Yesterday, the Progress & Freedom Foundation (PFF) and Electronic Frontier Foundation (EFF) filed a joint amicus brief with the U.S. Supreme Court urging the Court to protect the free speech rights of videogame creators and users and asking the justices to uphold a ruling throwing out unconstitutional restrictions on violent videogames. At issue is a California law that bans the sale or rental of "violent" videogames to anyone under the age of 18, among other regulations. While the law was passed in 2005, it has never taken effect, as courts have repeatedly ruled it unconstitutional. California appealed its loss at the Ninth Circuit Court of Appeals to the Supreme Court. The case is Schwarzenegger vs. EMA.

This case has profound ramifications for the future of not just videogames, but all media, and the Internet as well. Although we've had 15 years of fairly solid Supreme Court case law on new media issues, a loss in the Schwarzenegger case could reverse that tide. In the amicus brief, we explain how the current videogame content rating system empowers parents to make their own decisions without unconstitutionally restricting this new and evolving form of free speech. Our brief is focused on three major arguments:

1. Parental Control Tools, Household Media Control Methods, Self-Regulation and Enforcement of Existing Laws Constitute Less Restrictive Means of Limiting Access to Objectionable Content than Government Regulation of Constitutionally Protected Speech


2. Videogame Content is Constitutionally Protected Speech Deserving Strict Scrutiny


3. The State Has Not Established a Compelling Government Interest in Restricting the Sale of Videogames to Minors

• The Entertainment Software Association reply brief


• The Comic Book Legal Defense Fund by First Amendment legal wit Bob Corn-Revere


• The Center for Democracy & Technology, among others, focusing on the dangers of expanded age verification for the Internet, which PFF, CDT and EFF recently filed on in the FTC's COPPA review proceeding.


• this brief by various First Amendment scholars led by Eugene Volokh


• the Media Coalition & several other groups

The OECD study is also valuable because it stresses a point that I have long stressed--the importance of what the OECD calls "complements" in securing the economic benefits that improved IPR protections can produce: "Examples include policies that influence the environment for doing business, investment in research and development (R&D), development of human capital and entrepreneurial education (e.g. concerning the economic potential of intellectual property)."

This is a critical point. Intellectual property rights are intended to empower markets to promote the private production of social goods like expression, reputation for quality, and innovation. But these intangible or "intellectual" property rights seek to achieve these ends by granting exclusive rights. And while the exclusive rights granted by IPRs often differ in their details because intangible property rights always raise context-specific concerns, the exclusive rights granted by IPRs are, nevertheless, intended to produce--in markets for expression, reputation, and innovation--effects similar to those produced in markets for tangible goods by the exclusive property rights that we grant to producers of such goods. These observations thus suggest that we should expect to find what the OECD study actually found: A country can improve the efficacy of IPRs in producing economic growth by improving IPR protections and then by making improvements in the "complements" that will tend to improve both the efficacy of IPRs and the business climate generally.

Consequently, perhaps the most interesting OECD finding is that improved IPR reforms can trigger a "virtuous cycle" of complementary improvements. OECD notes that IPR reforms tend to trigger increases in foreign direct investment (FDI), that then trigger more general improvements in the "complements" that improve the general business climate. As OECD puts it: "[T]he significance of the results across the system of equations points to a virtuous circle, whereby improvements in the IPR environment are associated with improved economic performance - in particular with respect to FDI - and, in turn, further improvements in the IPR environment."

In short, this is a useful and generally cautious new multi-level analysis of the effect of improving IPR protections in developing countries. It should highlights the need for further research to improve our understanding of the roles of improved IPR protections and improvements in "complements" that improve both the prospects of both IPR-intensive enterprises and a country's general business climate. To the extent that improved IPR protections tend to generate improvements in complements important to businesses generally, then the true economic benefits of improved IPR protections may be far greater than even this new OECD study might suggest.

Jim's piece also highlights a fundamental problem with TechDirt's childish, copyright-hating worldview: TechDirt brews its venom from an ugly blend of hubris and cowardice.

Fine—but Masnick's preferred "business models" are ones that existing copyright law permits. As a result, if these "Masnick models" are superior means of production, then consumer-driven market competition between artists employing these superior models and artists employing other, inferior models, (like selling copyright-protected copies), should naturally have driven all those inferior models out of the market without resort to either piracy or government retraction of copyrights.

But that has never happened, and that suggests why TechDirt hates copyrights so venomously: Those wretched copyrights just keep on letting artists, (and those who make the risky long-term investments that let artists create), exploit creative works in ways that both artists and consumers insist upon prefering to those means of production decreed to be superior by TechDirt.

That is intellectual cowardice: There is no real problem if the "problem" with copyrights is that they let debates about the relative merits of subsets of the vast array of business models that copyrights permit to be settled by real consumers reacting to real works in real markets—rather than by the fertile imaginings of self-anointed Internet geniuses.

Perhaps that is why copyrights still tend to be strongly supported by both federal policymakers and most policy analysts—or at least those who retain the hint of personal humility required to admit that those who incur the risks inherent in creativity might be better situated than most pundits to decide how to exploit the rewards earned in the rare cases when those risks pay off.

I was also impressed that Brenner stressed a point that probably should be stressed more often during debates about technology policy: Antitrust and competition law exist to ensure that we do not need to do more harm than good by prospectively trying to identify and forbid every combination of property rights, new technologies, network effects, and circumstances that could lead to some Bad Thing happening.

This is an important point. Apart from the self-parodying sexist tirade in which William Patry denounced DRM as a Stalinist, Fascist chastity-belt-on-someone-else's wife, we really haven't seen much DRM doom-mongering lately. On the other hand, many former DRM-doom-mongers merely shifted to mongering other forms of allegedly impending Internet doom.

In almost every case, the hypothetical harms potentially threatened by the doom-of-the-week being prophesied would require multiple, sustained violations of antitrust laws—even those that were not being enforced too aggressively, as such laws often are. Nevertheless, properly enforced competition laws serve as a useful check against the need for the sorts of prophylactic restraints inevitably advocated by those hypothecating hypothetical horribles.

Malamud describes a government IT landscape that is a "vast wasteland of contracts that lie fallow inside this beltway" because of agency capture by special interests and proposes three steps to fix government IT:

• Finish the opengov revolution - create and enforce bulk data standards, release more government data using those standards, and update the Freedom of Information Act for the Internet age to require that any data released in response to a FOIA request is also posted online for anyone to access (others have already taken up this cause)
• Create a National Scanning Initiative - Spend at least $250 million per year (a third of what the Smithsonian currently receives from the Federal government) for a decade to put all of the works housed at the Smithsonian, the National Archives, the Library of Congress, the National Library of Medicine, and the Government Printing Office online
• Create a Computer Commission with authority to conduct agency-by-agency reviews and change projects from relying on over-designed custom systems to ones based on open-source building blocks and judicious use of commercial off-the-shelf components

O'Reilly's Jim Stogdill believes that Malamud's speech is an implicit recognition that Federal IT projects are just too big for the typical top-down IT development process and the better approach is "structuring incentives, policies, and ecosystems to encourage the complex to emerge from the simple." This approach is basically the Unix philosophy, which is best summarized as "Design programs to do only a single thing, but to do it well, and to work together well with other programs."

One big problem with most government software projects is that they're developed without any thought of having those systems interact with other systems. As a result, data files are typically proprietary and importing and exporting data is impossible. But if federal IT projects were developed more in line with the Unix philosophy, as smaller, modular, interoperable systems, they would be more manageable and problems with a specific component would not jeopardize other systems.

And as Stogdill points out, there are only a few companies able to deal with the complexity of the Federal Aquisition Rules and the scale typical of most government projects. Breaking things into smaller components and open-sourcing the code developed on all new projects will enable many more companies to compete for these contracts.

The Obama administration is the first presidency to have a Chief Information Officer. I only hope he was listening to Malamud's speech.

There is, and some of it can be found in a fine new book, Hamlet's BlackBerry: A Practical Philosophy for Building a Good Life in the Digital Age, by William Powers. Powers, a former staff writer for the Washington Post, is a gifted storyteller and his walk though the history of philosophy and technology makes this slender volume an enjoyable, quick read. He begins by reminding us that:

whenever new devices have emerged, they've presented the kinds of challenges we face today -- busyness, information overload, that sense of life being out of control. These challenges were as real two millennia ago as they are today, and throughout history, people have been grappling with them and looking for creative ways to manage life in the crowd. (p. 5)

Even though Powers clearly leans more toward the techno-pessimist camp in this regard, what I like best about his book is that he generally avoids a preachy tone and excessive hand-wringing. He isn't one of those techno-pessimists who adopts a holy-than-thou, the-rest-of-you-just-don't-get-it attitude. In fact, there's a great deal of self-deprecating humor in the book as Powers explains how he is struggling with the same issues the rest of us are and trying to figure out how to strike the right balance in his own life. Importantly, he notes that each of us will strike that balance differently. "[E]veryone has to work that out for himself. We're all different, and there's no one-size-fits-all way to balance the outward life and the inward one." (p. 203) That is a crucial insight. There's nothing worse than a techno-skeptic who tells us they have discovered the one true path to enlightenment or happiness -- especially when it entails giving up new technologies that can have so many beneficial upsides. Indeed, Powers argues that "It's never a good idea to buy into the dark fears of the techno-Cassandras, who generally turn out to be wrong. Human beings are skillful at figuring out the best uses of new tools. However, it can take awhile." (p. 3)

That very much reflects my own position on this issue, even if I tend to lean a bit more in the "pragmatic optimist" direction whereas Powers is more of a pragmatic pessimist. Nonetheless, my own struggle with information overload and gadget addiction continues. As I have written here before in essays like, "Can Humans Cope with Information Overload?" I've been formulating a variety of strategies to cope and find the right balance. For me, the most successful strategy is what I refer to as "mini sabbaticals." I try "unplugging" for short spells each day (turning off email & phone, close web browsers, and just generally get away from my computer and other gadgets). Usually I'm offline for an hour in morning and then also in afternoon, and then a couple hours offline during evening. My wife and kids certainly appreciate it! But it also helps me spend more "quality time" with books, writing, and other pursuits. And I've even started telling people not to expect a quick response from me when they call or write. When I tell people this face-to-face, their reaction is often one of puzzlement, and in some cases even offense. I suppose some of them imagine I'm just saying this to avoid them (which may be the case!) But I try to stick with the rule and avoid gadgets and connections for little spurts each day and it has been terrifically beneficial for me thus far. I am able to read even more than I used to and can focus on getting other things done that are important.

Earlier this summer, I went even further. During a week-long vacation in Germany, I decided to take day-long digital sabbaticals, only checking emails, Twitter, and RSS feeds after 10:00 at night, if at all. It was terrifically refreshing. Simply not having to carry a smartphone with me all day long was a huge relief. But ignoring email for days at a time was wonderful too. Of course, things had really piled up upon my return to the States. But that's another thing I've learned to do to cope: Hit that delete button a little more frequently! Do I really need to read through the hundreds of emails I get each day? No, not really. Neither do you, I bet.

In Hamlet's BlackBerry, Powers offers some possible solutions of his own, but they are generally in the form of practical advice about how to lead a good life. "The best solutions serve as a kind of bridge to the tech future, one that ensures that we'll arrive with our sanity intact." (p. 155) To find those solutions, he draws upon the wisdom of the ages from figures as diverse as Plato, Aristotle, Seneca, Shakespeare, Ben Franklin, Thoreau, and Marshall McLuhan. For example, from Thoreau he borrows the notion of finding or creating "a zone of inner simplicity and peace" to create "Walden time" or "Walden zones." This could take the form of daily digital sabbaticals, or an area of the home that is free of technology at all times. I already use variants of this rule in my own home. Many years ago, my wife and I instituted "Media-Free Mondays" in our house so that the kids understand at least one night every week will be free of TVs, computers, video games, etc. We use the time to play board games, do arts and crafts, or play outside more. In other words, Mondays are the Thierer family's "Walden Zone." Again, every family could come up with their own variant of the Walden Zone rule to fit their needs. At the end of his book, Powers says that his family unplugs their modem each Friday night at bedtime and doesn't turn it back on until Monday morning -- a weekend "Internet Sabbath," he calls it. That seems a bit extreme to me but, again, to each his own.

I should be clear that I am not quite as pessimistic as Powers about the impact of technology on humans. I'm not persuaded by his argument that information overload is having as deleterious of an impact on creative thinking and that "the best human creativity... happens only when we have the time and the mental space to take a new thought and follow it wherever it leads." And I think he goes much too far when he makes pronouncements such as "We're living less and giving less, and the world is the worse for it." (p. 210, italics in original.) In both cases, I think there are plenty of counter-examples and positive trends that can be cited that prove such sweeping generalities are off the mark. Yes, it's certainly true that many people are struggling from data deluge and that it has complicated their lives in many ways. But the presence of these new tools and the rise of information abundance have alleviated many of the problems that previous generations lamented. Indeed, for many centuries the primary problem we humans have faced was information poverty. We were starving for informational inputs. That problems has been largely alleviated and instead replaced by concerns about information overload. But my point is always a simple one: Isn't abundance a better dilemma for society to face than scarcity? As I told Gordon Crovitz of the Wall Street Journal recently, I'll take information overload over information poverty any day!

Nonetheless, the struggle with information clutter will continue. Assimilating new communications and entertainment technologies into our lives has always been challenging, but, thanks to excellent advice like that offer by William Powers in Hamlet's BlackBerry, I am optimistic that we humans can do so sensibly and be happier -- and wiser -- for it in the long-run.

__________

Other Views / Additional Reading:

• official website for the book


• a review of the book by Laurie Winer in The New York Times


• a review by David Harsanyi that appeared in The Wall Street Journal


• Jennifer Howard's review of the book + Carr's "The Shallows"


• a review by Heller McAlpin in The Christian Science Monitor


• a review from the Good Experience blog


• my essays on "Internet Optimists vs. Pessimists," an earlier piece on information overload, and my reviews of related books on this subject by Carr, Lanier, Siegel, Keen, Helprin, Baron, and Shirky.


• NPR radio spot on the book


• and two videos embedded below, one from a bookstore appearance by Powers and the other is an interview with the PBS "News Hour"

His biggest beef, of course, is Net Neutrality regulation--or the current lack thereof. He fears that without such a "Mother, May I" regulatory regime in place, the whole cyber-world is heading for eternal damnation. Echoing the fears of other Internet hyper-pessimists, Copps concocts grand conspiracy stories of nefarious corporate schemers hell-bent on quashing our digital liberties and foreclosing all Internet freedom.

Way back in 2003, for example, Comm. Copps delivered a doozy of a sermon at the New America Foundation entitled, "The Beginning of the End of the Internet." In the speech, Copps lamented that the "Internet may be dying" and only immediate action by regulators can save the day. Copps laid on the sky-is-falling rhetoric fairly thick: "I think we are teetering on a precipice . . . we could be on the cusp of inflicting terrible damage on the Internet. If we embrace closed networks, if we turn a blind eye to discrimination, if we abandon the end-to-end principle and decide to empower only a few, we will have inflicted upon one of history's most dynamic and potentially liberating technologies shackles that make a mockery of all the good things that might have been."

But that's hardly the only such fire-and-brimstone sermon that Rev. Comm. Copps has delivered about the death of the Internet.

Who knew the end was so near?! Of course, it isn't really. Again, the problem for Commissioner Copps and the other cyber-worry warts is that the cyber-sky is most definitely not falling. There's more innovation across all layers of the Net than ever before. In fact, despite the recent economic downturn, the digital sector has been a rare bright spot. Pick just about any metric (devices, applications, broadband speeds, etc.) and you'll see great improvements over the past decade. Could some metrics be even better? Sure. But can we at least agree that, contra Copps, the sky isn't even close to falling?

On the other hand, if Commissioner Copps feels the need to persist with the "Net is Dying" meme, I'd at least encourage him to broaden his vocabulary a bit. I mean, there are plenty of other good terms from which to choose, as John Cleese once taught us.

The paper notes that Net Neutrality has been "a rule tacitly understood by Internet users and providers alike" for more than a decade. It then mildly rebukes the FCC's proposal to reclassify broadband providers as common carriers - "a move [which] would be a serious step backwards," in their view.

Within this context, the Post sees important compromise in the Google / Verizon legislative proposal, "especially its designation of the FCC as an adjudicatory body such as the Federal Trade Commission rather than one with intrusive regulatory authority."

We have long been concerned about the FCC's "intrusive regulatory authority." One might have surmised that post-Comcast, the Agency would have gotten the proverbial "4-11" on this: If the FCC wants to regulate the Internet, it needs to get that authority from Congress; until then, nothing doing. But it did not. Instead, it has threatened to do indirectly what it could not do directly. The result is the same - i.e., regulation of the Internet. But the means are more nefarious - i.e., a Commission un-tethered to the rule of law.

The Google / Verizon proposal addresses this, if imperfectly. The two companies should be commended for their efforts to "solve" the supposed Net Neutrality "crisis." As their proposal strongly suggests, it is right for Congress to play a more prominent role in this debate and remind the FCC of its merely supporting part in the creation of U.S. communications policy.

Though Google and Verizon once sat at opposite sides of the table, they are now partners. Because of this, they recognize that should the FCC's reclassification efforts go forward, the Commission's new power would present a serious obstacle to their growth. Moreover, not only would it harm them, it would harm their customers and the Internet ecosystem as well.

While one might quibble with some of the specific details - and we do - the instinct to keep arbitrary and capricious rulemaking out of the process and to protect core lines of business is entirely rational (and perhaps legally bound).

The main concern for "free-marketers" is the legislative tactic itself.

For us it says, "Hey, aspects of the broadband market are broken and demand protecting by law, through some form of regulation." But, from our vantage point, none is needed. The Internet works. How, you may ask? Well, the advance of transmission technology and technological tools; marketplace guidance / economic signals; consumer education / transparency tools; industry best practices; and present authority to address competitive malfeasance - these all bake-in Net Neutrality principles to the benefit of the ecosystem.

We agree that Congress should be involved in this important matter. But instead of it granting new authority to the FCC "to regulate the Internet," Congress should be working to remove 19^th-Century regulations that hold the broadband Internet back from innovating for Americans. Thus, if there's an overarching sticking point to the Google / Verizon proposal, it is its call for Congress to add power to the FCC's hand, something that we know is neither warranted nor desirable.

Surveying the prevailing mood surrounding cyberlaw and Internet policy circa 2010, one is struck by the overwhelming sense of pessimism about our long-term prospects for a better future. "Internet pessimism," however, comes in two very distinct flavors:

1. Net Skeptics, Pessimistic about the Internet Improving the Lot of Mankind: The first variant of Internet pessimism is rooted in general skepticism regarding the supposed benefits of cyberspace, digital technologies, and information abundance. The proponents of this pessimistic view often wax nostalgic about some supposed "good 'ol days" when life was much better (although they can't seem to agree when those were). At a minimum, they want us to slow down and think twice about life in the Information Age and how it is personally affecting each of us. Other times, however, their pessimism borders on neo-Ludditism, with proponents recommending steps be taken to curtail what they feel is the destructive impact of the Net or digital technologies on culture or the economy. Leading proponents of this variant of Internet pessimism include: Neil Postman (Technopoly: The Surrender of Culture to Technology), Andrew Keen, (The Cult of the Amateur: How Today's Internet is Killing our Culture), Lee Siegel, (Against the Machine: Being Human in the Age of the Electronic Mob), Mark Helprin, (Digital Barbarism) and, to a lesser degree, Jaron Lanier (You Are Not a Gadget) and Nicholas Carr (The Big Switch and The Shallows).


2. Net Lovers, Pessimistic about the Future of Openness: A different type of Internet pessimism is on display in the work of many leading cyberlaw scholars today. Noted academics such as Lawrence Lessig, (Code and Other Laws of Cyberspace), Jonathan Zittrain (The Future of the Internet & How to Stop It), and Tim Wu (The Master Switch The Rise and Fall of Information Empires), embrace the Internet and digital technologies, but argue that they are "dying" due to a lack of sufficient care or collective oversight. In particular, they fear that the "open" Internet and "generative" digital systems are giving way to closed, proprietary systems, typically run by villainous corporations out to erect walled gardens and quash our digital liberties. Thus, they are pessimistic about the long-term survival of the wondrous Internet that we currently know and love.

Unsurprisingly, this elitist attitude leads to the second thing uniting these two variants of Net pessimism: An underlying belief that someone or something--most often, the State--must intervene to set us on a better course or protect those things that they regard as sacred. They either fancy themselves as the philosopher kings who can set things back on a better course, or they imagine that such creatures exist in government today and can be tapped to save us from our impending digital doom--whatever it may be.

In both cases, I will argue that today's Internet pessimists have over-stated the severity of the respective problems they have identified. In doing so, I will argue that they both have failed to appreciate the benefits of evolutionary dynamism. I borrow the term dynamism from Virginia Postrel, who contrasted the conflicting worldviews of dynamism and stasis so eloquently in her 1999 masterpiece, The Future and Its Enemies. Postrel argued that:

The future we face at the dawn of the twenty-first century is, like all futures left to themselves, "emergent, complex messiness." Its "messiness" lies not in disorder, but in an order that is unpredictable, spontaneous, and ever shifting, a pattern created by millions of uncoordinated, independent decisions.

How we feel about the evolving future tells us who we are as individuals and as a civilization: Do we search for stasis--a regulated, engineered world? Or do we embrace dynamism--a world of constant creation, discovery, and competition? Do we value stability and control, or evolution and learning? Do we declare with [Tim] Appelo that "we're scared of the future" and join [Judith ] Adams in decrying technology as "a killing thing"? Or do we see technology as an expression of human creativity and the future as inviting? Do we think that progress requires a central blueprint, or do we see it as a decentralized, evolutionary process? Do we consider mistakes permanent disasters, or the correctable by-products of experimentation? Do we crave predictability, or relish surprise? These two poles, stasis and dynamism, increasingly define our political, intellectual, and cultural landscape. The central question of our time is what to do about the future. And that question creates a deep divide.

In this chapter, I will take on the first variant of Internet pessimism (the Net Skeptics) and make the dynamist case for what I call "pragmatic optimism." I will argue that the Internet and digital technologies are reshaping our culture, economy and society in most ways for the better, but not without some serious heartburn along the way. My bottom line comes down to a simple cost-benefit analysis: Were we really better off in the scarcity era when we were collectively suffering from information poverty? Generally speaking, I'll take information overload over information poverty any day. But we should not underestimate or belittle the disruptive impacts associated with the Information Revolution. We need to find ways to better cope with those changes in a dynamist fashion instead of embracing the stasis notion that we can roll back the clock on progress and recapture "the good 'ol days"--which actually weren't all that good.

In another chapter in the book, I will address the second variant of Internet pessimism (the Net Loving Pessimists) and show how reports of the Internet's death have been greatly exaggerated. Although the Net Loving Pessimists will likely recoil at the suggestion that they are not dynamists, the reality is that their attitudes and recommendations are decided stasisist in nature. They fret about a cyber-future in which the Internet might not as closely resemble the its opening epoch. Worse yet, many of them agree with what Lawrence Lessig said in his seminal--by highly pessimistic--1999 book, Code and Other Laws of Cyberspace, that "Left to itself, cyberspace will become a perfect tool of control." Lessig and his intellectual disciples--especially Zittrain and Wu--have continued to forecast a gloomy digital future unless something is done to address the Great Digital Closing we are supposedly experiencing. I will argue that while many of us share their appreciation of the Internet's current nature and its early history, their embrace of the stasis mentality is unfortunate since it forecloses the spontaneous evolution of cyberspace and invites government intervention to create a more "regulated, engineered world" that will, ironically, undermine much of what they hope to preserve about the current Internet.

_______

[I'll then go on to finish this chapter, basically by finally completing my essay, "Are You An Internet Optimist or Pessimist? The Great Debate over Technology's Impact on Society." In the second chapter addressing the pessimism of the "Net Lovers," I will build on my review of Zittrain's "Future of the Internet," my two-part debate with Lawrence Lessig on the occasion of the 10th anniversary of "Code and Other Laws of Cyberspace," and my forthcoming review of Tim Wu's soon-to-be-released book, "The Master Switch The Rise and Fall of Information Empires." I will then eagerly await the hate mail from all the affected parties.]

The biggest changes in the wireless industry since 2000 have been consolidation among wireless carriers and increased use of wireless services by consumers. Industry consolidation has made it more difficult for small and regional carriers to be competitive. Difficulties for these carriers include securing subscribers, making network investments, and offering the latest wireless phones necessary to compete in this dynamic industry. Nevertheless, consumers have also seen benefits, such as generally lower prices, which are approximately 50 percent less than 1999 prices, and better coverage.

The point is, this is a great American capitalist success story that everyone -- especially "consumer advocates" -- should be celebrating. So, what does Public Knowledge president Gigi Sohn have to say?

"These trends do not bode well for consumers, despite any benefits of the moment," she told Ars Technica.

Wait, what?

What Gigi appears to be hung up on is the fact that, as the GAO reports, there has been undeniable consolidation in this sector since 2000. (Of course, that scale was essential to spreading faster networks nationwide). But in Public Knowledge's world, big is always bad. All that counts is how atomistic competition is. If we don't have lemonade stands* on every corner, then, by God, to hell with the entire system, they say. It makes no difference to them how well consumers did under that system. That's the key take-away here.

But how asinine is this? Again, isn't consumer welfare what really counts? Do we really care if we have 4 or 40 competitors? So long as prices are generally reasonable (or in this case constantly plummeting) and innovation is occurring at a healthy clip (which is certainly is here), then who cares how many players are out there? Who's to say to say that "X" is exactly the right number of competitors? Markets determine these things. Public Knowledge apparently doesn't like the fact that X currently is 4 instead of 40, or whatever it is they think meets their Goldilocks standard. And, so, to get things just right, they would bring in the regulatory wrecking ball and have FCC bureaucrats start re-engineering this sector according to their own preferred design.

Oh, the rank hubris of it all!

Anyway, you'll have to excuse me now. Once I finish up this post to on my Droid (yes, I can blog on my fricking phone!!!! How amazing is that, Gigi !!) I then need to get back to reading through my day's Twitter stream (also on my phone) my RSS feeds (also via my phone) and then sort through the tens of thousands of games and apps in the Android marketplace to find my kids some new things to keep them entertained on a long car drive during vacation next week, where I will be using the Droid's navigation system to find the hotel, while also searching for restaurants to eat at, while also...

Oh, you get the point. Some people are just never happy.

____

P.S. To understand why "lemonade stand economics" are never going to work out well in high fixed-cost sectors like wireless, please see my post, "Wireless Networks & Lemonade Stand Economics." For more facts about how vibrantly competitive and innovative this sector is, please see:

• Wireless Innovation is Alive & Well: Two New Reports Set the Record Straight


• CTIA's Refutation of Tim Wu's 2007 Wireless Net Neutrality Paper


• The Fiercely Competitive Mobile OS & Device Markets

Simply put, the head of a company makes decisions to maximize the outcome for that company and its owners or shareholders. Any government employee—even one in a role as acting head of a private company—is legally required to make decisions under a far stricter set of guidelines. Guidelines which force the decisions to be made for what is best not for the business they are charged with operating, but for the country as a whole. This is the case even if the decision made by the bureaucrat will result in a 'net negative' to the company and its owners/shareholders.

The article's anonymous author suggests that instead of "pick[ing] winners and coddl[ing] losers," government should improve the environment for all business by reducing regulations, investing in infrastructure, and "encourage winners to emerge by themselves, for example through the sort of incentive prizes that are growing increasingly popular."

I wholeheartedly agree with the first and third points. In fact, former PFF Summer Koch Fellow Jeff Levy, in just the latest PFF piece on the subject, wrote a PFF Blog entry on incentive prizes. But I'm concerned with the unqualified suggestion of investing in infrastructure.

The Economist article states that "governments should invest in the infrastructure that supports innovation, from modernised electricity grids (a smarter way to help green energy) to basic research and university education." Yet the article itself points to Spain's subsidization of its solar power industry as an example of a government that was "seduced by the hype of voguish high-tech sectors." Government investments in high tech sectors can have the same unintended consequences as directly picking winners in a fast-moving global market. As the article explains, "[t]hanks to globalisation and the rise of the information economy, new ideas move to market faster than ever before" and no bureaucrat is able to accurately predict which products and industries will be successful. The result is often a stifling of innovation and a waste of taxpayer money.

The Obama administration's infatuation with increasing broadband deployment is unfortunately about to become another example. The American Recovery and Reinvestment Act directs $7.2 billion in one-time support for broadband initiatives across the United States. The goal of the program is to accelerate broadband deployment in "unserved" areas and improve access in "underserved" areas. But because the Act leaves these terms undefined, it is certain that funds will be used to overbuild in areas that are already served by competing providers, which will likely harm competition.

"Underserved" is a bureaucratic term utilized by several different federal agencies, each with a different definition. Even within agencies, conflicting definitions of "underserved" occur. Sadly, many of these definitions aren't based on measurable economic, racial, or social data but simply overly-broad attempts to overcompensate for a perceived but unproven problem. When the "maps" of the Treasury Department's definition of "underserved" are compared with the FCC's current definition, the Department of Agriculture's definition, or any of the many other Federal definitions, the differences are dramatic.

And it is not clear that Federal funds should be spent on expanding broadband service in "underserved" areas (which at the least means there is one existing provider) in the first place. An investigation of the Department of Agriculture's Rural Utilities Service ("RUS") broadband expansion program, which is similar to the broadband stimulus provisions in the Recovery Act, found that 42% of communities receiving funding through the program were already served by competing providers.

As the Department of Agriculture's Inspector General wrote,

1. "[c]an the sparsely populated rural areas for which these loans are intended reasonably support multiple broadband service providers," or are the loans being made to systems that are doomed to fail?
2. "What is the government's responsibility if, due to subsidized competition, a preexisting, unsubsidized broadband provider goes out of business?"
3. as an equitable matter, "why should the government subsidize some providers in a given market and not others?"

There are many that subscribe to the "If you build it, they will come" philosophy when it comes to broadband investment: The belief that the secondary benefits of broadband are so immense, that it is worth building at any cost. But as the Economist article puts it, "In an age of austerity [governments] can ill afford to lavish money on extravagant industrial projects." At a cost of $350 billion, is the FCC's "100 Squared" initiative—a plan to connect 100 million households at 100Mbps—really a wise allocation of limited funds, compared to focusing on truly unserved areas? Or will it merely be a repetition of the RUS's bottomless pit of funding for special projects?

And as the FCC's official definition of what constitutes "broadband" increases in speed, small ISPs (especially Wireless ISPs), which are ready to expand their service to truly unserved areas, may no longer quality for Recovery Act funds. The government's attempt to invest in innovation and infrastructure would then serve only to kill off what, in many places, are the only businesses offering any sort of Internet access in truly underserved rural areas as well as creating a higher barrier to new entrants and competition.

Of course, what's so ironic about this latest privatization wave is that it comes at a time when some regulatory activists are clamoring for more regulation of the Internet and calling for broadband to be converted into a plain-vanilla public utility. For example, Free Press founder Robert McChesney has argued that "What we want to have in the U.S. and in every society is an Internet that is not private property, but a public utility." That certainly doesn't seem wise in light of the track record of past experiments with government-owned or regulated utilities. And the fact that we are talking about something as complex and fast-moving as the Internet and digital networks makes the task even more daunting.

Government mismanagement of complex technology projects was on display in a second article in today's Journal ("U.S. Reviews Tech Spending.") Amy Schatz notes that "Obama administration officials are considering overhauling 26 troubled federal technology projects valued at as much as $30 billion as part of a broader effort by White House budget officials to cut spending. Projects on the list are either over budget, haven't worked as expected or both, say Office of Management and Budget officials." I'm pleased to hear that the Administration is taking steps to rectify such waste and mismanagement, but let's not lose sight of the fact that this is the same government that the Free Press folks want to run the Internet. Not smart.

He specifically references the leading pessimist, Nicholas Carr, and optimist, Clay Shirky, of our time. In The Shallows: What the Internet is Doing to Our Brains and The Big Switch: Rewiring the World, From Edison to Google, Carr paints a dismal portrait of what the Internet is doing us and the world around us. Clay Shirky responds in books like Here Comes Everybody and Cognitive Surplus: Creativity and Generosity in the a Connected Age, arguing that we are much better off because of the rise of the Net and digital technology.

This is a subject I've spent a lot of time noodling over here through the years and, most recently, I compiled all my random thoughts into a mega-post asking, "Are You an Internet Optimist or Pessimist?" That post tracks all the leading texts on both sides of this debate. I was tickled, therefore, when Gordon contacted me and asked for comment for his story after seeing my piece. [See, people really do still read blogs!]

Moreover, practically speaking, I don't see any realistic way to roll back the clock to some supposed "good 'ol days"--whenever those were. As Gordon argues, "Whatever the mix of good and bad, technology only advances and cannot be put back in the bottle." Exactly right. Thus, we need to learn to assimilate new technologies into our lives, culture, and economy. Luckily, adaptation is something that we humans are very good at. Past experience tells us that we got through previous gut-wrenching technological / social revolutions; we can get through this one, too. But, again, there will be rough patches and legitimate issues that need to be addressed as we make this journey.

So, make sure to check out Gordon's article. It's a terrifically interesting topic, and one that I still hope to turn into a book as I noted here before.

P.S. Here are a couple of other interesting essays on this topic that that have been released recently:

• Andrew McAfee's terrific essay "I Know I'm Not the Only Internet Optimist..." from his blog


• Michiko Kakutani essay in the New York Times, "Texts Without Contexts"


• Peggy Noonan of The Wall Street Journal argues that "Information Overload is Nothing New"


• a great PBS documentary about these issues: "Digital Nation: Life on the Virtual Frontier" (+ my thoughts on the film)


• a video from a Family Online Safety Institute event about the PBS documentary that features a discussion about Internet optimism vs. pessimism

After a number of Hollywood scandals and public outcry over the immorality of Hollywood in the 1920s, the Motion Pictures Producers and Distributors Association (the precursor to the MPAA), adopted the Motion Pictures Production Code (known as the "Hays Code" after the first MPAA president) in 1930. The code required that "No picture shall be produced that will lower the moral standards of those who see it. Hence the sympathy of the audience should never be thrown to the side of crime, wrongdoing, evil or sin."

The 1952 case Joseph Burstyn, Inc v. Wilson directly overturned the earlier decision, but by that time the Hays Code was already well-established.

Our current system is far from perfect. Kirby Dick made a whole movie about how he believes the current system is too focused on sexuality and not focused enough on violence and that it gives harsher ratings to independent films and films dealing with homosexual issues. But the beauty of the system is that theaters are free to show movies that have not been rated by the MPAA, consumers are free to buy such movies and watch them at home, and other groups (e.g. parent and religious groups) are free to provide their own ratings--and they do.

In summary, the MPAA's ratings may sometimes be off the mark, but what would really be silly is suggesting that they stop rating films or that the government take over.

As I explained in this earlier essay and in the video below, this would be a disaster for investment, innovation, and consumer welfare. Differentiated and prioritized services and pricing are part of almost every industrial sector in a capitalistic economy, and there's no reason things should it be any different for broadband. As Litan and Singer note, "The concept of premium services and upgrades should be second-nature to businesses. From next-day delivery of packages to airport lounges, businesses value the option of upgrading when necessary. That one customer chooses to purchase the upgrade while the next opts out would never be considered 'discriminatory.'"

And let's not forget, something has to pay for Internet access and investment in new facilities. Differentiated services can help by allowing carriers to price more intensive or specialized users and uses to ensure that carriers don't have to hit everyone - including average household users - with the same bill for service. Why would we want to make that illegal through Net neutrality regulation and the misguided price control schemes of a bygone regulatory era?