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This Week in Law 258
Denise Howell: Hi folks. Denise Howell here. Coming up on This Week in Law, we’ve got Evan Brown, Christina Mulligan, Larry Downes and me. We are going to discuss next week’s meeting of the FCC we’re going to discuss the policy and delivery of information, communications and entertainment and pizza all next on This Week in Law.
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Denise: This is TWiL, This week in law with Denise Howell and Evan Brown. Episode 258, recorded May 9, 2014
Denise: Hi folks, I am Denise Howell. I am so thrilled that you are joining us for This Week in Law. Because we have two out of the ballpark amazing guest joining us today to talk about some very important issues on eve of the monthly FCC meeting next week at which net neutrality will be front and center. Joining us today is Larry Downes, hello, Larry.
Larry Downes: (larrydownes.com - @larrydownes). Hi Denise, thanks for having me back so soon.
Denise: (bagandbaggage.com - @dhowell) Wonderful to have you back. You know, I’d have you back every week if I thought we could get you, you just let us know when you have free time. I always struggle with introducing Larry on the show, he’s been on the show enough that I think people are familiar with him, if you play along with us on a semiweekly basis. I’ve decided Larry. I’m just going to call you an “explainer”. Because you do that fabulously well; (Laughter) a bringer of clues alla the clue train manifesto. Larry, is in addition to those things, a three-time author of Unleashing the Killer App, The Laws of Destruction, and most recently Big Bang Disruption. A prolific writer at Forbes and other menus online, and many many other Internet and policy related hats. And we’re thrilled to have you back on the show.
Larry: (laughter) My pleasure.
Denise: and joining us for the first time this week is Christina Mulligan from the University of Georgia School of law. Christina great to have you.
Christina Mulligan: (cmmulligan.com - @chrystyna) I’m thrilled to be here.
Denise: Christina teaches Internet law, cybercrimes and intellectual property at the University of Georgia. She is an expert on IP, and telecommunications. So, again, we could not have picked a better time to have you on our show.
Christina: You know, there’s so much exciting stuff going on. I’m just thrilled to jump in and talk about it.
Denise: there is. Evan can you believe the folks that come on the show with us?
Evan Brown: (InfoLawGroup LLP - @internetcases) I can’t.
Denise: It just blows me away.
Evan: it’s really something. Yeah. Just as people are saying and I are saying you bring guests. Denise. Yeah, it’s amazing some of the really smart people we get to talk to it really adds so much to the show. And today’s going to be another one that’s going to be one to really be fun to watch afterwards. So, yeah. Looking forward to it.
Denise: And you’re of course. Evan Brown. A partner at info law group prolific blogger and tweeter on all things in Internet law. It’s great to see you.
Evan: It’s great to see you. Glad to be back.
Denise: all right, well, almost. Our whole show today is going to be on policy related issues. I would think. So, let’s go there first.
(Advertisement: Legislation & Policy video lead playing music).
Evan: It’s great to get us started with this music.
Denise: Yeah, can’t beat it. So, next week on the 15th. Barring any delays, which some of the commissioners have been hemming and hawing about, the FCC will finally present and open the comment period on its new open Internet rules. There has been so much confusion about all of this going back to win the news broke on April 23 that there were going to be new open Internet rules presented. The initial news report that said, now the 23rd, I think was a Wednesday. And the initial news report from Wall Street Journal and the Washington Post discussed how the new rules would be made publicly available the next day that Thursday. I don’t know if they just got them wrong, or the FCC changed their mind and I’m interested to see what our guests think about that. But nobody has yet seen these proposed new rules. The Common Sense have talked about them being presented on May 15, so I guess maybe we have to wait until next week until we actually see them. Larry, you have written a big article at Forbes about the FCC’s stumbles, if we can call them that. They are probably worse than stumbles, in communications over this and other issues. What happened here do you think?
Larry: Well, I think this was a leak that went wrong. And I suspect it was an intentional leak but I don’t have any inside information that what actually happened was that on the date that you mentioned someone identified by the Washington Post as a senior executive at the FCC to Cecilia King at the Washington Post the news that the chairman had indeed circulated a draft of what’s called notice of proposed rulemaking to the other commissioners. And that that notice would be up for vote. May 15, and that, as you say starts the comment. No one, of course, outside the FCC has actually seen that, that’s not surprising, they never would have released the NPR and before releasing NPRM. So, any reports that said that the chairman or anyone else is going to make these public for May 15 was incorrect. Now it’s likely that it’s been leaked to friendly faces. Although it turns out that Chairman Wither doesn’t seem to have any friends anymore, At least not in Washington. And I become very sympathetic to his point here, because there are a lot of people making a lot of noise about something that unquestionably no one has yet seen. And no one would have been expected to see until this May 15 meeting when the process actually begins of circulating them to the public for comment and all the filings come in before the FCC makes any decision about. People think that May 15 is when they’re going to vote, they are not, it is whether or not to issue the notice, but they’re not voting on anything related to the actual passage of these rules on May 15.
Denise: That’s a really important point to make, we haven’t seen the notice. They are voting on whether or not to make the notice public and open for comment.
Larry: That’s right.
Denise: And how long will that comment period last?
Larry: Usually it’s 30 day comment maybe 45 days of comments and then 30 days of reply comment. So you can read the other people’s comments and then respond to their comments. The last time we went through this exercise in 2009, 2010, with the last set of open Internet rules that were struck down earlier this year, in the DC circuit. There were extensions for different reasons. If the government shuts down, a snowstorm that sometimes stops the clock on the notice and comment. But generally speaking, we’ll be talking about a couple or three months.
Denise: Okay, and again it just seems so odd, all right, we’re not opening up for public comment until May 15, but here’s an Internet address where you can send us your thoughts about the net neutrality proposal that you haven’t seen yet and here is our, I don’t even know what to call this thing. The public comment page at the FCC, where they have over, just in the time between when I fired up Skype today, and as were speaking now, more than 1000 comments have rolled in. 18,107 comments as we are speaking now. This is your ability, if you don’t want to use email, you have a web form that you can present comments and the difference there to is that all information submitted using this web form is going to be publicly available via the web. So, any thoughts on why the FCC is getting public comments on something they haven’t even approved yet?
Larry: There’s suspicion that the leak was intentional, that in fact, what the chairman’s office maybe wanted to do was let people know again that, there is no surprise, he said immediately after the DC circuit ruling in the Verizon case. He said, okay, the ruling gives me an invitation to try again to come up with a new set of rules that fit within the authority that Congress has granted, I accept that invitation and we will expeditiously move to come up with a revised set of rules that will respond to the court’s ruling. So, we knew it was coming. I think as I say, I think he thought he had more friends in Washington then it turns out that he does. There’s an old saying, a friend in power is a friend lost in Washington. And that seems to go the other way now. If you’re in power, you lose all your friends. So, I think that they are not making it known that very quickly. They would come up with new rules, that he was going to act and he was going to pass, and he thought this is going to make the supporters of net neutrality happy. And instead, what he discovered is that a lot of people who claim to be supporters of the open Internet really have other agendas. And they use this one in particular, as a have over the last decade as a sort of vehicle for pursuing everything from fundraising for advocacy groups that say lock the Internet is being destroyed give us money so we can help preserve it. On the one side. And that’s both the left and the right are doing that and there are other agendas here, people who want to nationalize the Internet, want to turn it into a public utility; and they wait for in a sort of news heard to say, see, we are not getting exactly what we want and then start a lot of fires and raise a lot of pitchforks. I think, as I say that Chairman’s office was really surprised by the response, there has been a lot spinning now in the last couple weeks trying to contain the story, and this is exactly as I said in the Forbes piece. That’s exactly what happened almost within the first couple of weeks of the chairman’s tenure with the FAA not with the FAA, but with the ruling that the FCC determined that cell phones were not interfering and they could be used on planes, and people took that to mean that you could start making phone calls on planes. But in fact that was never the FCC’s job that’s always the FAA’s job to determine but again, the PR was not handled very well, and it led to this back lash exactly as it happened in the last couple weeks. The Chairman’s office had to issue several clarifications and blog posts and he had to go out and make speeches as he has been doing the last couple of weeks to say, I’m not out to destroy the Internet, I’m doing exactly what I was going to do to come up with new rules that would be passed the mustard of the court, and he, I think, he ran into hurricane that he didn’t expect.
Denise: Christina, before we get to the substance of what we think the proposed new rules will be, do you have any thoughts on these sort of communication snafus and the odd timing that we have seen unfolding over the past couple weeks?
Christina: I mean, I think Larry, has it essentially right, this is a public relation debacle that was intended to go the other way and instead, the results have been people being violently angry about the rules that they think will be proposed, whether or not those are actually the rules. So, basically, this is an example of a poor way to handle a public relation issue, especially when substantively whatever the FCC proposes invariably is going to disappoint everybody. There are both the limitations on what they can do and since they are trying to project what the problems will be in the future, the law of unintended consequences is going to mean that they are probably going to make some mistakes and they are also going to write rules that aren’t going to catch stuff that people might agree or want to have been caught in those regulations. So, it’s sort of a no-win situation for everybody, I think, at the end of the day.
Denise: That’s sort of what happened with the 2010 rules, they served no particular master and got beaten up across the board.
Christina: Yeah, exactly. And you know the recent interconnection between Comcast and Netflix is a good illustration of that. So the general agreement is that the particular agreement would not have been covered by the 2010 open Internet order. Yet it is something that a number of net neutrality advocates would find, would make them nervous or would make them uncomfortable, or think maybe they shouldn’t be allowed. And so the fact is we don’t know the way the market is going to develop. We don’t know what’s going to be good for customers and bad for customers; it depends a lot on what happens. And trying to choose what people should, what Internet service providers should be allowed to do beforehand without having particular conflicts or examples in front to bus is probably not going to solve those problems. If and when they develop.
Denise: Evan, at least one of the FCC commissioners and then I’m going to lead Larry’s help pronouncing her last name; Commissioner Jessica Resenwarsal.
Larry: That’s perfect. That’s exactly right.
Denise: Wonderful, she at least has gone on record saying, hey whoa whoa, May 15 is awfully soon to be putting this to a vote before the commissioners. Evan do you agree that maybe a little more time is in order here?
Evan: It sure would, it would seem like it. I don’t have a good mastery of the nuances like Larry obviously does on this, but we already know the Commissioner or Chairman Wheeler has already said that he wants to implement rules by the end of the year. Right? Didn’t I pick that up in some point? We really have to make sure that there really is a quick schedule, quick time frame for all of this stuff but there’s a lot to happen, a lot to go on and just to tack on with what Larry and Christina were saying, and I really appreciate getting the inside on this about how this has sort of been a PR mistake, I wasn’t picking up on that at all until I read Mary’s analysis on that. It seems like the FCC should have known better than to sort of create a void here by saying, oh, there’s going to be something coming out, we’re not going to tell you what it is because procedurally were just not there yet. And then give people the opportunity to comment officially and for commentators, everybody to write blog posts and get on TWiL and say whatever they want to say about it. Because net neutrality is such a polarizing issue, we’ve talked about this motif many times before, no matter what kind of regulation is going to be ultimately come about here, because people are going to be upset about it. And leading up to it. They are going to take a very specific, a very dug in, entrenched view about it. There are similar comparison, there are comparisons to be made in similar comparisons and similar issues in law and policy. For example, what if we just got the indication that a member of Congress was getting ready to introduce a bill that was geared toward addressing the issue of on line piracy. Immediately, people get all kinds of freaked out thinking, this is Soppa and Pippa and Redox, What if there is an indication that there’s going to be some kind of international treaty about this. You see it in other areas outside of law and technology, abortion legislation, gay rights legislation, what have you, no matter what it is. If you say there is something coming. And there is nothing substantive on to hold onto and analyze, boy, people on both sides of the argument latch and recognize the apocalypse is inevitably here and it is upon us. So we have to spill all this ink and put all these pixels on the screen to really ramp up our position in advance of that. So, it’s got to happen quick.
Christina: Sort of an ironic note I want to point out, which is that, when the FCC says we are going to propose new regulations regarding net neutrality. The worry is that these regulations will be too weak and then everyone freaks out that this is going to then allow Internet service providers to do something they aren’t already allowed to do. But the default right now and the FCC is silent. We have an open market. There aren’t any net neutrality regulations so to the extent that the FCC regulations are mild or silent on something it doesn’t make the world any works. And so, the fact that people freak out because they think these are going to be kind of mild or not have enough tea is a little premature because there is always the possibility that if some problem develops the FCC can return or Congress can give FCC larger authority to handle an issue that they had before. So the freak out that’s happening here is also just clearly unwarranted.
Larry: And also, by the way, it’s not just the FCC, but the Federal Trade Commission and the Department of Justice, which have authority over antitrust in antitrust behavior have always been in the background here. And many people would say, the FCC has never passed net neutrality rules at least that have stood up to a court challenge and yet many of the worst case scenarios still haven’t appeared, or haven’t appeared except in tiny instances. Many people would say it’s not because the FCC had or didn’t have rules, mostly they didn’t; but also because the providers also felt that there are antitrust in anti-competitive laws vigorously enforced by the Federal Trade Commission and the Department of Justice. Neither of which have been particularly shy about getting involved in the Internet ecosystem more and more lately, so even if the FCC never passes it doesn’t mean there aren’t rule, and it doesn’t mean there are particularly rule about how three competitors, or how you treat other businesses in different ways, in anti-competitive ways. We always have that law there and agencies that are not shy about enforcing it.
Christina: And moreover, since the transparency provision of the 2010 order stood; we’re going to have at least theoretically a better perspective from which to gauge whether those things are happening.
Denise: Okay, that’s great back ground. We know a little bit more about what we will see on May 15. Assuming that the holds. In light of a talk that Tom Wheeler, the FCC chairman gave to the National Cable and Telecommunications Association on April 30; Larry, did the FCC made these remarks available right away, it seems like this might have just come out?
Larry: No, I was at the cable show. And I was geared for Chairman Wheeler’s reach, the press had the remarks within 40 minutes of when he gave the talk. And then he did a blog post, I think, almost immediately after so the agency hasn’t been holding back on, at least some public comments they have made. They have been publishing them pretty quickly.
Denise: So, the blog post that came out was a little bit vague, these comments are a little bit more specific, Very lengthy. Of course we have them in our show notes @delicious.com/thisweekinlaw/258 if you want to read the whole thing. Here’s a quote for you though,” the open Internet rule says Chairman Wheeler, first of all, he had to sort of, funny interlude realizing to his audience is the cable and telecommunications Association. He told everyone to put away the party hats because, you folks who are not in favor of net neutrality don’t have anything to celebrate about just yet and he goes on to say the open Internet rules will be tough, enforceable and with the concurrence of my colleagues in place with dispatch, then a little bit later. He says, since we’re in Los Angeles. Where he gave this address Let me use a highway traffic metaphor, prioritizing some traffic by forcing other traffic into a congested Lane will be permitted under any proposed open Internet rule, we will not allow some companies to force Internet users into a slow lane so that others with special privileges can have superior service.” So, we know, we don’t know what the text of the rule say, but they share a little more light on how any preferential fast lane might unfold. In fact, I’m curious to see what you all think about there being a fast lane in light of this comment. I suppose a fast and a faster lane is what the Commissioner is envisioning here and my question then is, is that going to really, fast doesn’t seem fast anymore right? When there’s a faster lane, what do you think about that Larry?
Larry: So, it’s true. One of the points to note is that obviously in the last 10 to 15 years, the overall speeds are improving from thy love, to DSL, to cable and ultimately to fiber and then on the wireless side from 3G to 4G to ultimately 5G. The general speed is improving, then we keep inventing applications that take advantage of those faster speeds. But what the chairman said at the speech and in the follow-up blog post is actually identical. There is no difference and what he is saying to the he is saying in the 2010 report or order on this very point. We had what’s called quality of service applications for a long time that runs over the same infrastructure as the public Internet. For example, it, telemedicine and other application that requires very low latency and very high availability. PBX, not PBXs, but when you have a private Internet access for your company. You can buy these kind of business services already they use the same infrastructure as the public Internet and yet the idea is again as he says you can’t use that infrastructure in a way that is going to reduce the availability of the consumers using the last efforts Internet, the public Internet. Again, that’s what the 2010 order said as well, and it’s nothing new here, that’s what the arguably what the existing anticompetitive law would require any way. That you can offer. For example, to the content provider the opportunity to get faster access and not offer the same terms, the same kind of deal to a similarly situated access provided. Of course, that might make some people unhappy if their competitors are able to or willing to spend more money than they are, then in some ways that feels uncompetitive to them, but it is really, that may be true but it is not any different than saying, if you want to buy from the post office and you want next day delivery, and somebody else is paying for same day delivery. They’re using the same infrastructure, somebody is getting faster service, but it’s not illegal.
Denise: What do you think Christina, as time has unfolded in the brief history of the Internet? Our perception of what’s fast and what’s not has changed dramatically, so are we into dangerous ground here, when we say, we’re not going to put anybody in to the slow lane because it’s hard to quantify what that is.
Christina: So, I think the real potential for difficulty is going to be ISPs that have monopolies over access to particular group of end users elect to not create faster systems or speed up their systems because they don’t need to, because there isn’t the market pressure to do from their end users. And so, as videos, as more and more people are downloading videos constantly. The same speed will become less effective and there won’t be, and so the regular lane, if you will effectively become slow lane as well. Generally, is it a problem is someone who is sending more data wants to pay more money so that it is sent faster? That might end up what’s being best for everyone in the picture. These are all really complicated relationships and until we sort of see what happens and what the rules are we are not going to get a good picture, we can’t reason from principles very easily about what’s going to be the best economic universe. In some ways it reminds me of radio, in the sense that, there’s this model on Nestlé that you think of a radio needs to pay copyright licenses to play music, but then sometimes you also have, people want to pay the radio stations to play songs to be more popular. And so there’s this question of who is providing value, who is supposed to pay her own, who owes something to someone else. And it’s a very messy complicated picture and thus sort of market situation and the relationships between all of the parties and among all the parties here aren’t fixed. So trying to both guess at what the rules will be, and then guess whether those rules will continue to be effective in five years, in 10 years time is kind of an impossible task. And perhaps one that we should hesitate to do to definitively.
Denise: Yeah, to say that both you Christina and Larry would prefer to see the FCC take a more hands-off approach because they are essentially playing with fire and we are going to live with what they can act for a long long time. Am I getting that right for the two of you?
Larry: Yes. That’s been my position all along, and frankly, it has been the SEC’s position as well. You mentioned. Denise when you were talking about this on TWiT, the other week. That the term for the 2010 rules that Baron Soaker used was that they were “prophylactic”, but actually that’s not his term, that’s the FCC’s term in the 2010 order because they couldn’t find literally more than one example of what the rules they were proposing, having been previously violated, they used the phrase ”prophylactic rules.” I counted it up a dozen times, in the 2010 order. And in some scenarios prophylactic regulation, prophylactic legislation is not a bad idea, but when you’re talking about technologies that are changing as quickly and evolving as quickly as everything having to do with the Internet not only the access, but the content, the services, and so on that’s happening. I think, you can’t find too many good historical examples where prophylactically regulating rapidly changing technologies has ever worked out particularly well; and, in fact, usually leads to very really significant unintended consequences. That is what I am worried about all along and, when I say all along. I mean over the last 10 years of this discussion. And I remain concerned about that now.
Christina: Yeah, that’s absolutely right. And what I think is really important to emphasize is that saying maybe we’re not ready for a blanket net neutrality regulation is in saying that Comcast is always going to do what is in the customer’s best interests, or that there aren’t potential market failures here, potential things that as a policy matter, we would want to change, but in a rapidly changing environment technologically, it probably makes more sense to wait until we see particular, particular harms. And then make rules to solve them, as opposed to as we seem to be doing kind of trying to guess at what those problems are going to be and what the right set of rules might be to solve them; which is the kind of thing that regulators don’t necessarily do very well. So this isn’t to say that there’s, that Comcast and the market as it is, is going to be perfect, it probably won’t be. Just that we’re not necessarily in the best position to figure out how to solve problems that don’t yet exist now.
Denise: I think, Evan, of a lot of situations that taking prophylactic steps to avoid bad consequences is a very good thing and that the case could be made for the dire consequences that might in situ here?
Evan: I can imagine we could, I would be interested in hearing some examples, because it sure does seem like that is a conversation that we could have of examples in other contexts, where there have been problems, problems that were recognized and there was some sort of regulatory system placed on top of it and it’s hindered some, or helped, whatever depending on your perspective. Done one thing or another to shape the situation into one that is more favorable. Had it not been done? What do you have in mind, Denise?
Denise: (laughter) Pregnancy. In certain circumstances.
Evan: I would love to go back, I wish there was somebody that would read the transcript of what I’ve just said, and if I could go back and put pregnancy in my mind, rather than thinking about the law, or something like that, shows what a nerd I am.
Denise: There are quantifiable differences between preventing pregnancies and trying to regulate as Larry says, rapidly evolving network technologies.
Evan: Thanks, I was trying to have a heart.
Denise: My analogy is not the best but there are certainly some choices where, bad consequences are something that you might want to take steps to prevent. So I do think, yes,
Evan: I was trying not to have a Beavis moment, when Larry was saying, prophylactic, oh my gosh 12 times.
Denise: No, I had it for you.
Christina: There’s a devil’s argument, advocate, that maybe you could make here that, if you could imagine that once a practices in place, it will be harder to regulate, in a regulatory manner or a statutory way to change, Comcast gets used to having a certain way of doing things and so if suddenly there is sort of this policy consensus, or majority view that, this is bad that then they are will be more, it will be more difficult to enact that rule because, Comcast will throw more lobbying dollars or what not at being, no, no, don’t do it. I don’t entirely thing that, that’s the most likely scenario because when there is a concrete harm that people can point to, this is a thing, we don’t live, and this is a thing that’s bad. This is something that we should get rid of. On the one hand, if the party is benefiting they will be more likely to advocate against it, but the people that are saying no, it is bad are going to be more wound up to advocate passing a law that or regulation that fixes it. So, I think that’s the main reason, or that’s the main worry that would speak to trying to do something now, some idea that it would be harder to do something later but it’s not clear to me that the evidence is there to show that that is true.
Evan: Is the problem totally intractable, no matter what happens, isn’t there going to be the ability for one side to argue the way and the other side to argue the other way. And here’s where I’m coming from on this, I’m having a hard time, this is probably something where a greater technical understanding would help me out, but I’m really on the lookout for soft-its industry where it comes to where the different sides are characterizing this. There’s this idea of consumer choice and consumer access and the fast lane, and a lot of people would say that is good if you want to pay for priority access to content, and data, and all that. It’s a good thing. And the FCC has said that the new rules may want to address that, countenance it in a certain respect. Then there’s this idea, that downgrading degrading throttling relegating other customers to a lower set of standards when it comes to the delivery of content. Are those really just two sides of the same coin, are they the same thing happening in one instance, but we are just characterizing it in two different ways, depending on how you come at it? Is it that if one party is going to have priority access, does that necessarily mean another party’s service is going to be downgraded, and relegated to 56K or something like that? And if it is just two sides of the very same coin. No matter how you look at the coin it’s going to be the same heads or tails, would that mean that there is no solution to this and however you characterize it, somebody is going to be able to characterize it as harm?
Denise: I think that’s right, go ahead. Christina.
Christina: What it might be is that the problem that we are worried about might be related to network neutrality or the idea of fast and slow lanes but not the same. In the sense that there is a worry if we allow for there to be, for people to pay for faster access and the people who are paying for the “regular” access will get terrible service or not be able to reach customers effectively. And, in some sense, this goes to the idea, that there is just not going to be enough bandwidth available for people. A critique of the monopoly power of the ISPs that reach end use users is that they do not have the motivation to improve their services because there isn’t any competition. And so, this worry about network neutrality kind of collapses into, in some ways, the problem of having a monopoly in this area right now. Because there is not the motivation for them to improve.
Larry: Yes. That’s an interesting point. One might ask why do cable operators have monopolies in local jurisdictions, it’s not as a result of devious business practices because Congress and the states in its wisdom, decided that the best way to deploy cable technology was through the franchising of monopoly providers back in the 70s and 80s and holding out for as much graft and corruption in many local markets as possible. Chicago did not get cable TV until after almost every other city in the United States. Now the cable act in 1990 deregulated that and said wow, maybe it was a bad idea to have only one, maximum legal provider in every local area, and since then we have got now; Verizon, AT&T, coming in as competition and ultimately we may see the satellite people come in. Ultimately, we may see that cellular technologies are improving on a pace that it can be a viable alternative for a lot of ISP services as well. It’s true, obviously, the worse risk we have is not having enough competition to drive the incentives for people to continue investing in better technology that will solve a lot of problems a lot faster than any legal can do. But if we have a monopoly problem now, it’s the results of earlier efforts to try to prophylactically figure out the best way to develop a market; not because of a failure of regulation or you as many people suggest.
Christina: Sure, the then question going forward is whether, if we are in a monopoly situation that is bad or rather in one that can be fixed with some kind of greater regulation or common carrier regulation. Whether the monopoly situation we have is better than what we can develop legally because, just because there is some anti-competitive affect doesn’t necessarily mean that we can regulated to be better or 3) growing access to Internet through the mobile providers is going to get good enough that you are going to then return to a dial-up situation where there was enough competition among people that we don’t have to worry about this. So, again, it’s one of those, the world in five years might be quite different than now situations.
Denise: So, I think it was the Politico story that we have in our show notes that it was trying to ballpark, okay, we haven’t seen the notice here, but let’s try, like you do with the Supreme Court, which way the various commissioners are going to go. Commissioner Cliburn, Miamian Cliburn has put up her own blog post at the FCC and very clearly she is not for fast lane type proposals and will reject something that includes that. She gives some history about the 2010, open Internet order and she’s all for maintaining the fact that we should not have preferential agreements made possible. She would have prohibited pay for priority arrangements altogether she says. So, we know how she’s going to go. She’s a Democratic commissioner. The two Republicans are speculated to not vote for anything that would codify net neutrality at all. So, that leaves. Jessica, of the unpronounceable last name, Rosenwarsal as sort of the wildcard. Does that seem to jive with your understanding, Larry?
Denise: Okay, so enlighten us.
Larry: There’s a lot of Shadow Theater going on here. It’s a very, very rare, it has happened, but it is very rare that the majority party, which is of course being the Obama mission, the Democrats are the majority party, they have three seats on the FCC. It’s almost unheard of for the Democratic commissioners not to vote with the chairman, whose of course of the same party. So, it’s true, of course, Commissioner Rosenwarsal did say that we should delay this. Commissioner Cliburn has always been vocal about her concerns about, even as you said the last order. But it seems that could be orchestrated, kind of discussion to make it sound like there is more debate going on in there actually is. Again, I don’t have the inside knowledge that apparently some journalists have, but I would say it’s almost inconceivable that either Commissioner Rosenwarsal or Commissioner Cliburn well vote against the NPRM. It’s not even clear that the Republican two commissioners will vote against the NPRM. The last time this happened, the two Republicans actually voted, there was a concurrence, but they voted to let the NPRM go forward, not that it mattered because it only had two votes anyway, but they voted to let that because they wanted to develop a full a record about just how big a problem was this, and what sort of me was there for regulation. So, it’s not even clear that the two Republicans would vote no here, but it’s very unlikely that either of the two Democratic commissioners would vote against Chairman Wheeler. Frankly, when that does happen. It’s kind of the end, it’s a vote of no-confidence. If you’re in a parliamentary system, obviously, the chairman doesn’t have to literally resign if that happens, but it really does signal tremendous lack of confidence by the other commissioners and in the press when this has happened. It has really marginalized the chairman’s office where it is very difficult to get any more work done. And so, if that happens here again, it seems unlikely to me. But if it happens here. It would probably mean that for the rest of the Obama administration the FCC would be pretty, pretty, pretty dysfunctional going forward. And that would be very unfortunate because of some of the other much more important issues that are actually before the commission. Ironically, some of which are going to be on the May 15 agenda along with this notice.
Denise: Well, let’s talk about that because Larry your article is all about how we are getting distracted by the open Internet discussion and losing sight of the importance spectrum issues that are also on the table. And, tell us, don’t they tie in? It’s all part of the same discussion that if we were able to free up more spectrum; the specter of unfair competition that the open Internet is attempting to address prophylactically becomes less threatening. Is that right?
Larry: Yes, that’s right. If you can imagine that one of the most effective ways of combating bad behavior, on neutral behavior is through an increase competition. One of the most promising technology options for that would be intermodal competition between cable and enhance DSL and even fiber with mobile networks with cellular technology. again with LTE, the more it is deployed the better efficiency we get, and the faster speeds we get and then ultimately 5G networks, which are already being experimented with in a lot of different areas. So, in that sense, then yes, if we wanted to increase competition, especially with wireless technologies, then getting the spectrum that those providers need to keep up just with current demand is very, very important. The national broadband plan in 2010 predicted, and there are some spectrum crisis deniers out there every time I say this; who tell me that this is, why would anybody listen to the FCC on this, but the national broadband plan predicted that if we didn’t get 300 MHz of new spectrum available for mobile networks by 2015, which is next year. And 500 MHz by 2020. That even for existing capacity mobile networks would seize up or they would start to experience considerable congestion and a considerable loss of quality. That’s what, chairman Jankowski, Wheeler’s predecessor was trying to do. Congress gave them authority to do these new auctions to try and get back some of the over the air TV broadcast spectrum that’s not being used, particularly effectively anymore. As well as some federal spectrum, which is really not being used, much of it is being warehoused by federal agencies. And Chairman Jankowski, to his credit, And Chairman Wheeler to his credit have worked very hard to do as much as they can to get more spectrum out there, but as I say in the piece, the big incentive auction rule is also on the agenda for May 15, and there’s some problems, they are to. But the distraction the last couple of weeks have made it very difficult to even have a conversation about how to make those auctions as possible, and as optimal as they could be to get as much spectrum as possible as quickly as possible for a new form of competition, if you will, with the cable and other wired technologies.
Denise: Christina do you agree that the FCC should put its eyes on the spectrum prize here?
Christina: Yeah, basically, so I don’t know the details of these particular proposals, but as a general matter, moving towards something more market like in terms of spectrum allocation, and letting spectrum go to its highest valued uses is definitely in everyone,, including the public’s, especially the public’s best interest. In the way to get us out of the difficulty that we have with Internet access right now is to create opportunities for there to be more competition for how and users can get Internet access. To the extent that we can make it easier and better for mobile providers to provide that competition. This is a good world for everybody.
Denise: I think we lost Evan, so I don’t, Evan if you’re here chime in. He’s not, so we will get his take in a moment, but Larry, can you give us some examples of how this would pan out and maybe ride to the rescue of the concerns of folks like the 150 tech companies who wrote to the FCC this week, making clear that they would like to see strong rules in favor of an open Internet. If we were able to have spectrum auctions that you think went off the way that they should and freed up more spectrum, how does that help, give us some examples.
Larry: Sure, it’s helps in a couple of ways. One obviously, it allows the mobile operators to move more of their customers more quickly from 3G and even 2G service, still a lot of 2G customers out there, very inefficient use of the spectrum. The quicker we can get them off of 2G and 3G networks and onto more robust 4G networks, and ultimately 5G and beyond networks. Again, the quicker we will have a real competitive Internet access in the form of wireless. Also, a lot of the proposals have to do with freeing up and the FCC again earlier this year done a great job of moving foreword of making more spectrum available for unlicensed use, particularly for next generation Wi-Fi that can travel longer distances and therefore itself be sort of be an alternative form of high speed Internet. Ironically enough, here the big investor here has been that cable companies, which instead of building up their own competing wireless networks as at one point the intended to do has decided to, in fact, make all their investments in Wi-Fi, so building out the next generation of hotspots known as gigabyte Wi-Fi is sort of performing another form of competition to wire based broadband and then also many people in the chatter are talking about doing what we can to make it easier for fiber build outs. That’s not part of the spectrum proposal, but fiber is, of course, is a great technology for, you can do a hell of a lot for it with fiber that you can’t do with anything else. And of course, one of the big problems. Even Google has run into this in the jurisdictions where they are trying to implement, state and local regulations that make it difficult, time-consuming, expensive and delays the ability to put in the fiber networks. Some really kind of terrible examples of this here in California. And make that yet another alternative from yet another alternative provider, yeah, I think in general, the more we can do to make it easier for these private investors to put their money into a wide range of competing technologies for broadband; that frankly will solve 99% of any potential problems with anti-competitive behavior before we need to get the courts and the regulators involved.
Denise: You go into the last auction in your article and how it was less an auction and more of a sale to Verizon. How did that happen, and how would you want to prevent something like that from happening again?
Larry: So it wasn’t Verizon, it was Dish network.
Denise: Oh Dish.
Larry: So this was, an odd thing, it wasn’t actually chairman Jankowski, or Chairman Wheeler, it’s sort of happened in between when Jankowski left, and before Wheeler was confirmed. There was an auction of a 10 MHz block of high frequency spectrum called the H block. And it probably should not have been carved out in the first place. It should have been kept with the AWS3, which is coming up for auction next. And again here Commissioner Rosenwarsal sort of the maverick on the commission. She was very opposed to the carving out of this particular block but there was a whole series of machinations done by Sprint and T-Mobile, suggesting again when you let the regulators have any power, it’s going to be corrupted by the industries that they actually regulate. Sprint and T-Mobile convinced the FCC, both to carve it out and then to create special rules around it that were in their favor with the promise that they would participate in the auction. Well in the end they didn’t they walked away saying they didn’t actually mean that spectrum after all. And in the end, the only bidder left was dish and they got it for the minimum reserve price. So effectively, it was a retail, it was $1.5 billion, not chump change, but many Wall Street analysis expected that that block of spectrum could have gotten a lot more money if it wasn’t so encumbered and it wasn’t specially carved out from all the other pieces of spectrum that it was initially grouped in with. I think the lesson here is the H block mistake as I say is conditioning auctions, trying to turn them in one way or another to favor particular bidders or encourage bidders in the interest of getting more competition just doesn’t work. They will outsmart and outmaneuver the FCC. Every time. And unfortunately that is what’s also happening in a certain circumstances with the incentive auctions that are going to vote and on next week.
Denise: Okay, were you guys surprised at all about the signatories to this letter to the FCC from the tech companies. We’ve got Amazon, Facebook, Google, Netflix, Microsoft, all in there Yahoo, Level 3. Some of these people are people who might want to benefit from an Internet fast lane in some sense. Christina what you make of this?
Christina: I do not remember what that particular letter said, so you should go to Larry first.
Denise: Okay. And here before I go to Larry, I’m sure there are people listening who haven’t read the letter. It’s a short one.
Larry: It’s a short letter. It doesn’t say much of anything, but go ahead.
Denise: Yes, it states that: we have heard, according to recent news reports, the commission intends to propose rules that would enable phone and cable Internet service providers to discriminate both technically and financially against Internet companies and impose new tolls on them. If these reports are correct, this represents a great threat to the Internet, instead of preventing individualized bargaining and discrimination. The commission’s rules should protect users and Internet companies on both fixed and mobile platforms against blocking discrimination and pay prioritization and should make the markets for Internet be more transparent. The rule should provide certainty to all participants and keep the cost of regulations low. That’s the jest.
Larry: Yeah, so that’s, there’s no surprise in that letter. And as you say, they can’t be condemning the rules that they legally at least haven’t seen but maybe they have seen them anyway. Look, the problem here is that many of the sort of types of things. You are not going to see, here is one thing I can guarantee without having seen the rules, the phrase Internet fast lane will not appear in the NPRM or the draft rules that come across, and it’s going to be rules that don’t enable or create anything. They are going to be rules that say what can’t be done, and under what conditions things can’t be done. And I think the concern is over the particular wording that has been floated as possibly being part of how that prohibition is going to be worded, it’s not going to be strong enough. So, in one sense, what these companies are saying is kind of mom and apple pie, that’s right. We all want an open Internet. We don’t want, we don’t want it wrecked intentionally or unintentionally by regulation or by bad corporate behavior. But of course it couldn’t propose, that the chairman to do anything in particular because again, they haven’t actually seen the text of the draft rules.
Christina: There might be a context here, which might be useful to point out to everyone which is that historically there has been on the Internet a history of payment to the larger ISPs. And Comcast has more recently, recognizing that it has been a strong market power, not only do they charge their end users $60 a month to have your home connected to the Internet, but they been pushing other companies like Netflix and now kind of trying to get the tier 1 ISPs pay them to carry content down. They want to be in a situation where everyone pays them to move data back and forth. And one could see this letter from a lot of these companies as saying this dynamic is not a good one and one that we want. We don’t want everyone paying Comcast. Comcast needs us too.
Denise: It’s somewhat entertaining if you are following issues to follow all the signatories to the letter, which includes FORTRAN, which I am guessing someone encourage them to not sign on. And something called Funeral Innovations. So, lots of interests in play here. Let’s see before we leave the topic of net neutrality because, I think what we really need to do to continue this discussion is see what is proposed next week. I just want to go around and get your final thoughts, impressions, any sort of advice you have for people as they are considering these issues. Larry?
Larry: Well, I guess my advice for Chairman Wheeler is to rethink his public-relations strategy, pretty significantly. But beyond that, I don’t expect that the rules as proposed will be frankly dramatically different than the 2010 rules that were passed, I think they will be modified to follow the line set out by the DC circuit when they rejected the last set. And by the way that line was not very clear. The opinion is extraordinarily vague and unhelpful if it was trying to be a blueprint for what the FCC could do right, so maybe these rules will be litigated as well. But I expect, this set of rules will go through the notice and comment. They will probably get past and then we will see if the world stops revolving.
Christina: Yeah, I expect whatever the FCC comes up with isn’t going to stop the world one way or the other. What’s going to be entertaining is to watch them go through another three years of litigation, to see if those regulations can withstand judicial scrutiny. And this is, you know, before one gets too angry at the court, the real thing is to look at Congress and why don’t they speak more clearly about this to open the SEC’s authority to regulate in this area.
Denise: Evan, you’re back with us. I know you’ve been off for a bit so you may have lost the thread of the discussion, but soon we will move on from this net neutrality talk. And I just wanted to see if you had any other question for our guests or any thoughts or comments.
Evan: No, yeah, I lost connectivity because I lost power here. Usually, when we’re talking about network neutrality you get throttled, by Comcast. It will be interesting to see how it’s unfolding here, you hear all the nuance that Larry and Christina bring to it is very helpful, it is putting it in the proper perspective because the way the FCC operates isn’t always intuitive and it’s easy to jump on, or pile on or throw stones before its appropriate or opportune to do so. So it will be interesting to see how this unfolds.
Denise: Yeah, I do have one more question for you guys before we move on. And it’s one that comes out of the fact that chairman Wheeler keeps referencing title II as again, this was part of the guidance he got from the DC circuit, you could reclassify and then you would have more leeway, and he is certainly not ruling that out and so knowing that. People ask why doesn’t he just go ahead and do it, and I’d love to get your take on that.
Larry: Okay, well, how many hours do we have to talk about that? So, first of all, it’s not that simple. The term reclassification is not in the statute at all. If you were to try to treat ISP broadband Internet service as a title II service there would be multiple court challenges; and I would expect that actually they would lose on that. But even given that if they were able to treat it as title II, title II, by the way, means not just federal but state and federal regulations as well, so we would just have a disaster that actually happened. But even so, there is a great Huffington Post by Kevin Warbock and Phil Weiser speculative of wording in Colorado, this is how title II works, discrimination, fast lane, all that stuff is allowed and done under title II when the old telephone system was regulated; so if your concern is fast lane’s end discriminatory behavior; title II is not the solution. Title II in fact, just makes that legal in an incredibly complicated form where you have to file tariffs, you have to get states governments to go along with federal governments and rate price caps, and price controls and all this other stuff which we are nearly gone with in the old phone network; having frankly killed the only phone network with them. Title II is no solution, even if it was legally allowed, in any event, this came up in 2010. A super majority of Congress, including a vast majority of Democrats and it was one of the few bipartisan thing that ever happened was a super majority of Congress wrote to the FCC, former chairman and said do not consider reclassification of title II. We will look very unfavorably upon such attempt.
Christina: so, I would classify this as being three issues with reclassification. One is, is it actually a good idea in a sense that it then opens the door to significantly more regulation of the Internet, or at least the ISPs that would be affected by it. Two, whether there is enough corporate and political pressure to not make it a viable choice.
Denise: Well that’s the big if. Do you think that could happen?
Christina: What does Congress do? You know, when there’s something as viable in Congress is so outside of kind of the technical merits of particular issues, it’s always a hard call. Without there being a lot of enthusiasm in the public, I don’t think Congress is going to say something. You need loud speaking, you need hot issues, you need something dramatically taking up the airwaves quite probably if something like that is going to happen, and that’s a shame because we would rather a world where Congress addresses the important problems of the day because they are important, and not because something dramatic has happened that has made the 24/7 news cycles get really excited about it for a semi arbitrary reason.
Denise: I don’t know, maybe it’s just the bubble I live in, but I think the public is kind of informed, more informed than I would think about this issue. People who know I’m involved in technology law, friends who are not rank and file members of the public have been asking me this issue, so I know it’s on their minds, and it seems like the news coverage on it, while it hasn’t been of Donald Sterling proportions, has been up there, as far as a second worst communication debacle of the last couple of weeks maybe. Evan, what do you think?
Evan: I mean you certainly get some mainstream treatment and you do hear about it and it is important because it goes to the real heart of the essence of the platform. I think that’s one reason why it lends itself naturally to being concerned about. And then there are issues of, there are broader issues of democracy and fundamental fairness when it comes all of this, and because of that it’s easy to characterize it one way or the other. Going back to the same theme that I’ve been sort of repeating, both on this episode and before, such a polarizing issue because it strikes at those things and that’s likely one of the reasons why it gets the attention in mainstream media and it gets the rank and file attention that it does because it can be characterized as really determining the future of what the online experience will be like and the entertainment and communication experience that we’ll enjoy in the future.
Christina: Yeah, in some ways Congress is damned if it is and damned if it doesn’t because these are far too technical of issues for Congress to want to get at the nuances directly and so what would have probably have happened is they would be giving the FCC greater authority to do something. And that opens you up for a huge amount of criticism because the FCC on the one hand is often criticized for being captured by industry, and on the other hand they will be saying, oh no, don’t regulate the internet. So, there is, the safe thing often for Congress to do is nothing because then you are not as open to criticism for botching an issue, which is also not necessarily ideal.
Denise: Well, didn’t Congress put us in this pickle to begin with? How do we have the Title I, Title II distinction? Where does that drive from?
Larry: Well so initially or explicitly it comes from the 1996 Communications Act but it actually followed from several earlier decisions and consent decrees having to do with the breakup of AT&T, and earlier rules that prohibited phone companies from doing data services and from computer companies from doing phone or anybody from doing phone services other than the regulated former monopoly. And that essentially is what got embodied into the 96 act as Title I which is the data services and Title II which is traditional switched telephone network voice services. Of course this was 1996. Obviously we had a commercial Internet then but Congress clearly couldn't have predicted, nobody could have predicted that it would’ve become the vibrant economic driver and ecosystem that it’s become, so we can’t entirely blame Congress for getting it wrong, even if they did get it wrong in 1996. There is, by the way ongoing discussion about an overhaul or reform or rewrite of the ’96 Act to bring it into 21st terms. That process if it does go anywhere will take years, but it is at least a discussion that’s happening and there have been hearings in Congress already about it.
Christina: You know maybe the lesson from the….Oh, I’m sorry Denise.
Denise: No, go ahead.
Christina: Maybe the lesson from the Telecom Act of 1996 is to see the dangers in legislating and regulating in areas where technological change happens very quickly. Because it’s not that the Telecommunications Act of 1996 was necessarily a bad law at the time, that since the Internet has changed so much since that time period, it no longer, you know this distinction between information service providers and a telecommunications carrier doesn't necessarily fit with the world that we currently live in. And if you look at the definitions of those two kinds of entities you know it would be fair to the FCC, Internet service providers could arguably fit into either one based on just the text of the statute by itself. So maybe the lesson in here is that even when you write something that’s quite, that might be appropriate at the time, the world can change so quickly that it might not be a good law later on for reasons that you couldn't anticipate when you wrote it.
Denise: Right, and that's why I think it might be right for Congress to revisit. I have a really hard time as you were saying, making the distinction between an information service provider and the common carrier and thinking that that distinction is meaningful in the way that maybe it was in the minds of the legislators when they wrote this. One last question on this, I'm sorry I keep dragging out this discussion but it's so interesting and important. I think we've been having this very US centric debate about all of this obviously because it’s a US agency who is making some decisions here, but I'm interested to get your take on the international repercussions. Do you think that other countries will look to the US to decide how they will handle this issue Larry?
Larry: Oh I hope not. Look every country is different and of course in much of the world the idea of Internet providing comes out of a long history of nationalized post and telephone companies. In some cases they’re still part of the government. In some cases they’re private companies which are largely or partly owned by the government. It's a very different model frankly, than the way in which both post and telephone and ultimately Internet has developed in this country, so I always find these international comparisons really not especially helpful, and also subject to a lot of torturing of the data, but I don't expect that the EU, for example, will take the FCC's latest draft of open Internet rules and use those as a starting point for whatever they're going to do next. It's just, it's so tied in with the history of how technologies have been regulated or not in this country and other countries and the geography of the United States, the population density of the United States, and the income disparity in the United States. So many things have to do with how our communications infrastructure has been built and exists that are specific, I think, to the US and many ways I don't think it's particularly useful to compare it and I wouldn't encourage another country to do so.
Christina: Yeah, I mean there's going to be such distinct differences between whether ISPs in different countries are public or private, what the antitrust laws look like in those countries, what those particular ISPs are doing that may or may not be good for customers, etc. So it's going to be, this is an issue that lays on top of a lot of other laws and facts. And whether, you know, different policies are going to be good depends on what those other laws and facts are in different countries.
Denise: Alright, I think that’s going to have to be it on Net Neutrality for the day and we could go on though, to the hearing on related issues, at least related in a lot of people’s minds; the Comcast - Time Warner cable merger. There was a hearing yesterday which lawmakers did not seem to feel via their questions that this proposed merger was going to do anything to help consumers. Now I don't know that that's why companies merge necessarily, although Comcast and Time Warner have certainly been singing that song to their customers. As a Time Warner cable customer I can attest to the PR that I've been getting from that company about the merger, and according to them it's going to be very rosy for us after the merger. The Congress people weren’t buying this. Does that mean anything one way or the other Larry?
Larry: No, Congress doesn't have any authority here over approval or not approval of mergers. Again, these hearings are partly part of the shadow theater that goes on here. It's partly part of the backroom compromises that are going to be made, the conditions that are going to be attached to the merger. These hearings are all a piece of that as well as presumably meetings, but the Department of Justice and the FCC that goes on as well, so I don't, I listened to as much as I could of the hearing this week on the merger, really kind of a lot of posturing, a lot of apple pie stuff being said, but I didn’t hear anything sustentative either from the witnesses or from the Congress people who were asking the questions.
Denise: Alright, Christina do you think this merger is going forward?
Christina: My guess is that it's likely because I'm gathering, though I'm not absolutely sure about this, that the sense is that it's not going to be, create harm to customers in an anti-competitive way because they don't share a lot of, there's not a lot of competition between them in a lot of places between Time Warner and Comcast, but that's something that I could be wrong about.
Larry: No, in fact there's none because again, but what I've said before about this brilliant decision to give franchise monopolies to the cable industry when it was first being built out, there's literally no overlap in customers between Time Warner Cable and Comcast. So from an antitrust standpoint it's extremely hard to make the case, at least as it applies to TV access, that there's any kind of competition harm that antitrust law recognizes anyway.
Denise: Evan any thoughts on Time Warner Comcast?
Evan: Well, I've never been too worried about it in any event. Soon after the news was announced we had Prof. Waller on TWIL and also Ryan Radia, so we had pretty exhaustive conversation about it very early on and they sort of set my mind at ease for a number of reasons. And moreover, if Larry Downes writes an article talking about how the case against it is evaporating, then who am I to sit here and to suggest that there will be too many problems with it? And it looks like the very opposition of it is starting to fold as well, right Larry? Wasn't it the, who was it that just came out recently in support of the merger? Was it the Washington Post itself? So you know, all indications are that the people who think about these things aren't too concerned about them so neither will I be.
Larry: Now what happened to the Evan Brown that used to disagree with everything I said? I liked him much better.
Evan: Well, I mean with this one, at the risk of being too repetitive, the big thing for me, the big factor is the fact that there really isn't going to be any anti-competitive effect because of the lack of overlapping customers already. I mean this is just, there's no marketplace effect like that it's going to take place right? I mean isn't that what you were just talking about? That really is the definitive thing for me.
Larry: Yeah, not in the TV service anyway. I think it's more interesting discussion about broadband access for broadband ISP service but yeah, as far as cable TV, this is a no-brainer.
Denise: There's a difference between what's anti-competitive under the antitrust laws and what's good for consumers across the board. I don't know if people necessarily acknowledge that there's a difference but I think that there is. And the Congress people seem to be more concerned with the latter. They were very focused on pricing and whether this would lower pricing and the cable representatives who they questioned said, no probably not. Don't see how that can happen. Our services are expensive to provide and we have to pay all this money to the content companies, so nope, probably not going to lower pricing. And one congressman at least, Republican Blake Farenthold, you have to say that name carefully, had the concern that the combined company will serve 91% of Hispanic households in the US, and was asking for assurances that it wouldn't discriminate against non-Comcast NBC Universal programming.
Denise: So again, I don't know that any of that would be the concern of the Justice Department sufficient to block this merger.
Larry: Right, so it wasn't, it was certainly, I mean obviously the real merger that was interesting from the standpoint of antitrust law was the earlier one of Comcast and NBC Universal. And there, I think, you know, could've made a stronger case that there was concerns with having both the content provider and the access provider being merged together. The Justice Department was very concerned about that. There's no question about it and I think there's about 100 pages of conditions attached to that merger when it was approved. And many of them having to do with minority channels, with sort of access to specific, very specific channels and not being able to restrict those in very specific ways. Those conditions will now actually attach to and in effect will be extended to the Time Warner cable as if they were now part of Time Warner cable because once those customers become part of Comcast the same conditions will attach to that part of the business, the new business, that attached when they merged with NBC Universal in the first place.
Denise: Do you think pricing is a relevant question for the Congress people to be asking about here Christina? If we do have this one mega cable company, regardless of what their content prices are, there is the danger that they're going to be setting prices competitively too high.
Christina: Yeah, so the fact that Time Warner and Comcast right now don't share, don't compete for customers doesn't indicate that this is going to create a greater monopoly power on the part of the merged Comcast Time Warner such that they be able to charge more to their end users than they would otherwise. But the fact that the question of, whether things would be, from different providers, would be streamed at different rates if they were merged illustrates the amount of conflation that has been going on between whenever issues involving the cable companies come up. And it seems like there's just a general fear or sense that there's monopoly power being wielded unfairly, and that whatever they're trying to do is probably suspicious and bad for people, which may be true, but what's important is to focus on what is the actual harm that exists or that we should be worried about. And what is the sort of narrow and appropriate legal response to that particular harm. And trying to kind of throw all these things together isn't necessarily going to create for the right outcomes. Is it appropriate for Congress to be worried about the cost of cable? In some sense yes and another sense no. If there isn't an antitrust issue in play, if there's not a legal question at issue, then that's the market going. And if it's determined that because there's an unfair monopoly power that causes the prices to be too high, and it doesn't look like there's others competitors emerging through mobile networks or satellite Internet or whatever, that may mean that down the road it would be appropriate to regulate those entities in a greater, more direct way. But it doesn't look like we’re there yet and trying to indirectly get at it by these half measures or vague worries is probably not the most effective way to get a good ecosystem in this area.
Evan: On the topic of raising prices, Larry I know in the piece that you wrote recently on CNET you put in some interesting facts about why cable prices have risen and one of the things that you said was the price of content is largely responsible for this; something like five, there's studies that say five dollars of every cable bill goes just to ESPN. I mean that fact caught me by surprise. It seems pretty provocative and I'm wondering whether and to what extent that should frame our thinking in general terms about things like the merger between Comcast and Time Warner. That seems pretty significant right?
Larry: It does to me. I think the problem is that, and here we’ll sort of tar the entire industry with the same brush; all of these agreements about content are secret and an under nondisclosure. So Comcast can't reveal what it actually does pay Disney for all the programs, Comcast can't reveal what channels have to be taken along with the channels they want, the channels they don't want that they're forced to take. There's a lot of wheeling and dealing that goes on between the big, and I'm largely talking about the big content providers people like Disney and the cable operators, and we don't know what any of it is. That doesn't really worry me as a consumer so much but I think if I was a regulator trying to figure out what's causing a price increase and whether it's anticompetitive or not, obviously if there really was significant concern and there was antitrust litigation brought by the Department of Justice, well then of course through discovery and under seal, they could actually find out what is going on here. But yeah, the sort of outside studies that try to figure it out without actually access to the agreements suggest that the very largest significance increase in cable bills over the last 10 years, by something like 50% of that increase, rests with improved leverage and therefore increase pricing by the content providers themselves, which kind of suggests why I'm not especially concerned with this merger. What I see happening in the content business is that the content providers have more leverage not less leverage. And one of things I think that’s driving Comcast to merge with Time Warner cable is the realization that they're on the losing end increasingly in these negotiations and are trying to in some ways kind of shore up their flank; especially when you bring in new forms of competition like over-the-top things like Hulu and Netflix and YouTube and alternate ways of getting the content outside of the traditional cable market. I see their businesses being under significant threat, not in a bad way but sort of in an innovative way, and everyone's kind of trying just to figure out what's the next iteration of the TV business, whether you want to call it that anymore?
Denise: Larry do you know what the status is of Sen. McCain's bill that would've allowed unbundling of some of the services, or would've prompted unbundling for consumers?
Larry: Yeah, it never left committee or has not even left committee yet.
Denise: Yeah, so I mean to the extent that content is so expensive and that consumers are underwriting their fellow consumers’ content because they cannot pay for just exactly what it is they want, do you think that something Congress should get involved in?
Larry: Well, I think it would be if there weren't alternatives but as were seeing the incidence or the rise of cord cutting, especially among people under the age of 30 who either never had the cable subscription the first place, or who got rid of it because they realize they can kind of piece together their own preferred set of channels, or the preferred set of content from Apple, iTunes, Amazon, Netflix and so on. That's increasing from the cable company standpoint they would say at an alarming rate. From our standpoint as a consumer we would say, look we have alternatives and people are using them so if those alternatives weren't there then it would be something more concerning, but it seems the bundling model seems to be on the ropes if nothing, and maybe that's a slight exaggeration, so the need to force it to change doesn't seem to make much sense when it's clearly changing already from these alternative mechanisms.
Denise: Yeah, you either have the person who forgoes the cable company altogether and figures out another way to get more specific content. Or you have the other end of the spectrum; the person who has the cable subscription, the Dish subscription, the Apple TV, the Amazon instant, the Netflix, you know because they want to have all their options open, and I'm sure that all of those companies just love having all of the additional revenue that these choices make available. I don't have a question based on that I was just making an observation.
Evan: Sounds like a win-win for someone.
Denise: Yeah for someone, exactly. So Larry, that sounds like a good lead-in to having you give us the state of the Uber at current time; that we generally go over with you the state of upstart companies like Uber and others, Airbnb, Taskrabbit are some that you mentioned in your New York Times op-ed. These are all companies that we want to see thrive, that you see you see running into local regulatory issues that protect the incumbent industries, correct?
Larry: Yeah that's right.
Denise: I'm wondering if we can draw a parallel, not to drag us back into net neutrality, but do you see a similar sort of danger here:
Larry: of course!
Larry: Yes I do. It's the danger of what happens when you take an industry that is difficult for consumers to work with, and you decide that the solution is to essentially turn it into a public utility. A highly regulated industry. That may be necessary as kind of a last measure in certain situations and you could say the hotel industry, the taxicab industry, to pick two. In an earlier era that was really the only way to control them given the sort of difference of availability of information between individual consumers and the industry as a whole. But the problem is the downside of any public utility or any kind of highly regulated industry is you immediately take away any incentive to innovate with new technologies, with new services, whatever it is because again the supply is artificially limited, the price is set by the regulators, changes have to be approved over a long and drawn out process as this is the case here for example for electricity and the water utilities. And the net result of that is that you have very low investment and very low incentive to invest in any kind of innovation. That's what's happening here is now we've got, because of the mobile revolution, because of the smart phone revolution, just because of the way the Internet works we've got the opportunity to kind of radically restructure these kinds of services like taxicabs and airports, and just anything having to do with very expensive assets that are mostly unused most of the time. That's kind of the thing that binds all these different startups together. They're figuring out that they can innovate with technology because it's gotten faster and cheaper and better and smaller and all the great things that it come with computers. And if you're the incumbent and you’re highly regulated, for one thing many times you can't directly compete because again you’d have to get permission from the regulator to do a lot of things that the startups are doing. But more to the point, you've had several generations of managers who don't even know what the word innovation means, so all they know how to do is interact with the regulators and not surprisingly what they're doing is going to the public utility commission and the taxicab commissions and the city councils and saying, we’ve been playing by the rules, we don't think they’re technically good rules anymore, and you don't think they're good rules anymore but those are the rules. And until you change the rules we don't see why we have to suddenly compete with people who don’t play by the rules. So, rather than trying to innovate themselves, they're fighting them in the courts. Of course the startups are often surprised by this. We’re not used to that happening here in Silicon Valley. We think we can just start whatever we want and not have to think about getting permission first, but that's with these particular startups are running up against and it's going to be a long and complicated battle with a lot of strange bedfellows involved.
Denise: So, what’s the score now as far as where Uber can do business and where can't?
Larry: I don't have a full scorecard. I was just in Miami earlier this week and they've lost there. They absolutely cannot operate any of their services in Miami. Obviously they’ve had some big victories in California, in Washington DC in particular. They've had some big losses particularly in Europe where they're fighting, and then kind of a lot of too close to call. They're trying to get in for example to New Orleans and Las Vegas and Miami, so far without any success. It’s depressing honestly to think again, from the startup standpoint that your main investment has to be, sorry Evan, sorry Denise, sorry me, sorry everybody, but the main investment has to be lawyers. That’s pretty depressing.
Christina: There’s so many industries were protection has motivated regulations sort under the guise of health and safety. This is just one of them and I think Uber is such a great example to highlight the fact that there's a ton of industries where people need licenses or to meet certain criteria in order to operate at all, and that's really inhibiting innovation. I think actually the thing that proves how little this is needed is actually the times that Uber has messed up. When in the past there've been the controversies about Uber charging to high rates, when there was a lot of demand for their cars, you see the good market effects that happens when there’s competition at play. Uber says, oh we’re sorry, this is what we going to do in the future. If people continue to not like what they're doing, they switch back to using regular taxis, and this is the market working correctly. It's not that if there's no regulation or if Uber’s allowed to function in certain cities that nothing will ever go wrong ever. And the test for whether something should be highly regulated shouldn't be whether something will ever go wrong ever, but whether the market system, the free-market system is going to deal with those mistakes well or not. And as we see Uber being able to very lively work and alter themselves when something comes, up we see evidence that their role in the marketplace is a good one because they can roll with those problems and fix them.
Denise: So I think we’ll go ahead and make state of the Uber our first MCLE pass phrase for this episode of This Week in Law. Some of you out there like to listen to this show for continuing legal or other professional education credit in your jurisdiction. We love that! We think we discuss a lot of things that are educational and worthy of that goal. So go ahead and take your shot at that. We’ve got a wiki page over at wiki.twit.tv. If you’re a lawyer it should help you out with the various processes in your state for claiming credit for listening to This Week in Law. We drop these phrases in, in case in your jurisdiction someone wants to see some kind of proof that you listened. And I can’t tell you how funny it was last week, Evan, when you weren’t on the show, but Bruce Schneier was. When we were going through this process and Bruce’s reaction was, really? This is how you’re demonstrating that people listen to the show? Secret words? So, in the absence of a more Schneier worthy verification method, this is what we do. We think it’s good enough, and I think a lot of jurisdictions do too, that’s why we do it. So, our first one is state of the Uber, and, where was I going to go with this? Oh, I did want to mention, I did have an inquiry I need to respond to from someone out there who wanted a participatory credit form from us. We will give you those if you email in for them, but bear in mind that I have no staff, I write those up myself. I’m happy to do it, but I’m not sure that all jurisdictions require them as some people listen to this show for self-study. But if you need one, go ahead. We’re thrilled that that’s how you’re enjoying the show. I will do my best to get one off to you, it just may not be instantaneous. Let’s go on here, as long as we’re talking about innovative technologies, one technology that people very much want to innovate with is private commercial drones. Of course, the FAA has a ban on that until, when is it? Next year I think? At least next year. But, news organizations actually are characterizing the bans on drones as a free speech issue, which I think is kind of interesting. They’re thinking about the drones as an innovative way to gather news, as opposed to the helicopter flying over you. You could use a drone which would be less intrusive, etc. What do you think about this argument Evan?
Evan: Well, you can see where the press is coming from on this. Clearly they want to have the, and here we are again painting with broad brush strokes, perhaps tarring an entire sector of the universe here, but it’s good that the press is watching out for, being on guard for any shrinking of First Amendment rights, infringement upon that or any kind of regulation that stands in the way of unfettered access to investigative sources, what have you. But you can see pretty clearly the other side of the interest here. There could be big privacy concerns, and ultimately what has to happen here is that there has to be some sort of licensed, regulatory scheme that is put in place here to make sure this is done appropriately. And I guess it falls to the FAA to do that. For example, I don’t want the local newspaper having a drone and flying it up, peering in my window, for example. That’s a pretty obvious example of things that I would want to be unlawful and I think clearly should be unlawful because of the privacy, let alone the fact that the drone could crash and hurt children playing outside my house and all of that good stuff. So, you can use some pretty banal examples to show why there are 2 sides to this issue as well. Clearly drones could be a very effective news gathering device, going into areas where it may be unsafe to send a human being. Being more places at one time than actually could do things. So, there is certainly positives to it, but there has to be a balance here struck somewhere. And we don’t want there to be, there’s plenty of Supreme Court law that says you don’t want there to be a First Amendment violation even for a moment. So, with that spirit we want to minimize the lag time it takes here to actually get a system in place where the press can use drone in a way that is going to take into consideration the safety and the privacy and the First Amendment issues.
Denise: Is there a parallel here, Larry to, we were obviously just talking about Uber, there’s safety concerns there that result in the web of local regulations and things that we have around taxicabs. Is the FAA right to be cautious in its authorizing these?
Larry: Sure. First of all, I think I should say, there are many TWIL viewers who would very much like to see a camera pointed at Evan Brown’s window, from the comments that I’ve seen about him in the chat. The will of the people may prevail on this one Evan. Look, the problem here as you said at the outset Denise, is not so much what is regulated, as so much the speed of regulation. This is another, I sound like a broken record myself, this is another example of innovative technologies get ahead of governments and they get faster all of the time. So, these kinds of breakdowns are more likely. Congress ordered the FAA, now 2 years ago, to develop rules, whatever the rules were going to be. Just to develop some rules about unmanned aircraft, or drone aircraft. The FAA is very slow and we don’t know when they’re going to finish. They only just started circulating the drafts, I think about 6 months ago. So, in the interim, what they did is they said, any commercial use of drone aircraft is prohibited until we get these rules written. And of course, now the fight is going to be, until the rules come into effect, is what does it mean to be commercial? If I’m doing it for fun, or as a hobbyist, is that commercial? If the press is doing it to gather news under the First Amendment, is that commercial? That’s what the fight is going to wind up being. But the real issue is we just can’t come up for regulations of new technologies as fast as the new technologies arrive.
Denise: I want my pizza delivered as economically and as efficiently as possible and if that means drones, then have at it. Just like I want my internet to be delivered at consistently fast speeds. So, do you think that the FAA is going to respond to that kind of concern?
Christina: Hopefully. Margot Kaminski, who I know you’ve had on this show before, has a great piece called, Drone Federalism in the California Law Review’s online supplement. Her argument is that for the same airspace that model airplanes have flown into, that airspace should be basically controlled by local legislation. And that this makes sense because there is a huge tension between journalistic interests and privacy law. We want drones to be able to film forest fires, and to be able to look at things that are happening like crowds, and even sports games and what not from above. But we don’t want people looking in windows and so the way to draw the lines between what drones are and aren’t allowed to do and what they are and aren’t allowed to film is going to be tricky. And this is going to be tricky because these lower than 400 feet areas are particular to particular places, or are limited in the damages they can do to particular places to some degree. This is the perfect area to have that kind of experimentalism that we often think is a good effect of federalism. So, the FAA should really kind of back away here. If you look at what the regulations, how they’ve been interpreted before, it seems that the FAA has been kind of overstepping by saying using the drones for commercial purposes isn’t allowed until we come up with other regulations, because there is nothing in their regulations that seems to differentiate between hobbyists and commercial users under using small aircraft, under that 400 foot limit. That amicus brief, it’s worth noting that it’s a little bit of a PR piece in m y opinion. It keeps talking about First Amendment interests of journalists, and that’s a very careful word choice because they’re not directly implicating First Amendment rights. There’s not a very concrete right to bring your camera anywhere necessarily. If we want to analogize to say the helicopter, assuming the FAA has the authority with drones it does with helicopters, you could see similar, the FAA saying, until we figure out what a pilot needs to know, until we figure out the dangers, no one can have a helicopter, or something like that. That’s the kind of broad, non-speech focused regulation for non-speech regulating purposes that advances genuine public interests. That would stand any kind of court challenge from a First Amendment journalist gathering perspective. And a lot of the cases that talk about the rights of journalists to gather information are very limited to specific circumstances. Where someone needs to gather information, a journalist is just a good, appropriate person to do it. Or cases like Barnette vs. Vopper, where the information has already been gathered, and the question is whether it can be disseminated, which is quite a different issue. So, in a lot of sense, this amicus brief operates in that penumbra around the idea of the free press rights. There aren’t specific extra rights that the press has, but because we’re so sensitive to society to having a free press, even where there isn’t a strictly First Amendment right in play, we tend to give the press extra permissions, or have exceptions for them to go into areas where the public is otherwise not allowed, or something along those lines. So, how should we go forward? Experimenting on the local and state levels is probably the best ways to go because there is going to be tons of issues that develop at this intersection of data gathering and free speech, and privacy on the other hand. And seeing what different states do and how it works in different situations is probably the best way that we can get at a good balance going forward.
Denise: Well, this would be a good time I think to delve into Parker Higgins’ piece in the Guardian, because everything we’ve discussed today has had a common thread of how lawmakers have to grapple with technology that is not fixed; is constantly evolving; is difficult to understand, and yet what they do has long lasting ramifications. Trevor Timm’s piece is about the Supreme Court, and he wrote it in response to the 2 oral arguments on cell phone privacy recently, and also the Aereo case, which the comments of the Supreme Court Justices made it clear that they had some real gaps in knowledge in about how certain things work, and it’s not just lack of technical knowledge, it’s lack of any sort of understanding of how these consumer, widely used consumer technologies function. So, Trevor’s solution, it sounds like he’s very concerned that all of these problems are landing at the feet of what he calls a handful of tech unsavy judges. And he thinks that future nominees to the Supreme Court should be quizzed on their knowledge of technology at confirmation hearings, and that maybe we should employ a technologist to explain technical issues to the less technical judges. It is a big issue that the people who make the laws in this area, and even the people who talk about the laws in this area, such as us on this show, may not have the degree of technical detailed knowledge that you really need to thoroughly understand how everything’s working. And thus, be able to intelligently enact laws. What do you think of Trevor’s proposal Evan? Do you think that’s where we need to go?
Evan: Well, probably somewhere between here and there. He makes a very good point. First of all, when I saw the headline that it’s going to be decided by people who don’t use email, I thought, oh because they’re using text messaging and snapchat and everything so much, right? Looks like we’re at the other direction. The really important point that I see in all this is not so much that they don’t understand how the technology works, but they don’t understand how people use it. And that’s really the fine point on this. You’re right Denise, this is the theme that underlies all of this, it underlies almost every conversation we have on the show here. Technology affords us with more abilities to make choices. We have more opportunities to do things every single day. The number of opportunities we have to go out and do things is growing exponentially because of the accelerating rate of change and innovation and all of those things that we enjoy. So, it’s not so much understanding how the signal gets from the dime sized antenna in the array that Aereo uses to the end uses device. Knowledge of that is not necessary to make good policy, but it’s understanding the norms that underlie those uses, and the desires that people have based on the opportunities that they have. That’s the thing that really needs to be able to shape policy maker’s thinking; policy makers, regulators, the courts, to take this particular example here. That’s where there really needs to be a robust understanding. Whether or not they actually use email or not, I don’t really care. I just want them to understand how people use email and how the consequences of their decisions in that realm may affect, both the present time and posterity.
Denise: Right. Some of the other cases headed to the Supreme Court that Trevor mentions are internet radio services, out of control software patents, whether online posts should be judged the same as traditionally protected speech. And of course the whole constitutionality of NSA surveillance bubbling up through the various district courts. So, what are your thoughts Christina? Do we need to have some sort of vetting process?
Christina: That’s probably a bit much. In some sense, a problem with having a generalist court is that there are always specific things, whether it’s the way bankruptcy works, financial institutions, how innovators design software, how different pieces of technology works; that need to be explained to a generalist judge. And this is sort of a choice we’ve collectively made because of, on the other hand if you get too specific you lose the general themes and cohesions of a legal system. If you listen to Aereo, Sotomayor and Kagan really get the technology and the worry is that when we say, you don’t really get the technology, we’re not saying you don’t understand how the file moves, we’re saying you don’t share my values about what this technology should be doing or what it’s role is in society. You’re missing the cultural context. These justices, a lot of them do know these things. They all have clerks who are from their mid-twenties to their early thirties. In terms of understanding what’s technically going on, they do, but Evan has it exactly right. The question is, how do people use it? How important is it in people’s lives and what are the dangers in it given how people use it? So the bigger issue is always, can I get you to share my world view about how things ought to be? That shouldn’t be conflated with do you technically understand what’s going on.
Denise: Alright, I appreciate your thoughts on that. I personally would love to see the Supreme Court Justices asked questions, not just about their stand about when does life start, but about their stand on snapchat and other kinds of modern technologies in the congressional hearing process.
Larry: That would require of course, that members of Congress themselves. You can’t ask a question if you don’t know what the answer means anyway.
Denise: That’s true. Excellent point. We need another MCLE pass phrase for the show, so let’s make it clueless Supremes. Sorry Supremes, I know that you know more than we’re giving you credit for; just to be able to put a phrase in the show for our listeners who need that. As long as were mentioning Aereo, I know you said you listened in to my TWIT segment awhile back Larry, and it sounds like you and I both agree that if Aereo is going to be put out of business, that that should be the decision of Congress, rather than the Supreme Court. Can you tell us why you think that?
Larry: Yeah sure, and by the way, I think that one of the problems with these cases that Trevor’s article brings up and that we’ve discussed, and I think it’s relevant to the Aereo case is that the Aereo case came to the Supreme Court on very early record, so there’s not a lot of…often you think back to the Betamax case as a counter example. There was a much more complete record for the Supreme Court to look at there, and they had testimony from Mr. Rogers and all of the other things and that just wasn’t there in the Aereo case because of its procedural position. And I think by the way one of the likely, or possible outcomes, I shouldn’t say likely with the Supreme Court, but one of the possible outcomes is they will send this back for further proceedings and to develop a more complete record, rather than trying to decide on what they’ve got. Now I’ve forgotten your question.
Denise: Congress would have to step in and say we think this is a public performance, or we don’t approve of you putting up tiny little antennas to kluge it into not being a public performance.
Larry: I learned a lot, by the way, in the last couple of months in trying to understand the Aereo case that I thought I understood but I didn’t. It’s posed as a copyright question. Whether or not the rebroadcast is in fact a public performance and so on, but what became clear from the oral arguments, and I think now what is clearer to me, what’s really at issue here is the entire structure of how TV content broadly has been regulated. We’ve had now 40 to 50 years again, of the efforts to try to either prophylactically solve problems, or to solve real problems that have come up in new technology. Cable was a new technology, and then as the internet has become a new technology and so on. We’ve seen a lot of acts of Congress that have tried to paste the system back together again after it’s clearly been disrupted. I think the chickens that are coming home to roost in the Aereo case are decisions about retransmission consent and must carry and the compulsory license and all these kind of legal fictions that Congress in some ways was forced to put over when the over the air television business was threatened by the succession of better and cheaper technologies. I think your point and my point in that piece was the solution here isn’t deciding about copyright or even fixing copyright in the particular instance. The real solution is for Congress to sweep away a lot of now counterproductive rules and legislation that were put into place at a particular moment in history in the television industry’s evolution that now clearly are doing more harm than good.
Denise: Yeah, that’s something Congress needs to do more of, isn’t it. That when something is becoming antiquated, they really need to go revisit it.
Larry: Or just put sunset provisions into laws like this that are going to have a significant effect on a developing industry, to say, alright, we’re going to take our best guess here; I think that’s what Congress can do, and what courts do as well. But we’re going to put a 2 year, a 5 year at the most clock on it to say if we don’t renew this, if we don’t revise this, it just goes away after some period of time.
Denise: Christina any Aereo thoughts?
Christina: Several actually. The Aereo case has made me realize that the copyright statute, and this is actually riffing on Larry’s idea that Congress should be the first to make this decision, but in a different kind of way. The copyright statute should be seen much more like the tax code than something that’s trying to protect some sort of platonic ideal of fairness and what creators are owed. A lot of the debate in the case, or the thing it seems to make the Justices uncomfortable is that Aereo seems to be kind of exploiting a loophole, or kind of technically just walking some line where they’re on one side rather than another where the line between public and private performance seems to be fairly arbitrary. The reality here is that we invented copyright much like the tax code actually. The idea that we want a certain amount of remuneration to go to creators and how can we do that? The copy was a good way to measure value being created for people and from the creators in the past and then we added the public performance right, kind of when we invented player pianos and that sort of thing. This is a very rough way to try to get at giving creators enough money for their efforts and letting the public access stuff. And we have all of these exemptions and there’s fair use and this distinction between public and private performance isn’t a platonic ideal of thing, or if we just think hard enough and do good enough philosophy we can determine whether everything is a public or private performance. The cases about performances and whether they’re public or private always seem to turn on these silly things like which person is pushing the button and that’s because it’s an arbitrary line that we drew, the same way that we draw very nuanced little lines in the tax code, putting things on one side or the other. Everything looks like a loophole, but you have to follow the text because there is not an animating spirit. There’s the goals of hundreds of people who got together to try to make the thing. And that’s the same thing about the copyright statute. The big takeaway, and I hope the Supreme Court doesn’t go this way by saying the text doesn’t really say this, but it feels like areas exploiting something so we’re going to rule against them. The way to go here is to say we wrote the transmit clause in a certain way, there’s only a few sane ways to interpret it. The best way to interpret it is to say that the person at home is the person completing the performance, and that performance is private because the copy that they are performing is one that can only be seen by them. Is that somewhat arbitrary? Is that just a call that was made based on some rough idea of what the good world was? Yes. So if that’s going to be changed, it should be changed by Congress.
Denise: Alright. Evan any final thoughts on this?
Evan: Yeah, I’m with this very same sentiment here. I liked, Larry, how you described copyright as a rickety edifice with compromises and changes along the way, and backing into a reality that is really brought about by innovation. I think the same could be said about other areas of the law as well. A most readily available example is the privacy laws. There have been changes to the Computer Fraud and Abuse Act, the Electronic Communications Privacy Act, and other privacy statutes, federal privacy statutes through the years to sort of address changes in technology. But at the root we’ve got mid-eighties era laws when it comes to those types of things. Those have become rickety edifices as well. If anything, just sort of from rot as the technology and means of communication and the ways of privacy being violated in an electronic age have changed. It’s not as if Congress doesn’t have anything else to do, but wouldn’t it be great if they could spend some serious time visiting at a very fundamental level copyright and some of these other areas of law, to that effect technology and communications like privacy.
Denise: Larry, what do you think the chance are that Congress would enact some sort of law that required the sunsetting of laws that affect rapidly changing technologies?
Larry: I thought you were going to ask me what the chances of them providing realistic reform on any of these issues, including by the way patent reform, to talk to Christina’s specialty. There are statutes that have sunset provisions in them. I don’t know that there’s any particular pattern that suggests when Congress does and doesn’t do sunsetting. But it’s an interesting idea if they sort of said that if it’s technology related, that’s kind of a plus factor for sunset provision. I don’t know if there’s anything like that. We’re dancing around this, but of course the likelihood that the current Congress will do anything substantive between now and the next presidential election is getting very, very small, including unfortunately patent reform.
Denise: We’ve gone really, really long today, otherwise I would love to get into patent reform with Christina. Christina we’re just going to have you back on the show in a week when net neutrality is not happening the next week. We can go into lots and lots of patent related stuff because it is important and something Congress is keeping its eye on even if it might not take any meaningful action before the next presidential election. So will you promise us that we’ll get to that on your next appearance on This Week in Law?
Christina: Definitely. I look forward to it.
Denise: Ok, good. Let’s move on to our tip and resource of the week. Our tip has to do with snapchat which we always talk about as the thing where you can have clandestine communications. Well, it turns out with its latest update, to the extent that that was ever the case, it’s less the case now because it’s actually added a feature where you can tap on a message to save it or screenshot it, so, so much for the femoral nature of snapchat. Now, there are other clients out there that are competing on a ground of privacy and disappearing messages and stuff. Molly Wood over at the Bits blog, the New York Times, writes about a bunch of them including Telegram, Cyber Dust and Confide. But snapchat, the sort of the poster child of this seems to be backing off, so our tip is, to the extent you ever using snapchat hoping to have clandestine conversations or femoral pictures; not so much anymore. Any thoughts on this Evan?
Evan: Well, it’s a little bit surprising isn’t it? When I think of snapchat, I think of that and what it does. Wasn’t it the answer for safe sexting? It sort of knocks a hole right in…..
Christina: There’s not truth in advertising with snapchat, right? There were always ways that people could technologically get around the fact that the pictures were supposed to get deleted. Now at least everybody is on notice.
Denise: Yeah, definitely.
Larry: I’ve never seen Evan speechless before, that was impressive.
Evan: Just trying to do the right thing. I could say all kinds of stuff, but my mom watches this show.
Denise: Those drones outside your window; those photos aren’t femoral anymore. At least not if they’re using snapchat. Alright, let’s move on to our resource of the week. It’s a really fun one. It’s a podcast that is put on by a couple of Christina’s college, the University of Georgia Law School, they are Joe Miller and Christian Turner, and it’s called Oral Argument. And I think we can officially say that Christina is making the tech policy law podcast circuit, and I think we can officially say that there is a circuit in light of this podcast, Oral Argument. In addition to this one, I can think of Hearsay Culture, Jerry Brito’s podcast, Surprisingly Free, IP Colloquium from Doug Lichtman, and now we’ve got, in addition to TWIL of course, Oral Argument, which is hysterically funny. I don’t know that they always focus on technology, but they both seem to have a technologically oriented bent. Joe Miller is an IP professor, Christian Turner has sort of a broader field of scholarship. They’re hysterical. Correct me if I’m wrong Christina, but it sounds like you all were just sitting around a table in one of their offices; one of their dogs was running around at your feet. It went for about 2 hours, so they’ve got kind of a sweet spot in time like we do and just let people ramble on and on. And if possible, even less focused than we are here.
Christina: That’s true. Their usual episodes are about an hour and we just kept talking. So if you want to hear me talk about network neutrality you can listen to us riff on that particular episode of the podcast. Oral Argument is really great because they’re such funny guys and incredibly intelligent. So Joe Miller, as you said does IP, and Christian Miller Information Theory and Property Law and they both have a fantastic sense of humor. I loved doing their show, almost, but not quite as much as I love doing this show, and people should definitely listen in because it’s really fun.
Denise: Yeah, and I definitely recommend that you go listen to Christina’s episode with them. I’m only about ¾ of the way through it, but we kind of jumped right into the politics and what’s happening next, and if you’re looking for a great discussion of the history and the policy and how we got to where we are now, and a lot more on the technological underpinnings; you guys went really deep on that and I think it was a fantastic discussion. And again, I’m not even through with it yet. Kudos on that and even though there were dogs running around, and there were Bonobo monkeys….
Christina: The dog is a feature, not a bug in their podcast universe.
Denise: I agree. It’s often a feature in ours as well. So definitely check that out, and I’m so excited I can officially say there is a tech law policy podcast circuit to be on and it’s good that you’re on it. Evan you need to check this one out if you haven’t seen it.
Evan: I will. I will. It looks really intriguing, I’m looking forward to it.
Denise: It’s really funny. I’m just glad they weren’t around in 2006 or so, I think that’s when we started this show, because then Leo would have been getting emails saying, oh you’ve got to have these guys host your tech law show, and who are these Denise and Evan people?
Evan: Where would we be?
Denise: We’re glad that they’re out there. Alright. This has been a really fun and informative show. Always a pleasure Larry, to have you back with us. Thank you so much for making the trek to the studio and joining us.
Larry: My pleasure. I always have more fun with you guys, by the way I have to tell you as an alternative to this I was asked to be on Glenn Beck’s internet channel today and I had to turn them down for you and believe me it was not a hard decision to make.
Denise: I’m so excited that we beat out Glenn Beck. I think I would have had to come over and slap you around a little bit if you’d made the other choice. Thank you for making the right choice.
Larry: You’re very welcome.
Denise: Christina, such a pleasure to meet you, I’m glad we’re going to get a chance to get you back on the show and talk more about patent stuff.
Christina: Yeah, I’m happy to talk about patents at any time so I’d be thrilled to come back.
Denise: Good. Anything else going on in your world that you want to let people know about, either at the law school or anything that you’re writing or working on?
Christina: You know, the thing that’s been in the mind of all IP professors the last week has been Aspen’s attempt to rent text books to students and claim that they weren’t buying them. I don’t know if anyone here heard about this, but one of the most popular property textbooks, Dukeminier, was, Aspen announced that their future editions would be only rented to students, and they would have to return them at the end of the term, and they would get unlimited access to a digital version which was covered by DRM and everything. There was a great backlash from a number of property and IP professors saying, hey guys, for sale, Bobbs – Merrill, what’s good for consumers and good for the public is to let these books actually be bought and sold and resold instead of having people return them and presumably have them be destroyed. In a matter of days, Aspen backpedaled on this because so many professors were like, I’m going to switch textbooks. That’s what’s been kind of hot in my universe this week, and it’s been really exciting and really cool to see the problem emerge and disappear quite quickly. So, it’s a property question, but it’s all this IP and tech stuff reimporting itself back into traditional property law. We always talk about whether software licenses and IP licenses for digital copies should be enforced and to what degree, and then we see people in the traditional property universe saying, hey, that gives us more control. That’s a good idea. Let’s try that. So I’ve been really proud of my colleagues in the academic universe altering that situation.
Denise: Yeah, that dovetails real well with our recent discussion with Kyle Courtney and these kinds of concerns when it comes to libraries. That’s very cool. I’m going to look into that in more depth. Folks we are so glad that you could join us today. We do this show every Friday at 11:00 Pacific Time, 1800 UTC. We hope you’ll join us live because it’s really fun to have a live audience in our chat room, which you can get to at irc.twit.tv. But don’t worry if you can’t; we’re also on iTunes and on You Tube and on the Roku box. You Tube makes it real easy if you have a web enabled TV in any way to just get our content right up there, if you don’t have any set top box that makes it easy for you to do that. What else Evan, anything you want to tell people?
Evan: No, it’s been a great conversation. It’s been a great conversation. Lots of fun today.
Denise: There are all kinds of ways to get in touch with us; you can go to our Facebook page, our Google+ page, you can email us. Evan is email@example.com, I’m firstname.lastname@example.org. Do give us a shout on the Twitter. I’m @dhowell there, Evan is @internetcases, Christina’s is @chrystyna there and she has made a New Year’s resolution to tweet more so be sure and tweet at her. Larry Downes is of course @larrydownes on Twitter and he tweets prolifically without any kind of New Year’s resolution, so definitely you need to follow them as well to keep up on everything we’ve been discussing here today and more, and we will see you next week on This Week in Law. Thanks so much for joining us!