Cable Industry's Own Survey Shows Majority Support Net Neutrality Rules

from the when-push-polls-backfire dept

The broadband industry is continuing its brave campaign to convince the public that gutting all oversight of growing monopolies like Comcast somehow ends well for the American consumer and smaller Comcast competitors. Last week this involved the cable industry's top lobbying organization (the NCTA) working with the Daily Caller on a poll the industry clearly hoped would show that the public really hates net neutrality protections. The full survey of 2,194 Americans (pdf) uses omission and leading questions to nudge participants toward taking the view that net neutrality protections are "burdensome regulations" imposed by an out of control government.

But it didn't work out that way.

As it turns out, 61% of the survey participants said they support rules prohibiting giant ISPs like AT&T and Comcast from being able to use the lack of last-mile competition in broadband to their anti-competitive advantage:

Note, again, that just 18% truly oppose net neutrality rules, while 21% still somehow have no apparent idea what any of us have been talking about for the better part of the last decade. And while the results pretty clearly suggest that the majority of the public supports the rules (which previous data has already suggested), this being the post-truth era, ISP-funded think tank employees like the AEI's Roslyn Layton were quick to insist the survey somehow proved the exact opposite:

Layton, one of Trump's telecom advisors, not only intentionally misstates what the survey actually found -- but she pushes for Congress to proceed on a new net neutrality law. As we've noted numerous times, the FCC knows it may be on shaky legal footing as it tries to roll back the rules via FCC process, since the agency will need to show that the broadband market has changed substantially since the court upheld the rules last year. As such, large ISPs (and friends) are pushing for a new law to "settle" the issue once and for all. You're to ignore that AT&T, Comcast, Verizon and Charter will be the ones writing it, ensuring it has so many loopholes as to be effectively useless.

The NCTA had only modestly better luck with other questions by forcing consumers to pigeon-hole their thoughts into arguably narrow silos. One question for example, asks "when it comes to the role of the federal government in regulating access to the Internet, which of the following comes closest to your view, even if none are exactly right?" Users were then forced to choose one of several narrow options, the majority answering that they thought it best that the government engage in a "light touch" approach to the internet where the government only acts if consumers are harmed:

So one, despite large ISP hand-wringing, we've noted time and time again that the FCC's 2015 net neutrality rules weren't really particularly onerous. Indeed, for those who actually understand them, they clearly are "light touch." They specifically blocked themselves from making use of any of the more onerous provisions of Title II (and, no, they can't just ignore that "forbearance" process and change their minds). In fact, the rules didn't even ban ISPs from using arbitrary usage caps to hamstring competing services (aka "zero rating"), saying the FCC would only step in during obvious evidence of harm (precisely what the majority of the respondents indicated they wanted). And contrary to repeated ISP claims, the rules did not stifle investment.

Meanwhile, as Ars Technica was quick to point out, the question responses suggest the majority of the public generally approves of the FCC approach in more recent years:

"The problem with the "ability to set specific prices" and "take action if consumers are harmed" survey answers is that both of them accurately describe the current federal system. The FCC does have the ability to set specific Internet prices, but it doesn't do so and has no intentions of doing so. The FCC's 2015 net neutrality order did not set specific prices for home and mobile Internet service but used Title II authority to let consumers complain about prices and practices that are unjust or unreasonable. In other words, the FCC's current approach is to "monitor the marketplace and take action if consumers are harmed," the approach supported by the majority of people in the cable survey."

Despite ISPs ceaselessly whining that the FCC overreached when it comes to net neutrality, people need to understand that this is traditionally an agency -- under both parties -- that happily turns a blind eye to predatory duopoly behavior, especially as it pertains to limited competition and how that results in Americans paying significantly more money for broadband than their European counterparts. That the FCC was going to seriously wake up to these problems and begin fully holding these duopolies accountable has never truly been a worry -- even under recent FCC boss Tom Wheeler.

You'll recall the FCC's $300 million broadband map intentionally omitted including pricing data at ISP request (include it, and somebody might just realize the industry isn't competitive). The FCC (again, under both parties) has also long turned a blind eye to the use of usage caps and overage fees to levy tolls on these uncompetitive markets (and competitiors), and the use of misleading below-the-line fees to jack up the cost of service after users sign up at the advertised rate (read: false advertising). This is, "light touch" regulation by any definition. To a fault.

And, contrary to public wisdom and large ISP jargon, the FCC passing some fairly modest net neutrality rules -- and returning ISPs to common carriers under Title II so those rules could be adequately enforced (something you can technically thank Verizon for) -- doesn't mean that was going to change anytime soon.

It's important to understand that the majority of ISPs were okay with the lion's share of the FCC's net neutrality rules, given they gave ample leeway for things like zero rating, and only truly prohibited things most ISPs never intended to do anyway for fear of a PR backlash (blocking a single website or service, for example). The real fear among providers like Verizon is that the FCC might, under some future theoretical leadership, actually wake up and decide to use its authority granted by the Communications Act to do something about the lack of competition in the sector.

To thwart this theoretical and unlikely future, FCC boss Ajit Pai's current plan is to gut FCC authority over broadband and shovel it over to an over-extended, under-funded, and jurisdiction-limited FTC, where large ISPs know these problems will fall through the cracks. Most reasonable folks realize that until we somehow bring more competition to bear on the sector, we're likely going to need a bit more regulatory supervision than we might otherwise like for some of the least competitive toddlers in American industry. After all, even the cable industry's own survey says so.

Filed Under: net neutrality, public, regulations, studies, support
Companies: comcast, ncta

eBook Pirates Tend To Be Older And Well Off, Which Means They Pirate Because Of Human Intuition On Economics

from the the-infinite dept

People tend to have a hard time discussing the two mathematical concepts of zero and infinity. It's not hard to understand why this is, of course, with reality being a material thing and both the lack of and the infinite amount of something being somewhat foreign. And this manifests itself in all sorts of disciplines, from cosmology to spirituality to physics. And, of course, economics, particularly in the digital age where many of the axioms surrounding physicality no longer apply to digitized goods. Zero and infinity play heavy roles here, both in the discussion of free content (zero) and the concept of digital and freely copyable goods as a resource (infinity). The economic nature of these concepts have long vexed established industries, even as some of us have pointed out how efficient and useful infinite digital goods can be if properly applied.

Industry rebuttals to the economics of all of this have mostly amounted to facile derision in the form of slandering younger generations who either "just want free stuff" or "want stuff they cannot afford." Neither makes much sense, with both claims easily disproven given statistics demonstrating how much more is spent by "pirates" than those who don't pirate content. The truth is that, while the average citizen likely can't speak eloquently about the economic laws at work for digital goods, they certainly can understand them intuitively. And this can be shown with piracy statistics for eBooks, which a recent study shows that eBook pirates tend to be both older and relatively affluent.

A new study, commissioned by anti-piracy company Digimarc and conducted by Nielsen, aims to shine light on eBook piracy. It was presented yesterday at The London Book Fair and aims to better understand how eBook piracy affects revenue and how publishers can prevent it.

In previous studies, it has been younger downloaders that have grabbed much of the attention, and this one is no different. Digimarc reveals that 41% of all adult pirates are aged between 18 and 29 but perhaps surprisingly, 47% fall into the 30 to 44-year-old bracket. At this point, things tail off very quickly, as the remaining ~13% are aged 45 or up. There are also some surprises when it comes to pirates’ income. Cost is often cited as a factor when justifying downloading for free, and this study has similar findings. In this case, however, richer persons are generally more likely they are to download.

With nearly half of eBook pirates falling into their thirties or forties, and the study later showing that two-thirds of eBook pirates have household incomes of at least $30k per year, and almost a third having incomes in six figures, this simply isn't a situation that can be explained away by pointing at young poor people. So, why do older, more affluent people pirate eBooks?

I would argue it's instinctual. Most of these people may not even be able to explain the term "marginal cost", but by instinct they feel that something that costs nothing to reproduce ought not to require payment. Their brains do this calculation behind the scenes, not thinking about the sunk costs of initial production, nor the sweat-equity spent by the content creator. Marginal cost is the term used by economists to explain pricing laws that emerged organically through human instinct.

This isn't to say that unauthorized downloading is somehow acceptable when eBook publishers wish against it. But it certainly does suggest that any eBook publisher, or publisher of other digital content, has a very high hill which it must roll its old business model wagon up to make it work. Human intuition is one hell of a thing to overcome. So much so, in fact, that it's likely the better strategy is to figure out how to make that intuition and infinite digital goods a boon rather than the enemy.

Now, it's worth noting that the price of eBooks was still a factor for those responding in the study, but not nearly the factor that convenience played.

Given the majority of pirates’ ability to pay, it comes as no surprise that convenience is the number one driver for people obtaining content from torrent sites. Cost still takes the number two position but a not inconsiderable four out of ten still believe that online retailers are lacking when it comes to content availability.

In other words, a huge amount of eBook piracy could likely be done away with immediately, if the content cost closer to what the buyer instinctually believes it ought to be and the content was at least as readily available for purchase as it is through pirated means. That really can't be that hard for eBook publishers to understand.

Filed Under: ebooks, infinite goods, non-excludable, non-rivalrous, piracy, studies

No, A New Study Does Not Say Uber Has No Effect On Drunk Driving

from the put-down-your-drink-and-read-the-study dept

The first rule of science journalism is to read the study before you write about it. Alas, that hasn't stopped media outlets from routinely misreporting, exaggerating or exercising insufficient skepticism about scientific research, particularly in the service of clickbait headlines and extra views.

A recent study from the American Journal of Epidemiology on whether the introduction of ridesharing has had an effect on alcohol-related crash fatalities was the latest victim of this kind of sloppy reporting. The Washington Post announced: "Is Uber reducing drunk driving? New study says no." CNN declared: "Uber doesn't decrease drunk driving, study says." Fortune writes: "A New Study Says Uber Has Had No Impact on Drunk Driving." Other outlets published similar stories.

But alcohol-related fatalities are not the same thing as drunk driving rates. According to the National Highway Traffic Safety Administration, nearly 10,000 Americans die each year in crashes involving a drunken driver; about two-thirds of that total are the drunken drivers themselves. But according to the FBI's Uniform Crime Reporting Program, there are annually about 1.1 million arrests for driving under the influence, which itself is just a fraction of the Centers for Disease Control and Prevention's estimate of 121 million incidents each year in which intoxicated drivers aren't caught. Astoundingly, according to one analysis, drunk drivers average just one arrest per 27,000 miles driven while intoxicated.

Ideally, society would like each of these three numbers to fall, but first, we must be able tell them apart. The AJE study's authors make clear that they "did not examine Uber's association with other traffic outcomes, including drunk driving incidences and nonfatal crashes." This leads one to the conclusion that these journalists – or at least, those writing the headlines – may not have actually read the study at all.

When it comes to whether services like Uber and Lyft reduce drunk driving overall, logic suggests that more available and convenient transportation options likely would make it easier for many to plan a night out without getting behind the wheel, and reduce the incentives to drive under the influence. The CDC already lists taking a taxi as an important preventative measure and ridesharing options are usually cheaper and very often more convenient than getting a taxi. As these services increase in popularity – particularly among millennials, who both use ridesharing more and have a greater propensity to drive drunk – one would expect a corresponding decline in the number of DUI arrests and alcohol-related fatalities.

There isn't much research on the subject, but most observations to date seem to support the supposition. A 2015 study published by Temple University's Fox School of Business concluded the introduction of UberX in California led to a reduction in the rate of motor-vehicles homicides per quarter of between 3.5 and 5.6 percent. Another study by Mothers Against Drunk Driving, in partnership with Uber, also looked at the introduction of UberX in California and found that alcohol-related crashes by drivers under age 30 fell 6.5 percent, or 59.21 fewer crashes per month.

In June 2016, Providence College published a study which found that "DUIs are 15 to 62 percent lower after the entry of Uber" and the introduction of the service "is associated with a 6 percent decline in the fatal accident rate." More recently, when Uber and Lyft were pushed out of Austin, Texas, DUI arrests spiked by 7.5 percent.

Given that background literature, it's important to note some significant limitations in the approach used by the AJE study's authors. They looked at data from 2005 to 2014 for the top 100 metropolitan statistical areas (MSAs) in which Uber has entered the market. Of course, in many of those MSAs, the company may be operating in the largest city or cities, but not across the whole metropolitan area. Also notable is that in most of the MSAs the study examines, Uber was introduced at some point in 2014, the same year the authors' data ends.

Additionally, many of these jurisdictions also did not have friendly regulatory climates for ridesharing in the period the authors examined. Aside from California and Colorado, where state-level pre-emption laws were passed, most ridesharing regulation through 2014 was done at the city level. It was fairly common at the time for transportation network companies to have uncertain legal status and for jurisdictions to impose hostile regulations, issue cease and desist orders or hold sting operations to block Uber and Lyft from operating. Additionally, carpool services like UberPOOL and Lyft Line, which are significantly cheaper, had not yet become widely available. Today, ridesharing is cheaper, more popular and fully legal in most major cities.

It also may not be that surprising the AJE study didn't line up with results from other research that focused on California. Uber was founded in San Francisco and launched there in 2009. Lyft launched in 2012. TNCs have been legal statewide in California since the California Public Utilities Commission's initial rulemaking in 2013. California is the oldest and probably strongest ridesharing market. If ridesharing has an effect on alcohol-related fatalities or drunk driving more generally, it would show up there first.

In much of the rest of the country, ridesharing is not as well-established. According to Pew, as of December 2015, only 15 percent of U.S. adults had used a ridesharing service. Of those, only 17 percent reported they use it more than once or twice a month. In short, outside of millennials in major urban centers, ridesharing hasn't yet caught on in a big way.

More research looking at more recent data is needed to better understand the effects of ridesharing on drunk driving rates. And with each new report, whatever its conclusion, one hopes science journalists will bring more care and a healthy skepticism to the table. In the meantime, this study alone isn't a compelling reason to dismiss other evidence supporting the positive effects of ridesharing on reducing drunk driving.

Zach Graves is a senior fellow at the R Street Institute, a free market think tank based in Washington, DC

Filed Under: drunk driving, journalism, ride hailing, ride sharing, studies
Companies: uber

American Academy Of Pediatrics Claims Broad Consensus On Violent Media Effect That Doesn't Remotely Exist

from the fake-it-until-you-make-it dept

Search through all of our stories about the supposed link between violent movies and games and real world violence by those that enjoy them, and you should come away with the impression that, at the very least, the science isn't settled on the issue. The more specific impression you should get is that violent media might -- might -- have a short-term impact on behavior, but that there isn't anything like a general agreement on the long term effects, which is obviously the vastly more important question.

Yet the American Academy of Pediatrics just released a policy statement on "virtual violence" that recommends legislative action due to a "broad scientific consensus" that violent media increases aggression in children.

Although there is broad scientific consensus that virtual violence increases aggressive thoughts, feelings, and behaviors, there has been little public action to help mitigate children’s exposure to it.

As a policy position, the statement goes on to recommend federal control over media ratings and a policy of reduced screen time to be prescribed to parents by pediatricians. We could spend all kinds of time arguing over whether those recommendations are good, bad, or somewhere in between. Instead, let's go ahead and expose the whopper of a false premise that is the so-called broad consensus on the effects of violent media.

Christopher Ferguson, a Psychology professor, wrote at HuffPo about how silly the claim is.

First, the AAP presents the results on media violence as if they were consistent. They argue that “hundreds” of studies show that “…the linkage between virtual violence and aggression has been well supported and is robust.” But this claim is easily contradictedby a whole host of studies that find no effect for media violence on aggression. Other studies have examined links between media violence consumption and societalviolence and found that media violence is, if anything, associated with reduced societal violence. This is not to say evidence is consistent against effects either. Some studiesdo find some evidence for media effects (although typically small and usually for minor behaviors) yet others do not. Claiming consistency in either directly merely discredits the claimant as a credible source of information.   

This claim also ignores increasing controversies about media effects’ role in psychology’s replication crisis. Scholars have identified “questionable researcher practices” in this realm, and have had difficulty replicating old studies, and studies using preregistered designs (where scholars publish their methodology in advance of collecting data, making it harder for them to monkey with analyses to get the results they want), generally found little evidence for effects.

He goes on to note that, despite the AAP's claim of broad consensus on the topic, the policy paper cited very few studies to back this claim. Those it did cite, of course, agreed with its position. But ignoring the multitude of studies that don't is. in itself, a form of citation bias, particularly given that the paper's two chief cited sources cited are generally considered controversial on the topic of media violence. Included in the post is a wonderful graph going back twenty years showing that as violent media consumption by youths has gone up, youth violence reports have gone in the opposite direction. It would be hard to square that graph with the AAP's claim, never mind with its claim of broad consensus on the topic.

But this is more than a mistake. The AAP should know better than this, and does.

The AAP claims the presence of a consensus of scholars and practitioners regarding media effects. However, most surveys of scholars and clinicians reveals this to be false. Depending on how questions are asked, surveys indicate that only 10% to 58% of scholars agree some kind of links may exist. Higher numbers are found when undefined “aggression” is used in queries (which could involve fairly minor laboratory tasks like filling in the missing letters of words...”kill” being more aggressive than “kiss” for instance in response to ki__), and drop significantly once questions ask about youth assaults or other significant behaviors. All surveys indicate significant disagreements among experts, with only a minority worried about media effects on violent behavior. Indeed, past claims of consensus have been thoroughly discredited.

Further, a group of 230 scholars, back in 2013, wrote an open letter advising against policy statements on media effects just like this one. That letter was written to the American Psychological Association (APA), but the same principle holds here. How does the AAP pretend this large group of 230 scholars don’t exist?

Combined with a later section of the paper, which laughably misreads a Supreme Court decision from 2011 as rejecting federal oversight on violent media consumption by children on First Amendment grounds when the court actually stated that lower courts have found the claim of a link between media and violence to be meritless, one wonders exactly what the motive is for all of this by the AAP. You have to blink before believing the AAP's recommendation that journalists not talk to "contrarian researchers" who don't see things its way. It's hard to think of a less scientific recommendation than censoring contradictory studies.

But more worrisome, the AAP appear to pressure journalists not to speak to anyone, including “contrarian scholars” who disagrees with their position. This arguably puts the AAP in the bizarre and aggressive position of, in effect, arguing for scientific censorship (whether or not this was their intent). They chide news media for presenting “both sides” of the debate (despite the presence of scientific evidence for both sides and the fact that most researchers do not agree violent media poses a serious risk to society) and offer as a recommendation “The news and information media should acknowledge the proven scientific connection between virtual violence and real-world aggression…”

The point of all of this isn't to fight over the link the AAP suggests. The point is that a policy paper built on a demonstrably false premise that then attempts to silence the work of opposing research isn't a prescription for good scientific output.

Filed Under: pediatrics, recommendation, studies, video games, violence
Companies: american academy of pediatrics

EU-Funded Study On The Cost Of Copyright Infringement Dismisses Key Real-World Factor As 'Outside Its Scope'

from the fantasy-economics dept

One of the less well-known outposts of the European Commission is the EUIPO Observatory. Here’s how it describes its objectives:

Provide evidence-based contributions and data to enable EU policymakers to shape effective IP enforcement policies and to support innovation and creativity

Provide data, tools and databases to support the fight against IP infringement

Provide knowledge and learning programmes for IP and enforcement authorities as well as for businesses and IP practitioners

Develop initiatives to help innovators, creators and businesses (especially SMEs) protect their IP rights

Design campaigns to raise awareness of the value of IP and the negative consequences of IP infringement

You may notice a certain one-sidedness there: this is all about infringement and enforcement, with nothing about whether the current copyright laws are part of the problem, or whether they are even fit for the digital age. Given that bias, the subject of the Observatory's latest report will come as no great surprise: "The economic cost of IPR infringement in the recorded music industry." Here are the main results:

In 2014, the recorded music industry lost approximately €170 million of sales revenue in the EU as a consequence of the consumption of recorded music from illegal sources. This total corresponds to 5.2% of the sector's revenues from physical and digital sales. These lost sales are estimated to result in direct employment losses of 829 jobs.

If the knock-on effects on other industries and on government revenue are added, when both direct and indirect effects are considered, infringement of IPR in this sector causes approximately €336 million of lost sales to the EU economy, which in turn leads to employment losses of 2,155 jobs and a loss of €63 million in government revenue.

I predict we'll be seeing these numbers a lot in the future, because the music industry will be quick to seize on them as "objective" figures that are above suspicion, unlike industry-sponsored analyses. But of course, things are not always what they seem, and it's worth reading the full report in order to find out what is really going on here. Nearly half of the 48-page is taken up with appendices outlining the forecasting model used to calculate those "lost sales." The mathematics there is pretty enough, but ultimately undermined by the following admission made earlier in the report:

It is important to note that the lost sales estimated in this report represent hypothetical additional revenue that the recorded music sector would have earned, had infringement not taken place. It is not an estimate of the value of the illegally acquired music recordings; nor is it an estimate of the substitution effect -- that is, the question of the extent to which the illegally consumed music would have been bought from legal sources had piracy not been possible, which is outside the scope of this study.

Thus it is taken as axiomatic that every lost sale would have converted to a real sale if a magic wand had been waved, and piracy had become impossible. No justification is offered for this huge assumption, and that's not surprising, since it doesn't exist: in the real world only a fraction of those "lost sales" would ever be converted to actual sales. So even if we accept the modelling in the appendices is correct, the figures that result must be reduced by some factor to take account of this. It's hard to say what that factor is, but it affects all the headline figures -- the 5.2%, the 2,155 jobs, and the €63 million in government revenue. Actually, things are even worse than they seem, because the study doesn't explore the possibility that online sharing boosts sales, rather than reduces them. It only mentions that crucial issue right at the end, where it says:

The question of whether piracy reduces sales of recorded music has been the subject of many studies, sometimes with contradictory results. Some authors have claimed that piracy actually increases sales by allowing consumers to sample music they would not otherwise have considered purchasing. However, a recent literature survey by Danaher et. al. (2016) shows that out of 25 studies reviewed, 22 found that piracy reduced the revenue of the legal industry. Thus, the results of the present study are in line with the prevailing consensus, albeit utilising a completely different methodology.

However, the methodology adopted by the report may be skewing the results by removing perhaps the most "advanced" digital market -- Sweden, the home of Spotify -- from the modelling because it is viewed as an outlier. And as for that 2016 study by Danaher et al., here are some of the 22 datasets showing that piracy "reduced the revenue of the legal industry":

1994-98 IFPI worldwide CD sales data and physical piracy rates

1998-2002 worldwide CD sales, IPSOS survey data for piracy downloads

1997-2002 country-level data on music sales and broadband usage.

1990-2004 consumer spending on cassette tapes, LPs, and CDs.

It seems unlikely that the analog world of cassette tapes and LPs tell us very much about what young people are doing online with digital files today. Of course, there's more recent data in the list, for example, this set:

2008-2011 iTunes music sales in France and other European countries

Which apparently showed the HADOPI anti-piracy law "caused iTunes music sales to increase by 22-25% [in France] relative to changes in the control group [countries]." Except that it didn't, as Techdirt noted at the time.

This quick run-through of the cited datasets is not meant to be a rigorous rebuttal, but it does indicate the superficial nature of the new report's analysis, which accepts uncritically the Danaher paper, instead of exploring properly the really important question of whether piracy drives or depresses sales. Coupled with a failure to consider substitution effects, that renders the EUIPO report's results of little value. What makes things worse is that the music industry will doubtless use them anyway to foist its copyright maximalist agenda on policymakers, who may mistakenly assume the Observatory's work can be relied upon.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

Filed Under: copyright, infringement, lost sales, studies

New Analysis Shows 'Frivolous' Corporate Sovereignty Suits Increasingly Used To Deter Regulation Rather Than Win Compensation

from the abusing-the-system dept

The rise in public awareness of the dangers of corporate sovereignty provisions in agreements like TPP and TAFTA/TTIP has brought with it a collateral benefit: academics are starting to explore its effects in greater depth. An example is a new paper from Krzysztof J. Pelc, who is an Associate Professor in the Department of Political Science, at McGill University in Canada. Called "Does the Investment Regime Induce Frivolous Litigation?" (pdf), it looks at how the investor-state dispute settlement (ISDS) mechanism has evolved in recent years, and in a very troubling direction.

Along the way, the paper explores one of the central arguments made by those supporting the inclusion of corporate sovereignty chapters in major agreements: investors lose most of the claims that they bring against governments, so ISDS is really nothing to worry about. But Pelc identifies a key question posed by this line of thinking:

Why would investors continue to file these highly costly cases, if the expected success rate is so low?

In fact, things turn out to be even more mysterious:

Current estimates actually overstate investors' success rates, especially when it comes to specific types of legal claims. What is more, this rate of success has been dropping precipitously over time -- the exact opposite trend to the one we observe in inter-state disputes in the trade regime over the same period.

By analyzing 1421 individual claims in 676 investment disputes from 1993 to present day, Pelc discovered that most disputes are over what are claimed to be instances of indirect expropriation by governments. That's in contrast to the traditional direct kind, for example when dictators send their armed thugs to throw foreign investors out of a factory they own -- something that almost never happens these days. Indirect expropriation is claimed by companies to include things like enforcing higher standards for drug patents, or simply trying to protect key water supplies from pollution. Pelc explains why investors are doing this, even though the odds of winning are low:

The cost of investor-state litigation -- far higher than the cost of, e.g., trade litigation -- means that firms may benefit from spillover effects of the challenges they bring forth. When Philip Morris challenged Australia's labeling regulations, New Zealand put its own labeling legislation on hold, and Philip Morris loudly praised the decision. If litigation exerts a sufficient deterrent effect, firms may benefit even when they lose a case. The result is an increased likelihood of frivolous litigation, where the purpose of a challenge is not so much to win the dispute or obtain compensation, as it is to deter further regulation.

Pelc says his analysis shows this kind of "frivolous" corporate sovereignty litigation is becoming more common:

Firms are litigating more and more, and they are winning less and less. To wit, investors win less than 10% of the indirect expropriation claims they bring against democratic countries. The design of the regime, which allows private standing [whereby private firms or individuals can themselves decide to bring a lawsuit against governments], has contributed to such frivolity: compared with analogous regimes like international trade, it features little of the restraint that exists in dispute settlement between sovereign states.

The fact that corporations can sue nations under ISDS without needing to ask permission, or to satisfy any pre-conditions, makes it particularly easy to bring "frivolous" claims against democratic governments purely in the hope that doing so will chill further regulations, rather than with any serious hope of winning substantial damages. Of course, the fact that such awards are also available represents an additional incentive to file lots of corporate sovereignty challenges, however weak. Pelc points out another feature of ISDS that encourages companies to bring even the most frivolous cases: the absence of reciprocity -- the risk that they will be sued back. In fact:

The only cost they face from a legal challenge is the cost of counsel -- which in the case of the investment regime, in particular, remains quite high. Yet they need not worry about possible retaliatory challenges, or the reputational costs of belligerence. Quite the opposite, a reputation as an aggressive claimant may work to a multinational company’s net benefit.

That kind of behavior is evident in the ISDS cases brought by Philip Morris against both Australia and Uruguay. They are clearly designed to establish the multinational company as a determined litigator in order to discourage other countries from bringing in new regulations to reduce tobacco consumption.

Pelc's paper is an important contribution to the field because it reveals the oft-repeated claim that corporate sovereignty is really nothing to worry about because investors rarely win as deeply misleading: investors do not need to win formal victories in ISDS tribunals in order to triumph in the wider world outside. It also shows that the one-sided nature of corporate sovereignty -- where companies can sue nations, but not the other way around -- not only tilts the playing field unfairly towards investors, but encourages them to abuse the system even further. Both are compelling reasons to drop corporate sovereignty chapters in trade agreements completely.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

Filed Under: corporate sovereignty, isds, regulations, studies, trade

Broadband Industry 'Studies' Claim Users Don't Need Privacy Protections Because ISPs Are Just Harmless, Innovative Sweethearts

from the watching-the-watchers dept

With few protections in play, most of the last decade broadband ISPs have collected any and every shred of data about their customers' online behavior. It began with clickstream data, which ISPs sold to third parties, then either refused to comment on or outright lied about. Since then, more intelligent network hardware has let ISPs use deep packet inspection to track and monetize user online behavior down to the second. In wireless, carriers like AT&T and Verizon not only collect and sell user online behavior and location data, but now embed stealth packet headers to track and profile users across the entire Internet.

It was that last decision that raised eyebrows at the FCC, prompting the agency recently to consider whether it should use its new Title II authority to build at least some basic rules of the road regarding broadband user privacy. This has, of course made the broadband industry rather nervous. After all, the telecom industry has grown very comfortable with the fact that nobody has bothered to give half a damn about broadband privacy for the better part of a generation.

Enter the telecom-industry funded Information Technology and Innovation Foundation, which has released a new "study" (pdf) that argues no privacy protections are necessary because you can trust broadband providers to do the right thing. The report starts off on a highly scientific note, insulting those who'd like some basic broadband privacy protections as "broadband populists" that are pushing an agenda that will -- you guessed it -- will hurt puppies, innovation, broadband deployment, and tear giant holes in the time-space continuum.

Amusingly, the report claims that basic privacy protections would prevent ISPs from providing "numerous benefits" to consumers. The report also tries to claim that basic privacy protections will somehow stop ISPs from properly managing their networks:

"Limiting the use of broadband data...would constrain broadband providers’ ability to provide numerous benefits to consumers. Analyzing data is essential for ISPs to understand patterns and trends in Internet traffic and allows for informed adjustments to network functions and capacity, both in the long and the short term. Customer data is also important to help diagnose problems within the network and facilitate responses to customer requests for assistance with various issues."

The report goes on to claim consumers really don't need privacy protections because they have the option of using VPNs and encryption to hide their traffic from ISPs. But Nick Feamster over at Freedom to Tinker does a nice job explaining why it's not really that simple. ISPs can still observe user online behavior based on overall traffic pattern and volume, unencrypted portions of communication, and the growing volume of unencrypted Internet of Things traffic. And a VPN is no guaranteed blockade to ISP snooping either, since again IOT devices won't use the VPN, and ISPs can often still monitor user behavior via DNS anyway.

To be clear, what the FCC is proposing isn't particularly heavy-handed, nor would it stop ISPs from managing their networks or even profiting from snoopvertising. With the FCC's recent Title II move, ISPs are now subject to Title II’s Section 222 privacy protections regarding "customer proprietary network information" (CPNI). But since those rules were crafted for older phone companies, the FCC's looking to modernize them for the modern era. We're talking about relatively basic protections, such as requirements that you inform customers if you're tracking them and selling their data, and give them opt out tools that actually work.

Given the billions everyone is happily making hoovering up user data from Silicon Valley to K Street, there's really no serious political motivation to go beyond that, "populist" outcry or not. But the report argues that broadband users don't need privacy protections at all because hey, ISPs don't actually know much about you and industry "self regulation" works exceptionally well to thwart bad behavior:

"The privacy policies of operating systems like Apple’s OS X and Google Android are also subject to FTC enforcement if they misrepresent how they use their users’ personally-identifiable information. This is the model for a well-functioning, self-regulatory environment that maintains the flexibility needed for rapid innovation and experimentation with welfare-enhancing business models. Broadband providers should not face steeper burdens for implementing advertising than already exist.

Except not. One, broadband is notably different from Apple and Google because telecom operators hold a monopoly over the last mile. Whereas an Apple smartphone customer annoyed at Apple's privacy policies can migrate to Android, or a Google search customer can pick a new engine, most broadband customers don't have a real choice of providers. Meanwhile, the FTC has proven all but useless in telecom privacy enforcement, and the self-regulatory approach has worked about as well in telecom as it has in the banking industry thanks to generations of cronyism and dysfunction.

For years, Verizon repeatedly stated that more meaningful privacy protections weren't necessary for broadband providers because "public shame" would keep the company honest. Verizon-owned AOL recently parroted that idea when it insisted "the market" would keep companies on their best behavior. How does that actually work in practice? As we've seen with Verizon's "zombie cookies," not at all.

In fact, it took months for security researchers to even realize that Verizon was embedding user wireless packets with stealth tracking technology. It took another six months of public pressure before Verizon even gave users the option to opt out. The self-regulatory approach just doesn't work in telecom. What we get in reality are companies like AT&T that are now charging broadband users a $60 premium if they want to opt out of invasive snoopvertising, then calling that innovation.

Alongside the ITIF report, the industry is pushing a second report this week (pdf), funded by telecom-industry lobbying group "Broadband for America." While most people familiar with sockpuppetry and astroturf will disregard these reports as the conflicted proxy musings of the telecom industry, the press usually isn't so savvy. In fact, ReCode ran an article on the study with a headline informing readers that ISPs know "less than you might think" about them, and an opening paragraph claiming ISPs "have limited access to consumer data." Only in a later update at the bottom of the story did ReCode disclose the study was funded by AT&T, Comcast and Verizon.

It's clear the broadband industry is now engaged in a full court press to derail rules that might take a small bite out of billions in user-tracking revenues. And in typical telecom-industry fashion, that involves creating a sound wall of fauxcademics, fake consumer advocates, third-party consultants and other mouthpieces who will be spending the next six months informing you that ISPs are utter angels when it comes to respecting and protecting consumer privacy, and that the status quo (read: no real privacy protections whatsoever) is good enough.

Filed Under: broadband, fcc, privacy, studies
Companies: itif

Yet More TPP Studies Predict Slim Economic Gains, Highlight Dubious Underlying Assumptions

from the another-reason-we-need-negotiating-texts-published-early dept

It's striking that from a situation where there were very few studies of the likely effects of the TPP agreement, we've moved to one where they are appearing almost every week. Recently Techdirt wrote about a World Bank study, and one from Tufts University; now we have one from the Peterson Institute for International Economics, which calls itself "a private, nonprofit, nonpartisan research institution devoted to the study of international economic policy." Here's its summary of the results:

The new estimates suggest that the TPP will increase annual real incomes in the United States by $131 billion, or 0.5 percent of GDP, and annual exports by $357 billion, or 9.1 percent of exports, over baseline projections by 2030, when the agreement is nearly fully implemented. Annual income gains by 2030 will be $492 billion for the world. While the United States will be the largest beneficiary of the TPP in absolute terms, the agreement will generate substantial gains for Japan, Malaysia, and Vietnam as well, and solid benefits for other members. The agreement will raise US wages but is not projected to change US employment levels; it will slightly increase "job churn" (movements of jobs between firms) and impose adjustment costs on some workers.

That figure of 0.5% cumulative GDP gain by 2030 is in line with the other studies discussed previously here on Techdirt. But there are various issues with both that figure and the study itself, which are highlighted by Dean Baker, co-director of the Center for Economic and Policy Research, in a post on Medium. One of the most serious is something we've noted before: despite attempts to present them as otherwise, the predicted gains are extremely small. Baker explains this well:

The study's projection of a cumulative gain to GDP of 0.5 percent by 2030 implies an increase in the annual growth rate of 0.036 percentage points. This means that if the economy was projected to grow by 2.2 percent a year in a baseline scenario, it will instead grow at a 2.236 percent rate with the TPP, assuming the Peterson Institute projections prove correct.

The projections imply that, as a result of the TPP, the country will be as rich on January 1, 2030 as it would otherwise be on April 1, 2030.

Then there's the matter of the econometric modelling technique adopted. The Computable General Equilibrium (CGE) analysis employed by the Peterson Institute makes some very big assumptions:

The model assumes that the TPP will affect neither total employment nor the national savings (or equivalently trade balances) of countries. This "macroeconomic closure" assumption allows modern trade models to focus on the goals of trade policy -- namely sustained productivity and wage increases through changes in trade patterns and industry output levels. With minor variations, the assumption is used in most applied models of trade agreements.

That means -- by definition -- these CGE models can tell us nothing about the effects of TPP on employment, and assume that no jobs are lost or gained overall. Baker points out another major consequence of this approach:

by design the model assumes that trade balance for the United States is not changed as a result of the TPP. This means that whatever changes we see in exports, according to the model, will be matched by an equal change in imports.

As a result, the predicted boost of $357 billion to US exports thanks to TPP is matched by a balancing boost of $357 billion to imports as well. Baker also offers an explanation of why the CGE model makes its rather surprising view on employment:

In prior decades most economists were comfortable with this sort of full employment assumption since it was widely believed that economies quickly bounced back from recessions or periods of less than full employment. In this view, if a trade agreement led to a larger trade deficit it would soon be offset by lower interest rates, which would provide a boost to investment and consumption.

However:

in the wake of the 2008 crash, fewer economists now believe that the economy has a natural tendency back to full employment. Many of the world's most prominent economists (e.g. Larry Summers, Paul Krugman, Olivier Blanchard) now accept the idea of "secular stagnation." This means that economies really can suffer from long periods of inadequate demand.

That risk is one key reason why the lack of currency controls in TPP is a big problem:

if one or more of the countries in the TPP began running larger trade surpluses with the United States, and then bought up large amounts of dollars to prevent an adjustment of their currency, there is nothing the United States could do within the terms of the agreement.

Another analysis of TPP comes from a very different quarter: the New Zealand government, as part of the formal process of ratifying the treaty. Even though the document runs to 279 pages (pdf), relatively few of them are devoted to how the modelling results were obtained, and how plausible they might be. The independent team behind a new "expert paper", part of a series exploring many aspects of TPP from a New Zealand viewpoint, was not impressed by what it found there (pdf):

[The writers in the expert group] found that the standard of documentation of the modelling is dreadfully inadequate -- just 20 pages of text in the published report. The authors [of the New Zealand government report] should have chosen, or been asked to present, a much weightier and more detailed account of every facet of the data, assumptions, modelling and results.

Not only is the methodology poorly explained, but the results are underwhelming too. The official predictions of economic gains for New Zealand are summarized as follows by the team of economists:

The government has used modelling to derive estimates of the economic benefit for New Zealand and estimated an increase in real GDP of 0.9% by 2030 or $2.7 billion annually. The increase is modest. A continuation of currently forecast levels of growth would mean that NZ GDP would be 47% higher by 2030 without TPPA, versus 47.9% with TPPA.

The expert group are even more scathing about the way in which the supposed benefits of removing "non-tariff barriers" (NTBs) have been included:

The government's analysis estimated that reducing NTBs would account for $1.7 billion of the $2.7 billion estimate for gains from the TPPA. The modelling is not specific about the types of NTBs that exist amongst the TPPA countries, aside from the definition that they are 'measures that are discriminatory and are for the purposes of restricting trade'. There is no adequate explanation about which countries maintain these barriers, how they are distinguished from legitimate NonTariff Measures (that are not for the purposes of restricting trade), what proportion of NTBs would be removed, what provisions in the TPPA would remove them or what the risks would be to societies as a result of their removal.

That lack of specificity is a serious problem, because most of the gains from TPP are supposed to come from removing NTBs. Without the details, there's no way of knowing how plausible the assumptions are. In any case, as the economists go on to note rather acidly:

This approach implies that societies maintaining higher levels of protection for social, environmental and health reasons, and a more developed system of business regulation, will generate benefits by removing their regulations. This may be a view held by some neoliberal economists but it is not the view of many other economists, and not supported by evidence.

The appearance of these new studies, together with those that were published before, underlines the fact that, whatever the source, it seems impossible to find any compelling economic justification for signing up to the agreement, since the gains are so pitiful -- and that's without including possible costs, which are never discussed. That this is only now becoming incontrovertible, in the wake of the publication of the TPP text last year, also shows why all the key documents should have been released as they were written in order to allow this kind of in-depth analysis to be conducted and debated as the talks proceeded. Not, as is happening currently, just a few days before the official signing ceremony on February 4 when it's a bit late to do much about it.

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Filed Under: predictions, studies, tpp

The Right Way To Stop Piracy

from the look-at-the-evidence dept

Read the new report from The Copia Institute,
The Carrot Or The Stick: Innovation vs. Anti-Piracy Enforcement »

Ever since the internet became a place where copyright infringement was rampant, we've seen the same basic playbook from the legacy entertainment industry: pass stricter anti-piracy laws. In the 30 years predating the big fight over SOPA in 2011-2012, the US had passed 15 separate anti-piracy laws. Countries around the globe (often under pressure from the US) have passed increasingly more draconian copyright laws designed to "stop piracy." And, when they can't pass laws directly, they resort to international trade agreements, like the TPP, whereby trade negotiators (who are directly influenced by the legacy entertainment industry) negotiate deals in back rooms that require stricter anti-piracy laws. And none of it works. Sure, when a new law first goes into effect there may be an initial, short-term decrease in piracy rates, but it doesn't last for more than a few months, as people quickly go back to finding ways to access the content they want.

So how about a different approach? One that actually does work. One that has been shown, time and time again, to actually reduce piracy rates? Enabling more innovation and allowing more services to legally deliver what consumers want.

The story in Sweden is somewhat famous. Sweden was home to the Pirate Bay and had sky high piracy rates. And then Spotify -- a company also born in Sweden -- launched at home. And piracy rates fell off a cliff. But only for music. Piracy for other products such as TV and movies remained high. Under pressure from the US, Sweden passed a strict anti-piracy law, IPRED. And, when it went into effect, there was a notable decline in piracy rates... but, within months, those rates rebounded to where they had been before, as people quickly figured out new ways to do what they were doing before. And then Netflix launched in Sweden. And piracy rates for TV and movies dropped.

This story made us wonder. So, over at the Copia Institute, we've been digging into similar situations around the globe, and this morning we're releasing our latest report: The Carrot or the Stick, in which we compare attempts to ratchet up anti-piracy enforcement against simply enabling more innovation, and the impact both have had on piracy rates in a bunch of different countries. Over and over again, we find the same basic story: anti-piracy laws have little to no long-term impact on piracy. Any impact is, at best, short term. However, when innovative services are allowed to thrive, and when there's real innovation, the public is more than willing to sign up in droves, often leaving their pirating ways behind.

Thus, if the entertainment industry is truly serious about decreasing piracy, why are they so resistant to the facts? Why do they fight tooth and nail against these services, demanding rates that are sure to bankrupt them, or putting ridiculous restrictions on them that limit their value to users? Why do they demand DRM or limit selection? It's difficult to make sense of this strategy.

And, yes, I know that some will claim that the two things (anti-piracy laws and innovation) go hand-in-hand -- and that the anti-piracy laws are necessary in order to make it possible for authorized services to thrive. Once again, however, our research showed that does not appear to be the case at all. In most countries we studied, the number of authorized services tended to rapidly expand before the introduction of new anti-piracy laws. And, in fact, sometimes we saw the number of services decline after these laws were in place, and after the "winners" in the market had already been established. In other words, entrepreneurs and users of these services saw no reason to wait for these laws, and the laws themselves don't appear to have done much to encourage more innovation in the field.

You can check out the full report over at the Copia site. Oh, and as a reminder, the White House's Intellectual Property Enforcement Coordinator is still asking for feedback on how to best use the federal government's resources on this issue. One would hope that learning what's in this new report would be helpful to him in crafting his new plan.

Filed Under: authorized services, carrot, copyright, innovation, piracy, stick, studies
Companies: copia institute

200-Plus Scholars Speak Out Against American Psychological Association's Violence/Gaming Study

from the dissension-in-the-ranks dept

We've been covering stories here about studies and claims linking real-world violence and video games for about as long as I've been a reader/writer. An even cursory review of our own record can only lead a reader to conclude that such links are, at best, nebulous, and are perhaps less likely than likely to exist. When coupled with some recent and fascinating revelations about just how easy it is to get a study to say exactly what you want it to say, and to get that study published and reported in supposedly reputable arenas, we're left with the troubling impression that such studies linking violence and gaming are more back-patting endeavors than they are true intellectual efforts.

With that in mind, you may have heard of a recent American Psychology Association report that strongly affirms the link between gaming and aggression, which is in this context meant to be synonymous with violence. This was the product of the APA's task force for studying the existence of such a link. It might represent a scientific victory for those who have long claimed that such a link exists, were it not for the predictably massive problems associated with the task force, the studies it took into account, and the methodology for the conclusions it drew. These problems are evidenced by the over two hundred academics who have submitted an open letter to the APA sharing their collective concerns over how this all went down.

One of those signees, Stetson University psychology professor Chris Ferguson, spoke with Game Informer, detailing the problems with the task force. Among those problems are details such as the task force being mostly comprised of scholars who have demonstrated in the past a willingness to link violence and aggression, the measures they used for aggression, and task force members having previously publicly supported legislation aimed at keeping games away from children.

Ferguson tells me that of the seven task force members, four had at anti-media leanings, with another that uses aggression measures that have been called into question by some factions of the psychology community. "To some degree, they're really commenting on their own product," he says. "I think people interpret these things as neutral. You have to remember that they are commenting on their own product. These are people looking at their own research and declaring it beyond further debate. All of us would love to do that, but we don't really get that chance, nor should we."

He also notes that all seven members of the task force were over the age of 50, citing a correlation between views on media and age. "I point that out because there is solid evidence that age is a correlate for attitudes about video games, even amongst scholars," Ferguson explains. "Age and negative attitudes toward youth predict anti-game attitudes."

For those of us that worship at the altar of science, this serves as a welcome reminder that science is only as good as those conducting it. Bias is omnipresent and omnidirectional and it is something we must always be vigilant against. For instance, cited in the open letter is the fact that the APA previously stated as a matter of policy that violent games should see a reduced exposure to children and that the APA had already made recommendations to the gaming industry about exactly how violence should be portrayed in games, specifically suggesting that real-world consequences should be visited upon violent actors in digital media.

In other words, as the letter states, the APA task force essentially reached the conclusion that the APA's previous work and recommendations were on point, using a hand-picked team comprised of researchers perfectly biased to reach just that conclusion. Adding to the letter's concern over some of the sloppy methodology for drawing the task force's conclusions is the kind of simple real-world analysis of data that has me wondering just how any of this made it past the APA's review to begin with.

Ferguson and his colleagues also point to data evidencing a decrease in youth violence, which contradicts assertions that media (video games and non-interactive forms) are a public health concern. Ferguson cites colleagues at Oxford, Villanova, Western Michigan University, and more that have presented recent findings in peer-reviewed journals. These studies indicate that there is no connection between violent video games and aggression. A study by Patrick Markey at Villanova indicates that "participants who were not angry tended to be relatively unaffected by exposure to violent video games."

In other words, at the exact moment that the APA suggests violence and video games are linked, and at the exact moment that violent video games have exploded in popularity and dissemination, violence amongst youth (and the general public) is trending downward. One would think that if a link existed, we might see some evidence of it outside of ham-fisted studies utilizing questionable methodologies.

But, alas, this is the way of things. And you should expect this to continue, probably right up to the point when most of the research of this issue is being done by a generation in which gaming was prevalent in their youth. Then the studies will likely show something more interesting than a self-created echo-chamber of moral outrage.

Filed Under: academics, scholars, studies, video games, violence
Companies: american psychological association