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Why net neutrality is only the beginning of a perfect internet

All eyes are on the FCC where a decision will be made on whether to regulate internet service providers or not.  If the FCC does decide to regulate Comcast and Verizon provide internet service, it will most likely be by reclassifying ISPs as telecommunication services under Title II, which has many pros and cons from a regulatory perspective. The biggest pro is that under Title II, the FCC can hold ISPs accountable for limiting communication over the internet, such as charging Netflix more to reach your computer. In theory, this would give the FCC power to enforce basic net neutrality.

Now, assuming the FCC passes the Title II reclassification and the reclassification withstands the certain court appeals, the United States will still be far away from a fair and optimized internet. Net neutrality itself is a symptom of the lack of competition in U.S. broadband markets. Even Comcast and Time Warner Cable admit, in their arguments for allowing the conglomerates to merge, they don’t compete with each other.

In most U.S. cities, consumers only have one choice for broadband provider. A lucky few have two choices at most. Rural areas have no choices and must rely on slower DSL, depressing productivity and economic development. Even for those with broadband options, they pay more for slower speeds in the U.S. than in almost every other advanced country. In Seoul, consumers can purchase 1 gigabit/sec connections for $30/month compared to $300 in the U.S. for half the speed.

For those that argue there isn’t a competition problem with U.S. broadband, compare the speeds and costs of broadband in cities with municipal ISP services. ISP lobbyists have trolled states, passing laws to ban municipal broadband, claiming that this increase in competition is bad for the cities because…reasons. In Chattanooga,Tenn., the municipal broadband cut user costs from $300/month to $70 and is well on track to pay back its bond financing. Cities are lobbying the FCC to also void the ban on municipal broadband in 20 states, which would allow cities to do what companies won’t – invest in better service. House Republicans are already proposing laws to block the FCC from voiding these anti-competitive laws.

Net neutrality is only needed because we lack broadband competition. In an ideal market, if one company was blocking Netflix, you could switch to another for better service. But instead, we have no choice and face an industry that prefers lobbying to investing.


Digital account inheritance law passes in Delaware

Ownership of digital assets is an ongoing legal debate. A new law in Delaware allows individuals to bequeath their digital accounts, email, Twitter, World of Warcraft, to an heir or estate. This is important evolution to treating digital accounts the same way physical assets or documents might, though the influence of this law may not be as vast as intended or needed. For example, in states without such protections, individuals could include their user name and passwords in their will. Though this may have some security issues (can you trust your lawyer), it is a simple way to ensure account information isn’t lost forever. Some terms of services, like Facebook, forbid this type of transfer, though how will they know.

Yahoo received significant publicity for refusing a family access to their son’s email account after he was killed in action in Iraq. This law may help in situations like this if the will is executed in Delaware. Whether this law is needed nationally remains uncertain. I would prefer data portability and privacy laws be emphasized over the right to bequeath an email account. A data portability law, giving the user some or complete ownership of their data, like email or web history, would allow users to download, backup, and move information between services. This then turns digital accounts into more specific files and data what are already owned by the individual. The information in these accounts is important while the user is still alive and that should be the priority for new legislation.


Supreme Court outlaws Aereo because reasons

Furthering the perception that the Supreme Court and those in power are out of touch with the realities of technology and innovation, the Supreme Court issued a 6-3 ruling against the streaming TV service Aereo for violating the copyrights of broadcasters. This ruling rests on the mistaken interpretation that Aereo functions like a cable company, and thus must be a cable company when it comes to copyright law.

TV companies including CBS, NBC, and ABC took issue with Aereo charging customers $8-$12 to stream broadcast channels to their mobile devices without paying the channels re-transmission fees like cable companies do. Aereo established a very convoluted system to route around the understood copyright law. Aereo provided a micro-antenna for every individual user which was used to capture over-the-air video for streaming. This antenna functioned the same way rabbit ear antenna would work on your home television set, only this antenna was found miles away. The only channels available were ones already using the public airwaves, which are freely available without charge for anyone using their own antenna. The crux of Aereo’s business model stemmed from the Cablevision ruling that permitted Cablevision to offer a remote DVR service which functioned exactly like a personal DVR, except the hard drive was located outside your home.

For technologists, Aereo basically provided the same product of television, only with a really long cable. Because current copyright is so complicated and convoluted, their system for offering this service seemed complicated and convoluted. The Supreme Court seemed to take issue at how much Aereo attempted to cirvumvent copyright law with its technology, ignoring that avoiding breaking the law does make you guilty of breaking that law. The court says Aereo possesses an “overwhelming likeness” to cable companies, establishing the “Looks like a Duck” legal test for how to treat new technology.

The fallout of this ruling will be a stifling of innovation. TV companies have not been eager to innovate, either through new business models or new technology that makes the experience better (such as suing over the aforementioned DVR in its many iterations). Because the court’s ruling ignores what the technology does instead judging it for what they understand presents a cloud of uncertainty around new technology and startups. The ruling itself seems to desperately try to say it will not apply to other cloud technologies, but without providing a useful legal test for the rapidly growing sector to apply when building new businesses.

Aereo has suspended its service, already bringing an exciting new business to a close.


Open-source community threatened: JDownloader declared illegal because of third-party add-on

A German court recently declared JDownloader, an open source download program, illegal for copyright infringement because of an add-on tool used to save encrypted video streams. The ruling, which holds JDownloader responsible for the optional contributions of a third-party, a feature that had been removed by the time of the ruling. 

For open source development, this is a disturbing ruling.  Already in the United States, third-party liability create risk for software and service providers worried about how consumers will use their products. This legal concept of contributory infringement was used to ban file-sharing services like Napster and is used to block websites and software that are used to share copyrighted content. However, rarely are the providers of the software themselves infringing on copyright, simply the software can be used for that purpose.

The German court ruling takes this concept even further by declaring an entire software illegal because of code written by a third-party.  JDownloader already can be used for downloading copyrighted content – it downloads links from file lockers like Rapidshare. The issue in this case was over an add-on that downloaded encrypted video streams, which meant circumventing DRM.  Even though JDownloader removed this add-on, it was still held responsible.

Consider how this might apply to other software. There are similar add-ons for Google Chrome and Firefox.  Many third-party tools allow for downloading YouTube videos or copying music off Spotify. It’d be hard to imagine a U.S. court banning these products (though YouTube is fighting a billion dollar lawsuit).

This is why the German court ruling should still make Americans nervous. The internet doesn’t differentiate between court jurisdictions. A website made available to one country will likely be accessible from any other. The fear is that countries may race to the bottom with restrictive court rulings banning important technological innovations out of fear of how they might be misused. Germany’s ban of JDownloader is unlikely to lead ot its removal from the internet, but it could impose a chilling effect on future development, both for contributors to JDownloader, and new software developers deciding whether they should allow third-party contributions.  Having open and vibrant communities has helped make useful products even better.  These communities should be encouraged and incentivized, not stifled and scared away. 


Time Warner proves competition improves broadband speed and cost

Broadband speeds have lagged in the United States, offering slower speeds for higher prices compared to most first world countries.  The U.S. ranks 9th for speed and 21st for price. Broadband providers have claimed people are using too much bandwidth, leading to data caps, reduced speeds, and other limitations.

Time Warner Cable, one of the first companies to test data caps on customers, has miraculously increased speeds and cut prices for a least one customer.  Consumerist reports a Kansas City customer received an email increasing his broadband speed 50% and lowering his monthly bill by 30 percent.  While its great to see a company lowering prices and providing more functionality, the reasoning behind it reveals ulterior motives.  Specifically, Google launched its own fiber optic internet service in Kansas City, offering 1 gigabit of speed (compared to a national average of 6.6 megabits) for a slightly higher monthly rate and offering free 5 megabit internet (which is the standard paid version from most broadband providers).

I and others have argued the dismal state of U.S. broadband is due to a lack of competition. In most markets, consumers have at most two choices for their internet service. Even in major cities, customers are locked into one option (like myself) where if we are unhappy with our speed and price, we have no option to switch.  Once a competitor enters the space, in this case Google, Time Warner finds it now has to compete for customers. No longer can it offer poor service for a high price simply because it has a monopoly on customers.  Claims of data congestion or over usage seem much weaker. 

There is speculation on whether Google intends to roll out its fiber service nationally, as that would be extremely expensive. Others suspect Google is simply showing up broadband providers, forcing them to improve their service (and show its technologically feasible and affordable to do so).  I lean more to the latter opinion.  Google favors a world where people use the internet more and faster.  Further, Google wants to be able to offer more services using the internet, and faster speeds make that a possibilities – showing more ads along the way.  As consumers, even if we may be wary of Google controlling more of our internet experience, we should be happy to see someone challenging the incumbent players who have so limited our internet experience thus far.  Competition improves services and lowers prices. Hopefully we’ll see more of this.


Pandora Radio versus Music Labels, Again

Pandora Radio entertains 60 million users a month with doubling revenue, yet this success is marred by oppressive royalty fees that make its growth a financial burden.

Pandora pays royalty rates for music played based on overall revenue, not profits, and pays higher rates than terrestrial radio stations.  Pandora is lobbying Congress to lower its rates so that it can stay in business.  Some in Congress believe terrestrial radio should instead pay the same higher rates that Pandora and internet streaming companies currently pay.

Artists and labels are fighting back against any decrease in the rates paid.  They claim the rates per stream are already fractions of a cent providing them with little income.

Laura Balance, co-founder of Merge Records, representing Arcade Fire and Spoon, told the Huffington Post "[Rates] should be higher. It doesn’t make me feel badly for [Pandora] at all that they should be paying out half of their revenue or more to artists – that is entirely how their revenue is generated."

But this is, of course, not true. Pandora generates revenue by providing a service that adds value to consumers. Not simply a radio station, Pandora creates custom playlists for listeners based on their interests, and adapts the playlist based on what the listener likes and dislikes.  The result is listeners might discover new music they never knew about. 

Music labels still seem to believe their content is the sole value generated by any music related technology company.  There’s a reason music labels have spend the past half century illegally paying radio stations to play their artists – because the radio stations have influence over their audience and are valuable promotional resources for artists.  Pandora, through all its algorithms, software interfaces, and community building, offers incredible value to consumers and back to music labels.   Music labels should consider what happens if their demands put Pandora and other streaming services out of business. Do they expect consumers will just start buying the music they tell them to? Or will consumers move to more piracy and music sources that provide no revenue.  Eventually, I hope, music labels will start recognizing the value they gain from embracing new music services rather than trying to drain them out of existence. Music labels might discover they are on the loosing side of that regime.


Anti-Counterfeiting Trade Agreement marching to the tune of lobbyists: consumer groups need not apply

The Anti-Counterfeiting Trade Agreement (ACTA) has been under secret negotiation since 2006 aiming to crackdown on counterfeiting and copyright infringement around the world. Most nations already have many laws against these acts, yet the international community has found the need to establish a completely new trade agreement that officials say will not affect U.S., or other nations’, laws. And as for why it’s being written in secret, that is due to national security, as the Obama administration claims. What counterfeiting and online file-sharing have to do with national security is still top-secret.

I realized I’ve yet to dive into the ACTA controversy on Prodigeek even with my riveted fascination on the subject. Significant documents related to the accord have revealed a scary set of dream proposals written almost exclusively by media companies and those looking for stronger copyright laws. This includes proposals to force ISPs to monitor copyrighted content, instituting a three strikes law banning alleged infringers after 3 warnings, and increasing criminal charges against copyright infringement. Almost no consumer groups have been allowed in the negotiations, and on the rare occasions consumer groups have even been entertained, they have been forced to sign non-disclosure agreements making it very difficult to generate a true public debate. Recently when Mexico opened its discussions, entertainment companies laughed out those who brought up consumer interests. One person who live-Tweeted the event was forced out.

Politicians and media outlets are starting to grasp onto the lack of transparency, but there’s yet to be a public outcry at the content of the trade agreement. The U.S. Trade Representative and lobbyists from media companies continue to claim this agreement will not affect U.S. law while refusing to explain why its needed. What has happened before with TRIPPS and WIPO is exactly that – a trade agreement passes (because it gets less public scrutiny than laws), then Big Content goes around telling countries they have to change their laws to achieve harmony with their international agreements.

Also like TRIPPS and WIPO, the ACTA lacks any concern for consumers and their interests. It’s a trade agreement focusing on protecting powerful industries and supporting their obsolete business models, even going so far as to harm innovation in other industries by increasing penalties  for secondary or contributory infringement (meaning YouTube or eBay would be responsible for what their users do). Don’t believe this will matter, look at South Korea where many of these laws have already been put in place because of, yes, a free trade agreement that is anything but free. Many service providers now ban most music and video uploads for fear of being sued for infringement. Some are being banning advertisements because the advertisement might infringe.

And none of this has anything to do with counterfeiting. Copyright infringement has nothing at all to do with counterfeiting (though the agreement does have some provisions against it, specifically border searches, yay). Counterfeiting, of course, has a much more negative public opinion than file-sharing, hence the bait-and-switch.

So written by lobbyists with little to no public input; the details hidden from the public for unknown national security reasons; major ramifications to U.S. law even though we’re told it won’t; and a trade agreement really all about protecting select industry’s obsolete business models. Sounds like our government at work.

For a more in-depth analysis of the ACTA, make sure to read Michael Geist’s ACTA Guide.


Sad state of U.S. broadband gets sadder

The U.S. has been trailing much of Europe and Asia in both broadband penetration and speed for years, ceding this major technological and competitive edge. Rather than invest fully in a national broadband strategy like Japan and Australia (to name a few), the U.S. is actually dropping in overall numbers while the rest of the world rockets forward with faster speeds and lower prices.

The U.S. ranks 12th in broadband penetration (speeds above 5 Mbps) with 24 percent, an 8.8 percent drop compared to last year according to Akamai. Speeds were also down 2.4 percent, ranking the U.S. 35th in the world. This puts the U.S. farther behind South Korea, Japan, and the Czech Republic who continue to invest in connecting their population recognizing the competitive edge they will have in the years to come.

Even with our slow speeds (if you can even get them in your area), U.S. customers pay about $40 per month for our average of 3.9 Mbps, almost the same price France gets 20-30Mbps with HDTV and DVR included. Only a tiny fraction of the U.S. even gets those speeds and pays more than $100 for it.

The culprit here is a total lack of competition. ISPs and telecommunication companies lock down areas, often leaving even major cities with only one or two choices for their internet connection. Governments in Australia and Japan have taken charge of their broadband strategy, providing loans, grants, and true competition among internet providers to increase speeds and penetration. The U.S. could easily do the same thing, but would rather pay the same companies who refuse to grow and innovate to continue to not grow and innovate.  So we continue to watch prices increase as service drops.


How Monticello, Minn got fast and cheap internet before most of the U.S.

While many countries continue to roll out faster and cheaper broadband, the U.S. remains locked in simply how to define broadband. For all our claims of technological superiority, our country is falling behind.  So how did Monticello, Minn, a town of less than 12,000, get some of the fastest and cheapest internet service in the country?

They tried to build it themselves.

In 2007, Monticello tried to build its own fiber-optic network recognizing that no business was going to using city bonds to fund the project. The local teleco, TDS Telecommunications, sued. And it sued over and over again up to the Minnesota Supreme Court claiming the town could only use bond money for specific reasons, like building utilities. The courts ruled the internet is a utility and the town could build its own.

Now TDS has launched 50Mbps fiber service to every home costing a fair $49.95.

TDS originally claimed it did not believe there was demand for faster speeds until after the town passed its referendum, but that does not explain why the company sued to the city rather than compete with its lead in the market.  But as we’re seeing around the country, lack of competition among internet service providers is costing Americans money for poor service.

Lafeyette, Louisiana launched its own fiber optic network and states they have saved their citizens $3 million because local cable provider Cox has not raised its prices even while raising them everywhere else.

Hopefully these examples will be a call to arms for local governments to recognize that their local cable and telecommunications provider is unlikely to improve their service (they’ve had more than a decade) even though prices keep rising.  These companies have had monopolies on their areas, and the lack of competition is costing us money while the rest of the world speeds past us.

The U.S. ranks 20th in the world for broadband penetration and pays higher prices for slower speeds.


Universities: Greatest U.S. resource undergoing radical shift – Part 1

All the manufacturing jobs leave the U.S. for China, India, South America, and eventually Africa, the U.S. will face more economic competition for both products and minds. To remain and be a knowledge leader throughout the next century, the U.S. has one massive industry that cannot be easily copied – universities.

Higher education in the U.S. is unmatched by any country. U.S. universities dominate international rankings. Shanghai Jiao Tong University awards the U.S. with 54 spots on the top 100 with the U.K. trailing with 11, Germany at 6, and downward. Many of our universities are famous and respected because of centuries of history and the prestige and connections that provides, something not easily replicated by young yet also top schools in India, China, and other emerging powers.

First, I bringing this up as, amid the global recession, universities are at risk. California is slashing university funding and endowments at Harvard and other universities have seen 27 percent losses. Also most threatening is the drop in foreign applications to U.S. universities, the first drop in five years (when the last drop had more to do with 9/11 than economics). Prices for U.S. universities have skyrockets, more than three times more than inflation, while the government makes attaining visas even harder.

But we should want foreign students coming to study in the U.S. This encourages the next generation of business leaders, scientists, and artists to spend four or more years in the U.S., spending money, learning our culture (and selfishly, learning English), and then hopefully staying to work here or, at least, doing business with us.

This is why limiting H-1B visas is so dangerous for the U.S. economy. One out of four tech companies are founded by immigrants who then create far more jobs than they take away. Even without starting companies, our current tech companies cannot fill all the high-tech jobs they need, but are limited to only a few foreign hirers. Instead, these highly trained and would-be highly paid immigrants return to their native countries to start companies there.

Monday, I will discuss how universities structure, from price to format, is undergoing a radical shift that requires forward-thinking and evolution.


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