Year: 2012

Why Genachowski’s Cybersecurity Initiative Is So Radical (In A Good Way)

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When people think of “cybersecurity,” they usually think about the big stuff like Iranian hackers bringing down the power grid or master criminals hacking Bank of America. We associate it with the Department of Homeland Security (DHS) and institutions generally clustered around the military. When its gets down to the individual consumer level, we usually think of it as something entirely different, like “identity theft.” To the extent we think of any federal agency involved with protecting consumers from such “cyberfraud,” we usually think of the Federal Trade Commission (FTC) going after businesses for failing to disclose that the free game you just downloaded to your smart phone will also track your location so that the folks at Target can text you when you get within 500 yards.

This has two unfortunate results. The first is that the “cybersecurity establishment” generally does not trouble itself about things like privacy or ease of use or general consumer habits. If anything, they think of users as part of the problem. Cybersecurity in this regard works like airport security. Just accept the loss of privacy and overall inconvenience as the price of security – even if it makes you much less likely to fly. After all, the mandate of the cybersecurity experts is security and protection, not promoting broadband.

The second unfortunate result is to treat consumers either as helpless victims or part of the problem. But in either case, no one thinks they have anything useful to contribute on the subject.

Which is what makes the Federal Communications Commission’s (FCC) new cybersecurity initiative so important, and Chairman Julius Genachowski’s speech last Wednesday such a radical and welcome addition to the cybersecurity discussion.  The approach outlined by Genachowski, if followed, promises to address three key security weaknesses in the Internet in a way that actually works with the underlying principles that have made the Internet such a widespread success for everyone from the most unsophisticated end user to the most sophisticated tech giant: voluntary consensus, openness, and ease of use. By leveraging the strengths of the network to help overcome the vulnerabilities of the network, the FCC can do a lot to improve cybersecurity while simultaneously fulfilling its statutory mandates to protect consumers and promote broadband adoption and use.

More below . . .

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Spectrum Auction Theory v. Competition Theory

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As I’ve previously reported, Congress is weighing spectrum legislation as part of the Payroll Tax Holiday and Everything Else extension. One critical change pushed by House Republicans (with the enthusiastic support of AT&T, surprise surprise . . .) involves whether the FCC should be able to keep companies that have a lot of spectrum (AT&T and Verizon) from bidding on some licenses in the future. This is called “eligibility restrictions” (i.e., are you eligible to bid in the auction or not). The FCC has authority to impose eligibility restrictions now, but generally doesn’t. As the spectrum gap between AT&T and Verizon and everyone else in the wireless world gets bigger, however, there is some talk of possibly bringing them back.

Needless to say, AT&T and its supporters think this is both unfair and bad policy. Others, such as the folks at T-Mobile (now no longer being absorbed into the Bell Borg) have responded to the fairness argument.  For myself, I am always deeply suspicious whenever incumbents start arguing about “fairness,” as it usually means “please consider this particular detail in a total vacuum without ever thinking about all the unfair advantages I have, and use my framing because I appeal to basic values and use sports metaphors like ‘level playing field.'”  But lets set that aside and do the cold-hearted  policy wonk think. As Paul Krugman occasionally likes to say “economics is not a morality tale.” And in any event, even if we decided this on “fairness,” we’d still want to know the right answers and outcomes, right?

Two usual policy arguments are advanced for no eligibility restrictions. The first is that “auctions put spectrum in the hands of those who will use it most efficiently.” The second is that auctions with open participation increase total revenue. Lets pretend for a moment the first statement is true. Based on this, I shall prove below that not only does open participation decrease revenue, but it creates a serious conflict with competition policy. If we maximize auction efficiency, it is inevitable that the largest players will win the majority of the licenses and that this problem will grow worse over time.

So meet below the line for a video blog explaining this and some serious policy trade off discussions . . . .

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The Keystone XL Pipeline — A project IG-Farben would be proud of

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You’ve heard of the Keystone tar-sands pipeline by now. You may not have heard that the Reactionary Right in the U.S. Senate is attempting to revive it yet again, after their last gambit failed.

We must not let this happen.

The Keystone XL Pipeline is planetary arson and intergenerational crime on an unprecedented scale.(PDF)

The arguments in its favor are all specious. At best, they are ignorant. At worst, they are dishonest and immoral.

Let me just address one of these arguments: jobs. Proponents of the pipeline say it will create jobs for Americans. And surely it will. Construction jobs that will disappear once the pipeline has been built. The permanent jobs created by this project will be in Canada. More importantly, since the pipeline itself is immoral, all jobs associated it will be morally tainted. The Holocaust created jobs too, remember. There were good jobs for chemical engineers and plant managers at IG Farben, where Zyklon-B gas was manufactured for shipment to Auschwitz and other well-engineered murder factories and crematoria.

If you find this rhetoric over-the-top, I respectfully suggest that you read up on the climate-change impact of this one project and ponder its implications. And then consider the risks of permanent damage to the Ogallala aquifer.

Please sign this petition now, and then pick up the phone and call your Senators. It won’t take long, and stopping Keystone is at least as important as stopping SOPA, PIPA and ACTA.

 

“A false sense of precision”

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“Whenever you hear the term ‘Darwinian’ from anyone other than historians of science, assume the crash position; it’s going to get real ugly.”

The quote is from a blogger known as Mike the Mad Biologist. The title of the post is When Economists Misunderstand Biology, an entry he wrote in response to economist Russ Roberts’ piece called What is economics good for?. In Roberts’ opening paragraph, he refers to his previous argument that macroeconomics is “deeply flawed and not a science”. He goes on to describe that economist Friedrich Hayek (the original anti-Keynesian) felt that to label economics a science gave “a false sense of precision and understanding.”
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RIAA — Take Us Back To The Days of Illegal Price Fixing.

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One final point about Recording Industry Association of America (RIAA) CEO Cary Sherman’s NYT Op Ed on “how the Internets did us wrong.” Mr. Sherman notes that:

They [Congress] knew that music sales in the United States are less than half of what they were in 1999, when the file-sharing site Napster emerged, and that direct employment in the industry had fallen by more than half since then, to less than 10,000.

There are two caveats here worth noting. The first is that when Mr. Sherman talks about sales and the “music industry” generally he means his organization’s members — specifically the four (soon to be three) “major labels” and all of their various sub-labels and subsidiaries.

This is important because in 1999, according to the Federal Trade Commission (FTC), the major labels were engaged in an illegal price fixing scheme. The major labels agreed to discontinue their price-fixing practices as part of settlement decree in May 2000. Not surprisingly, once the major labels stopped violating antitrust law, their artificially inflated profits declined and independent competitors saw a significant rise in profits.

Needless to say, as part of the general magical thinking problem of the industry, Mr. Sherman and his fellows don’t believe the loss of their stranglehold on industry distribution and the rise of competitors (online and offline) has anything to do with their fading fortune. No, it is all that evil Napster and its wicked legacy of Internet piracy. But any legislators and policymakers who expect to be taken seriously ought to seriously consider using a benchmark other than the period from 1995-2000. It would be embarrassing for those not explicitly in the pay of the music industry to believe that it is the responsibility of government to return the industry to glory days of price fixing and monopoly profits.

Stay tuned . . . .

Mr. Sherman’s Magical Thinking

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I am always impressed with the utter unwillingness of the Entertainment industry to acknowledge the world as it actually is, rather than the world as they want it to be. Perhaps it is a side effect of being in the business of ‘selling dreams.’ In any event, I could not help but marvel at Carey Sherman’s recent New York Times Op Ed “What Wikipedia Won’t Tell You.” Even for the Entertainment Industry, it is astounding. It actually crosses the boundary from an industry-centric bias to outright magical thinking.

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AT&T, Anger Management and Spectrum Legislation

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Based on recent statements, it’s hard to tell whose angrier at the Federal Communications Commission (FCC) and its Chair, Julius Genachowski: AT&T’s Upper Management or the House Commerce Committee Republicans. Mere mention of Genachowski’s name converts House Commerce Committee Republicans, such as Telecom Subcommittee Chair Greg Walden (R-OR), from urbane sophisticated legislators into sputtering mad parodies of Elmer Fudd.  “Oooh that wascally Chaiwman! Always wegulating the fwee market! I’ll fix his wagon!” Meanwhile, AT&T CEO Randal Stephenson devoted the main part of his recent earnings call to repeating variations on “Juliuth, you’re desthpicable.”

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What The SOTU “Piracy” Reference Means: Back In The USTR With Special 301 and The Trans-Pacific Partnership Agreement.

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It don’t take much to excite the Twitterverse. Obama makes a passing reference to intellectual property enforcement as a sop to the MPAA by saying foreign piracy hurts trade, and my reader explodes with “Obama’s flipping on PIPA/SOPA! Betrayal!” While I have no reason to believe that the Administration is backing away from its current hardline position against PIPA/SOPA, it doesn’t have to in order to show MPAA some love (and remind them this is a long-term game with many fronts and that they depend on the federal government for enforcement — something to think about when considering whether to go through with the threats to cut off campaign contributions).

On the other hand, the fact that it does not require new policy, merely continuation of existing policy, should be just as disturbing for anyone who cares about Internet freedom and burdens on innovation. (I exclude from this concern the proposed beefed up task force for intercepting counterfeit goods until we hear more. If it focuses on stopping delivery of counterfeit goods at the border, then excellent! That is exactly the kind of enforcement we need to keep things like fake heart medicine out of the country. OTOH, if they try to make ICE-style seizures of domain names on dubious pretexts, then we got problems.)

What the President was talking about, and how to stop the People Who Brought You SOPA from getting what they want through the back door of trade agreements, below . . . .

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The PIPA Aftermath — Will Senate Democrats Drive Off A Cliff For Hollywood?

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One of the more surprising developments in PIPA/SOPA politics has been the transition of Hollywood-backed legislation from a bipartisan issue with both Republican and Democratic proponents and opponents to a partisan issue. Democrats (particularly Senate Democrats) are increasingly identified as supporting the legislation and Hollywood while Republicans increasingly frame this as an exercise in big government and crony capitalism.

On the one hand, this seems remarkably unfair given that Democratic Senator Ron Wyden (D-OR) was the first Senator to oppose PIPA and one of the chief architects of the bipartisan alliance of Senators and Representatives that kept PIPA/SOPA from advancing to the point of no return. It also ignores the role the Obama Administration played in legitimizing and galvanizing anti-PIPA/SOPA efforts (including the SOPAStrike web blackout) by strongly opposing PIPA/SOPA before the SOPAStrike, despite the naked threats of Hollywood moguls to punish the Obama campaign by cutting off any further contributions.

But too many Senate Democrats seem intent on handing Republicans a partisan victory. Whereas even Republican champions such as Rep. Lamar Smith (R-TX) and Rep. Marsha Blackburn (R-TN) have acknowledged “legitimate concerns” of opponents and have “shelved” SOPA so that it can be “scrapped” and a new approach developed, high profile Senate Democrats continue to insist that they will press on against what they regard as unwarranted opposition motivated either by financial interest, disinformation, or political opportunism. Indeed, PIPA author Senator Pat Leahy (D-VT) used his opening floor speech yesterday to chastise Republicans for their opposition to PIPA and his hope that, now that Republicans are back in Washington and away from all those annoying constituents protesting PIPA, they will return to the True Path of Reason — which lies in fanatically embracing any legislation that gets the MPAA seal of approval.

Which brings us to the interesting question for the legislative season: will prominent Senate Democrats chose to make this the issue on which they will drive the Democratic Party generally off a cliff by continuing to try to “sell” PIPA/SOPA, thus embracing Republican charges of a “culture of corruption” and “crony capitalism?” Or will they finally come to their senses and publicly embrace those like Wyden who insist that measures directed against online infringement must not also threaten free speech and innovation?

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An Astounding Week In PIPA/SOPA Comes To A Close

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Today brought a dramatic conclusion to an extraordinary week and the culmination of months of amazing activism on PIPA/SOPA. A month ago, hardly anyone had heard of PIPA and a few more had heard of SOPA and its passage was regarded as virtually assured. Today, Harry Reid (D-NV) finally threw in the towel and called off Tuesday’s scheduled cloture vote. In the House, Lamar Smith and Marsha Blackburn, the last SOPA holdouts, threw in the towel and promised to go back to drawing board and totally rework their approach. Yes, the ill-grace with which the chief Democratic architects of PIPA in the Senate have responded, coupled with Chris Dodd’s increasing resemblance to Muppet Movie villain Tex Richman by openly threatening on Fox News to stop campaign contributions to any politician who didn’t keep pushing PIPA, make it clear PIPA’s sponsors (in both the legislative and financial sense) are as utterly unrepentant as they are in common sense. So yes, they will come back and try again and all the usual caveats that responsible people seem compelled to add to any moment of real triumph.

To which I say, feh. We can celebrate until at least Monday. No, we have hardly solved all the problems of our democracy, or even prevented the Entertainment industry from coming back to try again. However, “the work is not for you to finish, but nor are you free to set it aside.” (Pirkei Avot 2:21) Or, in the words of Matthew 6:34: “sufficient unto the day is the evil thereof.” It would be a poor world indeed where no victory is every enough, where all we see when we look ahead are the challenges and all we see when we look behind are our defeats. So let us celebrate with a whole heart, because in a mere 3 days we accomplished something wonderful.
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