Canada Decides That Canadian Ownership Is More Important Than Real Telco Competition

from the regulatory-failure dept

The biggest problem in the telco world is the lack of competition. Most of the worst abuses by various telecom providers is because there really isn't enough competition to make it worthwhile to treat customers better. The best thing that governments can do to encourage better broadband/telco services is to encourage competition. Apparently, Canada has different priorities. A new mobile firm was set to open up shop in Canada, called Globalive. However, Canada apparently has some rules about how telcos need to have Canadian ownership. And while Globalive was originally judged to meet the criteria in bidding on spectrum, a different government bureaucracy has now said that it doesn't meet the Canadian ownership requirements. In other words, to the Canadian government, having local ownership is more important than real competition. This is basically a form of protectionism that (like most forms of protectionism) ends up harming consumers.

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Venture Capitalists May Be Left Out Of Burdensome Regulations On Private Equity

from the good-news dept

Last month, we were a bit worried that an admittedly clueless Congress might lump venture capitalists in with other private equity firms in putting forth new regulations. Venture capital is quite different from basic private equity, and the proposed regulations would be quite burdensome for VCs without having any benefit. These "systemic" risk rules don't make sense for VCs who aren't investing in public investment vehicles for short times, but instead do long term strategic investments in private startups. VCs have been pushing Congress on this, and it looks like they finally got through to someone, as it appears that Barney Frank is looking to exempt VCs from any such regulation. This makes a lot of sense as venture capital and traditional private equity are very different animals, and putting them both under the same regulatory rules makes little sense. Putting VCs under systemic risk regulations makes even less sense, considering how unlikely it is that VCs investing in startups are involved in any sort of systemic risk issues.

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Congress Not Yet Willing To Outlaw Being A Jerk Online

from the that-whole-free-speech-thing dept

In the wake of the whole Megan Meier/Lori Drew thing, politicians started shoving each other aside to introduce "anti-cyber bullying legislation" that would outlaw being a jerk. The whole thing was pretty ridiculous. People are going to be jerks. You can't outlaw it. Beyond just the First Amendment issue, the simple fact is some people will act like jerks some of the time. It happens. It doesn't mean that it's good, but that also doesn't mean that you can just outlaw it. Of course, seeing as this is the type of legislation that politicians like to claim is "to protect the children" and gets them in the press, there's always a chance that laws like this get some momentum. Thankfully, it looks like our Congressional Reps. at least recognize what a dumb idea this is. While Rep. Linda Sanchez insists that such a law is needed, it appears that other politicians are not very interested, pointing out the First Amendment issues, as well as the unintended consequences of making such a vague concept a criminal offense.

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Anti-bullying Laws Don't Work Offline; Why Do Politicians Think They'll Work Online?

from the bullying-is-bad,-m'kay? dept

There's no denying that school bullying can be a terrible thing for those who are being bullied. But, in the last few years, the urge to overprotect has gone to ridiculous lengths, including various "anti-bullying" laws (not to mention the silly idea that if Spiderman told kids to stop bullying, they would). Yet, as Eric Goldman points out, a new report notes that there's no evidence that anti-bullying laws actually do anything at all to prevent or stop bullying. It's one of those laws that people want because it sounds good, rather than actually doing anything good. Politicians pass them because who could possibly be in favor of bullying? But the problem is that these laws don't actually do anything, and now there are all sorts of attempts to expand them online where they still won't do anything to solve the problem, but will be used to go after people that prosecutors don't like.

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Congress Clueless About Venture Capital... Still Wants To Regulate It

from the this-makes-no-sense dept

Following the financial crisis there's obviously a lot of interest in more carefully regulating aspects of the private equity markets, given that behind-the-scenes financial efforts have been seen (rightly or wrongly) as part of the cause of the mess. But, of course, Congress can barely understand what caused the problem, let alone other aspects of the the financial system, so they end up regulating by shooting in the dark. The latest is that the various attempts to put regulations on hedge funds and private equity firms that invest in public companies (which in many cases really were sneaky ways to get around regulations) may be applied to venture capitalists as well, despite the fact that venture capital is a totally different beast. It doesn't invest in public companies. It doesn't aim for sneaky quick flips. It's true long term investment capital, directly investing in private startup companies to help them grow. It's real investment -- not gambling. But Congress doesn't seem to realize that.

In a recent Congressional hearing where venture capitalist Trevor Loy explained this to our elected officials, Senator Jim Bunning of Kentucky apparently told Loy that he didn't believe him that VCs invest in private companies rather than companies likely to be rated by the various ratings agencies (I'd link to the story where this was noted, but the publication that wrote it, put it behind a paywall and apparently doesn't want traffic -- there's a Google cache for now). And, yet, these are the folks writing the regulations. This is why some of us get nervous about gov't regulations. Yes, in an ideal world, perfectly knowledgeable regulators might possibly be able to divinely create regulations that work. But that's not what we have.

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Erin Andrews Nude Video Means We Should Regulate The Internet?

from the please-explain dept

In talking yesterday about the legality of viewing the "spy camera" footage of sportscaster Erin Andrews in her hotel room, someone pointed out in the comments that some journalists are now claiming that this shows why the internet needs to be regulated. Wait, what? How? Why? Creating the video was already illegal. What kind of regulation is needed here and how would it actually change anything? It seems that any time something "bad" happens some people suddenly jump up and insist "their oughta be a law!" without actually thinking through what that actually means.

Meanwhile, some others have noticed that this video apparently has been online for many months, and no one paid any attention at all to it until ESPN made a big deal out of it. Now, you can understand ESPN's general position, but it makes you wonder if there wasn't a better way to handle this that could have involved tracking down who was responsible without putting out a big press release and kicking off all this interest in the video. It's almost as if (perish the thought!), ESPN is actually trying to exploit this situation (and Andrews) to draw more attention to itself...

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Texas Politicians Want To Make It A Felony To Create Intimidating Fake Online Profiles

from the if-you-intimidate,-please-be-real dept

The latest in a long line of questionable "cyberbullying" legislation has shown up in Texas, where the legislature has approved a bill that would make it a felony to create a fake social networking profile with intent to "harm, defraud, intimidate, or threaten" anyone. Of course, that seems rather broad. Oddly, the article doesn't mention the Lori Drew case (Update: actually, it does mention Lori Drew at the bottom... but says this law wouldn't apply, because it only applies to fake profiles of "real people"), though, it does mention the Tony La Russa/Twitter legal battle, even though it's difficult to think any court would rule a parody profile as being with intent to harm, defraud, intimidate or threaten. Of course, even if the bill is signed into law, Eric Goldman notes that it would likely have trouble surviving much of a challenge, pointing out the oddity of singling out "social networking sites" and (more importantly) the fact that any such law would likely ban all sorts of protected free speech. Still, "anti-cyberbullying" laws are all the rage these days, and politicians want to make sure they can tell constituents that they're out there "protecting the children," so expect to see plenty more of this type of legislation.

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More Privacy Laws Don't Mean More Privacy

from the think-this-through dept

There's evidence that we're about to see a big new push in "privacy" laws at both the state and federal level, and while privacy is important, these laws often do the exact opposite of what they're intended to do. They, like so many laws, do a lot more to give politicians headlines so they can say they protected constituents' privacy, but the reality is quite different. A recent Forbes article explored what a mess privacy regulations have become, basically creating huge bureaucracies in order to comply with the laws, but having little to do with actually protecting privacy. Instead, the added regulations have just created the need for people to sign various consent forms that they don't understand, and limited certain types of useful information sharing, while making it that much more difficult to accomplish certain basic tasks. And, on top of everything, in some cases it's actually increasing the privacy risk, by requiring the collection of certain "private" info in a database that now makes it that much more vulnerable.

No one denies that protecting privacy is important -- but that's not what's being done. Instead, politicians are rushing through legislation to make it look like privacy is being protected, when all it really does is create extra burdens on both companies and users without any corresponding privacy benefit.

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France Continues Its Campaign To Pass The Worst Internet-Related Laws Around

from the who-can-keep-up? dept

Perhaps it's a race of some sort to see which country can pass the worst laws related to the internet possible, and France feels that it's falling behind other countries? After approving a "three strikes" law that will kick those accused (not convicted) of file sharing off the internet, someone in our comments reminded us that France is also looking to implement a file sharing tax on ISPs (Google translation) -- even though there's already such a levy on storage media. So... your connection gets taxed in case you're sharing music, your storage gets taxed again for that same shared music... and you can get kicked offline for it anyway.

And then a bunch of folks have pointed out that French politicians are looking to implement new laws that give police the ability to use keylogging software, force ISPs to censor certain sites on a "banned" list, and create a massive database of information on citizens. All of these things have appeared in other forms around the globe. All with great controversy. So it's quite impressive that France is trying to take them on all at once. Who knows if this latest bill will pass, but it really cements the idea that Sarkozy seriously dislikes the internet, and would like to put as many controls on it as possible.

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Lawyers: To Save Newspapers, Let's Destroy Pretty Much Everything Else Good

from the yeah,-that'll-work dept

A bunch of people have been submitting an opinion piece from the Washington Post, that is basically one of the most stunning set of suggestions for what Congress could do to "save" newspapers. If I didn't know any better, I'd think it was satire, because the suggestions are so mind-bogglingly bad and dangerous, it's hard to believe anyone wrote it with serious intent. Also, it's worth noting that the Washington Post didn't bother to detail the rather massive conflicts of interests from both lawyers. Apparently they both have represented numerous big name newspapers. And what is it that these big newspaper journalists keep telling us about how it's the "blogs" that hide conflict of interests? Anyway, let's dive in to the meat of the argument:

The Internet innovators that have thrived online enabled their own success as early as 1996 by securing immunity from defamation and other liability caused by user postings on their sites. Two years later, they persuaded Congress to add another exemption, this one for user postings that violate copyright law. These safe harbors have allowed companies from Yahoo to YouTube to prosper from the content they carry with little concern of being held accountable for it.

First, it's rather troubling that two lawyers could so fundamentally misunderstand the safe harbor rules put into both the CDA and the DMCA. The claim that it was the internet companies that somehow sought out these rules is laughable and ignores the history of both laws in question. Both the CDA and the DMCA where massive extensions of laws that purposely limited internet communications massively. The two safe harbor provisions were tiny incursions into both laws designed to (reasonably) point out what should have been obvious: if someone breaks the law, the liability should be on the person who broke the law and not on the tool or service used to do so. That's called common sense. These safe harbors weren't, as implied by these lawyers, some massive gift to internet companies. They were a small "safe harbor" for internet companies worried about these two massive laws that criminalized a tremendous amount of communication, showing that the liability should fall on the actual party, rather than on the tool.

Bring copyright laws into the age of the search engine. Taking a portion of a copyrighted work can be protected under the "fair use" doctrine. But the kind of fair use in news reports, academics and the arts -- republishing a quote to comment on it, for example -- is not what search engines practice when they crawl the Web and ingest everything in their path.

Publishers should not have to choose between protecting their copyrights and shunning the search-engine databases that map the Internet. Journalism therefore needs a bright line imposed by statute: that the taking of entire Web pages by search engines, which is what powers their search functions, is not fair use but infringement.

That would be a massive reinterpretation of copyright law, and would effectively destroy much of what makes the internet useful. This proposal would make it illegal to index the web. It would outlaw search engines. Yes, for the sake of saving some outdated newspaper businesses, these lawyers wish to make it so that before a search engine can index any website, it needs to negotiate permission. This would kill the internet.

Federalize the "hot news" doctrine. This doctrine protects against types of poaching that copyright might not cover -- the stealing of information not by direct copying but simply by taking the guts of the content. While the Internet has made news vulnerable to pilfering because of the ease of linking from one site to the next, the hot-news doctrine has limited use because it is only recognized in a few states.

Now that many news aggregator sites have taken "linksploitation" to a commercial level by selling ads wrapped around the links they post, Congress has the incentive it needs to pass a federal law protecting hot news. Such a law would give publishers an additional source of legal leverage outside of copyright to demand fair compensation for the content they create.

The "hot news" doctrine, considered by many to be one of the worst legal decisions ever made when it comes to intellectual property needs to be reversed, not federalized. It is the one case in the US where "facts" can be considered protected information, and that's bad for everyone. Suggesting an expansion of the hot news doctrine shows a fundamental misunderstanding of First Amendment rights, copyright, the internet and communications.

Eliminate ownership restrictions. Media insolvency is a greater threat today than media concentration. Congress should abolish caps on ownership of broadcast stations and bars on newspaper and television ownership in the same market. These outdated rules belong to an era when the Web was a home for spiders.

The above suggestion might be the only one in all of this that makes any sense. Of course, when combined with the other suggestions, it becomes a horrible idea. These lawyers would effectively kill off all forms of competition to newspapers... and then let the big news organizations combine? Why?

Use tax policy to promote the press. Washington state is taking a lead in the current crisis with legislation signed into law this week to slash business taxes on the press by 40 percent. Congress could provide incentives for placing ads with content creators (not with Craigslist) and allowances for immediate write-offs (rather than capitalization) for all expenses related to news production.

We've already discussed how silly Washington state's new rule is, but are these lawyers really saying that Congress should specifically pick winners and losers in the online classifieds space? How does that not offend the basic concepts of what Congress is supposed to do? How could two lawyers suggest this with a straight face?

Grant an antitrust exemption. Congress first came to journalism's defense with antitrust relief in 1970, when it permitted endangered newspapers to combine their business operations without fear of antitrust suits if their newsrooms remained independent.

So because newspapers are too clueless to survive, they need to be granted monopoly rights? Sorry, don't buy it. The whole thing is stunning in just how brazen it is in basically stating that (a) newspapers are more important than all of the internet and (b) just kill off that pesky internet and everything will be fine. Usually, when industries try to work on regulatory capture (getting regulators to put in place laws that favor them) they at least try to couch it in language that pretends it's for the public good. To outright suggest killing off the internet in favor of newspapers is incredibly shameless.

In responding to this, Jeff Jarvis highlighted a comment made by Dale Harrison that's worth repeating:

A lesson worth remembering is at the turn of the 20th century people had a transportation problem... and the solution turned out not to be a "faster horse"... but a Ford.

And one should note that the Ford didn't arise out of the "Horse Industry Revitalization Act".

I think the future of the media business will look as different as Ford and Toyota's operations look from horse traders and blacksmiths.

Imagine what the passage of such ill-conceived legislation would have done to the car industry a century ago.

It would have strangled the nascent auto industry at birth, postponing its inevitable rise while sheltering a dying industry, only postponing its inevitable demise... doing great damage to both. Newspapers need to be encouraged to adapt to the future, not retreat behind legislative walls hoping the future will go away.

The newspaper industry's troubles go to the very core of their historical business model.

What's historically given value to editorial content is the relative scarcity of distribution versus readers. Newspapers have enjoyed natural localized economic monopolies that allowed each of them to exercise monopoly control over the amount of content (and advertising) they allowed into their local marketplaces.

Monopoly constraint of distribution and supply will always lead to prices (and profits) significantly above open market rates. Newspapers then built costly organizational structures commensurate with that stream of monopoly profits (think AT&T in the 1970's).

The dynamics of content replication and distribution on the Internet destroys this artificial constraint of distribution and re-aligns advertising (and subscription) prices back down to competitive open market rates. The often heard complaint of Internet ad rates being "too low" is inverted... the real issue is that traditional ad rates have been artificially boosted for enough decades for participants to assume this represents the long-term norm.

An individual reader now has access to essentially an infinite amount of content on any given topic or story. All those silos of isolated editorial content have been dumped into the giant Internet bucket. Once there, any given piece of content can be infinitely replicated and re-distributed to thousands of sites at zero marginal costs. This breaks the back of old media's monopoly control of distribution and supply.

The core problem for the newspapers is that in a world of infinite supply, the ability to monetize the value in any piece of editorial content will be driven to zero... infinite supply pushes price levels to zero!

What this implies is that no one can marshal enough market power to monetize the value of content in the face of such an infinite supply and such massively fragmented distribution. Pay-walls, lawsuits and ill conceived legislation won't allow the monopoly conditions to be re-constructed.

There are certainly ways to make online news profitable... and many of us are working to develop such approaches... but I can assure you they don't involve inventing a "faster horse"...

Indeed. It's time to stop having Congress keep passing laws that stop innovation in hopes that legacy industries magically come up with faster horses.

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What is Cyberbullying Anyway?

from the good-to-know-*before*-the-witch-hunt dept

We've been hearing a lot about "cyberbullying" lately. Cases like the Lori Drew incident have got politicians and teachers all over looking to pass vague new rules and laws (or twist existing ones) to punish behavior they feel is wrong. The problem is, no one really seems to be able to define the term, at least not in a way that really distinguishes it from simply being a jerk online, so it's encouraging to see a paper from a vice president of Stetson University, Darby Dickerson, calling on educators to slow down and define cyberbullying before creating policies about it, though I'm not sure she gets to the heart of the issue. Dickerson observes that people have been using the term often and easily, without any real consensus on what it includes and what it doesn't. In the absence of a generally accepted scholarly or legal definition, she calls on universities to take four steps before creating a cyberbullying policy:

1. consider the types of activity that might be included within the term,
2. consider the type of harm,
3. consider the level of intent required by the offender,
4. determine the extent that it will address off-campus conduct.

This is good advice and Dickerson does a pretty good job of outlining the concerns. She notes that conduct such as "cyberstalking" or "cyberthreats" might be included, while issues of fraud probably shouldn't be, arguing that "not all misconduct that occurs online should be labelled as cyberbullying." She cautions institutions to remember "free speech and related constitutional concerns." She's skeptical of extending the term to include simply being a jerk online, and she questions labeling students as cyberbullies who don't display real malice or hostility. She also raises lots of important questions about what it means to be "off-campus" in cyberspace. Dickerson concludes by urging institutions to clearly define the term before enacting policies, highlighting many important questions that must be answered first.

Yet... Dickerson ignores one major consideration: why have a separate policy for cyberbullying anyway? It seems to me that in order to consider these issues sanely, we need to stop pretending they're separate things simply because we apply a "cyber" prefix to them. What's a "cyberthreat?" How is that different from a threat in general? Is a "cyberthreat" just a threat made online? What if it's made with a cell phone instead? What about a plain old telephone? Yes, the medium must be considered ("you're going to die" is different when shouted in a playground than written in letters cut out of a magazine...), but do we create separate terms or policies for each medium? We do often need to re-examine our laws and policies in the face of new technologies, but it rarely makes sense to have separate "cyberpolicies" instead of ensuring that existing policies are adapted to handle the new technologies. Why not ensure that existing harassment policies cover real harassment that occurs online instead of creating a new "cyberharassment" policy? Without a consideration of the difference between cyberbullying and bullying in general at the heart of this discussion, people run the risk of spending their energy blaming the technology and grandstanding, creating new policies with troubling unintended consequences rather than addressing the real issue, which often may well just be plain old bullying in a new context. The new context can certainly present new challenges that might warrant policy changes, but people should be careful not to get distracted from the issue of bullying just because it has "cyber" tacked onto the front.

Blaise Alleyne is an expert at the Insight Community. To get insight and analysis from Blaise Alleyne and other experts on challenges your company faces, click here.

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Law To Ban Broadband Caps Moves Forward

from the not-the-best-solution... dept

We've already noted that NY Congressman Eric Massa believes broadband caps raise First Amendment issues, though we have trouble understanding exactly what those issues are. We're not fans of the caps by any stretch of the imagination -- and, in fact, think that they're bad for innovation and bad for everyone (including the broadband providers implementing them). However, that doesn't make them First Amendment issues. Still, Massa seems committed to introducing new regulations against caps, which may be as misguided as the caps themselves. The real issue shouldn't be whether or not the caps exist; it should be how we can enable more competition in the broadband space, such that caps are no longer an issue. Massa claims his bill will "seek to increase competition among broadband providers," but didn't provide any explanation of what that actually meant. It would be great to see more competition, but it seems unlikely that what's being cooked up here will do the trick.

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Just Add Diesel: How Unintended Consequences Rob Taxpayers Blind

from the regulatory-mess dept

One of the reasons we're often skeptical of legislative/regulatory solutions to things is that they almost always have unintended consequences that do a lot more harm than good -- and quite often those unintended consequences are the exact opposite of what the regulation was supposed to do. Tim Lee points us to an excellent, if depressing, example. A few years back, the government passed a bill to encourage "greener" transportation by providing tax credits for the use of alternative fuels -- including for the use of fuel mixtures that combined alternative fuels with gasoline or diesel. As Chris Hayes explains, this resulted in America's paper companies suddenly dumping diesel into their production process solely to qualify for the tax credit.

The end result is staggering. The paper companies are wasting diesel fuel (remember, the whole point of this bill was to decrease the use of such fuels) by adding it to a process even though it's entirely unnecessary, and then claiming the tax credit. And, boy, is it worth it. The top ten paper companies are likely to take in $8 billion dollars from this tax credit. The money coming from this is so valuable that it dwarfs the actual paper business. The industry is making a lot more money throwing diesel fuel away than actually selling paper. And that is a perfect example of why even the best intentioned regulators often end up doing an awful lot of damage.

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New Jersey The Latest To Try To Regulate Social Networks... For The Children

from the please-make-it-stop dept

We've seen a number of attempts by politicians to use the latest "moral panic" around social networks to pass regulations against them. A popular one at the federal level which still (thankfully) has gone nowhere is DOPA, which would require schools and libraries to block social networks. However, state politicians want to get in on the grandstanding as well. Politicians in New Jersey are pushing a law that would require social networks to include a "report abuse" button on web pages and then would make those social networks responsible to investigate each reported "abuse" or face liability.

The unintended consequences of such a law would be awful. Basically, to protect liability, many "social networks" (and the term may be broadly applied to an awful lot of websites out there today) would most likely just shut down the accounts of those accused of "abuse." From a simple liability standpoint that makes sense. Leaving the account up just opens you up to a lawsuit. Furthermore, the button would likely be abused itself. Don't like someone? Click the "report abuse" button! And, no matter what, it makes no sense to put the burden of investigating things on the sites themselves. Hopefully this law goes nowhere, but don't be surprised to see similar proposals pop up elsewhere as well.

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Content Companies Demand Subsidies From ISPs... While ISPs Demand Subsidies From Content Companies

from the regulatory-silliness dept

It's sometimes quite amusing to watch how various economic ecosystems grow, where multiple companies have symbiotic relationships, and then start to freak out when they think that other companies in the ecosystem are somehow earning "too much." That, of course, is at the heart of many recent battles we've seen -- from net neutrality (where the ISPs think Google is earning too much) to the music industry (where record labels think ISPs and Apple are earning too much). But sometimes it leads to rather amusing contrasts. For example, up in Canada, the entertainment industry is complaining that ISPs earn too much, and therefore are pushing for laws that would require broadband providers to pay money to the entertainment industry to develop new content.

But contrast that to the situation in the UK, where there's an ongoing push for content companies to pay extra to help subsidize the cost of broadband deployments. The argument there is that all the content that's being put online is creating a drain on broadband network resources. But, isn't that exactly what the content creators in Canada are saying is a "free ride" for the ISPs?

Basically, it's yet another situation where each side of the debate overvalues its own contribution. The ISPs think that it's the network that is the most important thing, and the content providers should be paying their way to use it. Meanwhile, the content companies think that it's their content that makes the networks valuable, so the ISPs should be paying extra to offer their content. In reality, they're both wrong. The two things work together just fine in a market where each side pays its own way and doesn't have to subsidize the other. Now, if we could just see such contrasting regulations proposed and passed in the same country, we could have an amusing situation where the cross-subsidies cancel each other out.

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EC's Latest Rules Govern Its Coffee Machines

from the politicians dept

The European government's penchant for regulation is well-documented: its generally fruitless battles against Google and Microsoft are but two examples. Now, though, it's taking on the really serious stuff: the quality of the espresso in the European Commission's offices. The NYT says the EC bought 21 high-tech coffee machines at 5,000 euros each for its headquarters, "as a perk to keep top officials and visiting dignitaries from having to line up in cafes on other floors of the star-shaped Berlaymont Building." The big bill attracted criticism as another example of wasteful spending, but a bigger problem emerged for Commission employees -- the coffee didn't taste good. The Italian company that made the machines plans to replace them with some modifications (apparently water softeners in the coffeemakers were partly to blame), and it will also train "coffee monitors" in "coffee tasting theory and sensorial techniques," "recipes and hints," and "ordinary machine maintenance procedures." I'm not sure if it's heartening or frustrating to learn that bureaucrats' penchant for wasting time, money and other resources is pretty much the same the world over.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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The Goldilocks Argument For Regulating Online Content In Canada

from the too-much,-too-little dept

The attempts by some Canadian TV writers and actors to get Canadian regulators to regulate internet content is seen by many as pretty ridiculous. The arguments make almost no sense, and seem to center on the idea that there's so much content online, that no one can find Canadian content unless (a) ISPs pay extra to fund it and (b) certain sites are forced to promote Canadian content. What's never explained is what's wrong with option (c): make good content that people want to see. That option would solve all the other issues.

That said, Rob Hyndman points us to a great analysis showing just how ridiculous it is to think that the CRTC needs to regulate online content:

Once upon a time there were only four or five television channels. Hardly anyone had the money to broadcast a television signal, and if anyone did, there were only so many spots available on the dial.

In such a world of "spectrum scarcity," it was argued, government regulation was essential to ensure a diversity of content--and, in Canada, to ensure that some of that content was Canadian. Or as the cultural nationalists had it, to make it possible for Canadians to "tell ourselves our own stories." This was the world in which the CRTC was born.

Flash forward 40 or 50 years, to a very different world. Not only are there now hundreds of conventional television channels catering to every conceivable taste, but with the advent of Internet broadcasting the constraints of cost and spectrum have disappeared. There are literally hundreds of thousands of Canadian websites, each of them, post-YouTube, potentially a broadcaster in its own right. It is now possible for any Canadian with a video camera and a laptop to transmit to every other Canadian. And the cultural nationalists' response? This just makes the case for more regulation.

It's a great point, and it's something I call the "goldilocks argument" for regulation. The original content regulations were because there was "too little" content that could be delivered over TV. Thus, there "needed" to be regulation to ensure that in that limited and scarce space, that some of it would be Canadian. But the argument now is the reverse. It's that there's "too much" content online, and thus it's hard to find good Canadian content (apparently, some people up north haven't discovered Google). So, the argument seems to be that the CRTC is needed to make sure the content is "just right" whether there's too little content or too much content available.

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Canadian TV Industry: Please, Regulators, Make The Internet More Like TV... And Have ISPs Give Us Money

from the how-to-break-the-internet-in-one-easy-step dept

Last week, we wrote about how the Writers Guild of Canada was pushing government regulators to force ISPs to fund content creation, with a specific focus on promoting Canadian content and trying to tone down or keep out non-Canadian content from online sources. This seemed pretty ridiculous, but the Canadian Radio-television Telecommunications Commission (CRTC) is in fact holding hearings on the issue.

Perhaps the most ridiculous is Canadian comedian Colin Mochrie, who is making pretty much a mockery of the whole thing by whining about how Canadian content will get buried if ISPs don't pay extra to create and "broadcast" Canadian content. Perhaps Mochrie hasn't noticed, but ISPs aren't like TV networks. They don't choose what content they air. They are the conduit. Mochrie's complaints get more and more silly the further he goes:

Unlike television, when you are broadcasting through new media, the space for content is practically endless. However, being endless, content can easily get lost. So how do we make sure Canadians can find our own content? How do we make sure Canadian content is featured and given "shelf space"?

How about by making the content good so people want to see it no matter where they're from? Or, if he wants to go fund a website that just highlights Canadian content, he's free to do so. It wouldn't even cost that much, thanks to the wonders of the internet. And that's before Mochrie just starts making stuff up:

Most of what we do on the Internet falls under the definition of "broadcasting" and that percentage grows daily as we turn to our laptops, iPods and mobile phones to watch our favourite programs.

No, actually. Most of what people do on the internet falls under the definition of "communications." A small amount falls under "broadcasting," but even then it tends to be a lot more interactive than traditional broadcasting. The broadcasting companies have jumped onto the internet bandwagon (much too late, of course), but they should learn to adapt to the platform -- not force the entire platform to become TV 2.0.

Mochrie goes on to make the argument that basically anyone offering content in Canada needs to be regulated -- meaning forcing them to show Canadian content, and that ISPs and wireless operators should be forced to fund this content? Why? Who needs reasons! It's for the good of Canadian culture or something.

In the meantime, while we agree with ISPs like Rogers, who are protesting any such move, it is worth pointing out how hypocritical they're being as well. Rogers is protesting any such rule by claiming "We're a dumb pipe" who can't be expected to "regulate" the content shown over their network. However, as Michael Geist points out, when it comes to traffic shaping, Rogers has no problem claiming it's "smart" enough to figure out what to shape and block. So which is it?

This whole debate is rather silly of course. Starting to regulate content on the internet would serve to severely damage internet services and culture in Canada -- bringing all of the disadvantages of protectionist cultural policies and knocking out most of the benefits of the internet. Hopefully the CRTC knows better than to follow folks like Colin Mochrie.

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Canadian Writers Guild Demanding ISPs Pay For Content Creation; Pissing Off Members

from the it-doesn't-work dept

Mark K. sent this in a week or so ago, but I'm just getting to it now. Apparently, Ryan Sohmer, an author of a popular webcomic called Least I Could Do, is pretty pissed off at the Writers' Guild of Canada, of which he's a member, which is supposed to be looking out for his best interests -- but is not. Specifically, it appears that the WGC is pushing for a proposal that would demand ISPs pay content creators for new content produced in Canada. It's sort of the equivalent of the recording industry's desire to put in place an ISP music tax, but for screenwriters for TV and movie content. On top of that, it has a nationalistic bent, that would limit certain foreign content from reaching Canadians in a ridiculous attempt to "promote" made-in-Canada content.

Sohmer points out why he felt forced to join the WGC against his better interest (he needed to in order to work on certain projects) and had mostly ignored them until they decided to push this dreadful idea for regulation. As he notes, what the WGC is trying to do is turn the internet into a version of television, with limited choices and strict regulation on content. He points out how disastrous this would be:

As someone who's been struggling with the television system for the last 3 years, I can tell you very explicitly: it simply doesn't work. It hampers talent, overpays "producers" while taking money out of the real talent budget and you inevitably end up with a watered down excuse for entertainment.

Why anyone would want to re-create the television industry is beyond me. That makes about as much sense as publishing a new newspaper these days, or putting together a new terrestrial radio station.

Say what you will about the web, and there is much to be said, it breeds innovation. The reason for that is because it's non-regulated, because an ass like me can produce whatever he likes, however he likes in an effort to entertain others. The majority of the things we try don't/won't/shouldn't work, but if 1 out of every 100 projects works, that's a success.

You simply can't do that in the traditional media system. It won't let you.

We see it time and time again. The organizations who benefited from the "way things used to be" will almost always work to force any new and innovative platform to be restricted, legally, to force a similar structure. Remember the laws that got passed when automobiles first came around that required people to walk in front of them waving red flags? Yup. The WGC's proposal seems pretty similar.

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Another Accounting Law Designed To Increase Transparency Does The Opposite

from the unintended-consequences dept

With all of the financial mess out there, it's likely that we'll soon see calls for new regulations to help "protect" against fraud. However, before we rush into doing so, it's worth looking at how damaging previous attempts to do the same thing have been. We've already covered the massive amount of damage done by Sarbanes-Oxley, which basically made it extremely difficult for a private company to go public and significantly increased costs for any public company -- all while doing next to nothing to actually cut down on fraud.

And, now, FAS 157 has come into play -- a new rule impacting many venture capitalists, forcing them to figure out what the "fair market value" of their investments are, and provide that number to their investors. This has many different VCs complaining about what a stupid process this is. It raises similar questions as the legal change a few years ago that required companies to put stock option valuations on their books as well. The problem is that these things are impossible to accurately value. Not difficult, but impossible. You're asking people to value a totally illiquid asset as if it were liquid.

Even if the venture capitalists use a rigorous process, the result will be wrong. There's simply no way to accurately value something like a private startup until another transaction happens where the value is actually set. And, that's the way it should be for a private investment (it's also why not everyone is allowed to invest in such endeavors, because it is inherently more risky). But forcing companies to make up bogus (no matter how well meaning) valuations for companies has dangerous unintended consequences. No matter how bogus the numbers are, since they're there, people will use them as if they're real. And that will lead to more bad investing, rather than less. So, once again, we have a law designed to stop bad investing, which will most likely cause the opposite to occur.

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