Up Is Down, Day Is Night, And Keeping Mobile Phones Locked Increases Consumer Choice?

from the let's-try-this-again dept

Despite the best of intentions, the very innovation that some members of Congress, the White House and presumably consumers who signed the petition claim they want to protect would actually be hampered by allowing consumers and third parties to unlock their cellphones. The DMCA is supposed to prevent digital piracy by making it illegal to disable digital rights management software, and it applies to the device locks that carriers put on cellphones — primarily to prevent phones they sell from being used on other carrier networks.

When tech companies spend billions of dollars on research and development, they have to recoup those costs and make a profit to stay on the cutting edge of innovation.

One of the ways they do this is by entering exclusive agreements with certain wireless carriers. AT&T, for example, dominated the smartphone market for years because of its exclusive contract to distribute Apple’s iPhone in the United States. AT&T paid Apple an exceptionally high subsidy on top of the consumer purchase prices, but the company made quite a return on its investment. In subsidizing more expensive phones, AT&T could sell more expensive data plans to its customers.

Now that cellphone manufactures and cellphone carriers have more protection for their intellectual property, they can recoup their research-and-development investment more quickly and, hence, spend more on developing new technologies in the future. It also ensures that most major carriers will continue to offer subsidized phones to their customers — increasing consumer choice.

Filed Under: 1201, anti-circumvention, contracts, copyright, dmca, early termination fees, locking, michael moroney, mobile phones

Debate Over Mobile Phone Unlocking Highlights Fantasy Thinking vs. Real World

from the are-they-serious dept

• First up, is testimony from George Slover of Consumer's Union. He highlights, correctly, how important mobile phone unlocking is for consumers, and points out that it's a demonstration of "the harm the anti-circumvention provisions of the Digital Millennium Copyright Act (DMCA) are causing consumers." He also points out that this issue should be a reason to explore more deeply the role of the anti-circumvention provisions found in Section 1201. He does offer a qualified support for the bill, but lists out a bunch of other changes that he thinks really should be added to the bill, to further allow consumer freedom and innovation around unlocked phones to thrive. The basic rights of consumers is important, and Slover definitely highlights that.
• Next up, is testimony from Steven Berry from the Competitive Carriers Association, who have also been fighting hard to allow phone unlocking. There, the message is obvious. The competitive carriers provide greater innovation in terms of business models, service plans, etc., but much of that is enabled by allowing unlocking of phones, so users can switch from big network providers to a competitive carrier, without having to buy a new phone. This testimony focuses on the importance of unlocking specifically, and doesn't touch on the bigger issue of fixing the anti-circumvention provision. It's narrowly focused.
• Then we get to testimony from Mike Altschul from CTIA, which is basically the trade group for the big mobile carriers. Their argument is basically "hey, we let you unlock your phones if you ask, so there's no need for this exemption." It claims, ridiculously, that carriers need to "lock" their phones so they can provide subsidies to make phones cheaper. But that's clearly not true. Carriers that subsidize their phones also have contractual early termination fees, which solve the subsidy issue, so the claim that they need the locks to protect the subsidies makes no sense. They already have the ability to do so contractually -- and they use it. There's no need for them to rely on digital locks and a broken copyright law to further protect something they already have through contract. Furthermore, the argument that they already allow unlocking is simply not correct. They allow unlocking in certain situations, but not all, and people have run into issues such as when travelling abroad, and just wanting to put in a foreign sim card.
• And, finally on the spoken testimony, we come to testimony from Steve Metalitz. Metalitz is the MPAA and RIAA's go to guy for writing the laws they like in DC. ACTA, SOPA, TPP have his fingerprints all over them, and he's the epitome of an extreme maximalist. There's nothing about greater copyright protection that he finds problematic, and he always supports expansions. I have no idea why he's a witness at this panel, since he has nothing to do with phone unlocking, and while he has advocated for the MPAA/RIAA's extreme interests during DMCA exemption reviews, he officially took "no position" on cell phone unlocking.
  
  His testimony is basically a spirited, ridiculous, and flat-out misleading "defense" of Section 1201 and the anti-circumvention provisions of the DMCA, which he seems to credit as being the reason why we have any entertainment at all online today. He claims that 1201 is "one of the most critical provisions" and says that it, specifically, has been "critical" (he likes that word) to the entertainment industry embracing the online world. This is wrong. First, the industry was dragged kicking and screaming into the online world, not willingly. And the anti-circumvention provisions have been nearly entirely useless in protecting their works, nearly all of which are available DRM-free from unauthorized sources. On the music front, they've already ditched DRM, and others will likely follow.
  
  Metalitz then claims that 1201 is critical to the success of cloud computing, which is also wrong and ridiculous. It's wrong because what protects cloud computing is not copyright law, but good computer security. If cloud providers are hanging their hat on a copyright infringement claim if someone breaks into their network, they're doing it wrong. It's also ridiculous, because it tries to pretend that the tech industry is supportive of section 1201, when many find it quite problematic.
  
  After that, he points out that 1201 was such a good idea that "scores of other countries have followed." What he leaves out is that those "scores of other countries" were pressured by the US government, in large part because of international treaties that (oooh, look at that) were strongly "supported" by Metalitz. It's quite a feat to claim that other countries supported your idea when they did so under pressure from the US government, using points highlighted by the RIAA/MPAA's own representatives.

Most significantly, the Section 1201 rulemaking is an exercise in legal theatre. All the parties to the rulemaking—those seeking an exemption, the rights holders, and the Copyright Office staff--acknowledge that it is unclear whether the rulemaking has any practical effect. This is because Section 1201(a)(1)(C) authorizes the Librarian of Congress to adopt exemptions to the Section 1201(a)(1)(A) prohibition on the act of circumventing a technological protection measure (TPM), but not to the Section 1201(a)(2) prohibition on the development and distribution of the technologies necessary to perform the circumvention. In other words, after receiving an exemption, a person might be legally permitted to perform the act of circumvention, but might have no lawful way of obtaining the technology necessary to perform that act.

Similarly, all the parties understand that what occurs inside the hearing room has no connection to the world outside it. In the last three rulemaking cycles, LCA has joined with other groups in seeking exemptions for educators and students to circumvent the TPMs on DVDs for the purpose of making educational uses of film clips. The rights holders know that the uses we seek will not harm their market in any way. They also know that whether the exemption is granted or rejected will have absolutely no impact on the level of infringement. This is because the technology necessary to circumvent the TPMs on DVDs is widely available on the Internet and easy to use. Nonetheless, the rights holders reflexively oppose the exemption or seek to narrow it so that it would be unusable. As a result, the discussions in the rulemaking descend into hyper-technical issues such as the quality of video necessary for effective pedagogy in different kinds of courses.

Moreover, in two rulemaking cycles, witnesses from the Motion Picture Association of America (MPAA) demonstrated how a person could camcord a film off of a high definition television. MPAA was attempting to show that a relatively high quality recording could be made without circumventing a technological protection measure. What it succeeded in proving, however, was the contradiction underlying its position. If one could obtain a high quality copy without circumvention, why use technological protection measures in the first place, and why should their circumvention be unlawful? Moreover, the MPAA was demonstrating how to camcord a film precisely at the same time it was asking Congress, state governments, and foreign legislatures to impose criminal penalties on camcording.

Banning technologies is an extreme step by government, a truly incredible reach of Federal power, and I would petition this body to be very careful in continuing to delegate the authority of what technologies to ban to a quasi-regulatory agent when, in these and many other circumstances, there is no compelling governmental interest.

This legislation, as currently crafted, does not reflect the input of the White House, former FCC Chairman, FCC Commissioner, scholars or outside groups such as R Street and FreedomWorks. Our campaign was about actually solving this problem and restoring a free market. Minor changes to this legislation would ensure that H.R. 1123 actually solves the problem it intends to address by permanently legalizing unlocking and allowing for businesses to sell the technology to consumers. Overall, our contention is that given the enormous benefits that phone unlocking provides to the consumer, phone unlocking should be made permanently lawful for the consumer to use, industry to develop and marketers to sell.

Filed Under: 1201, anti-circumvention, bob goodlatte, congress, copyright, digital locks, dmca, judiciary committee, mobile phone unlocking, mobile phones, steve metalitz
Companies: cca, consumers union, ctia, mpaa, riaa