Adam Thierer's Blog, page 82

Joseph Hall on e-voting

Elections are coming up, but though we’re well into the 21st century, we still can’t vote online. This archived episode discusses the future of voting.

Joseph Hall, Senior Staff Technologist at the Center for Democracy and Technology and a former postdoctoral researcher at the UC Berkeley School of Information, discusses e-voting. Hall explains the often muddled differences between electronic and internet voting, and talks about security concerns of each. He also talks about benefits and costs of different voting systems, limits to having meaningful recounts with digital voting systems, and why internet voting can be a bad idea.

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Related Links


“E-voting and Direct Democracy,” by Hall
“Security debate grows over Internet voting,” USA Today
“Hacker infiltration ends D.C. online voting trial,” Washington Post

Worst. Sentence. Ever.

Here it is:

In an era where individuals take to social networks to not only connect with one another, but also share experiences, the “statusphere” as I call it, is transforming a media ecosystem into a very personal EGOsystem.

Let’s start with the awkward phrasings.

An “era” is a time-period, so you’d modify it with “when” not “where.” And why not simply begin the sentence with “When”? Those four letters could have communicated the same thing as the first four words.

Then there’s the tongue-twisting staccato of putting a prepositional phrase that starts with “to” in series with an infinitive. And not just any infinitive: a split infinitive. (I don’t think it’s always wrong to split an infinitive, but there was no need to do so here.)

The parallel between “connect” and “share” should be signaled by saying “to share” rather than letting “share” dangle eight words from the “to” signal.

The failure to set off “as I call it” with commas at both ends makes it unclear whether the author is coining this term in the first instance or distinguishing his version of the term from someone else’s.

And shifting to substance: that term—”statusphere.” Really? No.

The “-sphere” or “-osphere” suffix is a played-out meme generator.

But that is not the only meme plopped in our laps. We also have the unpunny meme, “EGOsystem.”

Oh, I get it. People are too self-oriented on social networks. (The effort is evidently to make an obvious notion seem ready for the cover of Wired circa 1995.)

My point? I haven’t got one, other than: “If you write, learn to write.” And perhaps, “Let your original ideas shine through as clear expression rather than dressing old ideas in gaudy, new words.”

This has been my review of the second sentence in a piece called “The Erosion of Privacy and the Rise of Publicness…and why it’s a good thing” (pre-existing overdone meme, capitalization fail, and indeterminate reference all in original).

Now I’ll go see if I can get through the next sentence.

Why Doesn’t Everyone Go Prepaid?

There’s been a resurgence in interest in non-contract (prepaid) phone plans and MVNOs in tech reporting lately, which makes sense given recent market dynamics.  Prepaid subscriptions number over 100 million, are now 25% of the mobile subscriber market, and Ars Technica recently reported that post-paid subscriptions declined for the first time ever in mid-2012.  Prepaid is definitely attracting people other than the usual lower-income folks, students, and the tech-savvy, who have the patience (or need) to navigate the hurdles prepaid sometimes presents.  The prepaid market has come a long way since Adam wrote about Straight Talk three years ago, and as one of the newest customers of Straight Talk—an MVNO that leases their networks from the Big Four carriers—I’d like to weigh in on these prepaid market challengers.

This post is mostly inspired by a conversation I had with a policy executive from one of the major carriers at a recent event.  I asked her if she thought Americans would, like the Europeans have, shift towards prepaid in the next few years.  I was optimistic but she didn’t think Americans would go to a prepaid model anytime soon.  (She did say, however, that her company would prefer we switch to a prepaid model.)  So why hasn’t the US market shifted towards prepaid plans like much of the world?  I suspect if we polled economists, carriers, and tech writers, most would agree that prepaid is a better model.  It’s almost always cheaper to use a prepaid plan and you can avoid a two-year contract.  So why hasn’t there been even more adoption of prepaid?  I offer a few possibilities from the demand side (there are likely supply-side issues too, but let’s save that for another day).

1.   Crappy phones

Perhaps this is a symptom of weak demand for prepaid, not a cause, but the sub-par nature of many phones offered by prepaid carriers is certainly a deterrent for many people.  Prepaid evokes images of smartphones your grandma would be embarrassed to own and clunky feature phones.  Prepaid plan customers tend to be budget-conscious and don’t need the newest, most advanced hardware, so this may be a demand issue – if prepaid carriers offered nice phones, few would purchase them.

But prepaid does not mean you’re stuck with a lame phone.  (Straight Talk has some respectable smartphones, but most can be described as “entry-level” at best.)  Consumers willing to do a little research can have their cheap plan, no contract, and a good phone.  Before moving to Straight Talk from AT&T, I made sure I bought a phone that I’d be happy to use for awhile.  I purchased an unlocked Google Galaxy Nexus, popped in the activated Straight Talk SIM, and a few minutes later I was up and running.  Really, any consumer with an unlocked or already-purchased GSM phone doesn’t need to sacrifice phone quality by moving to a prepaid MVNO.  Likewise, I imagine consumers with CDMA (Sprint and Verizon) phones could also enjoy their phone of choice in prepaid, which brings me to my next reason I believe consumers don’t flock to prepaid….

2.   Two Technology Standards

Particularly when switching to an MVNO like Straight Talk, which leases networks from both CDMA and GSM carriers, figuring out which prepaid plan suits your current phone can be a deterrent.  The US is unique in that neither GSM nor CDMA has prevailed as the dominant technology in mobile phones.  Even the four major carriers mirror this phenomenon.  Sprint and Verizon are CDMA, AT&T and T-Mobile are GSM.  I suspect your average consumer doesn’t want to shop around and investigate whether they can bring their phone to, say, Virgin Mobile, or whether the Straight Talk or MetroPCS network is compatible.  This dual-standard problem may lessen in the next few years, however, if all carriers shift to voice-over-LTE.  If that does happen, we can expect more folks to switch out of two-year contracts since another hurdle is removed.

3.   Sticker Shock to Unlocked Phones

Many Americans have spent their phone-owning lives on post-paid plans, enjoying the subsidized phones they receive in exchange for a binding two-year contract.  Of course, the phone is not truly cheaper; the costs are simply spread out over the two-year contract, which you can get out of only at great expense.  Nevertheless, paying $700 -$900 for an unlocked iPhone 5 knowing that it’s available (subsidized) with AT&T for $200-$400 is daunting.  Even I wasn’t immune to this irrationality.  While I would have liked a Galaxy S III, and it costs around $200 when offered by AT&T, it’s a cringe-inducing $800 when not subsidized by a carrier.  At $350, my Galaxy Nexus was much less painful (and comes with Jelly Bean).  I’m not sure this sticker shock effect is going away soon.  Subsidized phones are an established norm in the US, and until we become accustomed to the truer cost of our phones, most will be reluctant to drop several hundred dollars on a phone, even if it means their monthly phone bill is cut in half, or more.

There may be other reasons people aren’t fleeing to prepaid.  Retail operations for smaller carriers seem meager (Straight Talk is an exception since they’ve paired up with Walmart for distribution.)  The chipset in your phone might not allow you to change carriers.  I’ve seen rumors on online forums that the larger carriers prioritize their own traffic over that of the MVNOs they lease to, which will degrade service quality.  And customer service may be more of an issue with prepaid carriers as well (I had one minor issue here during activation).  But for me, a month into my Straight Talk switch, I don’t plan on going back to expensive two-year contracts anytime soon.  I like having my HSPA+ phone, paying only $45 per month for (basically) unlimited data, text, and minutes, and no contract.

Five years into a recession, these budget-friendly plans should only become more popular and should provide some effective price competition to the major carriers.  It will be interesting to see how the major carriers respond to these prepaid challengers if trends continue.  After years of benign neglect of prepaid customers (I think all major carriers have small prepaid offerings), I doubt they’ll stand for the cannibalization of their post-paid subscribers to the MVNO carriers they lease networks to.  And it seems the major carriers are becoming interested in capturing budget-conscious consumers, if the proposed T-Mobile – MetroPCS merger is any indication.  Time will tell.

 

A Word of Thanks.  This is my first post on the Technology Liberation Front and I am grateful the other contributors gave me this opportunity.  I hope one day my posts will approach the quality of the insightful contributions here on TLF.

Perry Keller on the relationship between the state and the media

Perry Keller, Senior Lecturer at the Dickson Poon School of Law at King’s College London, and author of the recently released paper “Sovereignty and Liberty in the Internet Era,” discusses how the internet affects the relationship between the state and the media. According to Keller, media has played a formative role in the development of the modern state and, as it evolves, the way in which the state governs must change as well. However, that does not mean that there is a one-size-fits-all solution. In fact, as Keller demonstrates using real-world examples in the U.S., U.K., E.U., and China, the ways in which new media is governed can differ radically based upon the local legal and cultural environment.

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Related Links


Sovereignty and Liberty in the Internet Era, by Keller
European and International Media Law: Liberal Democracy, Trade and the New Media, by Keller
Media Law in Britain, by Keller

Getting Communications & Media Reform Done Right Once and For All

Yesterday it was my privilege to speak at a Free State Foundation (FSF) event on “Ideas for Communications Law and Policy Reform in 2013.” It was moderated by my friend and former colleague Randy May, who is president of FSF, and the event featured opening remarks from the always-excellent FCC Commissioner Robert McDowell.

During the panel discussing that followed, I offered my thoughts about the problem America continues to face in cleaning up communications and media law and proposed a few ideas to get reform done right once and for all. I don’t have time to formally write-up my remarks, but I thought I would just post the speech notes that I used yesterday and include links to the relevant supporting materials. (I’ve been using a canned version of this same speech at countless events over the past 15 years. Hopefully lawmakers will take up some of these reforms some time soon so I’m not using this same set of remarks in 2027!)

I) The fundamental problem we face in the world of communications and media policy today is easy and diagnose and, at least in theory, easy to remedy.

The Problem= asymmetrical regulation / “unlevel playing field”

Policymakers are imposing different regulatory policies on different layers of the modern information ecosystem. (This is sometimes referred to as the “regulatory silos” problem.)
Regulatory silos and unlevel playing fields create 3 additional problems. They:



are unfair to those players who suffer under more onerous rules;
threaten to roll the old onerous rules on newer and less regulated speech and communications platforms and technologies; and,
create uncertainty and threatens investment and innovations.

The Solution (again, simple in theory but not in political reality) = level the playing field by deregulating down to achieve parity instead of regulating up

II) Let’s get more concrete about how to accomplish that sort of liberalization and level the playing field. Three simple reform ideas can help:

“MFN clause for communications and media policy”: To the extent Congress continues to place ground rules on the information sector at all, it should consider borrowing a page from trade law by adopting the equivalent of a “Most Favored Nation” (MFN) clause for communications and media policy. In a nutshell, this policy would state that: “Any operator seeking to offer a new service or entering a new line of business, should be regulated no more stringently than its least regulated competitor.” Such a MFN for communications would ensure that regulatory parity exists within this arena as the lines between existing technologies and industry sectors continue to blur. Placing everyone on the same deregulated level playing field should be at the heart of telecommunications policy to ensure non-discriminatory regulatory treatment of competing providers and technologies at all levels of government. In other words, to level the proverbial playing field properly, we should “deregulate down” instead of regulating up to place everyone on equal footing.
“Moore’s Law” for information technology laws and regulations: With information markets evolving at the speed of Moore’s Law, public policy must as well. Toward that end, every new technology proposal should include a provision sunsetting the law or regulation 18 months to 2 years after enactment. And this principle should apply retroactively so that old rules are sunset on a rapid timetable. If Congress deems them vital, they can always be reauthorized. [See my Forbes column on this proposal.]
Comprehensive FCC reform, downsizing & defunding: You can’t truly deregulate communications and media markets if the primary regulator (the FCC  in this case) remains large and is constantly growing its budget and responsibilities. Regulators exist to regulate! Only by downsizing and defunding them can we truly deregulate these markets. (Alfred Kahn and the Democrats taught us that in the late 1970s when the comprehensively deregulated airline and transportation markets and then moved to abolish the agencies that oversaw those sectors as well. They understood that the very existence of those agencies was a major contributing factor to economic inefficiency and crony capitalism.)

III) If wasn’t that long ago that this sort of an approach was considered the model for how to move forward

Following the lead of the Democrats who deregulated airlines and transportation sectors in the late 1970s, a number of scholars in the 1990s and 2000s devised comprehensive reform proposals for communications and media markets. (Two old PFF projects built on this):

“The Telecom Revolution”: May 1995 proposal from @ a dozen different free-market think tank analysts to replace the FCC with a much smaller agency.
“Digital Age Communications Act” project (“DACA”): a 2005-06 set of proposals from over 50 non partisan academics to make the FCC behave more like the FTC. [See this paper by Ray Gifford for a concise summary of the project and all the proposals).

Generally speaking, both projects focused on same 5 reform objectives:

Replacing the amorphous “public interest” standard with a consumer welfare standard, which is more well-established in field of antitrust law
Eliminate regulatory silos and level the playing field through deregulation
Comprehensively reform spectrum not just through more auctioning but through clear property rights
Reform universal service by either voucherizing it or devolving it to the States and let them run their own telecom welfare programs
Significantly reforming & downsizing the scope of the FCC’s power of the modern information economy



If we can get those 5 things done, we will have accomplished true deregulation of America’s information marketplace.  What we don’t want is another fiasco like the Telecommunications Act of 1996, which represented an effort at managed competition. That law intentionally avoided providing clear deregulatory guidance and instead delegated broad and remarkably ambiguous authority to the FCC. This left the most important deregulatory decisions to the FCC and, not surprisingly, the agency did a very poor job of following through with a serious liberalization agenda.
Again, regulators generally don’t deregulate themselves! It is against their self-interest. Congress must impose restraint on the agency and limit (or, better yet, end) its powers.

IV) Some will say communications & media markets are too important to deregulate. But the exact opposite is true.

America’s Founders thought media was important enough that they made sure that the First Amendment clearly stated that “Congress shall make no law” as it pertains to freedom of speech and the press. They got it exactly right.
We need to return to that Constitutional prime directive for information markets and start removing the layers of unjust and unnecessary regulation that have encumbered these markets for the past 100 years. America’s communications and media policy should once again be the First Amendment, not the Communications Act of 1934 or the Telecom Act of 1996.
What we need, to borrow the title of Richard Epstein’s book of the same title, is “simple rules for a complex world.”  Those simple rules include: the law of contract, torts and common law, anti-fraud statutes, etc.
Such simple rules can govern our complex information ecosystem the same way they govern every other sector of our capitalist economy. We don’t need a sector-specific regulator or body of regulation for communications, media, and the Internet.

Pricing Experimentation & Broadband Usage-Based Pricing

We spend a lot of time here defending the simple proposition that flexible free-market pricing is a good thing. You would think that in 2012 we wouldn’t need to do so, but there’s a growing movement afoot today by some academics, regulatory activists, and public policymakers to have government start asserting more authority over broadband pricing. In particular, they want Congress, the FCC, or state officials to investigate and possibly even regulate efforts by wireline and wireless broadband carriers to use usage-based pricing and data caps as a method of calibrating supply and demand. This was the focus of my last weekly Forbes column, “The Specter Of Broadband Price Controls.” In the piece I note that:

Data caps and usage-based pricing are forms of what economists refer to as price discrimination. Although viewed with suspicion by some policymakers and regulatory-minded academics and activists, price discrimination is widely recognized to improve consumer welfare. Price-differentiated and prioritized services are part of almost every industrial sector in our capitalist economy. Notable examples include airline and hotel reservations, prioritized shipping services, amusement park passes, and fuel and energy pricing. Economists agree that price discrimination represents a sensible way to calibrate supply and demand while ensuring the fixed costs of doing business get covered. Consumers benefit from such pricing experimentation by gaining more options while firms gain more certainty about investment and service decisions.

This is confirmed by an excellent new Mercatus Center working paper on “The Impact of Data Caps and Other Forms of Usage-Based Pricing for Broadband Access,” by Daniel A. Lyons, an assistant professor of law at Boston College Law School. Lyons explains why a return to price controls for communications would be monumentally misguided. Lyons notes that “data caps and other forms of metered consumption are not inherently anti-consumer or anticompetitive. Rather, they reflect different pricing strategies through which a broadband company may recover its costs from its customer base and fund future infrastructure investment.” He notes that “by aligning costs more closely with use, usage-based pricing may effectively shift more network costs onto those consumers who use the network the most.”

What I find most interesting about the debate over broadband pricing flexibility is the way some so-called “consumer advocates” cannot seemingly wrap their heads around the fact that price discrimination can actually benefit most consumers by creating more and better pricing options and service alternatives. As I noted in my Forbes essay, “if policymakers lock-in flat rate pricing or regulate pricing such that it is not allowed to fluctuate with demand or investment needs, then it is likely that light users (including many lower income users) will end up paying more than they need to for their overall share of network costs. If that is also disallowed through rate regulation, then network investment will suffer and further innovation will be discouraged. Something has to give because, again, there really is no free lunch.”

It remains to be seen whether true free market pricing will be allowed to continue in this context, but make no doubt about it, this is the most important aspect of the ongoing debate about modern information economics. If America returns to price and rate controls for communications, innovation and investment will suffer greatly.

Oh, and here’s a video featuring Eli Dourado, who can explain this much more eloquently than me! …

Additional Reading

More on Net Neutrality, the Importance of Business Model Experimentation & Pricing Flexibility (May 9, 2012)
Real Talk on Net Neutrality (May 9, 2012)
Netflix Falls Prey to Marginal Cost Fallacy & Pleads for a Broadband Free Ride (July 8, 2011)
Smartphones & Usage-Based Pricing: Are Price Controls Coming? (July 12, 2011)
Why Congestion Pricing for the iPhone & Broadband Makes Sense (October 7, 2009)
The (Un)Free Press Calls for Internet Price Controls: “The Broadband Internet Fairness Act” (June 17, 2009)
Free Press Hypocrisy over Metering & Internet Price Controls (June 18, 2009)
Bandwidth Cap Hysteria & the Alternative (October 4, 2008)
Once Again, Why Not Meter Broadband Pipes?  (September 7, 2007)
Why Not Meter? (March 12, 2007)
The Real Net Neutrality Debate: Pricing Flexibility Versus Pricing Regulation (October 27, 2005)

New Paper on Wu’s “Separations Principle” & the War on Vertical Integration in the Tech Economy

The Mercatus Center at George Mason University has just released a new paper by Brent Skorup and me entitled, “Uncreative Destruction: The War on Vertical Integration in the Information Economy.”  Brent, who is the research director for the Information Economy Project at the George Mason University School of Law, and I have been working on this paper since the Spring and we are looking forward to getting it published in a law review shortly. The paper focuses on Tim Wu’s “separations principle” for the digital economy, something I’ve spent some time critiquing here in the past. Here’s the introduction from the 44-page paper that Brent and I just released:

Are information sectors sufficiently different from other sectors of the economy such that more stringent antitrust standards should be applied to them preemptively? Columbia Law School professor Tim Wu responds in the affirmative in his book The Master Switch: The Rise and Fall of Information Empires. Having successfully pushed net-neutrality regulation into the policy spotlight, Wu has turned his attention to what he regards as excessive market concentration and threats to free speech throughout the entire information economy.To support his call for increased antitrust intervention, Wu explains his view of competition in the information economy—a view that deviates substantially from current mainstream antitrust theory.

First, Wu contends that “information monopolies” are pervasive in the information economy. Wu’s “monopolists” include Facebook, Apple, Google, and even Twitter. In The Master Switch and essays like “In the Grip of the New Monopolists,” Wu argues that these so-called monopolies are increasing their market power and require more aggressive oversight and regulation.Second, Wu argues that traditional antitrust analysis is not sufficient for information systems because they carry speech. He claims, “Information industries… can never be properly understood as ‘normal’ industries,”and traditional forms of regulation, including antitrust enforcement, “are clearly inadequate for the regulation of information industries.”Wu believes that because information industries “traffic in forms of individual expression” and are “fundamental to democracy,” they should be subject to greater regulatory treatment.Third, in contrast to current competition law’s focus on horizontal relationships, Wu desires a reinvigorated regulatory enforcement that addresses “the corrupting effects of vertically integrated power” in the information sectors.He is particularly concerned about private threats to free speech arising from such vertical integration.The solution, he says, is preventing vertical mergers in the information economy and the mandatory divestiture of vertically integrated companies.

To implement this, Wu proposes a Separations Principle for the information economy, which would segregate information providers into three buckets, which we have labeled information creators, information distributors, and hardware makers.This article outlines Wu’s separations proposal, explains why his fears regarding vertical relationships should be rejected by regulatory and antitrust policymakers, and illustrates the legal and practical problems his Separations Principle poses. Wu justifies his Separations Principle by citing monopolies and market power in the information economy. He also advocates using U.S. antitrust authorities to enforce his Principle.

We argue that the antitrust harms he fears are not present, and we highlight scholarship on the accepted benefits of vertically integrated firms. We show that Wu’s remedies are policy preferences wrapped in the language of competition law. In fact, the information economy is largely competitive and does not warrant interventionist regulatory enforcement. Since much of American economic vitality flows from the information economy and technology, policymakers should reject a radical antitrust remedy like Wu’s preemptive Separations Principle.

The paper can be downloaded from the Mercatus website, SSRN, or Scribd.

Stan Liebowitz on copyright and incentives

Stan Liebowitz on copyright and incentivesStan Liebowitz, Ashbel Smith Professor of Economics at the University of Texas at Dallas, discusses his paper, “Is Efficient Copyright a Reasonable Goal?” According to Leibowitz, economists could hypothetically calculate the exact copyright terms necessary to incentivize creators to make new works without allowing them to capture “rents,” or profits above the bare minimum necessary. However, he argues, efficiency might not be the best goal for copyright.

Liebowitz argues from a fairness or justice perspective that society should not favor an economically efficient copyright law, but one that treats creators of copyrighted works the same as workers in other types of industries. In other industries, he argues, workers are allowed to capture and keep rents.

Download

Related Links


Is Efficient Copyright a Reasonable Goal?, by Liebowitz
TSeventeen Famous Economists Weigh in on Copyright: The Role of Theory, Empirics, and Network Effects, by by Liebowitz
How copyright is like Solyndra , by Jerry Brito

Event: FCC v. Fox: Broadcast Indecency Law as the New Paradigm for Regulatory Failure

This Wednesday the Information Economy Project at George Mason University wil present the latest installment of its Tullock Lecture series, featuring Thomas G. Krattenmaker, former director of research at the FCC. Here is the notice:

Thomas G. Krattenmaker
Former Director of Research, FCC
Former Professor of Law, Georgetown University Law Center
Former Dean and Professor, William and Mary Law School

Wednesday, October 17, 2012

The Information Economy Project at George Mason University
proudly presents The Tullock Lecture on Big Ideas About Information

4:00 – 5:30 pm @ Hazel Hall Room 215
GMU School of Law, 3301 Fairfax Drive, Arlington, Va.
(Orange Line: Virginia Square-GMU Metro)
Reception to Follow in the Levy Atrium, 5:30-6:30 pm

In its June 21, 2012 opinion in FCC v. Fox, the Supreme Court vacated reasoned judgments of the Second Circuit, without one sentence questioning the validity or wisdom of those judgments. Although the Court absolved Fox on a technicality, its opinion appears to reflect a post-modern approach to First Amendment jurisprudence concerning broadcast speech, whereby neither precedent nor principle control outcomes. This indulgent approach to a government censorship bureau appears to acquiesce in an unconfined, unprincipled, and unwarranted seizure of regulatory power by the FCC. The Fox opinion thus compounds and enables a grave regulatory failure; whether any sound broadcast indecency policy or legal regime is feasible is perhaps debatable, but the Federal Communications Commission is wholly incapable of administering such a regime. The lecture will be preceded by a short introduction by Fernando Laguarda.

Register here.

Leon Panetta: Beware of cyber-derailed trains full of lethal chemicals

[image error]On the front page of today’s New York Times, Defense Secretary Leon Panetta again sounds the alarm about a "cyber Pearl Harbor.

“An aggressor nation or extremist group could use these kinds of cyber tools to gain control of critical switches,” Mr. Panetta said. “They could derail passenger trains, or even more dangerous, derail passenger trains loaded with lethal chemicals. They could contaminate the water supply in major cities, or shut down the power grid across large parts of the country.”

Defense officials insisted that Mr. Panetta’s words were not hyperbole, and that he was responding to a recent wave of cyberattacks on large American financial institutions. He also cited an attack in August on the state oil company Saudi Aramco, which infected and made useless more than 30,000 computers.

Not hyperbole, hmm? It’s the usual cyber fear two-step. First lay out a doomsday scenario involving hackers remotely derailing trains full of lethal chemicals. Second, cite recent attacks as evidence that the threat is real. Except let’s look at the cited evidence.

Here’s how the New York Times itself described the recent attacks on banks:

The banks suffered denial of service attacks, in which hackers barrage a Web site with traffic until it is overwhelmed and shuts down. Such attacks, while a nuisance, are not technically sophisticated and do not affect a company’s computer network — or, in this case, funds or customer bank accounts. But they are enough to upset customers.

Explosive stuff. And what about that attack on Saudi Aramco? Serious, to be sure, even if no control systems were breached, but as Reuters recently reported,

One or more insiders with high-level access are suspected of assisting the hackers who damaged some 30,000 computers at Saudi Arabia’s national oil company last month, sources familiar with the company’s investigation say. …

The hackers’ apparent access to a mole, willing to take personal risk to help, is an extraordinary development in a country where open dissent is banned.

“It was someone who had inside knowledge and inside privileges within the company,” said a source familiar with the ongoing forensic examination.

What this shows is that one of the greatest threats to networks is not master hackers tunneling their way in, but good old fashioned spies. The cybersecurity legislation that Panetta and the administration are pushing cannot prevent a determined insider with access and permissions from carrying out an attack. It can, however, distort the incentives of businesses and hamper innovation.