Misunderstanding Net Neutrality

Senator Jim DeMint (the one I worked for last summer) is proposing an amendment as a possible addition to the up and coming telecommunications legislation, S. 2686. The amendment appears to extend the language of net neutrality from the broadband ISPs to including internet search engines. As reported by Multichannel News:

Under the DeMint amendment, it would be unlawful to “prioritize or givepreferential or discriminatory treatment in the methodology used todetermine Internet-search results based on an advertising or othercommercial agreement with a third party.”

The wording would strike directly at Google's sponsored links, where companies pay to get preferred space whenever people search for terms related to their products. Sponsored links are the links placed at the side of the page, distinctly set apart from the unsponsored links that PageRank returns.

Now first, I know Senator DeMint does not believe in this amendment (not in an insider way, but in a gut feeling sort of way). He has already spoken out against Net Neutrality on principle, his justification being that he is a firm believer in the free market (making him one in a group of people whom I've already recommended should leave the net neutrality debate). This must mean that DeMint introduced the amendmentnt proposal to simply make a point. Personally, I think if he has a point to make then he should just say it. To go through the trouble of writing out an amendment you don't believe in is a waste of time and effort.

Over at the Technology Liberation Front, DeMint caught the attention of James Gattuso who felt the need to write a post about it. Gattuso also thinks the amendment is designed to simply put pressure on Google because of its "uncomfortable position in the net neutrality debate." He goes on to critique Eric Schmidt's "Note to Readers" (read it first, it's short) by turning the tables on Google:

But take out the reference to "phone and cable monopolies" and this reads like a critique of Google itself. Google'’s business model to a large degree is based on tiering—, providing preferred ad placement for those who can pay for it. Its clearly not a system where anybody "“no matter how large or small"” has equal access. Its based, like it or not, on money.

Gattuso's commentary has two glaring problems:

1. The Net Neutrality debate at its core has nothing to do with the true equality of all packets or offers or links or really anything of a technical nature. The core of the debate (that not enough people seem to want to address) is the lack of competition in the broadband space, just as myself and others smarter than me have already said. By contrast, competition is fierce in the search engine market, and contrary to what Gattuso says, being the market share leader does NOT give you monopolistic powers. If Google screwed up in a big way tomorrow by changing their policies or procedures, you can bet they would become the least used search engine within the week.
2. Gattuso repeatedly points to the ability to pay nature of Google's sponsored links program as some sort of fault. What he fails to realize is that Google is at heart and advertising company. They provide an amazing service for free (the ability to search for most anything) with the hopes that you'll click on one of their sponsors ads whose links are usually very closely related to what you were searching for to begin with. Advertising space has always been based on the ability to pay principle and price discrimination. If you want Super Bowl commercial time, then you have to pay exorbitant amounts of money. If that's your logic, then why single out Google when it's simply a more efficient online version of an already established legitimate business?

Watchful of what goes on at his own posting home grounds, Tim Lee responded to Gattuso's post. Lee's main point was that Broadband companies aren't stupid, and that they'll use whatever means necessary to make the most money. Unlike what some proponents of net neutrality believe, Lee doesn't believe the ISPs will block any specific web site or content type:

I think it'’s safe to say that Verizon, Comcast, et al want to make as much money as possible. So here's my question: If you were a telco executive trying to maximize revenue from your shiny new fiber network, how would you set your prices?

Here'’s one thing you wouldn't do: set a flat rate of $100 million for any company wanting to access your "“fast lanes,"” and consign everyone else to the slow lane. It'’s quite true, as Schmidtz says, that such a policy would screw up the Internet and stifle entrepreneurship. But it'’s also a really stupid strategy, because it forgoes a lot of
revenue from smaller companies. And although none of them individually can pay as much as Google or Microsoft, they'’re likely to make up the majority of revenue opportunities, thanks to the long tail.

I couldn't agree more, and this is highlights another problem of the net neutrality debate. The two sides aren't listening to each other in order to find a middle ground. The opponents of new regulation believe all regulation is bad by its very nature, while the proponents paint a picture of the ISPs as intrinsically evil monolithic businesses. Due to my previous post on this issue, I'm going to refer to it from here on as the comic book effect.

However, I have a problem as Lee he continues:

No, if you'’re a monopolist trying to maximize revenue, you want to charge the big guys a lot more than you charge the little guys. How do you figure out who'’s a big guy and who'’s a little guy? A straightforward metric is the amount of traffic they generate. Charge 10 cents per gigabit, say. Google pays millions. The startup with a
thousand customers pays pocket change.

Now, I can envision all sorts of variations. Maybe big guys would get some kind of bulk discount so their per-bit costs are a bit lower. Or maybe they'’ll really soak the big boys, while they let the smallest companies ride for free (after all, their tiny bills might not be worth the trouble to collect, and today's small companies are tomorrow'’s
large companies).

I have no problem with his logic, but from what I understand, this is more or less how business is already done today. Anyone reading feel free to correct me, but from what I can tell business pay for the bandwidth that flows out of their website to individuals. However, in several statements made by the telcos, they seem to think there's a part of the network that the content companies are "riding for free."

This is the argument you may have heard where pundits argue what exactly people pay for when they pay for their internet. Do they pay to get to the "internet cloud," or do they pay to get straight to what they want to see like Google and Yahoo? The ISPs subscribe to the internet cloud theory, and thus see the part of the connection that connects the customers from the cloud to the content companies as "a free ride."

I hate this argument. At its simplest level, it claims the telcos deserve more money by simply redefining how they think the internet pricing model works. If they offered some sort of service, it wouldn't be so bad... but it's simply a greedy grope for more money, and I don't think they should get away with it.

Let's look at a parallel situation where only one credit card is available in your town. You pay to use the card via fees, and the companies pay for the convenience of being able to take the credit card. Some only need a hand operated reader, while others like McDonalds need the fastest and most efficient swiping machine possible. The credit card company now decides that you haven't actually paid to use the card at any restaurants, but rather you've simply payed for credit availability, a connection to the money charging cloud. They then decide McDonalds is getting a free ride because you payed to get to the cloud, but no one payed to get your money from the cloud to McDonalds, so they demand that companies pay for that part of the connection as well. With no other credit card to switch to, the companies either pay up begrudgingly, or take the issue to Congress (just as net neutrality advocates are doing now).

The key to both the real and fictitious scenarios is that competition is virtually or actually non-existent. Because competition doesn't exist, customers have nowhere to go. The market then can't take care of itself, and is subject to monopolistic influence. Some people are already on the topic, and it has started to come up in major debates.

As we debate net neutrality in congress we have to remember there is a balance to strike. Simply charging more and abusing monopolistic power is bad, but the radical equality of packets approach isn't ideal either. Video and voice do have lower latency requirements to be viewer satisfactory, but that should simply mean that there is opportunity for investment in expansion of the network, not that any particular group of companies is getting a freebie out of something they didn't pay for. We have to stop anticompetitive practices by the ISPs as well, though current legislation should e enough to cover that. Perhaps I'll go into more detail with that another day.

I just hope we can properly flush out these issues as the telecom legislation comes closer to passing. Listening will be the most important skill we can use in the near future, because the Internet needs room to grow, but if either of these sides wins in entirety, it will lead to a fundamentally more crippled internet than the one we have now.


Note: I'm having some trouble with my blogging tool. Certain phrases were written over and none of my punctuation marks made it in the transfer. I tried to edit everything back to normal but please let me know if I missed anything glaring.

Technorati tags: Net Neutrality, internet

Structure Update: RSS and Email Subscriptions

I've added some RSS buttons and the ability to subscribe to my blog via email right on the sidebar for all those interested. There's more in the works both content and layout wise, so stay tuned in the days to come.

Changing the Face of Politics: Email and the FCC

To start, I worked in Senator Jim DeMint's office for half a summer between freshman and sophomore years of college (summer of 2005 for anyone interested). The experience was an amazing one, learning how we process opinions from constituents, going to hearings on issues that matter, and watching people make decisions that affect everyone in both the country and the world.

One of my primary jobs as an intern was sorting the mail which came in several times a day (three if memory serves correctly) into the wall of mailboxes that lay before me. As is typical I'm sure, different people handled different areas of policy. These Lower level workers reported to a head person in their field. The policy gurus converged to a single advisor who then reported directly to Senator DeMint. If a given piece of mail was important enough, it would travel all the way up this chain, but rare did a piece of mail like that come in.

The least important pieces of mail came in the form of mass faxes/emails. These form letters came in by the hundreds every day, with several often under the same name, and all of them coming from a single source. I was told that interest groups sent out tons of these letters every day in an attempt to influence Senator DeMint by showing support of the people for a one policy initiative or another.

As an intern these were good pieces of mail, because they were the easiest to sort into a mailbox, and they came in huge stacks of the same letter. So in one swift motion, the pile of mail to be sorted could shrink as much as an inch or more.

Many interest groups use this tactic, from the conservative Parents Television Council to the Electronic Frontier Foundation. Again, I find their purpose to be subverted by their tell tale manufactured style. I would think that any reasonable person could tell that these were cheaply written and mass produced. There is no way each incarnation of the letter could represent a unique voter's opinion.

Now, on to news. Ars Technica pointed out this week that CBS is complaining about an indecency fine imposed by the FCC for an episode of Without a Trace which aired in 2004.

CBS affiliates are now protesting the fine against them, arguing that all 4,211 e-mailed complaints about the show came from [the Parents Television Council's] site and from one run by the American Family Association (which claims that more than 70,000 complaints were submitted; it's difficult to reconcile these two numbers). The CBS stations argue that such complaints are inappropriate and invalid.

I have no problem with these two utilizing any tactics within the law to get their message across. I'm only worried that the FCC felt that the complaints from these two sources were enough to justify a federal response(pdf). Discounting the objection that the most of the complainants never saw the clip in question nor the show itself, the fact that a few thousand emails can cause this response from the FCC prompts some thinking about both its security implications and its implications on democracy as we know it.

Security

Granted, the job of the FCC requires them to pay more attention to complaints than Senator Jim DeMint's does, but I've seen countless examples of the form letters that get sent to the government from these groups, and they are ridiculously easy to spot. Surely the FCC understands that each of these impersonal letters doesn't count for a unique individual's opinion on the issue.

How many emails were sent, ranging anywhere from 4.2k according to the FCC to 70k according to the AMA, is not a big difference for a few computers and a database of names. Given a few hours, either result can be readily produced. Thus, if the FCC will let itself be swayed by the number of emails it receives, how long will it take before someone learns to exploit this concept and threatens to sic the FCC on various content companies unless they change something more to the extortionist's liking? It's doable today, even if I don't think it's very likely. And the reason I don't find it likely deals with the democratic implications of the issue.

Democracy

Email is an amazing new technology, enabling us to connect to one another across the globe in a faster and more convenient form than ever before. Its potential abuses are worrisome though, especially in a society like ours that wishes to value the individual opinion. If an individual's voice can be duplicated and changed slightly after each copy by a machine to be passed off as a choir of voices, then the balance of power in our government has the potential to shift dramatically from the many to the few. To relate it to what people may be more familiar with *depressed sigh* it's like when geeks make machines to place an American Idol vote thousands of times in one night. Now replace American Idol with the US government and the geeks with terrorists or special interest groups.

Aside from the Idol affect, there appears to be another force at work here. If the FCC heard all email campaigns equally, they'd be a busy organization. Granted, to an extent they are constantly busy, but it seems that they listen to the PTC and the AMA more closely than they listen to other grassroots campaigns, like the EFF's DMCA reform campaign. This no doubt comes in part because there is no significant lobby against the PTC whereas the EFF takes on many active and very influential competitors in each of its complaint campaigns. After all, companies with deep enough pockets will pay whatever it takes to impose their business model into legislation, whereas few people are going to lobby that more sex on TV is a good thing for America.

However, I'm afraid of giving these two groups in particular control over the morality that comes through my TV screen. Last I checked we have a lot of competition in terms of television content. What's the upper limit on channels we can receive these days? 900? These days, no one is forced to watch anything on TV, and market forces will assure that if some content is too far out of line, they'll receive repercussions from people tuning out. Even for extremists, who think that television is too indecent on every channel (which is very unlikely), no one forces them to watch television at all. They can simply turn it off.

But coming back around a bit, how should emails be treated by the FCC? An email is more convenient for an individual to send, and I think an email written from scratch should be just as valuable as a handwritten letter. That said, I think the FCC, and the entire government for that matter, should implement a policy in which they won't accept pre-written emails anymore. If I had my way, I'd extend it to the flimsy postcards the AARP gets their members to send out en mass as well, but I'll stick to the email point, because email could be screened electronically, saving some manpower on top of the other benefits.

After that, I'd watch as the number of complaints from these organizations drops into the ground. I think the policy would work because the distinction between "Click here to send a letter to your Congressman" and "Click here to Compose a Letter from Scratch to Your Congressman" is large enough that the potential abuses of the system would be minimized while at the same time letting the technology grow and express appropriately how we feel in the matters of state.

Technorati tags: FCC, email, politics

Update: For those who want further reading on the subject, or want to look at specific numbers regarding indecency complaints and the FCC, Adam Thierer has pointed me to a great report(pdf) he put together for the Progress and Freedom Foundation last December. Check it out.

A Cheer for Comics and a Moan for America pt. 2

Now, I saw this at Duke during my last few days of the semester, before I'd started the blog. However, if it's important enough for WIRED News, it's important enough for me to glance over.

This comic book comes out of the Duke Law School, put together by three professors and named Bound by Law?: Tales From the Public Domain. Fortunately, the comic book doesn't seek to slant the issue of today's copyright one way or the other. Despite its cartoonish appearance, it takes a very reasonable and measured approach to educating people about copyright. From the WIRED article:

Wired News: Who is the audience for this book?

James Boyle: Our first audience is documentary
filmmakers and film students. But we're also trying to reach people who
might not think of themselves as documentary filmmakers, people who
have video blogs for example, who are using digital tools and editing
software to put things online.

But beyond that, there's a larger audience of people who are
interested in the effect of copyright on culture, in the free-culture
movement, people who are interested in what a world without gatekeepers
might look like.

They note that documentaries have come under fire lately for copyright infringement, and that these are the instances where people can most easily see what's wrong with the system. Instances where $10,000 had to be paid for the rights to a four second clip in the background of one scene. Or another documentary maker payed an equal amount for a ringtone that went off during the scene. The tune? The Rocky theme.

I have a lot of respect for the professors whose aim is to make copyright accessible and understandable to all. Without the slant and ridiculousness of Captain Copyright or The Corruptibles, and after some serious thought, I'm going to praise the three Duke Law Professors. Unlike before where I pointed out that the comic book nature of the propaganda simply skewed the debate, this books informs through examples that are well documented and covered outside of the comic. It notes the importance of copyright, expressing a clear and cogent opinion of how much control copyright owners should have.

This comic gets to the heart of the issue, without making any overly ridiculous claims and both furthers general knowledge and encourages discussion on the concept of copyright. So I cheer for the three Duke professors. May their presentability of ideas and honest dialogue become infectious and spread to other contested issues that need real debate so badly.

Technorati tags: copyright, Duke, Captain Copyright

A Cheer for Comics and a Moan for America

Alright, I understand. Techno-political issues aren't everyone's thing. The issues themselves can be hard to understand, and often those who summarize their view slant it so far to one side or the other it becomes comical.

....literally.

While they target different audiences and thus have slightly different purposes, the largest supporters and opponents of stronger copyright protection have released... I kid you not... their own superhero comics, Captain Copyright and The Corruptibles.

Now Captain Copyright came out first, and has already come under fire for his questionable... err.... copyright policy. That's not to say anything of the talk that he is a plagiarized work himself and that he lifted content straight from wikipedia without attribution.

The Corruptibles are created by the EFF and by contrast are aimed at adults. Once the cartoon is over, more in depth information about their side view of copyright can be found within a few clicks.

I admit, I enjoy clever marketing. The ability to turn heads for long enough to deliver a simple message is no easy task. A task many are paid lots of money to do for a living. And yet, I'm sad that both sides of this important issue which needs to be discussed honestly and openly are turning to slanted comic books in order to sway public opinion. It reminds me of the criticism John Stewart made about the show Crossfire (watch it, it's worth it) where both sides don't actually debate about anything so much as simply yell their talking points at each other until someone goes hoarse first.

I guess the side still talking can chalk that up as a win, and somehow it has more value as such than a compromise, but it just doesn't sit right with me.

The implications of new copyright legislation are too great for either side to win outright. A compromise must be reached. Hopefully it'll fall somewhere in between the extremes so that consumers still have what we enjoy today under fair use, while the artists still get their fair share (and not necessarily through the established business models that exist right this minute).

Life is not black and white. Politics are not left and right, nor conservative and liberal, nor Republican and Democrat. I'm worried by the growing trend of polarization that simplifies the issues so the public can easily sift through each one. It may be easier for the average Joe to choose a side, but it comes at the expense of talking about and developing a solid middle ground. But... that's a more detailed post for later.

For now, let's just say I left comics for novels years ago. I'm sorry to see the trend going the other way in the one arena where we most need debate..

Technorati tags: Captain Copyright, copyright, DRM

Record Labels V. XM: An Issue of Quality?

A suit has been filed recently against XM radio from four record labels. Take some time to read up on it here, here, here, and here. I had a discussion with one of my hallmates last night trying to understand why the labels would do such a thing. I don't think he had any real support for his position, and I may not do it a wealth of credit here, but I think it's something worth discussing.

My friend, let's call him Steve, said that the big issue that concerned the record labels was one of quality. The logic is as follows... Sure you can record music off the radio, but that quality sucks, so it's ok. Digital recordings from a satellite provider are digital and thus by their nature have all the quality that digital can offer. So the record labels must want compensation for that, right?

As a bit of background, Steve is far from unfamiliar with technology. He has a modded Xbox, already owns an Xbox 360, downloads music, has a hacked phone, etc, etc. What worries me is that Steve's logic makes sense on a very intuitive level, especially to those not familiar with the case and the bigger picture of the recording industry as it stands today. I believe this intuitive yet faulty argument, for one, presumes that we've always been able to record radio, ignoring the battle nearly identical to the one today that took place when tape recorders hit the scene, allowing people to record songs off the radio. Tapes were being sold at the same time in music stores, with a noticeable, but not too distinct difference from radio recordings. So the quality argument has to be insignificant. In fact, the devices in question are far more safe for the recording industry than the old tape recorder, because the recorded songs cannot be transferred away from the mp3 player, unlike tapes which at the time could be plugged into home stereos, kept in the car, or given to your girl/boyfriend.

My argument was that this lawsuit is basically the tape recorder argument all over again. Except, since the labels lost on the tape front, they've shifted focus to the digital front. The claim is that XM has turned into a more mobile iTunes, because the consumer ends up with mp3s on their portable device regardless which service they use. These files kept on the device can be replayed at will and are certainly no longer part of radio broadcasting. So they must have been distributed to users, an act which requires double the licensing fees XM already pays (which are actually the highest of any company thus far).

I have to disagree with the recording industry in this case. I favor XM in large part because I own an XM receiver. It's nice being able to have greater choice of what to listen to and not having to change the channel on long road trips from home to school and back again (4 hours each way). As a customer, I've also experienced the difficulties, and they're all identical to radio. Sometimes the signal is bad, and sometimes there's just nothing worth listening to at the moment. With XM established as radio, it should follow that recordings of its' broadcasts should be protected under fair use.

Now don't get me wrong. I don't see anything immoral or inhuman in the labels' actions. They are entitled to seek profit like all other businesses. Sure it gets sticky when intellectual property is involved and lawsuits allow companies to demand outrageous fines in damages (with sums that equal twice the labels' gross revenue), but everyone's entitled to try and get their piece of the pie.

That said, there are a number of practices the record labels have been employing which I don't like. I don't like claiming more than twice in damages than your company generates in revenue. I don't like pressing on with lawsuits against people who don't know how to use a computer, or who would have to drop out of school to pay the fines. I don't like raising the price of music over the years as the production costs have continued to go down, and then acting stunned as a grey and black markets emerge to cover the market you've shut out. I don't like claiming that the artists need to be fairly compensated when they see as little as 7% of revenue from music sales (7% specifically from iTunes). I don't like that because of the increasing expenses of courtroom battles, big companies can use monopolistic power and resources to outpay every challenger (or at scare most of them away).

When it's all said and done I worry though, because if people don't understand the larger issue of the recording industry trying to scrape for every dollar (deserved or not), and instead think that there's some semblance of credibility in their actions because of a discrepancy in quality, then the outcome would be based on dishonest and inaccurate foundations. I simply don't believe that that's how business should be done.

Technorati tags: XM, RIAA

Perfect Competition

Perfect competition requires five things according to answers.com:

1. All firms sell an identical product.
2. All firms are price-takers.
3. All firms have a relatively small market share.
4. Buyers know the nature of the product being sold and the prices
charged by each firm.
5. The industry is characterized by freedom of entry and exit.

Granted, it's not really fair to compare any real market to a fictitious one, but it's worth noting that this is the basic idea of economics. When many free market thinkers and various pundits are referencing competition, this is what they mean. They understand it's not attainable, but they believe any step in this direction is a good thing. While we're on the topic, the benefits of perfect competition are quite impressive; low prices, high quality, basically everything a consumer could want. That's why those thinkers reference competition this way. They want it to feel good whenever it's mentioned.

Perfect competition is good, don't get me wrong. I think competition is almost always a good thing as well. However, in the context of this debate, there has been some talk of already having enough competition in the field (or at least presumptions thereof) to ensure that consumers rights and priviliges will be protected by market forces. I think that's far from accurate, what with the somewhat less than infinite broadband ISP's out there.

More soon.

Net Neutrality: What's competition anyway?

Ok, in reviewing what I could about the net neutrality debate, I've surmised a few things. One of the most important things being that not enough people are talking about competition.

First off, all the free market thinkers should exit the stage right now. We're not talking about a free market either way, be it by regulating the internet via legislation, or by leaving the few and powerful telcos with their their lines that the government helped them to pay for in the first place.
If a free market existed, there would be infinite (or at least a good number of) competitors to the Charter @ Home cable internet service I use at home. As it stands, they are the only option. So naturally there's no incentive to have consistant service, no real customer service to speak of, and plans available trail behind offers where there exist at least two cable internet providers in the same area.

And thus lies a problem I see with the debate. Either people claim there competition exists complete with the full benefits thereof, or they claim that it practically doesn't exist at all and presume a monopoly scenario. I hate when two sides of a debate just yell their talking points at each other, so I want to analyze this particular conflict of assumptions by asking...

How much competition is enough?

A shift in Focus

Ok... so it's been many days, and I've decided to shift the focus of the blog.

Well... I supppose I should be more specific. I'm removing focus from this blog. I'm finding that at present, my environment doens't let me focus on a single topic like net neutrality every day.

So I suppose the direction of this blog is now open to my whim. I'll be posting about things that interest me, but nothing too specific until summer school is over and I can figure out better what it is I want to zero in on.