Platform Access

In Tech-Driven Economy, FCC Needs to Step Up

By: Mike Montgomery

It’s clear that technology is a key driver of prosperity in today’s modernizing economy. Trillions of dollars in economic activity flow through the networks which make up the internet, making America’s digital economy the envy of the world. Networks are redefining the services people consume and the income people derive. For example, according to a Pew survey, 72 percent of Americans have used a sharing or on-demand service.

That’s why the Federal Communications Commission has never been more important. From last year’s Net Neutrality rules to current proceedings about set-top boxes, internet privacy and business services, FCC rules are shaping the future of the internet – and the broader economy that it fuels. Whether you agree or disagree with these regulations, everyone agrees they will have a profound impact.

That is why it’s so disconcerting to see the FCC disconnected from the economic impact of its decisions. In a report he published in July, the FCC’s very own former chief economist, Gerald Faulhaber, Ph.D., raised alarms about the agency’s dangerous turn away from economic analysis in its decision making.

In the report, Dr. Faulhaber asks: Why do the U.S. Department of Labor, the U.S. Environmental Protection Agency and the Consumer Financial Protection Bureau all conduct stringent cost-benefit analyses on their decisions while the FCC does not?

The FCC has simply become too important to the economy for it to fail to explore the economic impact of its decisions. For example, numerous economists warned the FCC that its decision to impose so-called Title II regulations on internet service providers, which treats today’s advanced broadband access in the same way as telephone services from generations ago, will have a negative impact on investment and innovation while not solving the issue we all want addressed: how to ensure that internet traffic is treated fairly across networks, regardless of where it comes from. Yet, when issuing its Open Internet Order, the FCC conducted no economic analysis of the impact its proposed rules would have on consumers, innovation or investment.

How is that possible?

The problems continue. The FCC is currently facing a major backlash from Congress, Hollywood and many innovators for its proposed new technology standards for set-top boxes.

Read the full article here.

Advertising sucks, but TV would be worse without it

By: Mike Montgomery

Given the opportunity, many of us choose to organize our TV watching to minimize ads as much as possible. We record, fast forward or pay subscription fees to services like Netflix and HBO to watch shows ad-free. But here’s the dirty little secret of television — advertising makes it go and keeps it affordable for the viewing public.

Which is why the Federal Communication Commission’s attempt to “open” the cable set-top box to competitors has the potential to be a giant disaster for consumers. Let me explain. Although advertising is becoming increasingly easy to skip, it still funds an enormous number of programs. Last year advertisers spent $79 billion on TV. That’s down slightly from 2014 but still makes it the largest slice of advertising spending in media beating out digital and (obviously) print.

Advertising makes up as much as 50 percent of revenue for programmers and 8.5 percent of revenues for the so-called multi-channel video programming distributors. The money flowing from these ads keeps the TV ecosystem going. Networks have money to invest in and pay the creators who make TV shows. Prestige shows like “Mad Men” and “Empire” are financed by ads. But it also allows MVPDs to keep subscription prices relatively low by providing another source of revenue — one that doesn’t come out of consumers’ pockets. That helps subsidize pay channels, which is why standalone HBO costs $14.99 per month but you can get HBO through your cable provider for $10 per month.

The FCC’s proposal to open the set-top box market to third-party developers would destroy this entire system. The MVPDs would be required to provide their programming streams to anyone who wanted to use them. These third-party box makers wouldn’t be required to follow the advertising deals that MVPDs have carefully contracted. They could alter or delete the original ads or pile on more ads and keep all that new revenue for themselves, driving down the value of the “original” ads and sucking up revenue that would ordinarily go to fund new programs. Chairman Tom Wheeler has claimed the new rules won’t allow this but experts recognize that the “rules won’t prohibit extra ads around TV channels.”

Read the full article here.

Why Every Entrepreneur Should Care About Nintendo’s Pokémon GO

By: Mike Montgomery

Pokémon GO has changed the game.

By that, I don’t just mean the world of video games. There’s no question that the mobile game, which at last count was being f you haven’t played, the game works with a GPS map that shows you where Pokémon are in the real world (you can tell a Pokémon is nearby via a virtual rustling of leaves). When they’re close enough, they appear as augmented reality on your phone and you try to catch them. The result is entertaining and adorable.

Although augmented reality has been around for years, this is by far the best use of the technology. Video game designers all over the world are probably scrambling to include augmented reality in whatever project they are currently working on.

But the impact of Pokémon GO is bigger than that. It’s even bigger than Nintendo’s 100% stock climb over the past few weeks. The game is also creating amazing opportunities for brick-and-mortar entrepreneurs.

Players don’t only try to catch Pokémon in the game. They also congregate at Pokéstops (where they can collect Pokéballs and other bonuses) and gyms (where they can battle other teams). Pokéstops and gyms are locations in the real world. Bookstores, churches, restaurants and murals that happen to be gyms or Pokéstops are suddenly being inundated by Pokémon GO players.

Businesses didn’t have a chance to sign up for this. The maps of key locations come from a previous game from Niantic (the studio behind Pokémon GO) called Ingress.

But they can take advantage of the business. For example, businesses can put out lures, which temporarily increase the number of Pokémon around that business. Inc calculated that lures only cost $1.19 per hour and they can drastically increase foot traffic. A friend who was playing Pokémon GO with her son noticed a lure at a local candy shop. Her son caught a bunch of Pokémon and she ended up buying him some candy.

Read the full article here.

Congress must resolve net neutrality once and for all

By: Mike Montgomery

When the U.S. Court of Appeals backed the Federal Communication Commission’s (FCC) so-called netneutrality rules this week, PC World nailed the problem with its headline: “The decision will be challenged, and the case could drag on for years.”

Regardless of how the court ruled, net neutrality was destined to play out in courtrooms for the next decade as policymakers, technologists and consumers grapple with how to ensure open access to the internet while not crushing innovation and discouraging investment that created the Web in the first place.

Today the battle is largely between ISPs and edge providers. But as we’ve seen with buyers’ remorse statements from companies such as Netflix and Cloudflare, as well as EFF’s John Perry Barlow, in the future these legal battles may become more muddled as tech titans realize that they could be captured by the rules designed to keep the internet accessible to all.

These battles would test the patience of Bill Murray’s character in “Groundhog Day,” which is why there is only one entity that can settle the issue once and for all: Congress. Critics of the FCC contend the agency overstepped its bounds and applied 20th Century rules to innovative and rapidly changing technologies. At the same time, everyone wants to ensure that the internet continues to remain open and that we don’t create fast lanes, ban blocking and enhance transparency.

Only Congress can solve this problem by rewriting the laws that the FCC uses to base its rules. However well meaning the FCC was with its approach, two obvious negatives exist. The first is that the uncertainty over a decade-long legal fight leads tech companies – both those that supply the pipes and those who rely upon them – to play wait and see on new investments or innovations. That’s bad news for consumers and really bad news for an economy that needs a tech jolt.

The second is that we risk accepting that the Web deserves to be treated no differently than our water or electrical utilities – plodding and innovation-free, devoid of competition. That harms consumers and innovators alike due to a lack competition, choice and investment.

Read the full article here.

Periscope and Facebook shine a bright light on democracy

By: Mike Montgomery

Justice Louis Brandeis said, “sunshine is said to be the best of disinfectants.” A ray of digital sunshine emerged last week as a new kind of disinfectant, one that may make sure our nation’s elected representatives keep cameras on.

Last Wednesday, a group of Democrats staged a sit-in on the floor of the House of Representatives to draw attention to the gun responsibility debate raging across the country in the wake of the Orlando shootings. Republicans blocked a piece of legislation that would have made it illegal for people on the no-fly list to purchase guns. In protest, Democrats vowed to “occupy” the floor until Republicans allowed a vote on the bill.

In retaliation, the Republican leadership sent the house into recess, which caused C-SPAN’s cameras to go dark. The public window to the Hill is only open when the House is actually in session. Without cameras to watch, Republicans assumed they were taking the wind out of the Democrats’ protest sails.

But a few tech-savvy staffers and representatives quickly realized there was a way to keep the protest on the air. Rep. Scott Peters, D-Calif., was the first to take out his phone and start broadcasting the protest on Twitter using Periscope. C-SPAN soon started broadcasting the feed, eventually switching back and forth between Peters’s feed and Rep. Beto O’Rourke’s Facebook Live feed.

Needless to say, this was an historic use of technology driving government transparency, one that will mark a real turning point in how we see our elected officials in action. Both Periscope and Facebook Live, per Politico, have been trying to become bigger parts of this election year by forming debate-night partnerships. But Wednesday, both sites showed just how powerful livestreaming can be when users can work around traditional media blackouts without tripping the piracy alarm like Periscope did when it burst onto the scene during the the Mayweather-Pacquiao boxing match.

Read the full article here.

The Dark Web Is Still A Huge, Difficult Problem

By: Tim Sparapani

If you want to buy someone’s private data, it’s disturbingly easy to do. It’s all there for sale on the dark web, a completely anonymous twin of the web most of us use daily.

The dark web (or deep web, if you prefer) is “dark” because the sites on it cannot be indexed by a web crawling browser, such as Google. That makes it hard for ordinary people, and law enforcement, to find specific websites. This anonymity has the advantage of creating a zone of free speech where individuals can communicate, think and explore ideas without government interference.

But it also creates a haven for illicit activity, including the buying and selling of drugs, child pornography and individuals’ private information such as social security numbers, health records and passwords.

People who don’t closely follow privacy issues probably associate the dark web with Silk Road, the infamous illegal drug marketplace that did millions in business before the FBI managed to shut the site down in 2013.

But the death of Silk Road didn’t put an end to the dark web. This shady technological playground is still going strong, and many sites that thrive on the dark web are a daily threat to privacy and the economy.

Over the past three months, the website LeakedSource has uncovered huge caches of account data being sold on the dark web from eight websites including Twitter, MySpace and LinkedIn. In some cases, those accounts came from privacy breaches at the web companies. In other cases, data thieves were able to steal information directly from users.

The way the account information was stolen matters less than the fact that so much of it is for sale. Need a Netflix password? They’re available for pennies on the dark web. You can also get stolen passwords for Hulu, HBO Go and Spotify.

The dark web has also become a haven for child pornography. According to an article on Wired, over 80% of dark web searches are related to pedophilia.

Read the full article here.

The Disappointing Strategy Behind The Losing Battle To Force-Feed Set-Top Boxes To Consumers

By: Mike Montgomery

Despite the short window for public comment now being closed on the FCC’s unnecessary and harmful set-top box (STB) proceeding, efforts to rationalize and mislead the public continue in earnest. Yesterday, and likely in consultation with the FCC, a group of well-known individuals was assembled to push back on the massive group of detractors to the proposal.

We’re not talking about a few, scattered voices who dislike the FCC’s anti-innovation mandate. We’re talking about tech coalitions, business entities which would undoubtedly benefit from the proposed scheme, labor unions, broadcasters, content creators and an enormous bipartisan group of members of Congress (180 members!) that is seemingly growing by the day.

The best way for allies of the FCC’s ill-fated scheme to chip away at the groundswell of opposition that is rallying against the proposal is, apparently, to continue spewing erroneous facts and take personal potshots at members of Congress. It’s a strategy. But it’s not a mature strategy.

These proponents continue to bang away at the supposed size of the market, saying it’s a $20 billion dollar a year industry. They rely upon a Moore’s Law-ish theory that the price of consumer electronics falls over time and therefore the price of boxes should fall over time, but haven’t. These numbers and theories were pulled out of thin air. They fail to account for the innovation that has occurred. A few years ago, one couldn’t watch HD, couldn’t record a show and watch it later, and couldn’t watch video on demand. Today, I’m able to go all-HD, I can record, at the same time, far more programs than I can watch and can pull up an episode of Dora and Friends for my daughter or Mr. Robot for me — on demand. I can store hundreds of hours of programming. Do I love my box? Not really, but I don’t hate it either. I dream of a not-to-distant magical world where the box is marginalized, not demonized. I want a world where the box is unnecessary, not forced into my living room by government mandate.

Read the full post here.

Stuck in Wet Concrete: The Supreme Court Tells the Ninth Circuit to Rethink What Harms Our Privacy

By: Tim Sparapani

The US Supreme Court has just made the law of privacy in the US about as settled as wet cement. Now, neither consumers nor companies handling consumer data know where things stand.

This all came about when a data broker – a company that gathers data about individuals, typically without their knowledge or consent, and then resells that data – created a file of wholly inaccurate information about an individual for resale. Upon learning about the data broker, Spokeo’s, actions the individual sued Spokeo citing a violation of his rights under the Fair Credit Reporting Act. That federal statute creates a right to sue for violations. The trial court, nevertheless, dismissed the case but the US Court of Appeals for the Ninth Circuit allowed it to proceed. The Supreme Court overturned that decision and sent the case back for additional consideration because the Ninth Circuit had not determined whether the plaintiff’s alleged injury was sufficiently real, tangible, or, what it deemed “concrete” enough to meet Constitutional standards for sustaining a lawsuit.

The result of effectively a non-decision by the US Supreme Court coupled with it providing the barest of guidance has created tremendous privacy law controversy. Now a debate is raging in Washington and in the offices of General Counsels of corporations and plaintiffs attorneys nationwide about what it takes to satisfy this vague standard. Pitched battles are being waged to influence the interpretation of that non-decision and influence what happens next because so much is at stake in a time when our economy is driven by identifying and unlocking value from consumers’ data.

How do we know when a company’s actions using a consumer’s data – especially erroneous data – harmed that consumer’s privacy? The whole debate will turn now on the definition of the term “concrete.” It’s a word that’s hard to lock down. Dictionaries provide only slightly more help than the thin guidance provided by the US Supreme Court. “Concrete”, an adjective meaning, “based on sure facts or existing things rather than guesses or theories.” Cambridge English Dictionary. “Specific particular. Real, tangible.” Merriam Webster’s Dictionary.

This non-decision has corporate America celebrating because fewer privacy cases will be successful. Influential privacy and consumer advocates, in contrast, argue that giving the lower court a do over, in effect, changes nothing. The truth lies somewhere in between, of course.

This is, no doubt, a blow for plaintiffs trying to bring lawsuits. By forcing people who want to sue to describe a tangible injury – and perhaps barring ephemeral or hard to explain or quantify privacy harms, even when Congress created a statutory right to sue – the barrier is now higher to successfully sue to vindicate privacy invasions. While that’s not the end of all suits regarding privacy as some have erroneously claimed, it does mean that some privacy cases that would have gone forward in the past will not make the cut. That surely means that some not-well-articulated but nonetheless important privacy harms will go unaddressed in the courts.

Read the full article here.

Roku’s stance speaks volumes about problems with FCC’s set-top box proposal

By: Mike Montgomery

The Federal Communications Commission’s (FCC) plan to mandate technology standards for TV set-top boxes in the name of creating more retail competition is being opposed by an unlikely source: set-top box maker Roku.

On the face of it, the FCC’s scheme is designed to help companies like Roku. The mandate would deconstruct the video streams coming into your living room’s traditional set-top box so they could be repackaged and served to you by any company with an interest in building a set-top box.

Roku already makes a device that streams video to televisions. The FCC’s proposal would give Roku, already an established player in the market, access to a whole new source of video programming – the consumer pay-TV packages forced open by the FCC regulation. That would seem like a powerful supplement to Roku’s current line-up of streaming video from sites like Netflix, Hulu and Crackle as well as content that lives on apps from networks like ESPN, CNN and Fox. If the FCC proposal went into effect Roku could directly stream live feeds from every broadcast and cable network.

Despite this supposed opportunity, Roku submitted a filing with the FCC opposing the scheme. In an op-ed in The Wall Street Journal Roku CEO Anthony Wood said, “This might seem like a great deal for consumers and companies like mine, but once you start peeling back the layers, the picture changes.” In its FCC filing, Roku stated, “rather than accelerate the pace and change of innovation, the FCC’s proposed rules could actually inhibit the transition from traditional programming delivery models to OTT services.”

Read the full article here.

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