Even if social network and other content-hosting services could somehow hire enough people to pre-screen everything before posting it, what exactly would they be trained to screen for?  Even the most innocuous content could violate privacy laws in Europe if the participants haven’t signed proper releases, and those are nowhere to be found in the videos themselves.

Several commentators have speculated that anything more than instant removal is unacceptable and should erase the presumption of immunity.  (See, for example, John Naughton of The Observer.) (“And then there’s that awkward matter of the two months it took to take down the video.”)

Even if the length of time was relevant to this case, that too is a dangerous road to travel.  One can think of lots of reasons why companies should be skeptical when asked to remove content by a third party—or even a government entity.  Content that misrepresents, defames, or otherwise violates legal rights is actionable, of course, against the individual committing the violation.  But sometimes the truth hurts, too, and services that host content need some breathing space to investigate complaints to ensure they are legitimate.

Under U.S., law, for example, content hosts must respond “expeditiously” to takedown notices regarding content that infringes a valid copyright or lose their immunity. (Section 512(c) of the Digital Millennium Copyright Act.)   But as the EFF points out, there have been numerous cases of abuse of the takedown provision to suppress information that some third party doesn’t like or to claim copyright violations that aren’t violations at all.  Under Section 512(f), in fact, takedown requests that are not made in good faith can themselves lead to damages against the person making the request.  “Expeditiously” is not defined.

Which is all to say we want to encourage content hosts to investigate objections to content and not blindly and instantly remove it as soon as someone—anyone—complains.

It’s a great honor and pleasure for me to welcome Larry Downes to the TLF. Larry coined the term “Killer App” in his 1998 book, Unleashing the Killer App: Digital Strategies for Market Dominance. He’s written a few great pieces for CNET recently. And you can find our more about him at his website.

His latest book, The Laws of Disruption, was a rare bright spot in a decade of terrible books about technology and revived a venerable tradition of dynamist classics, including his previous book as well as Clayton Christensen’s 1997 book The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail and Virginia Postrel’s 1999 The Future and its Enemies. The Laws of Disruption expresses both optimism about the capacity of ongoing disruptive innovation to improve our lives and a healthy skepticism about regulation—as Adam noted in his 10 Most Important Info-Tech Policy Books of 2009 review.

Larry’s taught technology law (Northwestern) and business (Chicago, UC-Berkeley) over the years and is currently a nonresident Fellow with the Stanford Law School Center for Internet & Society. He’s a terrifically nice guy, a great writer, and a welcome ally in the fight for cyber-freedom.

But I Don't Love You, Elmo

I have decided what my swan song moment in the field of public policy will be. For some time now I’ve been considering retiring from the public policy world since I am really quite sick of political BS in Washington, but I’ve always wanted to go out in style. So, here’s what I plan to do to end my career next week. FCC Chairman Julius Genachowski has just announced that he will be delivering a major policy speech outlining how the agency’s new National Broadband Plan will benefit children and families next Friday at 10:30.  According to the press release, the Chairman will be joined by Sesame Street’s Elmo when making the announcement.

So, here’s my plan… I will go to the event , rush the stage as Genachowski goes up with Elmo, grab Elmo, pull out a fake gun, put it to Elmo’s head, and then shout: “Stop regulating the Net and free speech rights now or the Muppet gets it!”

An ugly scene will no doubt follow in which several of my old friends at Common Sense Media, who are co-hosting the event, will try to talk me down from the cliff by asking me hand over the gun and to “think of the children.” But I’ll rush out the back door of the auditorium with Elmo in tow and escape in my getaway car. (I plan to live in mountains in rural Idaho and skim money off of the FCC universal service fund & the E-Rate program since I know how to rig the system from reading years of GAO reports on fraud and abuse of both!)

OK, so you get that this is all sarcasm, right? I don’t want to Secret Service showing up at my door on the grounds that I am threatening a Muppet.  And I certainly don’t want to live in Idaho. But, seriously, what is the deal with politicians appearing with puppets? That’s always freaked me out a bit. I will never forget attending a congressional hearing about children’s television issues back in 1993 and watching a surreal exchange between Rep. Ed Markey and Lamb Chop, the sock puppet.  Really, a woman with a sock on her hand (Shari Lewis) delivered testimony to Congress. No, seriously, it really happened. Check it out:

File it under “Great Moments in Democracy.”  Sadly, there have been many others like this.

But Elmo, be warned … you are going down my little red friend.

Adam says no, as have Sonia and Wayne. Adam and I have pointed out that the FTC might want to think twice about crippling advertising at a time when it’s needed more than ever—before rushing to the kind of media bailout called for by the neo-Marxists at Free Press. The Onion’s team of leading commentators generally agrees, but points out an under-appreciated dimension of the debate.

How Will The End Of Print Journalism Affect Old Loons Who Hoard Newspapers?

Today I am testifying at an FCC hearing on “Serving the Public Interest in the Digital Era.” [Speaker lineup here.] The purpose of the workshop is to explore:

• A brief history and overview of policies involving “public interest” requirements for commercial media and telecommunications companies;
• The state of local commercial broadcast TV and radio news and information; and
• The impact of media convergence and the emergence of the Internet, mobile technologies, and digital media on FCC media policy.

In my remarks, I focused on “Why Expansion of the FCC’s Public Interest Regulatory Regime is Unwise, Unneeded, Unconstitutional, and Unenforceable.” Down below I have attached my written remarks.

Why Expansion of the FCC’s Public Interest Regulatory Regime is Unwise, Unneeded, Unconstitutional, and Unenforceable

by Adam Thierer

I.       Introduction

Thank you for inviting me here today for this FCC workshop on “Serving the Public Interest in the Digital Era.” I have been asked to discuss “the impact of media convergence and the emergence of the Internet, mobile technologies, and digital media on FCC media policy”[1] on the FCC’s “public interest” regulatory regime.

In my remarks, I will outline both the normative and practical cases against the expansion of “public interest” notions and corresponding regulatory requirements. I will argue that such considerations counsel that the Commission exercise extreme caution as it looks to revise regulations that govern America’s media marketplace.

II.     The Normative Case against Expansion of Public Interest Regulation A.     The Inherent Ambiguity of “the Public Interest” Notion

The normative case against expansion of public interest regulation begins with the fact that this notion has always been haunted by an inherent ambiguity that is fundamentally at odds with America’s First Amendment tradition. Indeed, while public interest regulation has been considered the cornerstone of communications and media policy since the 1930s, at no time during these seven decades has the term been adequately defined.

Former FCC Commissioner Glen Robinson has argued that the public interest standard “is vague to the point of vacuousness, providing neither guidance nor constraint on the agency’s action.”[2] And Nobel Prize-winning economist Ronald Coase argued 50 years ago that “The phrase… lacks any definite meaning. Furthermore, the many inconsistencies in commission decisions have made it impossible for the phrase to acquire a definite meaning in the process of regulation.”[3]

And that is still true today. Simply put, the public interest standard is not really a “standard” at all since it has no fixed meaning; the definition of the phrase has shifted with the political winds to suit the whims of those in power at any given time.

B.      None Dare Call it Elitism

Still, many policymakers continue to prop up public interest notions and regulations in the belief that they are directing the content or character of media toward a nobler end. At times, their rhetoric takes on a fairy-tale quality as lawmakers and regulators speak of the public interest in reverential and fantastic terms, again, all the while deftly evading any attempt to define the term.

But the fundamental problem here is that public interest proponents assume that their values or objectives—which, in their opinion, are consistent with the needs and desires of the public—should ultimately triumph within the public policy arena. Simply stated, what motivates much public interest regulation is a simple desire by some here in Washington to tell the American people what’s best for them.

Worse yet, how the term has been interpreted and applied by the FCC has often depended on the ideological disposition of whatever party is in charge at the time.  As Ford Rowan, author of Broadcast Fairness, once noted: “Many liberals want regulation to make broadcasting do wonderful things; many conservatives want regulation to restrain broadcasting from doing terrible things.”[4] Consequently, during periods of liberal rule, the “public interest” has been seen as a method of politically engineering more “educational” and “community-based” programming. By contrast, in the hands of conservative appointees, the public interest has been seen as an instrument to curb “indecent” speech.

Few have dared to call this elitism—but I will.[5] What else should we call it when a five unelected officials here at the FCC sit in judgment of acceptable media content and dictate media marketplace outcomes? The viewing and listening public, however, has a broad array of interests and desires that cannot be easily gauged by this agency. As media scholar Benjamin Compaine has rightly noted, “[i]n democracies, there is no universal ‘public interest.’ Rather there are numerous and changing ‘interested publics.’”[6]

Perhaps what some are afraid to ask is this: Does the public really want to watch what some policymakers and regulatory advocates consider to be more “culturally enriching” or “civic-minded” content, or would they rather tune into something else? Given the choice, many viewers will opt for what many public interest regulatory supporters would consider to be “low-brow” offerings over the programming that policymakers feel the masses should be consuming. Public interest supporters may bemoan the lack of civic spirit, or claim that this represents the end of our culture as we know it, but these are voluntary choices made by the citizenry that must be respected by government officials. In particular, government should not censor Americans’ choice of content through open-ended public interest regulatory rationales.[7]

C.      There’s More “Public Internet” Content Than Ever Before, But You Can’t Force Citizens to Consume It

Generally speaking, however, the media marketplace traditionally has reflected what the public on average really wants to see and hear. And that’s even truer today. Viewers and listeners are being offered a stunning array of diverse media inputs and options. Just because the American people sometimes make choices that policymakers find distasteful, it does not mean that citizens don’t have good choices at their disposal.

For example, we are blessed to be living in the golden age of children’s video programming.[8] As I have documented in my ongoing PFF special report on Parental Controls & Online Child Protection[9] and in other filings to the Commission,[10] there’s never been more educational and enriching kids programming available to families than there is today. Similarly, consider the stunning diversity of programming available thanks to the 500-plus channel universe of multichannel video options now at our disposal.[11] Almost every conceivable interest or hobby is now covered by a video network.[12]

And is there really any shortage political programming or “civic-minded” content from which to choose?  C-SPAN alone covers more activity in the course of a week than most of us probably came into contact with in our entire lives just 30 years ago. Consider these data points.[13] In the 2009 calendar year, C-SPAN provided the following amount of first run programming across their three channels:

• 8,438 overall hours of programming;
• 2,709 hours of House & Senate floor activity; and,
• 1,222 hours of House & Senate committee hearings.

Moreover, C-SPAN recently created the C-SPAN Video Library,[14] which archives 23 years worth (1987-on) of fully searchable (and free) video content, including:

• 161,000 overall hours of programming;
• 56,600 hours of House & Senate floor activity; and,
• 20,152 of House & Senate committee hearings.

Importantly, many people fail to realize that C-SPAN is a private, non-profit company that is provided as a public service by cable industry contributions. It receives no government or taxpayer contributions. From 1979-2009, total license fees paid by cable & satellite companies to support C-SPAN totaled $922 million.

And let’s not forget about what the Internet has made available to us. It has given us unprecedented access to public affairs information—local, state, national, and international.

But, again, you can’t make people watch, listen, or read if they don’t want to. “Today, the scarce resource is attention, not programming,” notes Ellen P. Goodman of the Rutgers-Camden School of Law. “Given the proliferation of consumer filtering and choice, these kinds of interventions are of questionable efficacy. Consumers equipped with digital selection and filtering tools are likely to avoid content they do not demand no matter what the regulatory efforts to force exposure.”[15]

Absent truly repressive measures to limit choice or alter consumer media consumption patterns, it will be impossible for policymakers to force the masses to pay attention to what they want them to see or hear in an age of abundant media content and unrestricted choice. “[R]egulation cannot, in a liberal democracy, force viewers to consumer media products they do not think they want in the name of the public interest,” argues Goodman.[16] (This dilemma creates additional practical problems for proposals to expand public interest regulation, which will be discussed in Sec. II below.)

D.     Returning to First Principles

Yet now we face the prospect of this arbitrary regulatory regime being expanding to cover more platforms and speech.[17] But, instead of first looking to expand regulation, we should use this as an opportunity to return to first principles—especially in light of the dubious constitutionality of the FCC’s existing public interest regulatory regime.[18]

We should begin by recalling that, from the time of the republic’s founding, public interest regulation has never been applied to newspapers, magazines, pamphlets, or books. Instead, the First Amendment has reigned supreme.[19] And when policymakers attempted to apply such public interest obligations to print media, those edicts were ruled flatly unconstitutional.[20]

The characteristics of broadcast radio and television, however, were considered sufficiently unique to justify a different regulatory approach and second-class citizenship status in terms of First Amendment rights.  Scarcity, of course, was the lynchpin of the regulatory regime imposed on the broadcast industry, and it yielded calls for public interest regulation of the medium. But whatever one thinks of the scarcity rationale for differential treatment of broadcasting—and, personally, I don’t believe it was ever a legitimate excuse for diminished First Amendment treatment—that era of scarcity is clearly over.[21] We now live in an age of information abundance—even information overload.[22] We have more media options and diversity at our disposal today than ever before, and generally at falling prices.[23] And yet, at the Commission, it continues to be business as usual.

The courts, however, have acknowledged that the situation on the ground has changed, and changed radically. When policymakers have sought to expand broadcast-like regulatory requirements to newer media platforms in recent years, the Courts have pushed back. That has particularly been the case for the Internet[24] and video game content.[25] The jurisprudential Twilight Zone will live in today—in which we classify services and determine free speech rights based on technical characteristics or functional features—makes no sense and can’t last for much longer for reasons discussed next.[26]

III.  The Practical Case against Expansion of Public Interest Regulation

Let’s look beyond these normative concerns and instead focus on the practical considerations associated with any effort to expand the horizons of public interest regulation.

A.     The Scale & Volume Problem

As the title of this particular panel quite rightly noted, we now live in an age of media and technological convergence.[27] All bits are coming together.[28] Because convergence is now upon us, media can be distributed instantaneously across numerous platforms. Thus, a regulatory attack on one type of media outlet or technology might necessitate an attack on many other media outlets if it has any hope of being effective.

But how will this work? If we are to achieve regulatory parity in an age of convergence, we must come to grips with the sheer scale of the task at hand. The modern mediasphere is massive—and growing rapidly. Consider some statistics about online media activity:

• 1.73 billion Internet users worldwide as of Sept 2009; an 18% increase from the previous year.[29]
• 81.8 million .COM domain names at the end of 2009; 12.3 million .NET names & 7.8 million .ORG names.[30]
• 234 million websites as of Dec 2009; 47 million were added in 2009.[31] In 2006, Internet users in the United States viewed an average of 120.5 Web pages each day.[32]
• There are roughly 26 million blogs on the Internet[33] and even back in 2007, there were over 1.5 million new blog posts every day (17 posts per second).[34]
• In December 2009, 86% of the total U.S. online population viewed video content.[35] The average online viewer watched 187 videos (up 95 percent from the previous year), while the average video length viewed grew from 3.2 to 4.1 minutes.[36] The majority of online video viewing (52%) occurred at video sites ranked outside of the top 25, suggesting the increased fragmentation of online video and the emergence of sites in the “long tail.”[37]
• YouTube reports that 20 hours of video are uploaded to the site every minute,[38] and 1 billion videos are served up daily by YouTube, or 12.2 billion videos viewed per month.[39]
• For video hosting site Hulu, as of Nov 2009, 924 million videos were viewed per month in the U.S.[40]
• Developers have created over 140,000 apps for the Apple iPhone and iPod and iPad and made them available in the Apple App Store.[41] Customers in 77 countries can choose apps in 20 categories, and users have downloaded over three billion apps since its inception in July 2008.[42] Apple’s iTunes Store has a catalog of 12 million songs, over 55,000 TV episodes, and 8,500 movies. It has sold more than 10 billion songs.[43]
• Social networking giant Facebook reports that each month, its 400+ million users upload more than 3 billion photos, and create over 3.5 million events. More than 3 billion pieces of content (web links, news stories, blog posts, notes, photos, etc.) are shared each week. There are also more than 3 million active Pages on the site.[44]
• There are 10 million edits made to Wikipedia every seven weeks.[45]

• Twitter users send out 50 million tweets per day, an average of 600 tweets per second.[46]
• 4 billion photos hosted by Flickr as of Oct 2009.[47]

Even in “traditional” media sectors, the scale and volume problem is formidable: [48]

• 565 cable TV channels[49]
• over 2,200 broadcast TV stations[50]
• over 13,000 broadcast radio stations[51]
• over 20,000 magazines[52]
• over 276,000 books[53]

In sum, the mediasphere is bigger than ever and it begs the question how the FCC plans to wrap its public interest regulatory tentacles around all of it if analog era regulations are to cover digital era content, platforms, and technologies.

B.      The Definitional Problem: Who’s Covered (or Subsidized?)

Another intractable problem associated with expansion of public interest regulation will arise once policymakers are forced to define who or what counts as a “media entity” or a “journalist” in today’s wide-open media world. And this will be a problem whether public officials are regulating media entities or subsidizing them.

For example, will bloggers be regulated or, conversely, eligible for public media subsidies? Will foreign-owned news entities be regulated or be eligible for support?  What’s the public interest standard that applies to MySpace or Facebook? Are YouTube, Hulu, and Vimeo, and Joost “just like TV stations” and, therefore, regulated like one? There may well be rational ways to make cuts along these lines, but they could raise constitutional questions. Government preferences among speakers or classes of speakers are prior restraints, constitutional sins of the highest order.

Further, it would be just these sorts of choices that would open the door to the most abusive government intrusion into the production of journalism.  It is not hard to imagine that government regulators, even with the best of intentions and acting in the utmost good faith, would, perhaps unconsciously, favor speakers and classes of speakers to whom they felt the closest affinity.  And, because Administrations come and go, as do members of Congress, no particular class of speakers would ever be truly safe — no story would be reported without at least a glance by the author over her shoulder to make sure that she had not offended the “wrong” person.  This is not an approach consistent with a free press reporting to a free people.

C.      Expanded Regulation Will Kneecap Media Providers As They Are Struggling to Reinvent Themselves

Meanwhile, this inquiry comes at a time when many traditional media providers are fighting for their very existence. Audiences are fragmenting. Advertisers are fleeing. Revenues are shrinking.  And yet, again, here we are toying with the idea of expanding regulatory burdens while the media marketplace is experiencing unprecedented upheaval and gut-wrenching creative destruction.

And if the FCC’s intends to simply continue to impose public interest regulations on the narrow set of media operations they currently control—broadcast television and radio—that’s tantamount to the FCC signing a death warrant for those media operators. But, as noted below, any proposal to “spread the pain around” by burdening everyone equally is a recipe for even greater economic catastrophe, and it wouldn’t likely pass constitutional muster in the courts anyway.

This all begs the question: Do traditional media providers really have too much power, or do they actually have too little.  Indeed, the viability of traditional media operators is increasingly in doubt since they lack pricing power and the ability to control when, where, and how their content is delivered and consumed. They no longer have protected geographic markets or “protectable scarcity.” Meanwhile, advertising—the traditional lifeblood of the media sector[54]—is increasingly being subjected to new scrutiny and regulation here in Washington.[55] And copyright infringement has also made monetization more challenging and placed strains on many operators.  Regardless, with traditional media operators in such serious trouble, now certainly isn’t the time to impose new rules and red tape that could hamstring their ability to respond to new competitive pressures.

Perhaps the most destructive set of ideas floating around today are those that would essentially burn the village in order to save it. For example, some regulatory advocates have toyed with ideas like “public interest vouchers,”[56] broadcast spectrum taxes,[57] expanded ownership restrictions or forced media divestiture plans,[58] or even taxes on commercial advertising,[59] consumer electronics, cell phone providers, and ISPs.[60] In each case, the cure would be worse than the disease that ails the body. We’re not going to get a more diverse media marketplace in this country by forcing private media providers to fund their non-commercial or public-subsidized competitors.  While some of these proposals are well-intentioned and aimed at addressing perceived deficiencies in the market for “public interest” content, there are better ways for policymakers to achieve that goal.

IV.  Using Existing Public Platforms to Promote Preferred Content Through a “Public Interest Portal”

Most obviously, support for the Corporation for Public Broadcasting (CPB) could be expanded. However, that should be achieved without skimming funds off of commercial advertising budgets or through “fees” on private media operators. Enhanced support for CPB and non-commercial media in general should be derived from general treasury funds, not special levies on commercial media operators.

If the FCC believes something more must be done to create—or drive citizens to—“public interest” or civic-minded content, the best approach would be for the agency to work with other federal and state entities and leverage existing government platforms and resources to accomplish this task.

Consider how federal agencies are already doing so in an effort to promote Internet safety and security. A dozen federal agencies and several private child safety organizations have collaborated[61] to create the OnGuardOnline.gov website, which “provides practical tips from the federal government and the technology industry to help you be on guard against Internet fraud, secure your computer, and protect your personal information.”[62] Among other things, the effort includes a “Stop-Think-Click” promotion that recommends “Seven Practices for Safer Computing.” In October 2009, OnGuardOnline also released a new online safety resource called Net Cetera: Chatting with Kids about Being Online.[63] This 54-page document, which is being widely distributed by the government (both online and offline), is an outstanding resource for parents and kids.

In a similar vein, the FCC could work with several other agencies to create a massive “Public Interest Portal” that aggregates and promotes the sort of the public interest programming and content that policymakers hope will gain more widespread distribution—whether produced by traditional programmers, niche professionals, or amateurs. The collaborating agencies might even be able to create a downloadable widget or toolbar for use on any web browser that could enable citizens to instantaneously access a wide variety of public interest content. Many organizations already offer similar portals for children’s content. (Examples include: KidZui,[64] Glubble,[65] Browser Buddy,[66] KidRocket,[67] KIDO’Z,[68] Noodle Net,[69] Hoopah Kidview Computer Explorer[70] and Peanut Butter PC.[71]) There’s no reason that model couldn’t be significantly expanded by the FCC and other government agencies if they put their resources behind it.

The success of this approach, of course, is by no means guaranteed since, as noted above, it is impossible to force a free people to consume content they do not demand.  Nonetheless, it would allow the government to at least accomplish the objective it has long sought to achieve through affirmative regulation of commercial media providers: increasing the availability and practical accessibility of public interest programming. Moreover, this approach would have the advantage of not raising serious constitutional objections or burdening commercial media operators with onerous new regulatory requirements or fees. If, however, policymakers reject this approach on the grounds that citizens would still “tune in” to other types of programming first, it would confirm the fundamental elitism that some of us have long suspected truly animates most “public interest” regulatory efforts.

V.    Conclusion: Regulate Up or Deregulate Down?

In light of the considerations addressed above, we must ask: To achieve regulatory parity, should we regulate up or deregulate down? To the extent that technological convergence leads to policy convergence, it should be done in the latter direction. In a world in which scarcity has been overthrown by abundance, we should strike the balance in favor of greater media freedom and stronger First Amendment protections for all speech however it is delivered.[72]

It is vital that the outmoded public interest rationales undergirding the broadcast regulatory regime be discarded, not only to spare broadcasters from more unfair, asymmetrical regulatory restrictions, but also to ensure that this contorted vision of the First Amendment is not extended to other media platforms.[73] While some policymakers and media critics propose extending the broadcast regulatory regime to cover new media outlets and digital technologies,[74] if America is to have a consistent First Amendment in the Information Age, such efforts should be halted and the public interest regulatory regime should be relegated to the ash heap of history.

There are better ways for the Commission and Congress to accomplish “public interest” goals other than by regulating as if it’s still 1934.

[1]       Federal Communications Commission, The Future of Media & Information Needs of Communities: Serving the Public Interest in the Digital Era, Media Advisory, Feb. 12, 2010, http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-296254A1.pdf

[2] Glen O. Robinson, The Federal Communications Act: An Essay on Origins and Regulatory Purpose, A Legislative History of the Communications Act of 1934 3, 14 (Max D. Paglin ed., 1989). Likewise, Lawrence J. White has noted that, “The ‘public interest’ is a vague, ill-defined concept. Under the ‘public interest’ banner the Congress and the FCC have established far too many protectionist, anticompetitive, anti-innovative, inflexible, output-limiting regulatory regimes and have unnecessarily infringed on the First Amendment rights of broadcasters.” See Lawrence J. White, Spectrum for Sale, The Milken Inst. Rev. (June 2001) at 38. See also William T. Mayton, The Illegitimacy of the Public Interest Standard at the FCC, 38 Emory L. J. 715, 716 (1989).

[3] Ronald H. Coase, The Federal Communications Commission, 2 J. L. & Econ. 1, 8–9 (1959). Even supporters of broadcast regulation such as Paul Taylor and Norman Ornstein admit that, “neither in the 1927 [Radio] Act nor in the 1934 [Communications] Act, nor subsequently, did Congress define clearly what actions by broadcasters would represent managing their stations in the public interest.” Paul Taylor & Norman Ornstein, New America Foundation, A Broadcast Spectrum Fee for Campaign Finance Reform, Spectrum Series Working Paper No. 4, (2002) at 6.

[4] Ford Rowan, Broadcast Fairness (Longham, 1984), p. 39.

[5] See Adam Thierer & Berin Szoka, The Progress & Freedom Foundation, What Unites Advocates of Speech Controls & Privacy Regulation?, Progress on Point 16.19, Aug. 11, 2009, www.pff.org/issues-pubs/pops/2009/pop16.19-unites-speech-and-privacy-reg-advocates.pdf. On occasion, even public interest regulatory advocates have admitted this. “One of the dangers in evaluating the media in a public interest framework is that it can easily take on an elitist tone.” David Croteau and William Hoynes, The Business of Media: Corporate Media and the Public Interest (2001) at 151.

[6] Benjamin M. Compaine, The Myths of Encroaching Global Media Ownership, Open Democracy.net, Nov. 6, 2001, at 5, www.opendemocracy.net/content/articles/PDF/87.pdf

[7] See Harry Kalven, Jr., Broadcasting, Public Policy and the First Amendment, J. L. & Econ. 15, 19 (1967) (“The mandate to grant licenses that serve the public [interest]… does not constitute the FCC the moral proctor of the public or the den mother of the audience.”)

[8] Adam Thierer, The Progress & Freedom Foundation, We Are Living in the Golden Age of Children’s Programming, Progress Snapshot 5.6, July 2009, www.pff.org/issues-pubs/ps/2009/pdf/ps5.6-childrens-television-golden-age.pdf.

[9] Adam Thierer, The Progress & Freedom Foundation, Parental Controls and Online Child Protection: A Survey of Tools and Methods, Version 4.0 (2008) (“PFF Parental Controls Report”), www.pff.org/parentalcontrols.

[10] Comments of The Progress & Freedom Foundation and the Electronic Frontier Foundation In the Matter of Empowering Parents and Protecting Children in an Evolving Media Landscape, Federal Communications Commission, MB Docket No. 09-194, Feb 24, 2010, www.pff.org/issues-pubs/filings/2010/2010-02-24-PFF-EFF_Response_to_FCC_Empowering_Parents_Protecting_Children_NOI_MB_09-194.pdf; Adam Thierer, The Progress & Freedom Foundation, Comments in the Matter of Implementation of the Child Safe Viewing Act; Examination of Parental Control Technologies for Video or Audio Programming, Federal Communications Commission, MB Docket No. 09-26, April 15, 2009, www.pff.org/issues-pubs/filings/2009/041509-%5BFCC-FILING%5D-Adam-Thierer-PFF-re-FCC-Child-Safe-Viewing-Act-NOI-%28MB-09-26%29.pdf.

[11] The number of channels available on multichannel video distribution platforms skyrocketed from just 70 in 1990 to 565 in 2006, the last year for which the FCC has released data. Federal Communications Commission, Thirteenth Annual Video Competition Report, MB Docket No. 06-189, Nov. 27, 2007, http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-07-206A1.pdf.

[12] For an up-to-date list, see National Cable & Telecommunications Association, Cable Networks, www.ncta.com/Organizations.aspx?type=orgtyp2&contentId=2907, or Wikipedia, List of United States Cable and Satellite Television Networks,  http://en.wikipedia.org/wiki/List_of_United_States_cable_and_satellite_television_networks.

[13] All C-SPAN data confirmed by Peter Kiley, Vice President, C-SPAN Networks. Also see: Marking 30 Years. Covering Washington Like No Other, www.c-span.org/30Years/default.aspx.

[14] www.c-spanvideo.org/videoLibrary

[15] Ellen P. Goodman, “Proactive Media Policy in an Age of Content Abundance,” in Philip M. Napoli, ed., Media Diversity and Localism: Meaning and Metrics (2007) at 370, 374.  And there is no reason to believe this situation has ever been different or will ever change. Writing in 1922, famed journalist Walter Lippmann noted that, “it is possible to make a rough estimate only of the amount of attention people give each day to informing themselves about public affairs,” but “the time each day is small when any of us is directly exposed to information from our unseen environment.” Walter Lippmann, Public Opinion (1922), p. 53, 57.

[16] Id., at 374.

[17] Among the expanded public interest responsibilities regulatory advocates promote: Controls on speech (indecent or “excessively violent” content); expanding coverage of political campaigns, debates and developments; free (or lower-cost) campaign ad time; expanded “educational” or cultural programming (especially aimed at children); and expanded coverage of community affairs and public service announcements.

[18] See Randolph J. May, The Public Interest Standard: Is It Too Indeterminate to Be Constitutional? 53 Fed. Comm. L. Jour. (May 2001) at 427-68, www.law.indiana.edu/fclj/pubs/v53/no3/may.pdf.

[19] Jonathan Emord, Freedom, Technology and the First Amendment (1991).

[20] Miami Herald v. Tornillo, 418 U.S. 241(1974).

[21] Even FCC officials have acknowledged this. See John W. Berresford, Federal Communications Commission, The Scarcity Rationale for Regulating Traditional Broadcasting: An Idea Whose Time Has Passed, FCC Media Bureau Staff Research Paper No. 2005-2, (March 2005) www.fcc.gov/ownership/materials/already-released/scarcity030005.pdf. Berresford refers to the scarcity rationale as “outmoded,” “based on fundamental misunderstandings of physics and economics,” and “no longer valid.”

[22] See Adam Thierer and Grant Eskelsen, The Progress & Freedom Foundation, Media Metrics: The True State of the Modern Media Marketplace (Summer 2008), www.pff.org/mediametrics; Adam Thierer, The Media Cornucopia, 17 City Journal 2 (Spring 2007) at 84-89, www.city-journal.org/html/17_2_media.html.

[23] See Benjamin M. Compaine, The Media Monopoly Myth: How New Competition is Expanding Our Sources of Information and Entertainment, New Millennium Research Council (2005) www.newmillenniumresearch.org/archive/Final_Compaine_Paper_050205.pdf.

[24] Reno v. American Civil Liberties Union, 521 US 844, 874 (1997); American Civil Liberties Union v. Gonzales, 478 F.Supp.2d 775, 795 (E.D.Pa. 2007).

[25] See, e.g., Video Software Dealers Association v. Schwarzenegger, 556 F.3d 950, 965-967 (9th Cir. 2009); Entertainment Software Ass’n v. Blagojevich, 469 F.3d 641, 652 (7th Cir. 2006); Interactive Digital Software Association, et. al. v. St. Louis County, et. al., 329 F.3d 954 (8 Cir. 2003); American Amusement Machine Association, et al. v. Kendrick, et al., 244 F.3d 572 (7th Cir. 2001); Entertainment Software Ass’n v. Granholm, 426 F Supp 2d 646 (E.D. Mich. 2006); Video Software Dealers Association, et. al. v. Maleng, et. al., 325 F. Supp.2d 1180 (W.D. Wa. 2004).  See generally Adam Thierer, The Progress & Freedom Foundation, Fact and Fiction in the Debate Over Video Game Regulation, Progress on Point 13.7, March 2006, at 13-18 www.pff.org/issues-pubs/pops/pop13.7videogames.pdf (discussing cases striking down state video game laws); Henry Cohen, Constitutionality of Proposals to Prohibit the Sale or Rental to Minors of Video Games with Violent or Sexual Content or Strong Language, Congressional Research Service, U.S. Library of Congress (Jan. 12, 2006), http://digital.library.unt.edu/ark:/67531/metacrs9144/m1/1/high_res_d/.

[26] Adam Thierer, Why Regulate Broadcasting: Toward a Consistent First Amendment Standard for the Information Age, Catholic University Law School, 15 CommLaw Conspectus (Summer 2007) at 431-482; http://commlaw.cua.edu/articles/v15/15_2/Thierer.pdf. Randy May as referred to these artificial distinctions as “techno-functional constructs.” Randolph J. May, Charting a New Constitutional Jurisprudence for the Digital Age, Engage (Oct. 2008) at 109.

[27] Henry Jenkins, founder and director of the MIT Comparative Media Studies Program and author of Convergence Culture: Where Old and New Media Collide, defines convergence as “the flow of content across multiple media platforms, the cooperation between multiple media industries, and the migratory behavior of media audiences who will go almost anywhere in search of the kinds of entertainment experiences they want.” Henry Jenkins, Convergence Culture: Where Old and New Media Collide (2006) at 2.

[28] Nicholas Negroponte, Being Digital (1995).

[29] Royal Pingdom, Internet 2009 in Numbers, Jan. 22, 2010, http://royal.pingdom.com/2010/01/22/internet-2009-in-numbers.

[30] Id.

[31] Id.

[32] Gavin O’Malley, Comcast Taps Hispanic Web Portal, MediaPost News, Online Media Daily, March 8, 2006, www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=40714

[33] Royal Pingdom, supra 29.

[34] David Sifry, The State of the Live Web, April 2007, www.sifry.com/alerts/archives/000493.html

[35] comScore, The 2009 U.S. Digital Year in Review – A Recap of the Year in Digital Marketing 10, Feb. 2010, http://www.comscore.com/Press_Events/Press_Releases/2010/2/comScore_Releases_2009_U.S._Digital_Year_in_Review.

[36] Id.

[37] Id. at 12.

[38] Ryan Junee, Zoinks! 20 Hours of Video Uploaded Every Minute!, Broadcasting Ourselves: The Official YouTube Blog, May 20, 2009, http://youtube-global.blogspot.com/2009/05/zoinks-20-hours-of-video-uploaded-every_20.html

[39] Royal Pingdom, supra 29.

[40] Royal Pingdom, supra 29.

[41] Apple, 140,000 apps at your fingertips. From day one., www.apple.com/ipad/app-store.

[42] Press Release, Apple, Apple’s App Store Downloads Top Three Billion (Jan. 5, 2010), www.apple.com/pr/library/2010/01/05appstore.html.

[43] Press Release, Apple, iTunes Store Tops 10 Billion Songs Sold (Feb. 25, 2010), www.apple.com/pr/library/2010/02/25itunes.html.

[44] Facebook, Statistics, www.facebook.com/press/info.php?statistics (last accessed Mar. 2, 2010).

[45] Katalaveno, Edit growth measured in time between every 10,000,000th edit, en.wikipedia.org/wiki/User:Katalaveno/TBE (last accessed Mar. 2, 2010).

[46] Twitter Blog, Measuring Tweets, Feb. 22, 2010, http://blog.twitter.com/2010/02/measuring-tweets.html.

[47] Royal Pingdom, supra 29.

[48] Statistics derived from various sources, but all can be found in Adam Thierer and Grant Eskelsen, The Progress & Freedom Foundation, Media Metrics: The True State of the Modern Media Marketplace (Summer 2008), www.pff.org/mediametrics.

[49] Federal Communications Commission, Thirteenth Annual Video Competition Report, MB Docket No. 06-189, Nov. 27, 2007, http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-07-206A1.pdf.

[50] Central Intelligence Agency, The World Fact Book, United States, www.cia.gov/library/publications/the-world-factbook/geos/us.html (data is from 2006).

[51] Id.

[52] Magazine Publishers of America, Magazines: The Medium of Action, A Comprehensive Guide and Handbook 2009/10, at 8, www.magazine.org/ASSETS/088C8564EB9E4E978A69B183881AEF58/MPA-Handbook-2009.pdf.

[53] Bowker, Bowker Reports U.S. Book Production Flat in 2007, May 28, 2008, www.bowker.com/index.php/press-releases/526.

[54] “Advertising is the mother’s milk of all the mass media,” Wall Street Journal technology columnist Walt Mossberg has noted. Walter Mossberg, Now You See ‘Em…, SmartMoney.com, June 15, 2000, available at http://web.archive.org/web/20061124235126/http://www.smartmoney.com/mossberg/index.cfm?story=20000615; And Harold L. Vogel, author of Entertainment Industry Economics, the definitive textbook for media market analysts, has noted, “Advertising is the key common ingredient in the tactics and strategies of all entertainment and media company business models. Indeed, it might further be said that advertising has substantively subsidized the production and delivery of news and entertainment throughout the last century.” Harold L. Vogel, Entertainment Industry Economics (Cambridge University Press, 7th Edition, 2007) at 46.

[55] Adam Thierer & Berin Szoka, The Hidden Benefactor: How Advertising Informs, Educates & Benefits Consumers, Feb. 22, 2010, www.pff.org/issues-pubs/ps/2010/ps6.5-the-hidden-benefactor.html; Berin Szoka & Adam Thierer, Targeted Online Advertising: What’s the Harm & Where Are We Heading?, Progress on Point 16.2, April 2009, www.pff.org/issues-pubs/pops/2009/pop16.2targetonlinead.pdf; Berin Szoka & Adam Thierer, Behavioral Advertising Industry Practices Hearing: Some Issues that Need to be Discussed, PFF Blog, June 18, 2009, http://blog.pff.org/archives/2009/06/behavioral_advertising_industry_practices_hearing.html

[56] For example, Robert McChesney and John Nichols advocate a “Citizenship News Voucher” that would give every American adult a $200 voucher to donate money to the non-profit news medium of their choice. Of course, a number of restrictions would apply to eligible entities, including a ban on accepting advertising as a condition of receiving support from the program. Robert W. McChesney & John Nichols, The Death and Life of American Journalism (2010) at 201-6.

[57] For a recent debate on the question of broadcast spectrum taxes, see: Resolved, Broadcasters Should be Charged a Spectrum Fee to Finance Programming in the Public Interest, Pro: Norm Ornstein, Con: Adam Thierer, in Richard J. Ellis and Michael Nelson, Debating Reform: Conflicting Perspectives on How to Fix the American Political System (2010) at 53-69. Also see McChesney & Nichols, supra 56 at 209-10.

[58] For example, Free Press calls for “government incentives to encourage local ownership and media divestiture.” They want to prevent private media operators from attaining greater scale at the exact time they probably need to do so. Instead, they would subsidize those media entities who went non-commercial and disaggregated to become more atomistic. Comments of Free Press In the Matter of News Media Workshops: From Town Crier to Bloggers: How Will Journalism Survive the Internet Age? Federal Trade Commission, Project No. P091200, Nov. 6, 2009, at 21, www.ftc.gov/os/comments/newsmediaworkshop/544505-00027.pdf.

[59] Free Press advocates channeling more money to public media by affixing “a small tax” on private commercial advertising. Comments of Free Press In the Matter of News Media Workshops: From Town Crier to Bloggers: How Will Journalism Survive the Internet Age? Federal Trade Commission, Project No. P091200, Nov. 6, 2009, at 18, www.ftc.gov/os/comments/newsmediaworkshop/544505-00027.pdf.

[60] McChesney & Nichols, supra 56 at 210-11. They advocate a 5% tax on consumer electronics and a 3% tax on monthly cell phone bills to channel money into a massive new “public works” program for the press.

[61] www.onguardonline.gov/about-us/overview.aspx

[62] www.onguardonline.gov/default.aspx

[63] www.onguardonline.gov/pdf/tec04.pdf

[64] www.kidzui.com

[65] www.glubble.com

[66] www.buddybrowser.com

[67] http://kidrocket.org

[68] www.kidoz.net

[69] www.noodlenet.com

[70] www.hoopah.com

[71] www.peanutbuttersoftware.com

[72] Brian C. Anderson & Adam D. Thierer, A Manifesto for Media Freedom (2008).

[73] See Adam Thierer, Why Regulate Broadcasting: Toward a Consistent First Amendment Standard for the Information Age, Catholic University Law School, 15 CommLaw Conspectus (Summer 2007) at 431-482; http://commlaw.cua.edu/articles/v15/15_2/Thierer.pdf; Adam Thierer, FCC v. Fox and the Future of the First Amendment in the Information Age, Engage (Feb. 2009) www.fed-soc.org/doclib/20090216_ThiererEngage101.pdf.

[74] See Adam Thierer, The Progress & Freedom Foundation, Thinking Seriously about Cable and Satellite Censorship: An Informal Analysis of S. 616, The Rockefeller-Hutchison Bill (2005) www.pff.org/issues-pubs/pops/pop12.6CableCensorship.pdf; Robert Corn-Revere, The Progress & Freedom Foundation, Can Broadcast Indecency Regulations Be Extended to Cable Television and Satellite Radio? (2005) www.pff.org/issues-pubs/pops/pop12.8indecency.pdf.

Adam Thierer (PFF) Remarks at FCC Hearing on Public Interest in Digital Era (3-4-10)

Progress Snapshot 6.6, The Progress & Freedom Foundation (PDF)

Mobile broadband speeds (at the “core” of wireless networks) are about to skyrocket—and revolutionize what we can do on-the-go online (at the “edge”).  Consider four recent stories:

1. Networks: MobileCrunch notes that Verizon will begin offering 4G mobile broadband service (using Long Term Evolution or LTE) “in up to 60 markets by mid-2012″—at an estimated 5-12 Mbps down and 2-5 Mbps up, LTE would be faster than most wired broadband service.
2. Devices: Sprint plans to launch its first 4G phone (using WiMax, a competing standard to LTE) this summer.
3. Applications: Google has finally released Google Earth for the Nexus One smartphone on T-Mobile, the first to run Google’s Android 2.1 operating system.
4. Content: In November, Google announced that YouTube would begin offering high-definition 1080p video, including on mobile devices.

While the Nexus One may be the first Android phone with a processor powerful enough to crunch the visual awesomeness that is Google Earth, such applications will still chug along on even the best of today’s 3G wireless networks.  But combine the ongoing increases in mobile device processing power made possible by Moore’s Law with similar innovation in broadband infrastructure, and everything changes: You can run hugely data-intensive apps that require real-time streaming, from driving directions with all the rich imagery of Google Earth to mobile videoconferencing to virtual world experiences that rival today’s desktop versions to streaming 1080p high-definition video (3.7+ Mbps) to… well, if I knew, I’d be in Silicon Valley launching a next-gen mobile start-up!

This interconnection of infrastructure, devices and applications should remind us that broadband isn’t just about “big dumb pipes”—especially in the mobile environment, where bandwidth is far more scarce (even in 4G) due to spectrum constraints.  Network congestion can spoil even the best devices on the best networks.  Just ask users in New York City, where AT&T has apparently just stopped selling the iPhone online in order to try to relieve AT&T’s over-taxed network under the staggering bandwidth demands of Williamsburg hipsters, Latter-Day Beatniks from the Village, Chelsea boys, and Upper West Side Charlotte Yorks all streaming an infinite plethora of YouTube videos and so on.

Unfortunately, the “neutralists” think that regulation, rather than innovation, is the better solution to dealing with the constant tension between the capacities of networks and the bandwidth demands of new applications.  But as Adam Thierer noted in making the The 5-Part Case against Net Neutrality Regulation in his debate last week with Ben Scott of the radical “media reform” advocacy group “Free Press”:

Innovation at the core of networks is every bit as important as innovation at the edge: We don’t want stagnation at the core or networks, and the applications that ride on them, will suffer.

Funding the Future of Broadband

All this begs the critical question: What funds the networks of the future? What policies need to be in place to make sure they are delivered? If we believe Free Press and other pro-regulatory forces backing the FCC’s pending plan to impose Net neutrality regulation, freezing innovation at the core through “common carriage” regulation is the best way to ensure greater network innovation and investment.  That’s essentially the argument they advanced in their filing to the FCC in the net neutrality proceeding (summarized here).  Does that make any sense? When was the last time increased regulation of anything led to increased investment and innovation in this or any other sector?

Importantly, the sort of mandatory dumb pipe approach that Free Press and the FCC favor would limit potentially beneficial forms of network experimentation with new approaches to delivering bits in a more rapid, more reliable, or more secure fashion.  Free Press apparently thinks speedy, reliable and secure networks just magically appear, like manna falling from heaven.  But networks don’t get built thanks to divine intervention or magic tricks.  Someone actually has to convince investors and shareholders to invest billions in risk capital on what are essentially high-tech crap-shoots.

Will massive investments in LTE or WiMax 4G wireless networks pay off as carriers compete with each to attract customers? That’s a very risky bet, since consumer wireless broadband service prices aren’t set by the cost of the networks but by what the market will bear: How much would you pay per month for a mobile data service capable of running applications that just aren’t feasible in today’s mobile environment?  That probably depends on whether there’s a “killer app” to make the greater speed of 4G plans worth the premium over 3G.  So, why would network operators try to strangle innovation at the applications layer (as Free Press fears)?  Faster web browsing is great, but what will really make buying a 4G phone and service plan worth the price premium are innovative mobile applications like mobile Google Earth, Microsoft’s Photosynth, 3-D gaming, immersive virtual worlds, and so on.

Rolling the dice on multi-billion dollar next-generation networks becomes an even scarier proposition once regulatory risk is factored into the equation.  Would you like to be the guy who has to convince your board, your employees, your shareholders, and the rest of the world that a multi-year, multi-billion investment in a commercially unproven technology is worth the risk when you have an FCC ready to wrap its tentacles around those networks and apply vague, open-ended regulatory notions like “Net neutrality” to them?

Consider recent innovations announced by Verizon and Google.

Verizon’s 10Gbps Super-Fast Fiber Demonstration

Verizon recently conducted a successful field-test of a passive optical network system known as XG-PON “that can transmit data at 10 Gbps) downstream and 2.4 Gbps upstream, four times as fast as the current top transmission speeds supporting the company’s all-fiber FiOS network.” Brian Whitton, executive director of access and video technologies at Verizon said, “This further validates our strategic choice of fiber-to-the-premises as the best way to build a future-proof network.”  It certainly does—assuming you can recoup the initial cost of building and deploying that network. But regulation which treats such advanced networks as nothing more than dumb pipes would undercut such innovations by dampening the incentive to further invest and innovate in this fashion.

That’s not to say Verizon and other network operators will need to block traffic or betray “neutrality” principles as Free Press fears.  Even today, Verizon has done what Free Press seems to think would never happen without regulation: Verizon recently announced it would begin allowing users to place Skype calls directly over the 3G network (which was previously only possible on Verizon phones over a Wi-Fi network).  As the Los Angeles Times explained:

By embracing Skype, Verizon is betting that any revenue it might lose from customers downgrading their voice-calling plans will be more than made up by added sales of data plans and a share of the revenue from Skype subscriptions.

So Verizon gets a cut of the revenue—so what?  How, exactly, is this obviously non-neutral deal bad for consumers?

Verizon’s Deal with HBO & TV Everywhere

The Los Angeles Times mentions another deal cut by Verizon that should illustrate just how important innovation is at the business model layer—i.e., in figuring out how to support the content and services taken for granted by users.  In response to the accelerating shift of consumers towards “cutting the video cord” as Internet-delivered video has become a more clear alternative to traditional cable or satellite video service, HBO has cut a deal with Verizon to make its content available to FiOS subscribers just as it does with other cable operators.

Again, this is exactly the kind of partnership that may be needed to sustain content production in a world where the traditional cable model is breaking down quickly.  Yet, for all their talk about the need for “new business models,” Free Press wants to ban this sort of innovation.  When the cable industry has attempted to expand upon the model of its deal with HBO to give subscribers online access to a far wider range of video programming through “TV Everywhere” service, Free Press has accused the cable industry of “Colluding to Kill Online TV” and demanded immediate antitrust action and “structural rules like compulsory licenses.”

Google’s 1Gbps Fiber Pilot Project

While Verizon’s December announcement about 10-Gbps FiOS speeds drew relatively little attention, Google generated lots of excitement when it announced earlier this month that it would build a 1 Gbps fiber network to serve up to 500,000 customers.  Google says it’s not entering the broadband business but considers this a “business model nudge and an innovation nudge.”[4] If it succeeds in raising the bar for broadband service and demonstrating what users could do with greater bandwidth, great!

But let’s not forget that the economic engine that drives Google (and will cross-subsidize this experiment) is advertising, which is under fierce attack.  Verizon and other Internet Service Providers (ISPs), by contrast, have to rely on subscription revenues to not just to pay the costs of that infrastructure but also the risk premium associated with building out new, faster networks in advance of consumer demand.  Unfortunately, all the recent hysteria about the use of “deep packet inspection” for behavioral advertising seems to have made it very unlikely that ISPs will be able to supplement subscription revenue with ad dollars any time soon.  But that’s exactly the kind of business model innovation that could defray some of the costs of deploying 4G wireless or super-fast fiber networks.

Even with the cross-subsidy of advertising for this promising pilot project, Google’s high hopes may be wrecked again by the same kind of extortionary demands that have long faced cable operators (and, more recently, fiber competitors) when dealing with local governments.  Google faced just such absurd demands with its municipal Wi-Fi scheme in San Francisco, ultimately helping to crater the deal.

A Framework for Promoting Openness, Investment & Innovation

Google and Verizon are, of course, just two of the many key players operating at the cutting edge—and convergence of—infrastructure, devices, applications and content technologies and business models.  But the two companies seem to have found common ground in working together—perhaps through their high profile partnership to make Motorola’s Droid handset, which runs Google’s Android operating system, the flagship of Verizon’s smartphone offerings.

Most notably, the two companies managed to work through most, though not all, their differences on the deeply divisive issue of net neutrality to forge a common set of principles for how to address technical disputes about network management: through self-regulation, especially through expert technical bodies like IETF, “with governmental involvement limited to dealing with bad actors on a case-by-case basis where industry mechanisms are unable to resolve conduct that is anticompetitive and harms consumers.” These principles, presented to the FCC in January, provide a clear alternative to the kind of “prophylactic” regulatory regime of full-blown “line-sharing” or “forced-access” mandates contemplated by Free Press.  These principles are also strongly reminiscent of the consensus proposal reached by a non-partisan group of 50 lawyers, economists, engineers and others PFF brought together in 2005-6 in the Digital Age Communications Act (DACA) project: Address actual harms through case-by-case adjudication ex post under the consumer welfare standard of antitrust law. Perhaps it’s time to dust off DACA as a “third way” on net neutrality.

Innovation at the Core Drives Innovation at the Edge (& Vice Versa)

“With a few notable exceptions, the tech industry seems unwilling to regulate itself. I will introduce legislation that will require Internet companies to take reasonable steps to protect human rights, or face civil and criminal liability.” – Senator Dick Durbin, as reported by the Washington Post.

We hear you, Sen. Durbin. The practices of many nations toward free speech and political dissidents are terribly wrong. But we respectfully and strongly disagree with your statements at yesterday’s Senate Judiciary hearing on global Internet freedom and the rule of law.

The growth of IT companies throughout the world has been an enormous boon to free speech and human rights. Although these technologies present new challenges, particularly when taken together with widely varying laws, they are doing far more good than harm, everywhere that they are deployed.

But if you attended the hearing and knew nothing about the Internet, you’d think that American online companies doing business in China and elsewhere were pure evil – as if they were the ones with the power to not comply with – or change — the criminal laws of other nations.

In particular, Facebook and Twitter were called out for not joining the Global Network Initiative (GNI). The product of more than two years of study and development by companies and public interest groups, the Initiative offers a set of guiding principles for global IT companies doing business in an increasingly global environment.

But while the GNI exposes online companies to new scrutiny, it doesn’t provide any protection from aggressive governments. And at a price tag of $200,000, the GNI isn’t cheap. How effective will it be, really, at changing the practices of totalitarian nations? This is the real goal, and it seems that the best way to achieve this is through diplomacy among governments, not by deputizing online companies to be our State Department.

Which brings us to the real question (first raised in this NY Times LTE): In a China with no American content or online services, will the goals of free speech and civil rights be better served? We’re right to focus on the human rights abuses of other nations and how online companies can better promote free expression, but let’s place the object of the scorn where it truly belongs.

Very cool little video here by Jess3 documenting Internet growth and activity. Ironically, Berin sent it to me as Adam Marcus and I were updating the lengthy list of Net & online media stats you’ll find down below. Many of the stats we were compiling are shown in the video. Enjoy!

• 1.73 billion Internet users worldwide as of Sept 2009; an 18% increase from the previous year.[1]
• 81.8 million .COM domain names at the end of 2009; 12.3 million .NET names & 7.8 million .ORG names.[2]
• 234 million websites as of Dec 2009; 47 million were added in 2009.[3] In 2006, Internet users in the United States viewed an average of 120.5 Web pages each day.[4]
• There are roughly 26 million blogs on the Internet[5] and even back in 2007, there were over 1.5 million new blog posts every day (17 posts per second).[6]
• In December 2009, 86% of the total U.S. online population viewed video content.[7] The average online viewer watched 187 videos (up 95 percent from the previous year), while the average video length viewed grew from 3.2 to 4.1 minutes.[8] The majority of online video viewing (52%) occurred at video sites ranked outside of the top 25, suggesting the increased fragmentation of online video and the emergence of sites in the “long tail.”[9]
• YouTube reports that 20 hours of video are uploaded to the site every minute,[10] and 1 billion videos are served up daily by YouTube, or 12.2 billion videos viewed per month.[11]
• For video hosting site Hulu, as of Nov 2009, 924 million videos were viewed per month in the U.S.[12]
• Developers have created over 140,000 apps for the Apple iPhone and iPod and iPad and made them available in the Apple App Store.[13] Customers in 77 countries can choose apps in 20 categories, and users have downloaded over three billion apps since its inception in July 2008.[14] Apple’s iTunes Store has a catalog of 12 million songs, over 55,000 TV episodes, and 8,500 movies. It has sold more than 10 billion songs.[15]
• Social networking giant Facebook reports that each month, its 400+ million users upload more than 3 billion photos, and create over 3.5 million events. More than 3 billion pieces of content (web links, news stories, blog posts, notes, photos, etc.) are shared each week. There are also more than 3 million active Pages on the site.[16]
• There are 10 million edits made to Wikipedia every seven weeks.[17]
• Twitter users send out 50 million tweets per day, an average of 600 tweets per second.[18]
• 4 billion photos hosted by Flickr as of Oct 2009.[19]

[1] Royal Pingdom, Internet 2009 in Numbers, Jan. 22, 2010, http://royal.pingdom.com/2010/01/22/internet-2009-in-numbers.

[2] Id.

[3] Id.

[4] Gavin O’Malley, Comcast Taps Hispanic Web Portal, MediaPost News, Online Media Daily, March 8, 2006, www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=40714

[5] Royal Pingdom, supra.

[6] David Sifry, The State of the Live Web, April 2007, www.sifry.com/alerts/archives/000493.html

[7] comScore, The 2009 U.S. Digital Year in Review – A Recap of the Year in Digital Marketing 10, Feb. 2010, http://www.comscore.com/Press_Events/Press_Releases/2010/2/comScore_Releases_2009_U.S._Digital_Year_in_Review.

[8] Id.

[9] Id. at 12.

[10] Ryan Junee, Zoinks! 20 Hours of Video Uploaded Every Minute!, Broadcasting Ourselves: The Official YouTube Blog, May 20, 2009, http://youtube-global.blogspot.com/2009/05/zoinks-20-hours-of-video-uploaded-every_20.html

[11] Royal Pingdom, supra.

[12] Royal Pingdom, supra.

[13] Apple, 140,000 apps at your fingertips. From day one., www.apple.com/ipad/app-store.

[14] Press Release, Apple, Apple’s App Store Downloads Top Three Billion (Jan. 5, 2010), www.apple.com/pr/library/2010/01/05appstore.html

[15] Press Release, Apple, iTunes Store Tops 10 Billion Songs Sold (Feb. 25, 2010), www.apple.com/pr/library/2010/02/25itunes.html.

[16] Facebook, Statistics, www.facebook.com/press/info.php?statistics (last accessed Mar. 2, 2010).

[17] Katalaveno, Edit growth measured in time between every 10,000,000th edit, en.wikipedia.org/wiki/User:Katalaveno/TBE (last accessed Mar. 2, 2010).

[18] Twitter Blog, Measuring Tweets, Feb. 22, 2010, http://blog.twitter.com/2010/02/measuring-tweets.html.

[19] Royal Pingdom, supra.