Author Archives
The Gravity-Defying Nature of Federal Regulation
Forbes magazine grabs a terrific quote from 10,000 Commandments, an annual report authored by Wayne Crews, CEI’s Vice President for Policy. The report focuses on just how bloated the federal registry has become:
What goes up and doesn’t come down? The federal budget and the cost of federal regulations. [Our] new report finds the cost of federal regulations on consumers [was] a staggering $1.16 trillion in 2007.
Thanks to Mr. Steve Forbes for including us in his fine publications and for sending us a note giving us a heads-up on the quote.
If you’re not feeling angry enough at just how out of control our federal government has become, read the report yourself at CEI.org.
Or, check out the 10,000 Commandments public service announcement produced by CEI:
Dirty Laundry: Private Contract Threatened in Maryland
The rights of homeowners to form associations is under attack in Maryland, where some residents believe that the state should forbid homeowners associations HOAs from enforcing some community guidelines.
The Post Express and the Washington Examiner both published an AP story last week outlining the frustrations that some Maryland residents have over not being able to hang their laundry outside—an action that’s forbidden by their HOAs.
One homeowner and clothesline enthusiast can’t let this injustice (to her) stand. Wei Wang, was cited in the AP piece saying that Maryland should pass a law “that forbids HOAs from preventing people from hanging laundry outside as soon as possible.”
Though I sympathize with Wang’s frustrations, this complaint shouldn’t be brought to the state. HOAs are private, voluntary organizations that residents become a part of in order to ensure that their community adheres to certain guidelines. Though these guidelines can sometimes be cumbersome, they can also prevent eyesores like perpetually uncut lawns or bright pink siding on the neighbor’s house—things that I would find amusing, but others may find distasteful.
Voluntary rules and restrictions are a part of life in a free society. We agree to wipe down equipment at the gym after each use, we consent to wearing stuffy clothes to the office, and we sign long-term contracts for everything from cell phone plans to car leases. When we don’t like the terms, we can renegotiate or seek a competitor—inviting in the authority of the state only serves to undermine our most basic right to private contract.
It seems that Wang tried renegotiation, but failed.
Who’s Best at Lobbying 2.0?
I’m looking for examples of effective tech lobbyists. We’ve seen a lot of people moving from the Valley to the Hill lately. Microsoft has gone from “Jack and His Jeep ” to a giant lobbying shop. Google learned from Microsoft’s mistakes and now has a couple floors down on New York Ave. These guys are making an impact in Washington, but what are the best Baptist and Bootleggers scenarios?
Bruce Yandle was the first to put this name to the common two-man play in Washington. It involves a moral authority and an underwriter with deep pockets to fund a lobbying effort. He used Baptists and bootleggers as the most clear example of this. Baptists called for temperance and prohibition because they genuinely believed that alcohol was a great evil. This provided moral authority. The bootleggers didn’t care much about morals, but they knew they’d get rich if legitimate breweries and distilleries were made illegal.
The same thing seems to be going on now. “Lobbying 2.0″ features moral crusaders fighting for net neutrality, the unlocking of cell phones, the unbundling of any service that dare be bundled and other such tech-morality causes. Meanwhile, the real beneficiaries of any regulation to come out of this are big tech companies trying to gain an advantage on one another through regulation rather than through competition and innovation.
So, by “best” stories I mean classic examples of businesses lobbying in favor of regulation as opposed to defending themselves against regulation. Who’s most guilty of being a bootlegger? What individual crusader or group is playing the role of the Baptists?
Your comments are appreciated. Also, be sure to check out this Onion discussion on lobbyists.
Do Not Track Registry Likely to Include Exemptions
Last week a scad of stories from Reuters to News.com covered the growing push for a “Do Not Track” registry similar to the “Do Not Call” list that serves to protect US households from mid-dinner sales calls. While I understand the concerns expressed by folks like Marc Rotenberg of EPIC and Jeff Chester of the Center for Digital Democracy, who were both cited by Anne Broache in the News.com piece from last week, I think that asking the government to hold a master list of IPs and consumer names is a bad idea, or at least one that won’t do much to really protect consumers.
First, tracking people online is a bit different from calling folks in their homes. Telemarketing, while highly effective in terms of sales produced per dollar of marketing money spent, is still orders of magnitude more expensive than spamming or collecting data online without consent. Both of these activities are illegal today, but they still occur. They occur so much that spam-filtering technology contains some of the most advanced natural language recognition and parsing software created. Cory Doctorow has mused that the first artificial intelligences will emerge from Spam and anti-Spam computer arrays.
So this list wouldn’t be the magic wish that privacy advocates and legislators might dream it to be. It would cause law-abiding companies like Google, AOL, and Microsoft to stop collecting data, but so could privately developed and enforced systems.
Anne Broache notes that cookies are a bad solution for stopping data tracking as many anti-spy-ware programs delete cookies, since cookies are often used for the purpose of data tracking. But why not just create a new variety of cookie? Call it a cake, a brownie, a cupcake–maybe even a muffin. Whatever you call it, just specify that a standards-compliant browser must contain a place for something similar to a cookie to be placed that will opt consumers out of tracking schemes. This isn’t a technological problem at all, it’s just a matter of industry deciding to follow this course.
My other concern is something that fellow TLFer and former CEI staffer James Gattuso pointed out in a 2003 piece in regard to the “Do Not Call” list, namely that the government will likely exempt itself from the rules. In our post-9/11 world (whatever that means) we should expect government–the supposed protector of our rights–to make these sorts of moves. But you don’t have to trust my assertion, look no farther than Declan McCullagh’s Wednesday post at New.com. The FBI is pushing hard for Internet companies to retain data so that they can later sift through it. It’s doubtful that the government will place itself on “Do Not Track” list if they believe they can gain useful intelligence by tracking people online.
So, by and large, this proposed registry seems unnecessary and ineffective. Industry can easily work out a way to allow consumers to opt-out and the two groups I’m most afraid of–the Russian Mob and the U.S. Government–won’t pay heed to any registry anyway.
Instead or wringing our hands over advertisers tracking what duvet covers we buy, can we turn our attention to what our freewheelin’ executive branch is trying to pull-over on us? Seems to me they’re cooking up exemptions to more than just this registry–a few of my favorite Constitutional Amendments spring to mind.
Localism is the new Fairness Doctrine
Just as pink was the new black and The Backstreet Boys were the new New Kids on the Block, the FCC is now turning “Localism” into the new Fairness Doctrine.
The Fairness Doctrine mandated that controversial issues of public importance be presented in a manner deemed by the FCC to be honest, equitable, and balanced. Though Localism isn’t concerned with political speech, both sets of rules interfere with the editorial process, both control and compel speech, and neither passes Constitutional muster.
The FCC has reasons to believe that Localism is a concern, but those reasons lack the weightiness and depth of well-conducted policy research needed for rule making. Commisioner Copps has stated that:
We have witnessed the number of statehouse and city hall reporters declining decade after decade, despite an explosion in state and local lobbying. The number of channels have indeed multiplied, but there is far less local programming and reporting being produced.
Yet only a few short years ago former FCC Chairman Michael Powell made this statement on the issue of localism:
Local newscasts have become the staple of any successful local broadcast tele
vision station, demonstrating that serving the needs and wants of your local community does not just fulfill their public obligations, but also simply make good business sense.
Powell also stated in 2004 that Americans today “have access to more local content than at any time in our nation’s history.” But still, commissioners like Michael Copps don’t approve of how that local news is produced or what it contains.
But events of national and international importance do not occur in accordance with regulators’ preconceived notions of how much coverage ought to be allotted to them. Local news outlets should not be wary of reporting on wars overseas, famine in the developing world, or other non-local issues they deem important for fear of neglecting to comply with bureaucratic dictates.
The Fairness Doctrine had the arguably worse effect of making many broadcasters shy away from political coverage altogether, for fear that–try as they may–their coverage would be considered “unbalanced.” Twenty years after instituting this misguided rule, the FCC finally acknowledged this fact in the wake of a 1985 Supreme Court decision (FCC v. League of Women Voters, 468 U.S. 364) which found that the rule was “chilling speech.”
The result was an explosion in talk radio content beginning most famously with conservative pundit Rush Limbaugh, but also creating new space for left-liberal voices like Thom Hartmann and Al Franken.
Where the Fairness Doctrine chilled all speech, Localism will compel speech of which FCC Commissioners like Copps approve. In a world of limited broadcast hours, compelling one sort of speech means sacrificing speech of another, effectively censoring speech.
Should we be content to let the FCC tell us what we have to say when we’d never stand for it telling us what we can’t say? Oh wait, I suppose we do let it tell us what we can’t say.
Bad Data & Broken Databases at the FCC
The FCC is continuing its desperate search for a reason to exist. This year it’s decided to assert its relevance by reengaging an issue that it had ignored since 2004. The “Localism” debate has reemerged and one of the most troubling aspects of this debate is the focus on the supposed lack of ownership of broadcast television and radio stations by women and minorities. While the goal of increasing diversity in the sphere of broadcast media is a noble one, the data being used to justify new rules is specious.
Many have attempted to validate their concerns over ownership diversity by referencing a March 2008 GAO study which focuses on media ownership. However, this report admits freely that FCC data is severely lacking.
Many of you who follow TLF will note that Jerry Brito has done extensive work on government transparency and the importance of making data truly accessible–you know, putting it online rather than in a basement in the Capitol. While it’s no surprise that some agencies haven’t updated their record keeping, it is a little disturbing that the FCC–a commission charged with regulating some of the most advanced technology available–doesn’t keep adequate records. Specifically the GAO sites the problems with Form 323, the FCCs method of collecting information on broadcast station owner gender, race, and ethnicity:
Companies must file the Form 323 electronically. However, FCC allows owners to provide attachments with their electronic filing of the Form 323. These attachments may include the gender, race, and ethnicity data. Since these data are not entered into the database, the data are unavailable for electronic query.
This flaw in data collection is certainly laughable, but the most glaring deficiency is that the FCC doesn’t require sole proprietors, limited partnerships, or non-profits to report on ethnicity of owners—leaving one to wonder how it assesses this information at all. Excluding these legal entities from data collection leaves only incorporated radio stations in the group required to file FCC Form 323 which contains information on race and gender.
But how does one determine the sex or ethnicity of a corporation? Clear Channel Communications—one of the nation’s largest owners of radio stations—has issued nearly 500 million shares of stock. Has Clear Channel polled every share holder about their race or gender? It’s doubtful. It’s also doubtful that any method of determining the race and gender of the owners of corporate stations could ever be done in a way that’s meaningful or anything close to a basis for sound public policy.
Dumb Pipes, a Dumb Idea: Net Neutrality as 21st Century Socialism
This week’s C:\Spin (#197), CEI’s tech policy newsletter, casts net neutrality in the appropriate light. Calling out proponents of neutrality for what they are–political predators–my colleague Wayne Crews lays bare the misconceptions and wrong-headed thinking that make up the neutrality debate:
“You know who owns your pipes? Your customers. You have no right to set up a tollbooth.”
- Sen. Byron Dorgan (D-ND), September 17, 2007
Sen. Dorgan’s statement refers to the broadband infrastructure built up by the telcos and their rivals. It lays the “net neutrality” issue bare: if you’re an infrastructure owner or Internet service provider, government people like him shall dictate your relationships with the world at large.
Welcome to infrastructure socialism, 21st century style.
Online activists teamed with superstars like Google seek a perpetual “open access” business model imposed on Internet service. Last summer’s master stroke: to link future wireless spectrum auctions to accommodating the policy.
Comcast recently received letters of inquiry from the Federal Communications Commission (FCC) in response to a petition filed by a coalition averse to what it regards as unjustified data discrimination against file-sharers. They seek fines in the millions.
Barack Obama, unveiling his “innovation agenda” late last year, pledged, “I will take a backseat to no one in my commitment to network neutrality. Because once providers start to privilege some applications or web sites over others, then the smaller voices get squeezed out, and we all lose.”
Sen. Dorgan, naturally, spies an opening for his net neutrality legislation (co-sponsored with Sen. Olympia Snowe, R-ME). Representative Ed Markey has introduced legislation to investigate neutrality as well.
The Full RSS
I want to thank my fellow Tech Liberation Front contributor Tim Lee for pointing out that Open Market RSS feeds should feature full articles, not mere teasers. I’ve made the change today so you can now enjoy OpenMarket.org posts in your RSS reader in their entirety!
RIP Gary Gygax
Gary Gygax, the father of role-playing games, died today at his home in Lake Geneva, Wisconsin. As a fellow Wisconite and lover of video games–the modern forum for Gary’s roll-playing games–I have to say this is a sad day.
Wired has a post on his passing and for those of you who don’t know much about gaming and the contribution that Gygax made to the field, it’s worth reading the Wikipedia entry on his life.
Gygax with Stephen Hawking and Lieutenant Ohura on an episode of Futurama.
Though his passing isn’t a policy issue, Gygax was one of the founders of early gaming culture which has been carried through to the PC and console platforms which are under attack today. Gygax’s passing should remind us that attacks on gaming aren’t anything new. Role playing games were also attacked when they arrived on the scene. In fact, Tom Hanks starred in Mazes & Monsters, a movie based around the death of gamer James Dallas Egbert III, resulting in hype similar to the stuff we hear today about the effects of violent video games.
Today such objections to board games seem silly. Hopefully in the next decade we’ll look back on the proposed game burnings of the 90s and today as just as foolish.
Rep. Markey’s Wireless Investment Prohibition Act
Congressman Ed Markey (D-Mass) has introduced legislation aimed at ridding the cell phone world of the much criticized practicies of phone subsidies, long-term contracts, and termination fees. In the name of contract “consistency” Markey’s bill mandates that cell companies offer alternative plans that contain no subsidy for the handset and plans that offer month-to-month service.
The bill contains a long section of “findings,” which are intended to point out what, from Rep. Markey’s perspective, are the illogical practices of cell phone providers. However, if you look at the issue of termination fees, you’ll find that Rep. Markey’s bill ignores the role of competition in decreasing costs to consumers and fails to take into account long-term investment in increasing nation-wide wireless capacity.
The bill claims that termination fees “Do not reflect the cost of recovering the monetary amount of a bundled mobile device or any other expenditure for customer acquisition.” The most glaring problem with this finding is that it’s already outed. Sprint, which is currently hemorrhaging money, instituted a new policy in November that allows customers to change plans without extending contracts and prorates termination fees. This came on the heels of similar announcements from Verizon and AT&T in October of last year. So, the bill’s $175 average termination fee figure is likely an incorrect one based on old policies.
But termination fees don’t just serve the purpose of cost recovery, they also provide an incentive for customers staying loyal to their wireless provider and giving these providers revenue predictability. With predictable revenues, it’s easier for cell phone network companies to get the financing they need to build the multi-billion dollar networks of tomorrow. Rep. Markey’s bill may save consumers in the short-term, but in the long run adding volatility to the marketplace will stem investment and slow the roll-out of 4G and Wi-Max networks.
We often talk about the unintended consequences of legislation in our work at CEI–this is a prime example of some very significant and costly unintended consequences that will ultimately hurt consumers and threatens to put America behind the curve on cell phone technology.
Rep. Markey’s bill also deals with wireless broadband, coverage maps, and spectrum efficiency. Topics that Ryan Radia and I will be addressing in future posts.
Who’s more hostile? Microsoft or the FTC?
The fight for Yahoo! continues as Microsoft stated yesterday that:
Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo!’s shareholders are provided with the opportunity to realize the value inherent in our proposal
This statement was issued in response to Saturday’s rejection by Yahoo’s board of the $41 billion dollar offer that Microsoft proposed to the board of Yahoo! This new “all necessary steps” language from Microsoft has been perceived by many to mean the Microsoft will go “hostile” in its pursuit of Yahoo! Of course, hostile in this case isn’t all that hostile. Or at least share holders sure shouldn’t think so. Yahoo’s board has said that a price of $40 a share would be more to their liking, raising the price of the deal to nearly $52 billion. Only in the strange world of corporate-speak can the word “hostile” be applied to a company shelling out an extra %30 to another’s shareholders.
Yahoo’s stock at close of market Monday was trading at $29.87, after having jumped about 8 points after the Microsoft acquisition offer was announced. Yahoo’s stock holders already owe a lot to Microsoft for this added stock value, but a $40 a share price would mean more than doubling the value of their shares since January 30th. Even looking at Yahoo’s 52 week high of $34, a $40 price is a 17% gain. Not too shabby.
Though the Yahoo! board may try to resist the merger, this hostile takeover shouldn’t inspire hostility at the FTC.
Defending The Right to Acquire
If you’re interested in the marriage that might have been and could still be between Microsoft and Yahoo, check out my appearance on C-SPAN’s weekly show The Communicators, which is unfortunately only available in our favorite format, Real Media.
Though Mr. Ballmer’s proposal was rejected the first time, he’s not one to give up easily and he’ll likely barrow even more than the few billion he thought he’d need to increase the size of the dowry. Though he may want to pause, at least for a moment, as the Wall Street Journal reports that tech stocks are up after this weekend’s rejection of the deal by Yahoo!
Regardless of whether Microsoft is successful in its quest to obtain Yahoo, one thing is certain, the FTC should not block such a move. The FTC is charged with ensuring that competition is adequate in markets, but the internet advertising market is beyond competitive, its hyper-competitive. Just look at how rapidly internet firms can go from zero to hero.
Google Caused My Rock Band Addiction
Thanks to Google, I am now addicted to the game Rock Band. I don’t own the game, but I do alternate between playing the demo at BestBuy in Pentagon City and playing the demo at the Gamestop across the street in the mall.
How can I prove that Google caused this addiction? Here I am playing Rock Band with Jillian Bandes of Roll Call in Google’s game room.
Jill’s fake drum performance far exceeded my abilities at the fake guitar. Soon after this photo was taken a tech from Google’s New York offices schooled us on how to rock Rock Band and scored a 97% on a much more difficult setting. Thanks to Adam Kovacevich at Google for featuring my silly performance on Google’s policy blog.
On a more serious note, I’m looking forward to working with Google on some of the policy issues that we’ll likely confront in the coming year. CEI is of like minds with the monolith of Mountain View on issues like privacy and competition policy. But we also disagree on policies like network neutrality and the best way to liberalize spectrum in the U.S.
Google is a great company that has created an enormous amount of wealth. I hope that their DC offices focus on creating a freer market for them to operate within and that they move away from the standard Washington favor-seeking.
Good Copps Bad Copps
This Tuesday, CNet’s Anne Broache reported that FCC Commissioner Copps was NOT ready to support “new rules requiring wireless carriers to open their networks to whatever devices or programs their customers desire.”
On Wednesday, the story was updated:
Update at 10:05 a.m. PST Wednesday: A Copps aide called us on Wednesday to say that his boss didn’t intend to give the impression that he opposes new regulations on the wireless industry. He pointed us to a sentence in Copps’ speech (PDF) in which the Democratic commissioner said he would “enthusiastically support” the FCC’s declaration of “general principles for open wireless platforms” at any time. Copps did then go on to say, as we reported Tuesday, that he would not “strongly object” to industry-led initiatives, “at least for now.”
Regardless of the subtleties of commissioner speak, however, open access rules are just another short term solution to a long term problem. Open access, net neutrality, and other proposals ignore the real problem with the wireless communications market in America–there isn’t one.
Sure, we have a market for broadcast towers, radio receivers, satellite radio, RC cars, and a host of other devices, but the spectrum that those devices used are controlled by the FCC, the commissars of broadcast technology.
The commissioners are knowledgeable and I don’t doubt that most of the time they are acting in the public interest, but the same was true for whomever the politburo selected to plan the distribution of steel in the USSR. Bureaucrats of expertise and virtue can’t outwit the marketplace, especially the high-tech marketplace.
Free trading of spectrum would allow the right airwaves to be paired with the best technology to utilize them–best not according to some bureaucrat, but by the measure of market value.
For more on the FCC and open access, check out my response to CNet piece at News.com.
DC to Elderly Couple: Stay in Your Basement
Yesterday’s Washington Post featured a great piece, “Human Dignity Also Needs to Be Preserved,” from columnist Marc Fisher about a DC couple being nothing short of victimized by the DC government. Fisher tells the story of Cornelius and Merry Lucas, a disabled elderly couple who have been unable to use the upper floors of their home because the DC governments historic preservation laws have prevented them from building a ramp onto their porch. Why? According to the DC government because “repeating porches of similar height and depth create a notable pattern and rhythm.”
As a result, the Lucases remain stuck in their basement rooms, able to come and go only through a back door that opens onto an alleyway.
This story struck a chord with me not only because it’s outrageous on face, but also because my brother Jason was born with cerebral palsy, making him unable to walk and limiting much of his mobility. Thanks in large part to modern technology, my brother leads a very good life. He has a successful career in the financial sector, he’s a HAM radio enthusiast, a downhill and water skier, and owns his own home. Modifying that home makes up a large part of what makes him able to lead his life.
Not only does my brother’s front porch have a ramp, he also has a ramp leading into his garage, a stair-lift to transport him to his basement, a roll-in shower, extra-wide doors, lowered counters, and a large assortment of bars and railings to help him do the simple thing we take for granted. Without the ability to modify his home, my brother would lead a very different, and much poorer life.
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OpenMarket.org is the staff blog of the Competitive Enterprise Institute. We believe that people improve their lives not through government regulation, but by making their own choices in a free marketplace. -
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