FTC Warns AT&T Court Victory On Throttling Could Screw Consumers For Decades

from the not-so-free-markets dept

AT&T stopped selling unlimited wireless data plans back in 2011, and instead started pushing more expensive capped and metered plans. Existing unlimited users at the time were "grandfathered," but AT&T went out of its way to make life as unpleasant as possible for these users, ranging from blocking them from using Facetime unless they subscribed to metered plans, to throttling these "unlimited" users after only consuming a few gigabytes of data. Ultimately AT&T faced a $100 million fine by the FCC (currently being contested by AT&T), and a 2014 lawsuit by the FTC for misleading consumers and dramatically changing the terms of service while users were under contract.

But AT&T being AT&T, its lawyers got right to work contesting the FTC lawsuit, arguing that the very Title II common carrier FCC classification it had been fighting tooth and nail against exempted it from the FTC's jurisdiction. As it turned out, AT&T didn't need to engage in this Schrodinger-esque legal tap dance at all, with a court ruling back in August that the FTC never truly had authority over AT&T in the first place:

"The common carrier exemption in section 5 of the FTC Act carves out a group of entities based on their status as common carriers. Those entities are not covered by section 5 even as to non-common carrier activities. Because AT&T was a common carrier, it cannot be liable for the violations alleged by the FTC. The district court’s denial of AT&T’s motion to dismiss is reversed, and the case is remanded for entry of an order of dismissal."

The FTC isn't particularly pleased with this ruling, and this week it filed a petition for a rehearing in which it stated that the ruling could potentially let any company dodge FTC authority -- just as long as some component of its business has common carrier status. This could, the FTC warns, result in companies buying select companies they may not even want just to avoid regulatory scrutiny:

"The panel’s ruling creates an enforcement gap that would leave no federal agency able to protect millions of consumers across the country from unfair or deceptive practices or obtain redress on their behalf. Many companies provide both common-carrier and non-common-carrier services—not just telephone companies like AT&T, but also cable companies like Comcast, technology companies like Google, and energy companies like ExxonMobil (which operate common carrier oil pipelines). Companies that are not common carriers today may gain that status by offering new services or through corporate acquisitions. For example, AOL and Yahoo, which are not common carriers, are (or soon will be) owned by Verizon. The panel’s ruling calls into question the FTC’s ability to protect consumers from unlawful practices by such companies in any of their lines of business."

And again, while light touch regulation may work in healthy markets, that's simply not the case in telecom, where AT&T all but owns state legislatures and the lion's share of Congress, and the lack of last-mile competition leaves regulators as the last defense for frustrated consumers stuck in monopoly or duopoly markets. The FTC continues to warn that this new enforcement gap, if allowed to become precedent, could have a notable impact on user privacy:

"The FTC is the nation’s primary protector of consumer data privacy, but under the panel’s ruling it could be powerless against any company that provides a common-carrier service. Consumers would have no protection from breach or misuse of their personal information or practices like false advertising or improper billing."

And that's kind of a big deal for an industry in which misleading billing and sneaky fees are already a huge problem. And while the FCC is considering some basic new privacy rules for broadband subscribers, the collective lobbying power of the telecom, advertising, and content industries (Google is also quitely opposing the FCC's new rules), there's not a great chance that they ever see the light of day while retaining any teeth. No regulatory oversight is a problem in a sector where ISPs are flirting with charging users more just to protect their own privacy.

The FTC argues that the appeals court panel ruling conflicts with prior decisions of the 9th Circuit and other appeal courts. But should these efforts fail, one of the least ethical companies in telecom in one of the least naturally competitive industries in America could suddenly face less regulatory oversight than ever before. And while those that falsely believe telecom is a free market and all regulation is inherently bad may applaud that outcome, the resulting regulatory capture AT&T would enjoy would be almost total, resulting in higher prices, worse service, and potentially more anti-consumer behavior than ever before.

Filed Under: broadband, competition, fcc, ftc, oversight, regulation, throttling, title ii

Come On Elon! Tesla Stupidly Bans Owners From Using Self-Driving Teslas For Uber

from the you-don't-own-what-you-bought dept

We've talked a lot about the end of ownership society, in which companies are increasingly using copyright and other laws to effectively end ownership -- where they put in place restrictions on the things you thought you bought. This is bad for a whole variety of reasons, and now it's especially disappointing to see that Tesla appears to be jumping on the bandwagon as well. The company is releasing its latest, much more high powered, version of autonomous self-driving car technology -- but has put in place a clause that bars Tesla owners from using the self-driving car for any competing car hailing service, like Uber or Lyft. This is not for safety/liability reasons, but because Tesla is also trying to build an Uber competitor.

We wrote about this a few months ago, and actually think it's a pretty cool idea. Part of the point is that it effectively will make Tesla ownership cheaper for those who want it, because they can lease it out for use at times when they're not using it. So your car can make money for you while you work or sleep or whatever. That's a cool idea.

But it's flat out dumb to block car owners from using the car however they want.

If Tesla wants to compete with Uber, that's great, but it should compete and offer a better deal for car owners, rather than artificially limiting what they can do. And the thing is, Elon Musk knows this. Remember, a few years ago when he famously freed up all Tesla patents into the public domain, recognizing that it was better to compete on execution rather than artificial legal limitations? So why not take that same approach with competing in car hailing services as well? Don't limit what owners can do with their cars. That's now ownership. ow they're just leasing.

Tesla's plan for a competing ride hailing service is a good idea, and I'm excited to see what the company does with it, but if it starts off by artificially blocking Tesla owners from using their cars on competing services, it makes me think that Tesla doesn't think it's own service will be very good, and therefor it needs to artificially lock Tesla owners into its own platform, rather than competing on the merits. That seems antithetical to the message that Tesla and Elon Musk have given off in the past. Hopefully Musk reconsiders this anti-consumer move and recognizes that Tesla can build such a service that can stand on its own merits without artificially restricting Tesla owners.

Filed Under: autonomous vehicles, car hailing, competition, drm, elon musk, limitations, ownership, restrictions, ride hailing, ride sharing, self-driving cars
Companies: lyft, tesla, uber

Vox Seems Kind Of Upset That We're Building Gigabit Networks With Bandwidth To Spare

from the you're-not-helping dept

If you want to see why broadband in the United States still stinks, your first stop should be to examine the state level protectionist laws used to stifle competition across countless markets. But despite the lobbyist stranglehold over state legislatures, we're still seeing some impressive progress when it comes to the deployment of gigabit fiber networks. Google Fiber continues to slowly but surely expand its footprint, and we're seeing the rise of numerous other piecemeal gigabit solutions, whether coming from the likes of Tucows or municipal broadband deployments in cities like Chattanooga, Tennessee.

To be clear, the "gigabit revolution" is certainly a bit overhyped. The vast majority still can't get this caliber of service, and the obsession with the mighty gigabit does tend to obscure a potentially more important conversation about broadband prices and the often glaring lack of real competitive options. But by and large most people can agree that gigabit fiber builds are a good thing in an era when most users can still only obtain DSL at circa 2002 speeds and prices, and two-thirds of homes lack access to speeds greater than 25 Mbps from more than one provider (aka a broken monopoly).

Well, unless you're Vox, which published a kind of strange article this week lamenting how "cities spent millions on fast gigabit networks" and "nobody is sure what they're good for." The central narrative of the article is apparently that gigabit fiber networks aren't any good because nobody has developed the "killer app" that can effectively use all that bandwidth at once:

But six years after the first super-fast connections went live, even proponents concede no “killer” gigabit application has emerged. Most of their potential, critics say, is simply ignored by users. And building gigabit networks nationwide would be a colossally expensive undertaking.

Vox appears to have missed the fact that gigabit broadband competition itself is the killer app. Google Fiber may only have a small footprint, but in markets where it's deployed, incumbent ISPs have been forced not only to dramatically improve their own networks, but also to offer these services at a significantly lower price point (usually around $70) without the usage caps that have been popping up in less competitive markets. Gigabit municipal broadband deployments often have the same impact, as we've seen in locations like Wilson, North Carolina, and Chattanooga, Tennessee.

It's true that most consumers don't take gigabit speeds when offered; usually because 25 to 50 Mbps remains the sweet spot and can often be had for significantly less. But ISPs consistently note that even advertising gigabit speeds causes consumers -- most of whom actually have no damn idea what speed they subscribe to -- to call in and see if it's time for an upgrade, driving overall adoption. Another study has found that prices of all service tiers tend to drop when gigabit connectivity is introduced into a market.

Yes, gigabit speeds aren't really necessary for most people, but that's missing the point. Especially when you're trying to build the networks and competitive landscape of tomorrow.

As such, Vox's claim that "nobody is sure" what gigabit networks are actually good for seems a bit short-sighted. Worse, perhaps, the article's core narrative is only fueled largely by a single analyst at the Information Technology & Innovation Foundation -- the same think tank that first proposed SOPA. Said think tanker manages to contradict himself in pretty short order, lamenting the lack of the "killer app," then immediately admitting gigabit network deployment could help the development of said apps in the future:

Of course, there’s another possibility: Maybe people just don’t have any use for so much bandwidth. That’s the view of Doug Brake, of Information Technology & Innovation Foundation, a think tank funded by foundation and government grants as well as donations from firms such as Google and IBM. "There are no apps today and no apps on the horizon,” he said, though he acknowledged that development of new applications would probably proceed more quickly with far broader gigabit coverage.

Vox notes that the ITIF takes money from "Google and IBM," but forgets to inform the reader they also take money from the same incumbent broadband ISPs threatened by the rise in gigabit competition. The ITIF is the same organization that recently tried to argue that Comcast's plan to charge users more money to protect their own privacy was "pro consumer," and that the failed Comcast merger would have been fantastic for consumers. As such, perhaps the ITIF is not the best cornerstone for your argument that gigabit networks are useless.

Meanwhile, this narrative that gigabit networks aren't important because we're not yet using their full potential runs deeply through the entire piece, the author trying to use Netflix as an example of why, apparently, we shouldn't aim high when building new broadband infrastructure:

Right now, one of the most bandwidth-hungry applications out there is Netflix. Netflix recommends users have at least 3 Mbps of bandwidth for standard-definition video — meaning that you could stream about 300 Netflix videos simultaneously on a 1 gigabit connection. If you want Netflix’s highest-quality streaming, called Ultra HD, that requires 25 Mbps. So a gigabit connection would allow you to stream 40 Ultra HD videos at a time.

But again, who builds technology for the future constrained solely by the needs of today? Are gigabit networks over-hyped? Yes. The fascination with extreme speeds tends to help some ISPs obfuscate the reality that the lion's share of their tiers are expensive (or capped). But Vox seems to have been sold on the idea that we don't really need these additional gigabit networks because the incremental improvements being deployed by cable and phone companies are "good enough."

But most of us realize that's not true: while cable companies are busy using relatively inexpensive DOCSIS 3.1 cable upgrades to deliver gigabit speeds Vox implies nobody wants, most phone companies are hanging up on unwanted DSL customers to focus on capped and metered wireless broadband that isn't truly a replacement for fixed-line service. The end result is going to be a stronger cable monopoly (and in many areas less competition) than ever before, and a market that might offer gigabit speeds eventually, but at exorbitant prices and with utterly unnecessary usage caps.

No, you don't need gigabit speeds today. But gigabit networks from the likes of Google Fiber and municipal broadband providers are delivering the kind of competition folks at incumbent ISPs (and by loyal proxy think tanks like the ITIF) are pretty clearly terrified of. And by helping them keep the bar set at ankle height, Vox is only perpetuating the kind of thinking that saddled us with the current broadband duopoly that so many of us "enjoy" in the first place.

Filed Under: broadband, competition, gigabit fiber

Theater Association Boss Reminds Theater Owners, Netflix To Stay In Their Own Lanes

from the don't-gingerly-nibble-on-the-hand-that-feeds-us dept

Guess who's bringing back "broken windows" policing!

The National Association of Theatre Owners (NATO) is sounding the alarm over a recent deal between Netflix and iPic, in which the luxury-theater chain will screen 10 movies simultaneously with their release on the streaming service.

You would think that a theater owners' association would represent theater owners first, rather than the studios that have long battled any sort of innovation/disruption in its windowed release schedules. Of course, theaters are first on the food chain traditionally, so that probably explains the NATO head's statement, which comes across as a strange mixture of veiled threat and Stockholm Syndrome.

In a statement, NATO chief John Fithian warned that while iPic was free to make its own decisions, “We all should tread lightly and be mindful that over the years, the film industry’s success is a direct result of a highly successful collaboration between film makers, distributors and exhibitors.”

Yes, let's tread lightly and be mindful that creating artificial scarcity is a fool's errand, but creating an experience that people will leave the house for is something that can't be delivered over an internet connection. This defense of the way things have always been done -- phrased the way it is here -- sounds like NATO distancing itself from iPic, the way one distances themselves from close relatives with multiple indecent exposure arrests.

NATO head Fithian goes on to claim that day-and-date releases won't work because they've never worked in the past.

“Simultaneous release, in practice, has reduced both theatrical and home revenues when it has been tried,” Fithian said in a statement. “Just as Netflix and its customers put a value on exclusivity, theater owners and their customers do too.”

Conveniently ignored is the fact that past day-and-date releases have never been fully embraced by studios and, as a result, have been handled ineptly and cluelessly. These have been done on an extremely limited basis and almost always with an exorbitant price tag attached.

There's probably a tad more defensiveness than usual in NATO's statement. Now that there's a group containing respected directors and producers backing a day-and-date release startup, the "threat" is more substantial than a few streaming providers whose libraries have been stripped to nearly nothing by major studios over the last few years.

Theaters aren't going to go away completely. Under-performers who can't offer an experience worth leaving the house for will fall by the wayside, but day-and-date releases will only slightly hasten their demise. If there were more experimentation, everyone involved might find new ways to make money. But as long as people like Fithian are in charge, nothing will move forward. It a small roll out of Netflix films to theaters -- solely for the purpose of allowing the streaming company to get some entries in the Oscar race -- results in these sorts of statements, any chance of studios and theaters moving on from traditional windowed releases is still a long way off.

Filed Under: competition, day and date, movies, streaming, theaters
Companies: ipic, nato, netflix

Judge Posner Smacks Around Cabbies For Thinking That Cities Allowing Uber Violates Their 'Property Rights'

from the that's-not-how-this-works dept

It's no secret that cab companies and many cab drivers don't much like Uber and Lyft. Competition is tough. And cabs in most cities have survived thanks to artificial limits on competition through medallions and the like. This has always been a stupid, and frequently corrupt, system. For years, before Uber and Lyft came along, people talked about the ridiculousness of artificially limiting competition in this manner, but it was only once those companies came along that the true ridiculousness was made clear. While some forward looking cabbies have embraced these and similar systems, others have been fighting the new reality, often in fairly ridiculous ways. In Milwaukee and Chicago, cab companies sued those cities, arguing that allowing this type of competition amounted to a Fifth Amendment violation, in the form of "taking private property for public use without just compensation." What private property, you might ask? Well, according to the cab companies, the artificially restricted competition is their property. No, really.

The district courts didn't buy it, and now that it's moved up to the 7th Circuit appeals court, Judge Richard Posner isn't buying it either. In the two decisions -- Joe Sanfelipo Cabs v. City of Milwaukee and Illinois Transportation Trade Association v. Chicago, Posner makes quick work of explaining to these folks that the government restricting competition from entering your market isn't a property right that those who benefit from it get to make claims over (though he does, unfortunately, say that patents are a form of property in dismissing the "absurd" claims from the cabbies):

The plaintiffs’ contention that the increased number of permits has taken property away from the plaintiffs without compensation, in violation of the constitutional protection of property, borders on the absurd. Property can take a variety of forms, some of them intangible, such as patents. But a taxi permit confers only a right to operate a taxicab (a right which, in Milwaukee, may be sold). It does not create a right to be an oligopolist, and thus confers no right to exclude others from operating taxis.

Posner notes that if there had been an explicit promise not to change regulations, that might have been one thing, but there was not. Similarly, he admits that the taxi permits are property, but that's unrelated to the issuing of more permits:

The taxi permits issued by the Milwaukee city government are property, but have not been “taken,” as they do not confer on the holders a property right in, amounting to control over, all transportation by taxis and taxi substitutes (such as Uber) in Milwaukee.

And then he basically says "welcome to a market economy, cabbies":

Undoubtedly by freeing up entry into the taxi business the new ordinance will reduce the revenues of individual taxicab companies; that is simply the normal consequence of replacing a cartelized with a competitive market. But the plaintiffs exaggerate when they predict ruination for themselves. Buses and subways and livery services and other taxi substitutes have not destroyed the taxi business; nor has Uber or Lyft or the private automobile or for that matter the bicycle. Taxicabs will not go the way of the horse and buggy— at least for some time.

That's from the case against Milwaukee. The Chicago ruling is pretty similar:

All seven of the plaintiffs’ claims are weak. The first is that allowing the TNPs into the taxi and livery markets has taken away the plaintiffs’ property for a public use without compensating them. A variant of such a claim would have merit had the City confiscated taxi medallions, which are the licenses that authorize the use of an automobile as a taxi. Confiscation of the medallions would amount to confiscation of the taxis: no medallion, no right to own a taxi, ... though the company might be able to convert the vehicle to another use. Anyway the City is not confiscating any taxi medallions; it is merely exposing the taxicab companies to new competition—competition from Uber and the other TNPs.

“Property” does not include a right to be free from competition. A license to operate a coffee shop doesn’t authorize the licensee to enjoin a tea shop from opening. When property consists of a license to operate in a market in a particular way, it does not carry with it a right to be free from competition in that market.

Posner doubles down on just how dumb this argument is by the cab companies:

Taxi medallions authorize the owners to own and operate taxis, not to exclude competing transportation services. The plaintiffs in this case cannot exclude competition from buses or trains or bicycles or liveries or chartered sightseeing vehicles or jitney buses or walking; indeed they cannot exclude competition from taxicab newcomers, for the City has reserved the right (which the plaintiffs don’t challenge) to issue additional tax medallions. Why then should the plaintiffs be allowed to exclude competition from Uber? To this question they offer no answer.

All that the City gives taxi‐medallion owners is the right to operate taxicabs in Chicago.... That isn’t a right to exclude competitive providers of transportation.

Perhaps more importantly, though, Posner also shoots down the argument that it's unfair that Uber gets to operate under a different regulatory regime:

The plaintiffs argue that the City has discriminated against them by failing to subject Uber and the other TNPs to the same rules about licensing and fares (remember that taxi fares are set by the City) that the taxi ordinance subjects the plaintiffs to. That is an anticompetitive argument. Its premise is that every new entrant into a market should be forced to comply with every regulation applicable to incumbents in the market with whom the new entrant will be competing.

Here’s an analogy: Most cities and towns require dogs but not cats to be licensed. There are differences between the animals. Dogs on average are bigger, stronger, and more aggressive than cats, are feared by more people, can give people serious bites, and make a lot of noise outdoors, barking and howling. Feral cats generally are innocuous, and many pet cats are confined indoors. Dog owners, other than those who own cats as well, would like cats to have to be licensed, but do not argue that the failure of government to require that the “competing” animal be licensed deprives the dog owners of a constitutionally protected property right, or alternatively that it subjects them to unconstitutional discrimination. The plaintiffs in the present case have no stronger argument for requiring that Uber and the other TNPs be subjected to the same licensure scheme as the taxi owners. Just as some people prefer cats to dogs, some people prefer Uber to Yellow Cab, Flash Cab, Checker Cab, et al. They prefer one business model to another. The City wants to encourage this competition, rather than stifle it as urged by the plaintiffs, who are taxi owners.

And, later:

There are enough differences between taxi service and TNP service to justify different regulatory schemes, and the existence of such justification dissolves the plaintiffs’ equal protection claim. Different products or services do not as a matter of constitutional law, and indeed of common sense, always require identical regulatory rules.... If all consumers thought the services were identical and that there was therefore no advantage to having a choice between them, TNPs could never have gotten established in Chicago.

There are all sorts of arguments people can make about whether or not companies like Uber and Lyft are good (and I'm a fan of them), but arguing that they're "taking property" away from cab medallion holders is not a legitimate argument.

Filed Under: car hailing, chicago, competition, medallions, milwaukee, property, property rights, richard posner, ride sharing, taxis

MPAA Applauds Derailment of FCC Cable Box Competition Plan Because, Uh, Jobs!

from the overlords-of-nonsense dept

Last week we noted how the FCC had to scrap its plan to bring competition to the cable box after an unprecedented PR and disinformation campaign by the cable and entertainment industries. In short, using consultants, think tanks, payrolled politicians, a soundwall of misleading editorials and even the US Copyright Office, the cable industry was able to convince many in the press, public and even at the FCC that the plan would have ripped the planet off its very orbital access, violated copyright, eroded consumer privacy, and even harmed diversity programming.

In reality, the cable sector's opposition was about two things: $21 billion in captive box rental revenues, and a fear of a loss of control. Being an expert in the latter, the MPAA of course was quick to issue a statement applauding the "delay" in the FCC's proceeding:

"The MPAA is pleased that the FCC is taking more time, and we hope they use it to ensure any set-top box proposal remains consistent with copyright policy and avoids harming creators,” said MPAA Chairman and CEO Senator Chris Dodd, who emphasized that his organization, along with “virtually the entire creative community” is “standing up for copyright and the rights of creators."

Except again, the cable box plan has nothing to do with copyright. The rules would have simply required cable companies pass on their existing programming (and all DRM) to third party hardware vendors, resulting in more competition in cable boxes and ultimately more open and cheaper boxes. Because that might just give consumers a little more control, the MPAA joined the hissy fit parade of inaccurate implausibilities. And to justify trying to keep the cable box locked down and shitty, the best the MPAA can apparently do is reiterate some nonsensical talking points about jobs:

"We support the FCC’s goal of promoting set-top box competition, but we continue to urge the Commission to forge a path that does not undermine the creative economy,” Dodd continued. “Copyright employs more than 5.5 million U.S. workers and generates over $1 trillion in economic value – incentivizing innovation and investment in creative works enjoyed by millions around the world."

Except the FCC's proposal wouldn't hurt jobs in the slightest. Under the FCC's plan, customers still would pay for cable, they'd just have more flexibility in how that programming is consumed. And if anything, you'd see more jobs as the cable hardware itself was opened to multiple hardware competitors and streaming vendors looking to make headway in the space. But just like their previous whining session on this subject, the MPAA can't just admit it's terrified of evolution and consumer empowerment, so it apparently has to conflate "copyright" with a loss of control.

Meanwhile, while many media outlets continue to insist this plan is simply on hold, there's really only two likely outcomes moving forward thanks to cable lobbyists, the US Copyright Office, and folks like the MPAA: either the plan gets scrapped entirely, or the end result winds up being so watered down as to be utterly useless.

Filed Under: competition, copyright, fcc, set top boxes, stb
Companies: mpaa

A Massive Cable Industry Disinformation Effort Just Crushed The FCC's Plan For Cable Box Competition

from the thanks-for-'helping' dept

Back in February the FCC proposed a new plan to bring competition to the cable box. Under the plan, cable providers would need to provide their programming to third party hardware vendors without the need for a CableCARD. The goal? Bring some competition to bear on a stagnant, captive market, resulting in cheaper, more open, and higher quality cable boxes. But because the plan would demolish $21 billion in rental fees while eroding sector control, the cable industry launched one of the most unprecedented lobbying and disinformation efforts I've ever seen in 16 years of covering the sector.

Politicians loyal to the cable industry wrote letters lambasting the FCC for "jeopardizing the incredible evolution of video distribution services," falsely comparing the idea to Popcorn Time. A flood of editorials magically began appearing in newspapers country wide claiming the FCC's plan would boost piracy, hurt consumer privacy, and even "steal the future." The cable sector even trotted out Jesse Jackson, who claimed in a horribly misleading op-ed that increased cable box competition was akin to the "snarling dogs, water hoses and church bombings" of America's racist history. Seriously.

Of course given our news outlets don't think it's particularly important to highlight financial conflicts of interest, most of these editorials were presented as purely objective insight into the FCC's proposal. Even the US Copyright Office joined the festivities, falsely claiming the FCC's plan would "interfere with copyright owners' rights to license their works as provided by copyright law" despite IP experts stating it would do nothing of the sort.

And this cavalcade of lobbying, disinformation, and hand-wringing worked absolute wonders.

Apparently informed by all the wrong people, FCC Commissioners Jessica Rosenworcel and Mignon Clyburn began waffling after voting yes on the original proposal. That forced FCC boss Tom Wheeler to scrap his original plan, releasing a revamped, weaker app-based alternative proposal based largely on the cable industry's recommendations. Despite this new plan effectively being their idea, cable companies like Comcast still complained, falsely claiming the FCC's plan would "stop the apps revolution dead in its tracks by imposing an overly complicated government licensing regime and heavy-handed regulation in a fast-moving technological space."

Yes, because when I think about "fast moving" innovation, the dusty old cable box with its circa-1998 GUI is usually the first thing to come to mind.

As a result of this collective feigned hysteria, when the FCC's latest plan for cable box competition went up for a vote yesterday morning, the agency found it no longer had the votes to move forward. Wheeler and Commissioners Mignon Clyburn and Jessica Rosenworcel issued a joint statement that goes out of its way to avoid noting that Wheeler lost his fellow commissioners' support:

"We have made tremendous progress—and we share the goal of creating a more innovative and inexpensive market for these consumer devices," Chairman Tom Wheeler and fellow Democrats Mignon Clyburn and Jessica Rosenworcel said today in a joint statement. "We are still working to resolve the remaining technical and legal issues and we are committed to unlocking the set-top box for consumers across this country."

By "technical and legal issues" the FCC means it no longer had the votes to move forward after Commissioners buckled under the pressure of a tidal wave of bullshit. And while the FCC says the plan will "remain under consideration," it's entirely possible that the entire effort just died a quiet death in committee. That's not the end of the world given the cable industry (and the cable box) will likely implode on its own in the face of streaming competitors, and it might make more sense for the FCC to use its regulatory calories on things like broadband competition and usage caps anyway.

That said, the cable industry's ability to manipulate the public, press, and regulators in this fashion isn't our nation's finest hour. And while it's possible the FCC could revisit the vote, the end product may be so watered down as to be useless for consumers. Believing they've done yeoman's work in defending the cable industry's walled garden empires, some politicians took to applauding Rosenworcel's expected decision to "stand up for content creators" in voting down the FCC plan:Comcast also was quick to applaud the FCC for heeding the call of the sound wall of "respected third parties" opposed to the FCC's plan:

"The FCC made the right decision this morning to delay its vote on the set-top box item. It is now critical that the Commission heed the bipartisan calls of dozens of Members of Congress and respected third parties and release its new proposal and associated rules to allow the public to provide comment...Based on the limited information available from the Chairman’s Fact Sheet and op-ed, a broad range of content creators, civil rights organizations, labor unions, and others have concluded that the Chairman’s new approach does not solve the copyright, privacy, innovation and other significant concerns that were implicated in his discredited original proposal – and suffers from the same legal infirmities."

Right, but again, that's bullshit. Most of the opponents listed by Comcast were paid by the cable, broadcast and entertainment industries in one form or another to falsely malign the plan. The plan doesn't hurt copyright, it doesn't hurt privacy, and it certainly doesn't harm racial diversity. What it would harm is the cable and entertainment industry's monopoly over cable hardware, and the $21 billion in captive revenues it enjoys annually. It would also most certainly harm the walled garden that consistently protects the cable sector from pesky things like consumer choice.

While Wheeler today proclaimed that the delayed vote was "simply a matter of running out of time," it was notably more than that. It was another disgusting example of how the US Copyright Office frequently fights against the best interest of the public, regulators aren't getting sound advice, media outlets are thrilled to regurgitate pay-to-play industry garbage as objective insight, and Congress remains happy and willing to prioritize campaign contributions over consumer welfare. Wonderful job, everybody. Kudos all around.

Filed Under: competition, copyright, copyright office, disinformation, fcc, set top boxes, tom wheeler

Chicago Cubs: With Success Comes Trademark Lawsuit Against Street Vendors

from the cubby-blues dept

As a lifelong Cubs fan with a resume that includes going to my first game at Wrigley when I was four months old and living in Wrigleyville for several years, I can at the very least claim some expertise on the culture around the team and the stadium. For those that have not been lucky enough to visit baseball's Mecca, the walk about up to the park consists of bar-laden streets on either Addison or Clark, with the sidewalks spilling over with fans, bar-patrons, and street vendors. Those street vendors offer innumerable wares, including t-shirts, memorabillia, and food. It's part of the experience.

An experience suddenly under fire by the team and Major League Baseball, which have jointly filed a federal lawsuit against some forty street vendors for trademark and counterfeit violations.

The Cubs and Major League Baseball filed a lawsuit in federal court Thursday against a vendors hawking allegedly counterfeit and trademark-infringing merchandise.

"Defendants are a group of vendors who are deliberately free riding on the success of the Cubs and trading — without a license or permission — on the substantial goodwill associated with the Cubs' trademarks and trade dress," the team and the league claimed in the lawsuit, alleging the vendors "flooded Wrigleyville and the Internet with all manner of unlicensed products."

They're not wrong, of course. These vendors are everywhere. As I said, it's part of the experience. And it got to be that way because it's gone on forever. That the team is suddenly taking this action on the eve of a playoff run is within its rights, certainly, but doesn't otherwise make a great deal of sense. Were this the problem the filing appears to claim it is, it should have been a problem during last year's playoff run, or in 2007 and 2008 when the team also made postseason appearances.

While much is made in the Tribune post about how the internet has exacerbated this problem, the vendors targeted here sell solely on the street around the ballpark. Something they have surely done for years now. The team must surely have considered the question of whether forty street vendors posed a true threat to its trademark rights and the insane merchandise revenue it collects from its own sales, and whether or not that threat was of greater importance than an ambiance and culture that has always been central to the team's commercial success.

The Cubs clearly think the threat is real, but it's tough to see how that makes sense. Other avenues besides a federal lawsuit could have been pursued in order to protect the team's trademark rights, but the Cubs didn't go that route. Instead, street vendors will be brought into court, even as the team makes its run. The friendly confines feel a little less friendly all of a sudden.

Filed Under: baseball, competition, counterfeit goods, trademark, vendors
Companies: chicago cubs

Law Professor Mark Lemley: Hollywood Is Simply Wrong About FCC's Set Top Box Plan

from the not-a-copyright-issue dept

We've been discussing for a while now about how the MPAA, with the help of the Copyright Office, has been propping up the complete myth that the FCC's plan to create more competition in the cable set top box space involves violating the copyrights of studios. It's a complete myth. The cable industry has been leading the charge here, mainly because it makes billions of dollars by charging people to "rent" its crappy boxes. But it found a strong ally in copyright maximalists who have repeatedly misrepresented the proposal. As we noted, the Copyright Office put out a report that flat out lied about what the FCC's proposal entailed and about how copyright itself works (arguing that contracts between two third parties could somehow eliminate the fair use rights of private citizens). And, incredibly, the basic argument being put forth by copyright maximalists, if taken to its logical conclusion, would mean that VCRs and DVRs are illegal too.

That's not how copyright law actually works -- but the message has caught on, and the FCC has already been forced to weaken its proposal -- and the industry is still bitching about it.

Thankfully, we're finally starting to see some copyright experts speak up about just how wrong Hollywood and the Copyright Office are on this. Mark Lemley, by far the most cited intellectual property professor (who is also a practicing lawyer), has written up a piece for the Hill that rips to shreds the idea that the FCC's plan somehow would implicate Hollywood's copyrights. As he notes, they're totally overstating what copyright allows:

The MPAA’s argument that studios have the right to control the device on which you view your content reflects a fundamental misunderstanding of copyright law. Copyright gives its owner the right to control the making of copies and public performances of a work. But it does not give them control over any use of a work. That’s no accident. Once the copyright owner has been paid once for a particular copy, its control over that copy ends. That’s why I can lend a book to friends, or sell my used record collection outright.

True, there are some things I can ‘t do even with a copy of a movie or song I own. I can’t upload it on a file-sharing site, for instance, and I can’t play it on the radio. But that’s because doing those things either makes a new copy or makes a new, public performance of the work.

The studios have already been paid for the movies shown on a cable or satellite service. Indeed, they’ve been paid specifically for the right to publicly perform the work by transmitting it to my (and everyone else’s) home.

And here, copyright law says something very important to copyright owners: that’s all you get. Once the cable companies have paid the MPAA for the right to deliver their movie into my home, the MPAA loses control over how I choose to watch their movie in the privacy of my own home. I can record it on a DVR and watch it whenever I want. I can watch it on a big-screen TV or a small one, with the sound on or off, in one sitting or many, while fast-forwarding through parts I don’t like or rewinding to rewatch parts I do. I can watch it again and again. Most important, I can watch it on any device I want, including my computer, my iPad, or my phone.

And, while the MPAA and its supporters keep calling the FCC proposal a "compulsory license," Lemley points out that it's not a compulsory license that lets you record a TV program to your VCR or DVR, and neither is this:

That isn’t a “compulsory license” of copyrights; it’s a limit on the scope of those rights. That limit exists even if copyright owners try to declare that it doesn’t. This is the law. It has always been the law. Every effort by copyright owners to control how I watch a show in my own home has ended in failure.

Unfortunately, this blatantly false attack by Hollywood and the Copyright Office on the FCC's plan has been effective. It seems unlikely that the plan will go through, and what's troubling about it is that it's all based on flat-out falsehoods by Hollywood, the Copyright Office and its supporters.

Filed Under: competition, copyright, copyright office, fcc, mark lemley, set top box, set top boxes
Companies: mpaa

Lenovo Accused Of Locking Linux Out Of Certain Laptops At Microsoft's Request

from the that-would-be-dumb dept

A thread on Reddit is getting a fair bit of attention today, claiming that Lenovo has set up some of its Yoga laptops to block anyone from installing Linux -- and a Lenovo representative then pointed the finger at Microsoft, saying that it's part of what Lenovo was required to do as part of the Microsoft "Signature Edition" Windows 10 program, though there are reasons to doubt this is true. What is clearly true is that there's a problem installing Linux on a bunch of Lenovo machines. Here's a giant thread on the problems (which apparently disappeared for a while, but is back as I write this). And here's another. And here's another. Some of these threads go back many months. But the issue that has suddenly made it big news is a comment supposedly from a Lenovo "product expert" that the company is forced to block it as a part of the Signature Edition program: If you haven't heard of the Windows "Signature Edition," it's a program from Microsoft to offer a "clean" (read: no annoying bloatware) version of Windows. Think of it like a Google Nexus phone with a clean Android install, as compared to one from a carrier or handset maker stuffed with annoying bloatware you'll never use. The Signature Edition PCs have received some fairly glowing reviews -- and many (ironically given this story today) of the news stories about the Signature Edition program use the Lenovo Superfish malware fiasco as a reason for why people should look at a Signature Edition computer if they want to run Windows.

So, yeah, based on this storyline so far, you have Microsoft making a clean install of its operating system without bloatware (good idea!), but then being accused of making Lenovo design its BIOS to block the installation of Linux (bad idea!). There is at least some reasonable skepticism that the problem here is really because of the Microsoft Signature Edition program. First of all, Signature Edition computers are supposed to only be available directly via Microsoft's stores -- and the laptop that kicked this off was purchased at Best Buy. Also it wasn't labeled as a Signature Edition PC. And it's certainly not unheard of for low level employees in forums to post incorrect information -- and there is even some question as to whether or not the "Lenovo Product Expert" in the forum post above is even a Lenovo employee or a third-party contractor anyway.

So whether Microsoft is truly to blame here is still an open question. At the very least, it does seem like Lenovo has some questions to answer -- and one hopes that the company will be more forthright and honest than it was back during the Superfish episode when it basically lied through its teeth until it couldn't lie any more.

Filed Under: bios, blocked, competition, linux, locked, secure boot, signature edition, windows
Companies: lenovo, microsoft