If telcos are having trouble attracting investment from capital markets because no one's sure they'll do well in the long run, structural separation may make sense — even to them. Just a few regulatory shifts and some bravery stand between us and a more competitive and choice-filled world of communications. And with separation and competition may come economic growth as well.
Nice pointer from EuroTelcoblog in this direction — thanks to James Enck and his reportage.
Someone must have told me years ago that extended warranties on equipment are a bad idea. So I never get them. Nor do I ever get frequent buyer cards. Life is too short for me to remember the details about the warranty. And I know myself well enough to be able to predict that I'll never have the buyer card with me at just the right moment.
I was told tonight that businesses like Best Buy make high profit percentages on extended warranty sales. Consumer electronics are becoming a commodity, so the real money is in service contracts that (with any luck) won't get used. (Consumer Reports story here.)
Extended warranties are a mysterious business. There's no requirement that the manufacturer actually service its own material, so there may be one giant warranty-servicing company out there (right? one Beatrice Foods of warranty services) doing all the work. And making, one hopes for their sake, a lot of money.
Things with moving parts break, and the long tail must have a warranty equivalent. Thinking about this has led me to Warranty Week, an online magazine for “warranty management professionals.” The extended warranty guys are apparently irritated at their bad reputation, noting that no one says negative things about basic manufacturers' warranties.
This seems like a market that, like the travel industry and the bookselling industry, is ripe for creative disruption online. If consumers really understood what warranties they were getting, and were able to manage them in aggregated places, we'd be better off. Right now, it's hard to compare extended warranties, there's a huge variety of consumer electronics being bought and sold, and manufacturers' warranties are getting shorter and shorter. Time for a big, detailed, extended warranty marketplace to emerge.
I know it isn't even Thanksgiving yet, but I had some moments of thought about next term today.
I'd like to have every person in both of my classes next term (cyberlaw and communications law) posting reactions to the reading/answers to questions/suggested new questions online in some comfortable wiki-place. This worked well in my seminar last year, and it was great to see the students reacting to things their classmates posted. (I've said this before — I knew the class was going well when they started arranging for cyberlaw-seminar drinks after school using the wiki.) The Paul Romer online problem-set approach doesn't fit law school perfectly, but the lecturing-plus-exam approach isn't the best either.
So, not for the first or last time, here's a request: if you've got suggestions for online tools or techniques that have worked well for you, as a student or teacher, please let me know.
There's a fascinating decision [warning: enormous pdf] out of a federal district court in Chicago about craiglist's liability for fair housing act claims. Spoiler: craigslist is not liable for what posters say in their advertisements for roommates (“Christian single straight female needed”). I think the court gets to the right result, but the opinion contains some dicta (language not essential to the holding) that isn't helpful.
The judge finds that 47 U.S.C. 230 shields craigslist from liability under the Fair Housing Act (look at section (c)), which bars everyone from taking the following steps:
To make, print, or publish, or cause to be made, printed, or published any notice, statement, or advertisement, with respect to the sale or rental of a dwelling that indicates any preference, limitation, or discrimination based on race, color, religion, sex, handicap, familial status, or national origin, or an intention to make any such preference, limitation, or discrimination.
The advertisements posted by craigslist users may violate this statute, but craigslist is an Interactive Computer Service under Section 230:
No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.
Starting with the Fourth Circuit's 1997 Zeran decision (described here), an enormous number of courts have found that Section 230 provides immunity from claims under federal law (except, generally, intellectual property claims) to online service providers of all kinds. The Zeran court noted that making entities or people who don't originate online material liable for it would have staggering effects:
It would be impossible for service providers to screen each of their millions of postings for possible problems. Faced with potential liability for each message republished by their services, interactive service providers might choose to severely limit the number and type of messages posted. Congress considered the weight of the speech interests implicated and chose to immunize service providers to avoid any such restrictive effect.
Many companies have relied on Section 230 and the cases construing this statute to assure their investors that they won't be liable for claims that have to do with third party content.
The craigslist opinion (from a lower court, not an appellate court, but noting dicta in a 7th circuit opinion) in dicta disagrees with the traditional Zeran reading of Section 230 in a couple of crucial respects. First, the court asserts that sites/services are protected by the statute only for claims that would treat them like a “professional” publisher — like someone who edits and chooses what to post. Claims that have to do with the site's role in simply making available the material are not barred, in this court's view.
That's strange, because the universe of claims that have as one of their elements a fingerpointing assertion that “you are an editor” is small. (Indeed, the fair housing claim in this case is one of the few. Plus defamation.) This reading of Section 230 narrows its immunity function substantially.
Second, the craigslist court opines that if a site actually alters material that is then made available (and the altered material sparks a legal claim), then the site shouldn't be immune under Section 230. This is a big deal, because mere editing and selection so far hasn't been enough to make the site liable as an “information content provider”. The court hastens to note that the alterations would have to be part of the challenged material, but this really muddies the waters.
The important takeaway here is that this new decision asserts that the immunity function of Section 230 is limited to claims that specifically include “publishing” as an element. There aren't many claims like that. Now, it may not really matter, because the court does use the statute to protect craigslist. This is all dicta.
I think Congress intended Section 230 to do much more work than this court's crabbed reading would suggest. The Preamble suggests as much:
(b) Policy
It is the policy of the United States –
(1) to promote the continued development of the Internet and
other interactive computer services and other interactive media;
(2) to preserve the vibrant and competitive free market that
presently exists for the Internet and other interactive computer
services, unfettered by Federal or State regulation;
If the goal was just to shield sites from defamation and fair housing act claims, we wouldn't have needed that preamble. The deal struck in Section 230 was to provide broad immunity, and the term “publisher” didn't just mean editing — it meant not holding the site liable to the extent it made material from third parties available.
This case isn't the last word or even (arguably) an important word on online liability. Zeran is still the circuit court opinion that courts will defer to, and the 7th Circuit doubt is dicta; yesterday's opinion came from a lower court within the 7th Circuit and its narrow reading is itself dicta. But if another federal appellate court reads Section 230 differently than the Fourth Circuit did in Zeran, and if the Supreme Court decides that this circuit split is worthy of attention, then we may someday get an opinion from them about this that will give different guidance.
[Updated to make the "dicta" point a few more times]
Things I heard yesterday at CDT (this isn't an attempt to capture the thrust of the conversation, just to note some interesting assertions that I want to follow up on):
1. that the U.S. Post office attempted twice to claim that they had exclusive rights to deliver “mail” and that they should be in control of email. Looking for details.
2. that it would cost less to deploy fiber to everyone in America than to buy a new car every 15 years for each household.
3. that it would a good idea to require all ISPs reaching certain benchmarks (size of pipe, number of points of presence) not to depeer, and that in general it would be a good idea to abolish ISPs' ability to depeer based on asymmetry of traffic.
4. that companies offering everyone tiers of connectivity actually provide all subscribers with the highest tier, but charge the group asking for it specifically (“I want the highest level of bandwidth!”) more.
5. that all of the most subtle prioritizing techniques are possible, but no one knows whether they'll actually be used. And we can't tell whether they're being used now or not.
More generally, it seems clearer to me all the time that all the claims to exclusivity and specialness made by particular communications modalities don't fit reality. (“We're cable and we own our pipes.”) I don't understand how the user will tell the difference. It will just be a broadband connection to a sea of digital data, organized by entrepreneurs and groups into meaningful patterns with which we'll want to interact.
I'm still in motion (today in New Haven) and looking forward to getting back to NYC this afternoon. TMobile isn't letting my mail go out of this Starbucks. The cellular story is the worst part of this whole picture.
Yesterday I moderated a panel at Cardozo as part of a conference called Patenting People. The discussion was about whether there should be new laws (more Congressional oversight?), new institutions (bring back the Office of Technology Assessment!), or new global convergence about whether to issue “morally controversial” patents. (“Other countries ban reproductive stem cell patents, why not us?”)
Given how much trouble we have supporting basic science of all kinds, the benefits of encouraging disclosure of new inventions through the patent system seem to me to far outweigh the burdens. And how will we ever know, beforehand, how a particular invention will be used? So I'm fully in the “more science, more invention” camp. But reasonable minds differ on this question, and we had a good session.
Then I tried to get to DC. It was raining heavily; I barely made it to the train station, and then it took almost five hours for the train to crawl to Union Station. When the train finally ground to a halt, the doors didn't open, and when they did there was a very long line for cabs outside the station. It wasn't a very scientific, rational, or progressive trip. But I'm here now, until this afternoon's train back through the greyness and damp towards New York. Today is all Network Neutrality, all day.
Yesterday I spoke at PLI's 2006 Communications Law program, an annual event that Jim Goodale has been running for 30 years or more. Many traditional mindsets were on florid display:
Goodale is worried that online advertising is destroying newspapers, and can't believe that keyword-based advertising is legal.
Bob Joffe of Cravath, representing cable companies, says there's been plenty of innovation in the form of additional cable channels. And he's not even pretending that cable companies won't monetize their broadband networks. Of course they will! They own them! (No more of this “it wouldn't be in our best interest to discriminate” stuff.) Joffe was particularly skilled at the “there's no problem, no need to regulate” argument.
Dick Wiley of Wiley Rein, representing most incumbents, but particularly telcos, says that telcos are anxious to get into video and that that will represent online innovation. He's claiming that the AT&T/BellSouth merger is being inappropriately held up by network neutrality proponents.
In response, Gigi Sohn of Public Knowledge actively took on Joffe and Wiley — this seems to be an annual sparring match, during which Wiley begins every sentence with “Well, Gigi, as you well know…”
There was a large, well-dressed, and middle-aged crowd in attendance. Many suits and ties; not so many junior lawyers, as far as I could tell. After the panel, we all went out to lunch in a very convivial fashion. I'm glad Goodale invited me, and I had a fine time.
It was an odd morning. These categories (cable, broadcasting, telephony, mainstream news) seem to be drifting farther and farther away from reality. Everything is converging at this point. But yet well-meaning people keep getting together to talk through these regulatory categories in a serious fashion, in ballrooms with pitchers of water and white tablecloths and microphones. No laptops in evidence.
Very odd.
I have four big projects right now – being a researcher, being an ICANN director, making sure that OneWebDay has a life of its own, and being a violist.
The viola project is the easiest of the four, because it's the thing I've been doing the longest. This hasn't always been true. I remember when I first tried to play all four open strings on the violin (one at a time, up and down). Very very hard — right hand holding tight to the bow, right thumb locked underneath the bottom part of the bow stick (hard to explain without a picture), feeling of pain in my left shoulder and neck. I remember that when I first started the pads of the fingers on my left hand stung with pain; the topmost string was like a razor. No wonder so many kids quit after a year or so.
I didn't know quitting was an option. So I kept going, and now when I don't play my hands don't feel as useful and the pads on the tips of my left fingers start to ache. I switched to the viola when I was a junior in college because I thought I'd get a better job that way. I've never looked back, and the few times I've played the violin since then I've sounded like a trombone player.
I did get a better job eventually, but as a lawyer and not a violist. About six years after I graduated from law school I started practicing every day again, not the three or four hours a day I'd done in college (not the smartest thing to do in college, by the way), but a solid hour. I'm not sorry that I took the route I did. Musicians don't get treated very well in America (except for a lucky few), and lawyers, amazingly, get paid just for thinking, writing, and talking. What's so hard about that? I remember the first day of my first job after I dropped out of music school. I couldn't believe that they would pay me for sitting in an air-conditioned office and keeping track of pieces of paper. It seemed like a game, a lark, a scam.
Now playing seems like a gift, a lucky thing I get to do that I've done all my life.
I remember a feeling of great happiness the day after Clinton was first elected President. It was a beautiful fall day in Washington, and I truly believed that the world had changed. I even remember walking out of the building I lived in (the remarkable and much-missed Kennedy-Warren, where I and everyone I knew at the time went to an inaugural ball for Clinton)
have to pause for a picture of the K-W lobby
and thinking on that bright fall day, “Boy, this is great! Just imagine what his election will mean for gay rights in America!”
And, of course, within a month or so we had Don't Ask, Don't Tell and it was all a disaster and there was much disappointment ahead on scores of issues.
So I'm trying not to get too excited about all the Democrats running things on Capitol Hill right now. I know that things may not work out. On the net neutrality front, the punditry is that there won't be a big telecom bill for a long time because the Bells have gotten the video franchise rules they wanted from the states. Some people think net neutrality isn't really a standalone issue, so it can't fill up an entire bill on its own.
But there is an angle that might work. Democrats should be, if they think about it, the party of long-range social planning. They should be the party that worries about investment in fundamentals that will support society into the future. Education! Stem cell research! National parks! Basic science of all kinds! And — universal access to broadband.
If Congress takes a hard look at the state of universal service today they'll be horrified. Graft, bloat, corruption — paying for services that haven't been provided, paying more to more recipients by raising assessments, funding old stagnant service providers. . . lots of material here for dramatic camera-covered hearings. Lots of good Perry Mason moments. And, at the end, we'll have to decide that what the US should really be funding is broadband access, not access to traditional telephone services.
Traditional voice telephone services are quickly being taken over by much less expensive internet services, so it makes little sense to continue funding the former as a national policy matter. Improved broadband connectivity has been a national priority for some time (did you know we were supposed to get there by 2007? just a few weeks to go!), and it would make sense to implement this important goal more coherently as a matter of universal service policy. The goal of universal service, after all, is to make communications technologies available to every citizen, and the relevant technology at the moment is broadband access.
The question of who should pay for universal service has dogged the policy discussion for years. Finding a common fund method for paying for universal service seems essential. Although difficult as a matter of political priorities, it may be more appropriate to fund these universal service programs through general tax revenue rather than through imposing fees on nascent VoIP services.
And once we start paying for broadband as a nation, we'll want to make sure that it's being provided on an open, neutral basis. Why? Because that's essential to the overall economic growth of this country.
We have begun to understand that the growth in social wealth per capita over the last millennia is deeply related to the increase in the diversity of new nonrival ideas that has occurred over the same time. Specialization, or new ideas, and the increasing returns that come with specialization, is the key to rising output. In the words of my new hero Paul Romer, “Economic growth arises from the discovery of new recipes [ideas] and the transformation of things from low to high-value configurations.” Even small increases in economic growth can lead to dramatic effects on the standard of living of human beings.
An open internet is a world of new ideas. New ideas lead to economic growth. If we pay for broadband access as a matter of social policy (and we should) we need to make sure that access is neutral.
But, again, trying to stay calm here.
This is my 765th post, and you'd think I'd know what I was doing by now. But I don't. I usually do these posts at the end of the day, and as part of my routine I delete all the zillions of trackback spam that's attached itself to this account.
I keep deleting legitimate trackbacks. I've wiped out, recently, about six months' worth of legitimate trackbacks, trackbacks that I cherished. Because they were mixed into a nest of spam I've blindly deleted them as part of a big batch delete — I delete 50 at a time, and it takes quite a while.
I'm really sorry. I'll try not to do it again. As penance, here is a drawing that you can use to make fun of me.
