Adam Thierer's Blog, page 135

FERPA Regulation Amendments as a Teachable Moment

When legislation or regulation is what you rely on for privacy protection, your privacy protection relies on political consensus staying the same. When political consensus changes, your privacy can go away.

Witness the Department of Education's proposed change to FERPA regulations—the Family Education Rights and Privacy Act—to make more data about students available to more people. The privacy protections that have applied until now are unlikely to withstand the Education Department's belief that using data about students is more important.

To anyone who relied on FERPA for privacy protection: Oops!

YouTube Introduces "Copyright School" to Educate Infringing Users

In the ongoing copyright debates, areas of common ground are seemingly few and far between. It's easy to forget that not all approaches to combating copyright infringement are mired in controversy. One belief that unites many stakeholders across the spectrum is that more efforts are needed to educate Internet users about copyright. The Internet has spawned legions of amateur content creators, but not all of the content that's being created is original. Indeed, a great deal of online copyright infringement owes to widespread ignorance of copyright law and its penalties.

For its part, Google yesterday unveiled "Copyright School" for YouTube users. As Justin Green explains on the official YouTube blog, users whose accounts have been suspended for allegedly uploading infringing content will be required to watch this video and then correctly answer questions about it before their account will be reinstated:

Of course, boiling down the basics of copyright into a four and a half minute video is not an easy task, to put it mildly. (The authoritative treatment of copyright law, Nimmer on Copyright, fills .) Copyright geeks and fans of "remix culture" will appreciate that Google's video touches on fair use and includes links to in-depth resources for users to learn more about copyright. It will be interesting to see how Google's effort influences the behavior of YouTube users and the incidence of repeat infringement.

Tax Day Thoughts on the Non-Tax USF Tax

While most folks have been obsessing over their income taxes the past few weeks, Jerry Brito and I have been obsessing about a non-tax: the universal service assessments on our phone bills.

More specifically, the Federal Communications Commission has asked for comments on its plan to gradually turn the current phone subsidy program in high-cost rural areas into a broadband subsidy program in high-cost rural areas. This opens up a big tangled can of worms.  Comments are due Monday.  We deal with two issues in our comment:

Definition of broadband: Thankfully, the FCC is asking for comments on its proposal to define broadband as 4 Mbps download/1 Mbps upload. This is an important decision with a big effect on the size of the program. The 4 Mbps definition more than doubles the number of households considered "unserved," because it doesn't count 3G wireless or slower DSL or slower satellite broadband as broadband. It also raises the cost of the subsidies by requiring more expensive forms of broadband.

The definition fails to fit the factors the 1996 Telecom Act says the FCC is supposed to consider when determining what communications services qualify for universal service subsidies.  A download speed of 4 Mbps is not "essential" for online education; most online education providers say any broadband speed or even dialup is satisfactory. Nor is that speed "essential" for public safety; the biggest barrier to public safety broadband deployment is creation of an interoperable public safety network, which has nothing to do with USF subsidies. And the proposed speed is not subscribed to by a "substantial majority" of US households.  The most recent FCC statistics indicate that the fastest broadband download speed subscribed to by a "substantial majority" of US households is probably 768 kbps.

Definition of performance measures: Fifteen years after passage of the legislation that authorized the high cost universal service subsidies, the FCC has proposed to measure the program's outcomes.  Actually, the FCC wants to measure intermediate outcomes like deployment, subscribership, and urban-rural rate comparability — not ultimate outcomes like expanded economic and social opportunities for people in rural areas.  But it's a start …  provided that the FCC actually figures out how the subsidies have affected these intermediate outcomes, rather than just measuring trends and claiming the universal service subsidies caused any positive trends observed.  We have some suggestions on how to do this.  

I'll modify this post to include a link to the comment once it appears in the FCC's system.  Or if you just can't wait, e-mail me at jellig@gmu.edu and I'll send you a copy.

Exploiting Copyrightunities

Reputation oils the gears of many markets. People's expressions of opinion about goods and services help establish the reputations of sellers and service providers. Knowing that they are the subject of reputation systems that they do not control, service providers do a better job on average than they otherwise would. Slacking off even once can sully a reputation and produce well-placed economic sanctions: people won't do business. Withdrawing reputation information from the public sphere will generally slow the process of winnowing bad actors out of any market and rewarding most highly the good ones. Commercial opinion is a little engine of positive externalities.

Federal privacy regulations under the Health Insurance Portability and Accountability Act shaped the information terms in health care services in ways people are right to disagree with. So it might be tempting to trade away one's right to criticize a doctor for greater privacy protection. But a new site called DoctoredReviews.com argues against that bargain—indeed, it argues the bargain is illusory—and it criticizes the use of copyright law to enforce the deal.

Apparently, a group called Medical Justice is offering doctors a form contract to give to patients that holds out greater privacy protection for the patient if the patient will refrain from criticizing the doctor. That's a deal people should be free to make, though—again—it's probably a bad one. One way that the deal is enforced is by giving the doctor a copyright in the expressions of opinion that patients may issue. This gives the doctor a right to issue "take-down" notices to web sites where content critical of them is found.

This peculiar use of copyright takes the virtuous cycle where a patient talking about an experience with a doctor benefits others, and doesn't just nip it—bringing it back to zero. It places enforcement costs on third parties. The enforcement of copyrights in commentary pushes negative externalities onto web site operators as it deprives markets of useful information.

The DoctoredOpinions site has a good, concise explanation of the law as it relates to website owners. I think copyright has some explaining to do—its distinction from rights in physical property is in high relief—if its enforcement can draw disinterested and uninvolved third parties into an administrative/litigation vortex.

The "Privacy Bill of Rights" is in the Bill of Rights

Every lover of liberty and the Constitution should be offended by the moniker "Privacy Bill of Rights" appended to regulatory legislation Senators John Kerry (D-MA) and John McCain (R-AZ) introduced yesterday. As C|Net's Declan McCullagh points out, the legislation exempts the federal government and law enforcement:

[T]he measure applies only to companies and some nonprofit groups, not to the federal, state, and local police agencies that have adopted high-tech surveillance technologies including cell phone tracking, GPS bugs, and requests to Internet companies for users' personal information–in many cases without obtaining a search warrant from a judge.

The real "Privacy Bill of Rights" is in the Bill of Rights. It's the Fourth Amendment.

It takes a lot of gall to put the moniker "Privacy Bill of Rights" on legislation that reduces liberty in the information economy while the Fourth Amendment remains tattered and threadbare. Nevermind "reasonable expectations": the people's right to be secure against unreasonable searches and seizures is worn down to the nub.

Senators Kerry and McCain should look into the privacy consequences of the Internal Revenue Code. How is privacy going to fare under Obamacare? How is the Department of Homeland Security doing with its privacy efforts? What is an "administrative search"?

McCullagh was good enough to quote yours truly on the new effort from Sens. Kerry and McCain: "If they want to lead on the privacy issue, they'll lead by getting the federal government's house in order."

House votes to nullify net neutrality: what's next?

On Forbes this morning, I analyze the legislative and judicial challenges to last year's FCC Open Internet rules, the so-called net neutrality order.

Despite the urgency of Friday's budget machinations, the House took time out to pass House Joint Resolution 37, which "disapproves" the FCC's December rulemaking.  If passed by the Senate and not vetoed by President Obama, HJR 37 would effectively nullify the net neutrality rules, and ensure the FCC cannot pass alternate versions of them absent new authority to do so from Congress.

Most commentators believe that the House action was merely symbolic.  Passage in the Senate requires only a simple majority, but the neutrality fight has turned violently partisan since the mid-term elections and getting a few Democratic Senators on-board may be hard.  More to the point, the White House last week pre-emptively threatened to veto the resolution.

As I've noted before, however, net neutrality could still become a casualty of more important compromises between the White House and Congress.  Last week, Politico reported that undoing the FCC order was one of the policy riders Republicans were still pushing.  Today's draft budget bill doesn't mention that provision, but the budget fight isn't over.

Still, it seems more likely that the real challenges will come in the courts.  On that front, the D.C. Circuit last week rejected lawsuits filed by Verizon and MetroPCS as premature (the new rules are still not published in the Federal Register, and the reasons for the delay are unclear).

The two companies will surely try again, though the dismissal of their first efforts means the case could wind up somewhere other than the D.C. Circuit.  Given the strong decision against the FCC in the Comcast case last year, the general consensus is that the D.C. Circuit is the court most likely to rule against the FCC's thin arguments for authority to issue the rules in the first place.

Rob Carlson on biological technology

On this week's podcast, Rob Carlson, principal at Biodesic, an engineering, consulting, and design firm in Seattle, and author of the book, Biology is Technology: the promise, peril, and new business of engineering life, discusses his book. Carlson explains what he means by "biology is technology" and gives a few examples of how humans have been using biology as technology for thousands of years. He then discusses a few modern biotechnology applications, like antibiotics, biologics, genetically modified organisms, fuels, and plastics. Carlson also talks about why more biotech garage innovators are needed, what the industry might be able to learn from open source software and hardware, and how legal and regulatory barriers to innovation in biotechnology might be minimized.

Related Links


Biology Is Technology: the promise, peril, and new business of engineering life
"A Life of Its Own: Where will synthetic biology lead us?," The New Yorker
"Biohacking: Hacking goes squishy," The Economist
Book review: Robert Carlson's Biology is Technology , Journal of Evolution and Technology

To keep the conversation around this episode in one place, we'd like to ask you to comment at the web page for this episode on Surprisingly Free. Also, why not subscribe to the podcast on iTunes?

Remembering What Regulatory Capture Looked Like: The Airline Experience

This week, my colleague Jerry Brito asked me to guest lecture to his George Mason University law school class on regulatory process. He asked me to talk about one of my favorite topics: the sad, sordid history of regulatory capture. Regular readers will recall the compendium I posted here a few months ago [and that I continue to update] of selected passages from books and papers penned by various economists and political scientists who have studied this issue.

Again, it doesn't make for pretty reading, but the lesson that history teaches is vital: No matter how noble the "public interest" goals of regulatory advocates or their specific proposals, the only thing that really counts is what regulation means in practice.  Regrettably, all too often, regulation is "captured" by various interests and used to their advantage, or at least to the disadvantage of potential competitors, new entrants, and innovation.

While I was gathering some materials for the case study portion of my lecture — which incorporates the history of telecommunications monopolization, broadcast industry regulatory shenanigans, and transportation / airlines fiascos — I figured I had to post a passage from one of my favorite books on regulation of all-time: Thomas K. McCraw's brilliant Pulitzer Prize-winning 1984 book, Prophets of Regulation. In his chapter on the late great Alfred Kahn, the father of airline deregulation, McCraw recounts the history of the Civil Aeronautics Board (CAB) from its creation in the 1940s up until the time of Kahn's ascendency to CAB chairman in the Carter Administration (and then the CAB's eventual deregulation and abolition). Here's the key passage from that history:

"Clearly, in passing the Civil Aeronautics Act [of 1938], Congress intended to bring stability to airlines. What is not clear is whether the legislature intended to cartelize the industry. Yet this did happen. During the forty years between passage of the act of 1938 and the appointment of [Alfred] Kahn to the CAB chairmanship, the overall effect of board policies tended to freeze the industry more or less in its configuration of 1938. One policy, for example, forbade price competition. Instead the CAB ordinarily required that all carriers flying a certain route charge the same rates for the same class of customer. […] A second policy had to do with the CAB's stance toward the entry of new companies into the business. Charged by Congress with the duty of ascertaining whether or not 'the public interest, convenience, and necessity' mandated that new carriers should receive a certificate to operate, the board often ruled simply that no applicant met these tests. In fact, over the entire history of the CAB, no new trunkline carrier had been permitted to join the sixteen that existed in 1938. And those sixteen, later reduced to ten by a series of mergers, still dominated the industry in the 1970s. All these companies… developed into large companies under the protective wing of the CAB. None wanted deregulation." (p. 263)

To reiterate: Zero new competitors were allowed. Zero price competition was allowed. And very little service innovation was permitted. It was a comfy little protected cartel from start to finish. It's no wonder that "none wanted deregulation"!  Folks, if that isn't the very definition of regulatory capture, I don't know what is.

This is what makes Fred Kahn's achievement all the more monumental.  Beyond his obvious mastery of the subject and rigorous documentation of regulatory failure in action, it was Fred's sheer force of will and amazing spirit that provided the spark to get the deregulation of this mess moving forward. Against all odds — and with the help of some fellow liberal Democrats like Ted Kennedy, Ralph Nader, and Stephen Breyer — Fred did it.

And consumers owe him a huge debt of gratitude for it. Prices plummeted following the CAB's abolition and countless new industry faces have come and gone since deregulation. Things haven't been perfect by any stretch of the imagination, but can you imagine how much worse off we would have been absent Fred Kahn's bold move to break the regulatory capture logjam and "free the skies" for competition?

Something to think about next time someone tells you that regulation is always in consumer's best interests.

[P.S. - I posted a short obit here late last December remembering Fred Kahn upon his passing. I hope you read it if you haven't already.  I still wish I could hear Fred speak just one more time. What a joy and inspiration that man was. I always treasured my moments with him. I still have the final email he sent me from early 2010 sitting in my inbox. I just can't bring myself to delete it for some reason. He had passed along a nice note about a paper I had recently written. I practically cried when I read his note. One of my intellectual heroes had not only read something I penned but he had actually liked it! And he was 92 when he sent it to me.  Blows my mind.]

Regulators are Like Tommy Boy

…says Nick Schulz, in partial answer to the question why regulators want to control telecom and wireless even though those sectors currently enjoy "rising customer satisfaction, falling prices, enviable investment levels, and greater innovation—even during the Great Recession."

Thoughts on Recent Video Policy Wars

In my latest Forbes column, "Keeping The Video Revolution Going Strong," I argue that we've been blessed to live through a veritable information revolution but that "many scarcity-era regulations remain on the books and threaten this ongoing revolution — especially in the video marketplace. So long as Washington continues to enforce regulations dating to the days of I Love Lucy, the old regulatory norms and edicts threaten to roll over onto emerging video technologies, stifling innovation and consumer choice."

I go on to briefly discuss a few flashpoints in the ongoing video wars, including: the fights over "retransmission consent," so-called "AllVid" tech mandates, and the broader battle to liberalize spectrum. "While the video revolution will hopefully continue apace, a light-touch from Washington will be essential to keep it going strong," I conclude. "To the extent policymakers are looking to 'level the (regulatory) playing field' between the old and new video worlds, they should do so in the direction of freer markets, not more tech mandates."

Anyway, read the whole thing over at the Forbes site.