" /> net.wars: January 2013 Archives

« December 2012 | Main | February 2013 »

January 25, 2013

Lock box

I have to confess, I'm fascinated by the news that unlocking a cell phone under contract without the permission of your carrier will become illegal in the US on Saturday; that is, tomorrow, January 26, 2013. Partly, I find the story astonishing because it's such a minute thing to have outlawed. But partly, because it shows how far out of step the US continues to be in the mobile phone world - and just how twisted some laws can get.

It isn't unreasonable for the companies that sell people mobile phones at subsidized prices to lock them into contracts whose ultimate purpose is to ensure that the subsidy is repaid over time. If you don't like that setup, there's a simple solution, assuming you can afford it: buy your own phone at full price. It ain't cheap, to be sure, to buy something new and fancy like a Samsung Galaxy Note 2. For that phone, the best price I could find before Christmas: £419, shipped direct, customs fees and delivery paid, from Hong Kong; it seems to be somewhat higher now. But buying the same phone, subsidized, from a carrier meant being required to sign up for a pricey monthly data plan instead of the inexpensive but more-than-adequate one I already had. If you did the math, buying the phone outright at the outset would pay for itself in less than the two years the contract would have been in force - in 17 months, to be precise. Maybe that makes sense if you change your phone every 18 months to two years, but much of the significant benefit to a new phone going forward will be in the software updates - and you can have those anyway.

But not necessarily in the US, where any European resident would conclude the consumer protection forces have failed utterly in the mobile market for some decades now. Even though the US has migrated to standards used in the rest of the world, it's still often not as easy as it should be to find a setup where you can stick your service's SIM card into any phone you happen to have handy - or insert any SIM card that makes roaming cheaper into the phone you have. It's amazing there hasn't been a class action suit about this. (Side note: that article seems to confuse unlocking the phone with jailbreaking it. They're not the same.)

If you've read the stories you, like me, might be wondering what on earth the Librarian of Congress - a job title that sounds like the owner ought to be utterly harmless - is doing banning unlocked cell phones. Shouldn't that be a job for the Federal Communications Commission or the Federal Trade Commission? People who deal with communications and consumer protection?

If the law at issue were contract law and the terms to which people agree when they buy their subsidized cell phones, that would be true. Instead, it turns out that the law being invoked is the Digital Millennium Copyright Act (1998), which bans "circumventing" technology designed to protect copyright. Back when the DMCA was being negotiated, folks like the Electronic Frontier Foundation (and many others) warned that it would have far-reaching effects. People talked about a legal ban on liquid paper (which you could use to white out a copyright notice), scissors (which you could use to cut one off), and (of course) crypto.

It's safe to say that no one, certainly not the framers of the law, saw it as a measure that would ultimately be used to protect the market control of a few large phone companies at the expense of millions of ordinary Americans. The EFF has been on the case all this time, however, and in the rulemaking process last November, asked the Librarian to an exemption for cell phones. The even weirder upshot of this whole thing is that the Librarian granted in 2009 and renewed in 2012 an exemption for *jailbreaking* phones (but not tablets or video game consoles on the basis that they're too hard to define). This week, EFF argued in a statement quoted by many media that locking phone users into a phone carrier is not at all what the DMCA was meant to do.

The Librarian's argument seems to be that it's not fair use to break the lock because you don't own the software - which has led commenters to AndroidAuthority to suggest taking a copy of the phone's built-in software and then flash the phone with unlocked custom software, a notion that might be within the spirit of the law but sounds like it violates the letter. On the other hand, it's a ridiculous law clearly against consumers' best interests.

It's easy for the rest of the world to laugh and say, oh, well, that's American cellular telephony for you. But the DMCA was followed by anti-circumvention laws in the EU and elsewhere. They're unlikely to be abused in the peculiar way that will take hold in the US this weekend. But there will always be people and companies looking for ways to twist the law to serve their particular purposes. A case like that provides a great demonstration of just why laws need to be drafted as narrowly and precisely as possible. And why there's so much danger in bad law that sticks.

Wendy M. Grossman's Web site has an extensive archive of her books, articles, and music, and an archive of all the earlier columns in this series.

January 18, 2013

First-mover disadvantage

News stories alerted me this week to a new feature of my 17-year-old Amazon.com account: the site will load up a cloud music area with MP3s of all the CDs it knows you've bought so you can play them wherever and whenever. I went and looked. Sure enough, Amazon knows, or thinks it knows, that I own, or at least have bought, 161 CDs, and it rapidly populated my account with the MP3s from those discs. All I have to do is push buttons to listen to them any place, any time.

How 1999.

Those with long memories may remember Michael Robertson's MP3.com, one of the earliest sites to do retail digital music (not first - that was the Internet Underground Music Archive). Founded in 1997, the site focused on indie bands and artists - people who didn't have hostile record labels to make trouble. The company went public in 1999 with, a trendy dot-com-boom triple first-day pop. In January 2000, the company announced My.MP3.com. It worked like this: you put a CD in your computer's drive to confirm you owned the disc, and thereafter the service would allow you to play MP3s from that CD any time you liked.

Instant lawsuit! MP3.com's argument - which it subsequently made in court - was that there was no copyright infringement since you could only play the MP3s if you had a physical CD to unlock access (glossing over, I suppose, the possibility that you borrowed or copied one). The record companies, however, focused on the fact that in order to provide this service MP3.com had to create its own database of MP3s by ripping all those thousands of CDs. Ultimately, they were successful in arguing that creating that database was not fair use. The resulting settlements crippled the company and it was finally taken over by Vivendi (and then the domain name was sold to CNet, which means it now belongs to CBS, but that's a whole 'nother story).

It's patently obvious that Amazon is not going to be taken down over what is essentially the same service (for one thing, the company already has MP3 copies of most CDs under license, since it is already a significant digital music retailer in its own right). During the dot-com boom people used to talk a lot about "first-mover advantage", the notion that the first into a market could run the table and get so far ahead of later entrants that they will never catch up. It worked for Amazon.com, eBay, and Paypal, for different reasons. all services where contractual agreements with suppliers and client servers or creating a pooled mass audience were difficult to duplicate for later entrants, just as a new entrant into car-sharing would find it hard to get enough parking spaces in urban areas to compete with Zipcar. The strategy even worked for Yahoo! only until something way better came along. But if you're too far ahead of your time - especially if you're small - you run into the MP3.com problem: other people may not *understand*

There are lots of examples of technologies and services that failed because the inventors were too far ahead of their time: the many early 1990s efforts at digital cash, Go's 1987 pre-tablet effort at pen-based computing. Usually, these efforts are defeated by either the state of the technology (for example, they function poorly because 3there isn't enough processing power or cheap storage space) or the state of the market (not enough people online, or too few people understand the technology you're asking them to use). But My.MP3.com was an example of something that failed because of the state of the law. At its launch at the beginning of 2000, the original Napster was perhaps a month old (and already being sued by the RIAA), and iTunes was more than a year from its first outing. It was a time when the record companies had yet to accept the Internet as a medium that, like cassette tapes before it, could provide them with a new marketplace.

Now, of course, everybody knows that. According to the IFPI's own figures from its 2012 report, in 2011 the number of countries with major international music services nearly doubled. Global record company revenues grew by about 8 percent to $5.2 billion, and the number of paying subscribers rose 65 percent to 13.4 million worldwide. You have to wonder: what if they had made deals with Napster and let My.MP3.com go ahead instead of suing them out of existence? They might be years further ahead in terms of revenues, and be spending far less time and money pursuing file-sharers - not that there would be no illegal file-sharing, but there would almost certainly be much less of it, and there'd certainly be much less residual anger among the recording industry's best customers.

It's also clear that size matters as well as timing: Amazon, like Google Books, is too big to kill. Little guys you can prosecute or sue. Big guys, you have to make deals. Although: the biggest price consumers paid for the loss of My.MP3.com wasn't really that service but the rest of the site's function as a hub for independent artists.

I don't know Michael Robertson. But if I were in his shoes, I imagine I'd be shaking my head and going, "Damn. We did that 13 years ago. Why didn't they let us?"

Wendy M. Grossman's Web site has an extensive archive of her books, articles, and music, and an archive of aearlier columns in this series.

January 11, 2013


It's long been obvious that there's a genuine problem with respect to advertising both online and in older media The more invasive and frequent ads get, the more consumers take action to insulate themselves by blocking, bypassing, or editing. It is clear, for example, that at least some of the success of video recording is the ability to skip or fast-forward through commercials. Yet consumers also expect to be able to access a great deal of new content either for free or at an aggregate price that means that no one piece of it costs much.

Advertising as a business model worked for a long time, in part because the market was divided up into a small number of relatively large audiences with relatively few alternative choices. Today's market continues to fracture into smaller and smaller pieces, and as the rates content owners can charge drops accordingly, they get desperate to replace the lost revenue. And so US television gets 22-minute half hours, the London Underground gets video billboards, and news Web sites display moving ads that (deliberately) draw the eye away from the thing you're trying to read, making it impossible to concentrate.

The result is an arms race between frustrated consumers and angry content owners and advertisers. Consumers block ads by installing browser plug-ins; sites such as cbs.com retaliate by refusing to play video clips to anyone blocking ads. Industry responds with DVRs optimized to skip ads and fast forward buttons, and sometimes gets sued as a result. At the industry level, however, the game looks a little different. You might call it "Who owns the audience?"

At the beginning of January, the French ISP Free, sent out a firmware router update that added a new feature that blocks ads for its subscribers. If you want ads, you can get them, but you have to opt in. This week, the French minister for the digital economy, Fleur Pellerin, told it to stop.

I'm sure Free thought it was taking a popular approach. As the above-linked article notes, the Firefox extension Adblock Plus alone has 43 million users worldwide, even operating under the disadvantage that users must learn about, locate, and install it. For that many people to take that much effort to buck the system means real and widespread discontent with the status quo. A smart ISP trying to compete might well see default ad-blocking as a unique selling point, at least in the short term; longer term, for free content to survive, advertising has to find levels and techniques consumers can tolerate.

However, as Deutsche Welle points out, this case is also a twist on the kinds of debates we've seen before, first in disputes between cable companies and TV networks, and more recently framed in the online world as network neutrality. Ultimately, this is about who pays. Should Google, whose business relies on the ability of billions of people to reach their services via their Internet connections, pay ISPs and mobile network operators for delivering that audience to it? Or should ISPs and mobile network operators regard Google as a major reason people bother to subscribe to their services in the first place? Which one is the opportunistic parasite?

Those of us who do not work for either side probably would say neither. Instead, it's more reasonable to see all these large companies as interdependent and all benefiting from the relationships in question. Symbionts, not parasites at all. So far, despite various loud demands and threats at various times, the industry has generally behaved as though it agreed. Bandwidth-swamping video, however, always had the potential to disrupt that, not least because the cable companies that deliver Internet services also deliver television (just as the telephone companies were the ones complaining when Internet telephony became popular). In France, however, there is some precedent for seeing Google as the unfair beneficiary; DW notes that last year Google began paying the country's largest ISP, Orange, for some of its traffic. In a larger piece on the many points of failure in online TV viewing, Gigaom points to a possibly similar spat in the US between Netflix and Comcast. There, however, there is the added complication of the First Amendment, which protects even commercial speech.

In any event, blocking ads at the router level offers consumers mixed benefits. You don't have to see ads, great. However, that also means rendering some sites inaccessible. Most notably, anything owned by the US TV network CBS refuses to display content to anyone blocking ads (my doped-up Firefox can't load CBS subsidiary ZDNet, and the home of a friend whose router blocks all ad networks is practically a news-free zone). Browser-based blocking can be easily turned off or bypassed; for technically unsavvy consumers router or ISP-based blocking is a blunt instrument of mass destruction. It's not censorship, since lost sites are not being specifically targeted for disruption. But it benefits no one to have sites unpredictably drop out of availability. For free content to survive, advertising has to find levels and techniques consumers can tolerate.

It pains me to say that Free's approach is wrong because I hate so many online ads so much, but it is, because as I've seen the system described it is only user-configurable in the broadest sense: on or off. Users need more and finer-grained choices than that.

Wendy M. Grossman's Web site has an extensive archive of her books, articles, and music, and an archive of all the earlier columns in this series.

January 4, 2013

The antitrust time warp

Government antitrust actions are typically a generation behind when it comes to something as fast-moving as the Internet. They can't help it; they're supposed to wait for evidence of actual harm. So when the issue was Microsoft tying things to Windows, the EU was still fretting about media player in 2004 and Internet Explorer in 2009.

This week, the US Federal Trade Commission announced it has found no evidence that Google exercises search bias at the expense of its competitors. However, the FTC did decide the company had misused some of its mobile phone patents and Google has agreed to let sites opt out of having their content scraped for reuse.

These things do matter - and it's churlish to complain that a government process designed to be slow and careful is...slow and careful - but they are at the very least incomplete: I'm less concerned about Microsoft's and Motorola's ability to compete with Google than I am if all of them lock out smaller companies. The FTC's requirement that Google stop preventing small companies using its advertising platform from signing up with competitors' platforms is to be welcomed. But for many consumers the battleground has already moved and the casualties as these large companies shift strategy to win at mobile and social networking will be all of us.

This week the Wall Street Journal highlighted Google's strategy of aggregating material onto Google+ pages in ways users do not expect. The integration of that service across all of Google's products is increasing every day, exactly as privacy advocates feared when the company coagulated its more than 60 privacy policies last year. At the corporate level this is, the Journal suggests, necessary for Google to compete with Facebook. Most consumers, however, use the two services for completely different reasons: we sign up for Facebook to share information with friends; we use Google services for specific tasks.


Then there's mobile. For the last month or so, I've been experimenting to see how far I could get with my new Android phone without tying it to a Google account. (I don't like feeling pwned.) On the one hand, the phone is perfectly functional: you can do all the things you actually bought the phone for, like email, SMS, phone calls, Web browsing, reading, listening to music, and taking pictures. What you can't do is download apps, even free apps without a Google Play Store account. Finding them elsewhere means increased risk of malware. Running anti-virus software on your phone, however, requires you to download the app from the Play Store. Or the Samsung app store, which, requires you to accept its privacy policy even just to search and to create an account if you want to download anything. Upshot: the security of this device, the class that is increasingly being targeted by cybercriminals, is dependent on our agreeing to tracking, to providing data for marketing purposes, and to any other conditions they care to impose. This sounds like a protection racket to me.

As Chris Soghoian (among others) has pointed out, the default settings for such things matter; most people will use what's put in front of them. So I note, for example, that on Android the only Web browser provided is Chrome, and within Chrome you can only choose Google, Bing, or Yahoo! as your default search engine. Adding DuckDuckGo, my default search engine of choice, requires me to root the phone to hack Chrome and violate the warranty or download a different browser, which means signing into the Play Store. (Actually, I did find a way to download Firefox onto my desktop, run it through an anti-virus checker there, and then transfer it to the phone for installation; but how many people are that stubborn?) Which means, accordingly, that the long tail of search engines might as well not exist for most Android users. How is this different from Microsoft and Internet Explorer in the early 2000s?

Note: this is not a subsidized phone. I bought it retail. If it's not going to be free as in beer, shouldn't it be at least a bit free as in speech?

Elsewhere, this week saw an interesting exchange between Evgency Morozov at the FT and Andrew Brown at the Guardian regarding Google Now. Morozov argued that in aggregating everything Google knows about you and delivering little nudges to be a "better person", such as a note of how far you've walked in the last month, it's becoming a corporate nanny on a scale of intrusiveness that a government could never get away with. Brown explores the human limits of that approach.

For the purposes of net.wars a more significant point is that Google Now demonstrates precisely why making informed decisions about our privacy is so hard. Who ever thought, when signing up for and diligently read the privacy policies of Gmail or Google calendar, or an Android phone - or even did all three and creating a Google+ page - that their data would be aggregated in order to chide you into walking more or that your Google+ page would suddenly assemble your various disparate postings across the Net as part of your profile?

These are the issues of 2013. And sadly, the FTC and the EU most likely won't get to them for another five years.

Wendy M. Grossman's Web site has an extensive archive of her books, articles, and music, and an archive of earlier columns in this series.