The Market for Privacy Lemons. Why “The Market” Can’t Solve The Privacy Problem Without Regulation.

Practically every week, it seems, we get some new revelation about the mishandling of user information that makes people very upset. Indeed, people have become so upset that people are actually talking about, dare we say it, “legislating” some new privacy protections. And no, I don’t mean “codifying existing crap while preempting the states.” For those interested, I have a whitepaper outlining principles for moving forward on effective privacy legislation (which you can read here). My colleagues at my employer Public Knowledge have a few blog posts on how Congress ought to respond to the whole Facebook/Cambridge Analytica thing and analyzing some of the privacy bills introduced this Congress.

 

Unsurprisingly, we still have folks who insist that we don’t need any regulation and that if we don’t have a market that provides people with privacy protection, it must be because people don’t value privacy protection. After all, the argument goes, if people valued privacy, people would offer services that protect privacy. So if we don’t see such services in the market, people must not want them. Q.E.D. Indeed, these folks will argue, we find that — at least for some services — there are privacy friendly alternatives. Often these cost money, since you aren’t paying with your personal information. This leads some to argue that it’s simply that people like “free stuff.” As a result, the current Administration continues to focus on finding “market based solutions” rather than figuring out what regulations would actually give people greater control over their personal information, and prevent the worst abuses.

 

But an increasing number of people are wising up to the reality that this isn’t the case. What folks lack is a vocabulary to explain why these “market approaches” don’t work. Fortunately, a Nobel Prize winning economist named George Akerlof figured this out back in the 1970s in a paper called the Market for Lemons. Akerlof’s later work on cognitive dissonance in economics is also relevant and valuable. (You can read what amounts to a high level book report on Akerlof & Dickens “The Economics of Cognitive Dissonance” here.) To summarize: everyone knows that they can’t do anything real to protect their privacy, so they either admit defeat and resent it, or lie to themselves that they don’t care. A few believe they can protect themselves via some combination of services and avoidance I will call the “magic privacy dance,” and therefore blame everyone else for not caring enough to do their own magic privacy dance. This ignores that (a) the magic privacy dance requires specialized knowledge; (b) the magic privacy dance imposes lots of costs, ranging from monthly subscription to a virtual private network (VPN) to opportunity cost from forgoing the use of services like Facebook to the fact that Amazon and Google are so embedded in the structure of the internet at this point that blocking them literally causes large parts of the internet to become inaccessible or slow down to the point of uselessness; and (c) Nothing helps anyway!  No matter how careful you are, a data breach by a company like Equifax or a decision by a company you invested in to change their policy means all you magic privacy dancing amounted to a total expensive waste of time.

 

Accordingly, the rational consumer gives up. Unless you are willing to become a hermit, “go off the grid,” pay cash for everything, and other stuff limited to retired spies in movies, you simply cannot realistically expect to protect your privacy in any meaningful way. Hence, as predicted by Akerlof, rational consumers don’t trust “market alternatives” promising to protect privacy. Heck, thanks to Congress repealing the FCC’s privacy rules in 2017, you can’t even get on to the internet without exposing your personal information to your broadband provider. Even the happy VPN dance won’t protect all your information from leaking out. So if you are screwed from moment you go online, why bother to try at all?

 

I explore this more fully below . . .

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The Upcoming IPAWS “Presidential Level Alert” Test Is Not A Trump Thing — Really.

There is a bunch of hysteria running rampant about the September 20, 2018 test of the “Presidential Level Alert” functionality of the Wireless Emergency Alert System (WEA), which is part of the Integrated Public Alert Warning System (IPAWS).  (See FEMA Notice of Alert Here.) The thrust of the concerns is that Fearless Leader is creating a propaganda system that can blast through all cell phones and no one can opt out.

 

I ask everyone to please calm down. The fact that it is called a “Presidential Alert” has nothing to do with Trump. This all goes back to The Warning, Alert, Response Network Act (WARN Act) of 2006 (and tweaked by the Integrated Public Alert and Warning System Act of 2015).  That Act required that we integrate the old Emergency Alert System (EAS) which is on broadcast and cable with a newly created wireless emergency alert system (WEA) so that we could take advantage of the emerging communications technology (texting in 2006, broadened in 2015) to warn people in advance of disasters.

 

Most emergency alerts are local. Indeed, the primary challenge of EAS and WEA in the last few years has been focused on trying to get as narrowly targeted and hyper-local as possible, so that people who are not impacted don’t receive false alerts, while people who are impacted receive real-time instructions. There is also a long term element about incorporating new technologies capable of handling multi-lingual warnings (and not just Spanish) and other potentially life saving capabilities (such as locating the nearest evacuation shelter).

 

However, one element is the creation of an integrated national emergency alert system in the highly unlikely event that we might have some kind of national level disaster that requires immediate real-time communication of one set of instructions on a national basis. Prior to the WARN Act, such as capacity did not exist. It has now been developed, but it has never been tested on a national basis before. The test of this capability was scheduled for September 20, 2018 well before Hurricane Florence became a concern.

 

This absolutely has nothing to do with Trump. The WARN Act mandates that while users may opt out of other alerts, they may not opt out of  “Presidential Level Alerts.” This was decided way back in 2006, when Congress determined that people should not be able to opt out of anything so important that it triggers a nation-wide alert (although, annoyingly, they did give wireless carriers freedom to opt out of WEA entirely, which tells you a lot about the priorities of Congress back in 2006). See WARN Act Sec. 602 (b)(2)(E). This was not a choice by the Trump Administration. Nor can the current FCC allow people to opt out of “Presidential Level Alerts.” It’s in the WARN ACT of 2006.

 

The IPAWS Act of 2015 (Sec. 526(d)) further limits IPAWS (including Presidential Level Alerts) to messages relating to “natural disaster, act of terrorism, or other man-made disaster or threat to public safety.) And while it is entirely possible for President Trump to decide that generating support for his reelection campaign relates to either and act of terrorism or other man-made disaster, that still wouldn’t be enough to switch on IPAWS. As with many things, the request goes down the chain of command, with lots of safeguards along the way to prevent abuse of the system. Remember, this was modified back in 2015 by Republican Senator Ron Johnson when Republicans were convinced Obama was an evil socialist Kenyan out to destroy our way of life. You can bet they they put safeties in place.

 

So please, please stop spreading rumors about this. Please stop treating this as more evidence of Trump overreach with all kinds of possible sinister motives. The President can’t just press a button to send out a text. And while a determined President with enough effort can abuse any system, this is not something Trump can just decide to do with his morning Tweets.

 

We have enough real craziness going on in the world. We do not need to encourage people to freak out about a routine test of life-saving technology, or portray it as an abuse of authority or diversion of funds.

 

FULL DISCLOSURE: I was asked during the Obama Administration to apply to the FEMA IPAWS subcommittee to act as a consumer/privacy advocate (See IPAWS Act of 2015 (b)(2)(I)(IX)). My admission was not formally processed and approved until 2017. I have been an active member of the FEMA-NAC-IPAWS for approximately the last two years. This statement is entirely my own. It does not represent a statement of the FEMA-NAC-IPAWS or any other advisory committee or federal agency. This is just me asking people to stop panicking and resist the urge to see everything in the administration as an abuse of authority. Yes, the times warrant scrutiny. But there is a difference between laudable skepticism and scrutiny v. panic and conspiracy theory.

 

Stay tuned . . . .

Why Platform Regulation Is Both Necessary and Hard.

This is the first blog in a series on regulating digital platforms.

 

As digital platforms have become increasingly important in our everyday lives, we’ve recognized that the need for some sort of regulatory oversight increases. In the past, we’ve talked about this in the context of privacy and what general sorts of due process rights dominant platforms owe their customers. Today, we make it clear that we have reached the point where we need sector-specific regulation focused on online digital platforms, not just application of existing antitrust or existing consumer protection laws. When platforms have become so central to our lives that a change in algorithm can dramatically crash third-party businesses, when social media plays such an important role in our lives that entire businesses exist to pump up your follower numbers, and when a multi-billion dollar industry exists for the sole purpose of helping businesses game search engine rankings, lawmakers need to stop talking hopefully about self-regulation and start putting in place enforceable rights to protect the public interest.

 

That said, we need to recognize at the outset that a lot of things make it rather challenging to  figure out what kind of regulation actually makes sense in this space. Although Ecclesiastes assures us “there is nothing new under the sun,” digital platforms combine issues we’ve dealt with in electronic media (and elsewhere) in novel ways that make applying traditional solutions tricky. Before diving into the solution, therefore, we need to (a) define the problem, and (b) decide what kind of outcome we want to see.

 

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FCC Tells You About Your Phone Transition — Y’all Might Want To Pay Attention.

I’ve been writing about the “shut down of the phone system” (and the shift to a new one) since 2012. The FCC adopted a final set of rules to govern how this process will work last July. Because this is a big deal, and because the telecoms are likely to try to move ahead on this quickly, the FCC is having an educational event on Monday, September 26. You can find the agenda here.

 

For communities, this may seem a long way off. But I feel I really need to evangelize to people here the difference between a process that is done right and a royal unholy screw up that brings down critical communication services. This is not something ILECs can just do by themselves without working with the community — even where they want to just roll in and get the work done. Doing this right, and without triggering a massive local dust-up and push-back a la Fire Island, is going to take serious coordinated effort and consultation between the phone companies and the local communities.

 

Yes, astoundingly, this is one of those times when everyone (at least at the beginning), has incentive to come to the table and at least try to work together. No, it’s not going to be all happy dances and unicorns and rainbows. Companies still want to avoid spending money, local residents like their current system that they understand just fine, and local governments are going to be wondering how the heck they pay for replacement equipment and services. But the FCC has put together a reasonable framework to push parties to resolve these issues with enough oversight to keep any player that participates in good faith from getting squashed or stalled indefinitely.

 

So, all you folks who might want to get in on this — show up. You can either be there in person or watch the livestream. Monday, September 26, between 1-2 p.m. For the agenda, click here.

 

Stay tuned . . .

The Summer Blockbuster Return/Reboot You Are All Waiting For Teaser Trailer Release!!!

Some of you may recall that many years ago I would occasionally show up on a video from my employer called “5 Minutes With Harold Feld.” I would use my clever wit and style to produce informative videos on pressing telecom issues with amazing low budget special effects. Like Troy McClure, you may remember me from such classics as “ACTA Recommendation: Ditch the Crazy Stuff” and “Special Access — Too Special To Be Competitive?

For those who have missed a low-budget YouTube show about incredibly mindnumbingly boring things that I try to make slightly less boring because THIS STUFF IS IMPORTANT, I have great news! We are rebooting 5 Minutes With Harold Feld! And, I will now wear a bow-tie, because bow-ties are cool.

Why? Because it is summer time, and time for the remakes and the reboots to roll! Also, we got a cool new camera at PK. Which bring me too —

THE MOST AWESOME AMAZING TEASER TRAILER FOR A 5 MINUTE POLICY YOUTUBE SHOW EVAR!!!

Wasn’t that totally awesome? I could totally hear the folks doing the Star Wars trailer gnashing their teeth in jealousy.

The Mandatory Social Media Tie In To Make This Feel All Interactive and Stuff! #ASKFELD

Like all manufactured marketing campaigns attempting to go viral, we have a hashtag for you so you can ask your own telecom and tech policy questions which I will answer at the end of the episode. And yes, my faithful Trolls, I will try to answer some of your ridiculous troll questions too, in the spirit they are given. Because y’all know I love my little catnip troll toys. So go to the Public Knowledge Facebook page, or Tweet your question with the #ASKFELD hashtag, and I just might actually answer it.

Remember #ASKFELD

Stay tuned . . .

Policy, Anecdotes and The Problem of The Black Swan. Why Events Like Comcast/Netflix and Fire Island Matter.

Often in policy debates I find myself facing a broad general statement, such as “Wireless is just as good for everyone as wireline, just look at how the market has adopted it.” Or “ISPs would never block or degrade service because they would lose customers.” Point to a counter example, e.g., “Verizon’s effort to replace wireline with Voicelink on Fire Island was a total flop” or “But Comcast, AT&T, Verizon and other ISPs have deliberately allowed Netflix quality to degrade as a negotiating strategy” and the response is invariably “Oh, that’s just an anecdote and you can’t base rules on anecdotal evidence.”

 

Oddly, this throws most people into a tizzy of confusion because (a) they vaguely remember learning something about anecdotes not being proof or something; (b) everyone always says anecdotes aren’t proof; but (c) the general statement is clearly false based on real world experience. People know that “it’s only an anecdote, therefore it doesn’t count” is a bull$#@! answer, but they can’t explain why. Hence confusion and much bull$#@! going unchallenged in policy.

 

In logic, we refer to this as “The Problem of the Black Swan.” No, this has nothing to do with the somewhat racy but very artsy so that makes it OK movie starring Natalie Portman. And, while it is the inspiration for the book by Nassim Nicholas Taleb, it actually means something different. “The Problem of the Black Swan” is a demonstration of the problem of reasoning by induction and falsifiabilty. You cannot prove all swans are white just by finding a white swan, but you can disprove all swans are white by finding a single black swan.

 

While I don’t normally use this blog to teach Logic 101 type stuff, application (and misapplication) of the “Problem of the Black Swan” comes up so often that I will delve into this below. By the time we’re done, you will be able to explain to people who pull that “oh, an anecdote isn’t evidence” crap exactly why they are wrong. You’ll also be able to apply the “anecdote rule” properly so that you don’t get caught in any embarrassing errors.

Elucidation below . . .

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Appreciation: Professor Robert B. Seidman RIP: 1920-2014

On April 3, 2014, the world lost a true giant of the public interest. Professor Robert B. Seidman, of Boston University law school died of heart attack in his home in Milton, MA at age 94. With him was his wife of more than 65 years, co-author, co-professor, and all around partner in every sense of the word, Professor Ann Seidman. You can read a far too abbreviated obituary here, see his CV here, and a list of publications here.  None of these, of course, come even vaguely close to capturing Bob’s importance in the world generally, or in my life personally.

I’ll insert this video here where Bob and Ann explain their work. I try to put some of what Bob did and what he taught me below  . . .


http://youtu.be/iTc5f8Qv-o8

 

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Our RSS Feed Is Back!

A number of folks have asked me for awhile what happened to our RSS feed. I recognize that because we post infrequently here (damn you, life, for getting in the way of my blogging!) having an RSS feed really helps people to know when we’ve added something.

The answer is that Wetmachine is kept going on the technical side by the voluntary efforts of Gary Gray and John Sundman. Because of various problems, we needed to migrate Wetmachine awhile ago from one hosting company to another and make various other changes. As a result, the RSS plug in we were using broke. Making sure the site actually worked and stayed up and running took priority over finding a new RSS plug in, and it took Gary awhile to find a plug in that would work with the new site.

In any event, thanks to Gary’s hard work, you can now once again ensure that you will never miss another article by following the side bar on the right down to the RSS button. Please do. Also, you can follow us on Facebook and Twitter, because Lord knows you can now follow individual air molecules on Facebook and Twitter.

 

Stay tuned . . . .

 

 

 

 

Ten Years Of Tales of the Sausage Factory — What Snarky Trip It’s Been

December 2013 brings two important anniversaries for the world of telecom policy. First, December 19 marks the 100th anniversary of the Kingsbury Commitment, the letter from American Telephone and Telegraph Vice President Nathan Kingsbury to to the U.S. Attorney General offering to settle the antitrust action against AT&T by allowing interconnection for all surviving rival phone companies (which by that time mostly meant companies in rural areas AT&T did not want to buy) and supporting the concept of universal service. (text here)

 

Second, December 10 marks the tenth anniversary of when I started doing this blog, Tales of the Sausage Factory.

 

Stipulated the first has had much greater impact on telecom policy, but I like to think we here at Wetmachine have done our bit as best we can.   For those curious, here is a link to my first ever post, although I actually think this over here (which quickly follows) remains one of the funniest things I’ve ever written about telecom policy (mind you, this is not a hard bar to meet).

 

A few nostalgic reflections and links to my favorite posts below, as well as seeking reader advice on what to do going forward . . .

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Free Event on IP Transition In Boston Next Tuesday. Come Hear Me Preach.

Next Tuesday, December 3, the Massachusetts Department of Telecommunications and Cable will hold a free event open to the public about the whole “transition of the telephone system thing” I keep going on about. As you can see from this flyer here, the event will run from 9 a.m. to 2 p.m. at Suffolk University Law School. I’ll be speaking on the last panel — which is generally where the “consumer stuff” gets stuck.

 

As you can also note from the flyer, the list of speakers is practically indistinguishable from a similar event here in D.C., except the moderators are local. So if you have attended any of the various events on this subject here in D.C. in the last 6 months, you are unlikely to miss anything. On the flip side, if you are local to Boston, then you bloody well ought to show upWe’re talking about the future of your phone service.

 

Stay tuned . . .