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Industry combating online piracy

The Digital Millenium Copyright Act‘s notice-and-takedown safe harbor is rapidly becoming obsolete. The safe harbor, aka Section 512 of Title 17 of the U.S. Code, is the subject of a hearing tomorrow in the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet. The safe harbor limits the liability of online service providers for copyright infringement if they remove infringing content upon receiving notice from the copyright owner. Safeguards are built into the law to protect against the possibility of erroneous or fraudulent notifications. The problem is the safe harbor was designed for the Internet as it existed 15 years ago, before broadband. Most people did not access video over the Internet when Congress enacted the DMCA in 1998. As the Federal

Repeal Satellite Television Law

The House Subcommittee on Communications and Technology will soon consider whether to reauthorize the Satellite Television Extension and Localism Act (STELA) set to expire at the end of this year. A hearing scheduled for this week has been postponed due to weather. Congress ought to scrap the current compulsory license in STELA that governs the importation of distant broadcast signals by Direct Broadcast Satellite providers. STELA is redundant and outdated. The 25 year-old statute invites rent-seeking every time it comes up for reauthorization. At the same time, Congress should also resist calls to use the STELA reauthorization process to consider retransmission consent reforms. The retransmission consent framework is designed to function like the free market and is not the

Advertisers vs. ad-supported pirate sites

A sampling of 596 web sites that deal primarily in pirated content made an estimated $227 million in annual advertising revenues, according to the Digital Citizens Alliance (See: “Good Money Gone Bad: Digital Thieves and the Hijacking of the Online Ad Business – A Report on the Profitability of Ad-Supported Content Theft“). “The 30 largest sites studied that are supported only by ads average $4.4 million annually, with the largest BitTorrent portal sites topping $6 million. Even small sites can make more than $100,000 a year from advertising.” “It is important to note that the advertising profits garnered by content thieves do not equate with the losses incurred by the owners of the content,” notes the report. “These losses are

The Overblown Case For Retrans Reform

Retransmission consent came under attack again this month, and two long-awaited bills on the subject have finally been introduced–the Next Generation Television Marketplace Act (H.R. 3720) by Rep. Steve Scalise, and the Video CHOICE (Consumers Have Options in Choosing Entertainment) Act (H.R. 3719) by Rep. Anna G. Eshoo. The American Cable Association’s Matthew M. Polka has reiterated his view that the process whereby cable and satellite TV providers negotiate with broadcasters for the right to retransmit broadcast signals is a “far cry from the free market,” and Alan Daley and Steve Pociask with the American Consumer Institute claim that retransmission consent jeopardizes the Broadcast Television Spectrum Incentive Auction. As Jeff Eisenach pointed out at the

Satellite Carrier Subsidies Are Unwarranted

DISH Network gets another opportunity on Tuesday to plead with Congress for another Satellite Home Viewer Act reauthorization–ostensibly to protect consumers from unwarranted rate increases and program blackouts, but actually to preserve and expand DISH Network’s and DirecTV’s access to broadcast programming at regulated, below-market rates. A couple minor provisions in the Act that have nearly outlived their original purpose are due to expire, but DISH Network is taking advantage of this opportunity to argue that “there is much more that Congress can do to expand consumers’ access to local programming…” DISH’s plea is an example of the narcotic effect of supposedly benign regulation intended to promote competition by giving nascent

Crawford’s Misplaced Nostalgia for Utility Regulation

In her new book, Captive Audience, Susan Crawford makes the same argument that the lawyers for AT&T made in Judge Harold H. Greene’s courtroom in response to the government’s antitrust complaint beginning in 1981, i.e., that telephone service was a “natural monopoly.” In those days, AT&T wanted regulation and hated competition, which is the same as Crawford’s perspective with respect to broadband now. Here is what she said today on the Diane Rehm Show: Diane Rehm: “Is regulation the next step?” Susan Crawford: “It always has been for these industries, because it really doesn’t make sense to have more than one wire into our homes. It is a very expensive thing to install; once it’s there, it has to be kept up to the

FCC Risks Getting Sidetracked on Spectrum Auctions

On Wednesday, the Subcommittee on Communications and Technology will conduct an oversight hearing of the implementation of spectrum auctions by the Federal Communications Commission. The subcommittee members ought to consider the fact that although the mobile wireless industry faces an acute shortage of spectrum (“broadband spectrum deficit is likely to approach 300 MHz by 2014“), the FCC risks getting distracted and mired in a pointless effort to leverage its spectrum auctioning authority to manipulate the structure of the mobile wireless industry. In mid-2011, former Commissioner Michael J. Copps warned of “darkening clouds over the state of mobile competition … we find ongoing trends of industry consolidation.” As Copps saw it, increasing concentration

Roosevelt Tried To Abolish the FCC

No doubt you are aware that the Communications Act of 1934 eastablished the Federal Communications Commission, which has profoundly affected the broadcast, cable, telecommunications and satellite industries. You will recall that the legislation was signed into law by President Franklin D. Roosevelt. What you may not realize is that President Roosevelt made two subsequent attempts to abolish the Federal Communications Commission. On Jan. 23, 1939, Roosevelt wrote similar letters to Senator Burton K. Wheeler and Congressman Clarence F. Lea urging dramatic FCC reform. I am thoroughly dissatisfied with the present legal framework and administrative machinery of the Commission. I have come to the definite conclusion that new legislation is necessary to effectuate a satisfactory

No More Backscratching Between Phone Companies

An ad campaign urged residents of Butler, GA to “Stop AT&T From Raising Your Rates” by planning to attend a public hearing earlier this month at the Taylor County Courthouse to provide testimony in Docket #35068, Rate Cases on the Track 2 Companies. The Georgia Public Service Commission sets the phone rates in Butler, but politics are politics, and AT&T is a better scapegoat for an ad campaign. AT&T doesn’t even provide the town’s phone service, although the telecom giant does help finance it. That’s because Georgia consumers pay a hidden tax on their phone bills that subsidizes the phone service provided by Public Service Telephone Co. in Butler. You guessed it, PST paid for the ads. >Continue

Still Seeking Advantageous Regulation in Telecom

One of the most egregious examples of special interest pleading before the Federal Communications Commission and now possibly before Congress involves the pricing of “special access,” a private line service that high-volume customers purchase from telecommunications providers such as AT&T and Verizon. Sprint, for example, purchases these services to connect its cell towers. Sprint has been seeking government-mandated discounts in the prices charged by AT&T, Verizon and other incumbent local exchange carriers for years. Although Sprint has failed to make a remotely plausible case for re-regulation, fuzzy-headed policymakers are considering using taxpayer’s money in an attempt to gather potentially useless data on Sprint’s behalf. Sprint is trying to undo a

Government cares more about politics than the tech economy

The hottest companies in Washington, DC right now include Netflix, Sprint and T-Mobile. What do these firms have in common? They are all marketplace losers. A few years ago, the Supreme Court said that the Sherman Act “does not give judges carte blanche to insist that a monopolist alter its way of doing business whenever some other approach might yield greater competition” (see: Verizon v. Trinko, 2004). Yet this is precisely the course of action that technocrats are taking as a result of accepting invitations from Netflix to conduct a “wide-ranging antitrust investigation” of the cable industry and from Sprint and T-Mobile to find a way to block Verizon Wireless’ acquisition of additional spectrum. Netflix built a successful mail order DVD business when

Network access regulation 4.0

More this week on the efforts of Reed Hastings of Netflix to reignite the perennial debate over network access regulation, courtesy of the New York Times. Hastings is seeking a free ride on Comcast’s multi-billion-dollar investment in broadband Internet access. Times columnist Eduardo Porter apparently believes that he has seen the future and thinks it works: The French government forced France T�l�com to lease capacity on its wires to rivals for a regulated price, he reports, and now competitor Iliad offers packages that include free international calls to 70 countries and a download speed of 100 megabits per second for less than $40. It should be noted at the outset that the percentage of French households with broadband in 2009 (57%) was less than the percentage of U.S.

Nothing to fear from pricing freedom for broadband providers

The airline would not let coach passenger Susan Crawford stow her viola in first class on a crowded flight from DC to Boston, she writes at Wired (Be Very Afraid: The Cable-ization of Online Life Is Upon Us). Just imagine trying to run a business that is utterly dependent on a single delivery network — a gatekeeper — that can make up the rules on the fly and knows you have nowhere else to go. To get the predictability you need to stay solvent, you’ll be told to pay a “first class” premium to reach your customers. From your perspective, the whole situation will feel like you’re being shaken down: It’s arbitrary, unfair, and coercive. Most people don’t own a viola, nor do they want to subsidize viola travel. They want to pay the lowest

Landline rules won’t work for telecoms, or for Susan Shaw

Cecilia Kang of the Washington Post reports that the telecom industry is forcing policymakers to re-examine what has long been a basic guarantee of government – that every American home should have access to a phone, along with other utilities such as water or electricity. Industry executives and state lawmakers who support this effort want to expand the definition of the phone utility beyond the century-old icon of the American home to include Web-based devices or mobile phones. The quid pro quo for a monopoly franchise was an obligation to provide timely service upon reasonable request to anyone, subject to regulated rates, terms and conditions. The Telecommunications Act of 1996 eliminated the monopoly franchise, but the obligation to serve remains in the statute books of most

New Client of the Regulatory State Expects Results

When the federal government torpedoed the AT&T/T-Mobile USA merger in December pursuant to the current administration’s commitment to “reinvigorate antitrust enforcement,” it created a new client in search of official protection and favors. It was clear there is no way T-Mobile – which lost 802,000 contract customers in the fourth quarter – is capable of becoming a significant competitor in the near future. T-Mobile doesn’t have the capital or rights to the necessary electromagnetic spectrum to build an advanced fourth-generation wireless broadband network of its own. T-Mobile’s parent, Deutsche Telekom AG, has been losing money in Europe and expected its American affiliate to become self-reliant. In 2008, T-Mobile sat out the last major

Federal broadband loan program hopelessly duplicative

A hearing tomorrow in the House Subcommittee on Rural Development, Research, Biotechnology, and Foreign Agriculture will examine duplicative rural development programs. The subcommittee should pay particular attention to the Broadband Loan Program administered by the Rural Utilities Service of the Department of Agriculture. Audits have uncovered serious shortcomings and the agency has resisted needed reforms for years. The time has come for lawmakers to brush aside rosy assurances from agency officials and wind the program down. Testifying in February of last year, the Department of Agriculture’s Inspector General briefly summarized a shocking set of audit findings from 2005 that included waste, fraud and abuse, and noted that most of the issues had still not been resolved

Kentucky considering telecom update

Legislators in Kentucky are considering a bill for modernizing Chapter 278, sections 541-544 of the Kentucky Revised Statutes relating to the jurisdiction of the Public Service Commission (Senate Bill 135). States including Alabama, Florida, Georgia, Indiana, Illinois, North Carolina, Ohio, Tennessee and Wisconsin have all recently revamped their telecommunications statutes, and Mississippi is in the process of considering similar legislation. SB 135 would put Kentucky in a strong position relative to these nearby states in terms of creating a favorable business climate for private investment in advanced networks. Rates for basic local exchange service would be market-based and not subject to commission jurisdiction beginning 60 months after a telephone utility elects (or has already

Telecom reform in Mississippi

Proposed House Bill 825 would update the regulation of telecommunications services in Mississippi. Effective July 1, 2012, the Public Service Commission would no longer be authorized to regulate the rates, terms and conditions of single-line flat rate voice communication service, nor impose other regulation. The bill also clarifies that nothing in Title 77, Chapter 3 (Regulation of Public Utilities) of the Mississippi Code may be construed to apply to video services, voice over Internet protocol services (“VoIP”), commercial mobile services, Internet protocol (“IP”) enabled services, in addition to broadband services. The commission would continue to regulate intrastate switched access service, as well as arbitrate and enforce interconnection agreements between

House spectrum bill protects taxpayers — and progressives are not happy

Congress is considering a bill which would authorize the Federal Communications Commission to reassign certain electromagnetic spectrum for mobile broadband services through “voluntary incentive auctions.” Speaking at a trade show earlier this month, FCC Chairman Julius Genachowski was critical of provisions in the “Jumpstarting Opportunity with Broadband Spectrum Act” (H.R. 3630, Title IV) limiting the FCC’s power to impose conditions on successful bidders that have nothing to do with maximizing revenue for the Treasury. One provision would prohibit the commission from unreasonably restricting who can participate in a spectrum auction, such as large firms. Another provision in the JOBS Act would prevent the FCC from requiring a successful bidder to sell