Should the FCC Join the Federal eRulemaking Program?

On December 19, 2016, John W. Davis II, the founder and CEO of Notice and Comment Inc., published an article in The Hill proposing an interesting idea for the FCC to join the federal eRulemaking Program. Regulations.gov serves as the government’s public-facing portal where federal agencies issue regulatory notices and accept citizen responses, but unlike most federal agencies, the FCC uses its own system for publishing rulemakings and accepting comments.

Mr. Davis says that the wave of 4 million comments made during the Net Neutrality proceeding showed a clear “need for modernization of the Commission’s processes.” Not only did the FCC’s comment system crash in 2014, but “it ended up taking nine months and an estimated $50 million for the FCC to consider the entire comment dataset.” On the other hand, Mr. Davis endorses the federal eRulemaking Program:

With standardization of data comes a whole new level of immediate transparency in governance, permitting a higher degree of public participation -- and at earlier stages of the process, such as the discovery phase of highly common utility-pole- attachment disputes, which fall under FCC purview. This greater degree of public data accessibility should naturally result in more efficient complaints adjudication.

Given the possibility that the FCC’s Open Internet Order could get repealed by the incoming Commission, Mr. Davis says that the FCC should join the eRulemaking Program as soon as possible. He states:

[I]f net neutrality rules are re-opened for consideration, judging from public response to the last round, the FCC stands to be inundated by many millions of comments. Even if the Commission’s network does not crash again, its staff of lawyers are sure to be occupied for several months manually reviewing and analyzing the tidal wave of data. Meanwhile, businesses will remain in a state of uncertainty about the shape of the future telecom regulatory environment.

The benefits in terms of cost savings, government responsiveness, and public data transparency make the move an obvious choice.

If the FCC were to join the eRulemaking Program, there still would remain many areas of necessary process reform (see here, here, and here). However, the proposal is certainly an interesting one that should garner consideration.

More on Facebook and Fake News

On November 25, I posted a blog, "Mark Zuckerberg and Fake News," in which I addressed Facebook CEO Mark Zuckerberg's post on "fake news." I included this excerpt from his November 25 post:

“The problems here are complex, both technically and philosophically. We believe in giving people a voice, which means erring on the side of letting people share what they want whenever possible. We need to be careful not to discourage sharing of opinions or to mistakenly restrict accurate content. We do not want to be arbiters of truth ourselves, but instead rely on our community and trusted third parties.”

And I said: "Mr. Zuckerberg commendably outlines some measures Facebook itself is considering to address the fake news issue."

Now, in a December 15 post, "News Feed FYI: Addressing Hoaxes and Fake News," Adam Mosseri, VP, News Feed, offers some steps that Facebook is taking now to address "fake news." These steps include: easier reporting; flagging stories as disputed; informed sharing; and disrupting financial incentives for spammers.

Mr. Mosseri acknowledges that these are first steps, and that Facebook intends to learn from them and adjust accordingly if advisable.

As Mr. Zuckerberg said in November, "[t]he problems here are complex, both technically and philosophically." This certainly is true, it's why it makes sense, as Mr. Mosseri says, to approach the fake news problem carefully.

The steps that Facebook has announced seem reasonable, certainly on a trial basis so that their effect on users' experience can be gauged. It's important that Facebook and other similar platforms take the initiative themselves to consider means of addressing the problem of fake news in ways that are compatible with the vast majority of users they seek to attract and serve. If they don't, there may be calls, however misplaced, by some for the government to "just do something."

That would be terribly wrong. On this point, I'll just repeat what I said in my earlier post:

"As a matter of sound policy, the government should stay out of the business of evaluating the truthfulness of news, except, for example, in rare instances involving public health and safety. And as a matter of law, the First Amendment’s free speech clause demands no less."

New White House Report Promotes Enforcement of IP Rights

On December 12, 2016, the White House’s Office of the U.S. Intellectual Property Enforcement Coordinator (IPEC) published a report entitled “Supporting Innovation, Creativity and Enterprise: Charting a Path Ahead,” which promotes strengthening the enforcement of IP rights in the U.S. and abroad for the next three years.

The IPEC submits a joint strategic plan to Congress every three years under the Pro-IP Act of 2008. The Pro-IP Act outlined the following objectives for the joint strategic plan:

• Reduce counterfeit and infringing goods in domestic and international supply chains;

• Identify unjustified impediments to effective enforcement action against the financing, production, trafficking, or sale of counterfeit or infringing goods;

• Support the sharing of information to curb illicit trade;

• Disrupt domestic and international counterfeiting and infringement networks;

• Strengthen the capacity of other countries to protect and enforce intellectual property rights;

• Establish with other governments international standards and policies for the effective protection and enforcement of intellectual property rights; and

• Protect intellectual property rights overseas by enhancing international collaboration and public-private partnerships.

With those objective in mind, the joint strategic plan for FY 2017-19 sets goals including: (1) enhance national understanding of economic and social impacts from trade secrets misappropriation and IP rights infringement; (2) minimize counterfeiting and IP-infringing activity online; (3) secure and facilitate lawful trade; and (4) enhance domestic strategies and global collaboration.

IPEC Daniel Marti should be commended for the new report. Not only does it recognize the impact that strong protections of IP rights has had on U.S. GDP ($6.6 trillion value added), but it addresses key ways that IP rights can be strengthened including: curbing illicit efforts with innovative enforcement techniques; increasing the ability of consumers to recognize illegal content and goods; and using trade agreements to promote strong global IP rights.

Utilizing various means to enforce rights enables artists and creators to earn a return on their labor and incentivizes innovation and economic activity around the world.

The Core Copyright Industries Continue to Boost the U.S. Economy

On December 6, 2016, the International Intellectual Property Alliance (IIPA) published its 2016 report entitled “Copyright Industries in the U.S. Economy.” The new report, authored by Stephen E. Siwek, finds that the “core copyright industries,” – that is, industries whose primary purpose is to create, produce, distribute or exhibit copyright materials – generated $1.2 trillion in economic activity in 2015, accounting for 6.88% of the U.S. economy. In the same year, the core copyright industries employed 5.5 million workers, which is 3.87% of the entire U.S. workforce.

At a time when much attention is focused on reviving America’s economic growth and job creation prospects, these figures should not be lightly dismissed.

The core copyright industries do not just comprise a substantial portion of the American economy; they continue to grow at an above average pace. Between 2012 and 2015, the core copyright industries grew at an aggregate annual rate of 4.81%. This is 127% greater than the growth rate (2.11%) for the entire U.S. economy over the same period. Furthermore, the average annual compensation paid to core copyright workers is $93,221, which is 38% higher than the average annual compensation paid to all U.S. workers, $67,715.

Additionally, the core copyright industries are a key contributor to U.S. exports. The new report finds that sales of selected U.S. copyright products in overseas markets amounted to $177 billion in 2015, a significant increase from $164 billion in 2014. This is impressive considering that other major industries, such as chemicals, pharmaceuticals and medicines, agriculture, and electronics saw little or no growth in their respective exports over the same period. (See the chart below.)

Foreign Sales & Exports for Selected U.S. Industries (Billions of U.S. Dollars)	2014	2015
Selected Copyright Industries (Motion Pictures, TV, Video, Recorded Music, Newspapers, Books, periodicals, Software Publishing)	$164.4	$177.0
Chemicals	$145.9	$135.8
Aerospace Products and Parts	$129.0	$134.6
Agricultural Products	$72.9	$62.9
Electrical Equipment, Appliances & Components	$60.6	$60.3
Pharmaceuticals & Medicines	$54.5	$58.3

In a December 2016 blog, Michael Horney discussed why it is important for President-elect Donald Trump to reconsider his apparently negative perception towards the Trans-Pacific Partnership (TPP) and similar trade agreements. By implementing strong Intellectual Property protections for 12 member countries, TPP would incentivize creation and innovation among American (and foreign) entrepreneurs. If TPP is adopted, the U.S. would see a significant increase in the amount the U.S. exports, including core copyright and IP-intensive industries.

The IIPA’s report shows that the core copyright industries play a large role in the U.S. economy and that these market segments are growing at a faster rate than most U.S. markets. The United States’ robust protection of intellectual property rights has incentivized creation and entrepreneurial activity that has not only benefitted American consumers and workers, but also has spurred economic activity overseas.

The core copyright industries continue to boost the U.S. economy!

New Proposal Would Modernize the Copyright Office's Outdated Technology

On December 8, 2016, the House Judiciary Committee Chairman Bob Goodlatte and Ranking Member John Conyers proposed to modernize the U.S. Copyright Office for the 21^st Century. The proposal would allow the Copyright Office to have autonomy over its budget and technology needs. The proposal also would allocate to the Copyright Office the necessary funds for information technology modernization, enabling the Copyright Office to maintain a “searchable, digital database of historical and current copyright ownership information.”

The Copyright Office is long overdue for technology modernization and FSF scholars have made multiple statements regarding this need. (See here, here, and here.) Modernization is necessary for our copyright system to achieve its important purposes of protecting artists’ and creators’ rights to earn a return on their labor and to facilitate market transactions in copyrights in a way that promotes “the Progress of Science and useful Arts.”

We commend Chairman Goodlatte and Ranking Member Conyers for their proposal and hope it quickly passes through the House of Representatives.

It's Up to President-elect Trump to Revive TPP

The Tran-Pacific Partnership (TPP), a trade agreement between the United States and 11 other Pacific Rim countries, seemingly is dead, at least for now. It will not be approved by the current Congress. Therefore, it is up to President-elect Donald Trump to revive it during his Administration.

It’s true that President-elect Trump has said that TPP is a “disaster” and he has declared that he will withdraw from the agreement on his first day in office. But other than a few bullet points on his website, the President-elect has never publicly explained why he does not like this particular trade deal, which looks to be a win for entrepreneurs, creators, consumers, and the global economy.

As I discussed in a June 2016 blog, TPP would expand global trade by eliminating roughly 18,000 tariffs that member countries have imposed on imports from the United States, lifting millions of people out of poverty around the world. By removing these trade barriers imposed by foreign countries and others imposed by the United States, TPP would allow consumers and entrepreneurs in all member countries to enjoy more economic activity and lower prices than what the status quo offers.

From an intellectual property (IP) perspective, TPP appears to require adherence to strong protections of IP rights in member countries. This would help artists and entrepreneurs around the globe to earn a return on their creative works and the labor that makes them possible. According to a September 2016 report by the Department of Commerce and the Patent and Trademark Office, in 2014, 45 million jobs (or 30% of the jobs in the U.S. economy) either directly or indirectly were generated by IP-intensive industries. In the same year, IP-intensive industries added $6.6 trillion of economic activity, which is roughly 38% of GDP.

TPP addresses all aspects of IP, including copyright, patents, trade secrets, and trademarks. The IP chapter of TPP aims to do the following:

• Improves strong and balanced protection of rights and enforcement of laws;

• Bolsters incentives for the development of, and trade related to, IP-intensive products;

• Addresses common threats, including piracy, counterfeiting, and other related infringements, as well as misappropriation (including cyber theft) of trade secrets;

• Promotes transparent, efficient, and fair regulatory systems, including for patent and trademark application and registration;

• Promotes development of and access to innovative and generic medicines;

• Facilitates legitimate digital trade, including in creative content; and

• Prevents the spread of overly-restrictive geographical indication policies, including by safeguarding the rights of prior trademark owners and rules clarifying the use of generic terms.

Establishing strong IP safeguards among countries in the Pacific Rim would diminish theft of American IP, which totals $320 billion annually. U.S leadership regarding strong IP rights protections will incentivize more investment, innovation, and economic growth at home and abroad.

A 2014 report from NDP Analytics estimates that TPP would increase U.S. exports by $26 billion, U.S. GDP by $11 billion, and American jobs by 48,000 with roughly two-thirds of these benefits coming from IP-intensive industries. This increase in U.S. exports would have direct spillover effects for the other 11 member countries, leading to an estimated $6.4 billion increase in GDP and 68,240 additional jobs. Of course, these figures do not include the increases in economic activity and job creation that will occur among member countries nor do they include the increases in U.S. imports.

Additional economic activity and development within member countries would not be the only benefit flowing from a stronger IP framework; mutual gains from trade are much higher with transactions that contain strong protections of IP rights rather than weak protections. Therefore, member countries which currently have weak IP protections according to the Chamber of Commerce’s Global IP Center International Index, such as Peru, Chile, and Mexico, will incentivize creation and innovation within their own countries. And also, other developing economies, which trade with TPP countries, will recognize the gains from trade and be encouraged to adopt similar IP rights protections.

Gains from trade are mutually beneficial but not necessarily equal. If TPP is adopted, the United States would benefit from the positive externality of robust IP rights protections in other countries and from lower trade barriers with countries in the Pacific Rim. When more countries around the world have strong IP rights protections, American creators and entrepreneurs have a greater incentive to innovate because their creations are less likely to be stolen overseas. However, developing countries, which, on the whole, would substantially upgrade their IP rights protections with the adoption of TPP, likely will enjoy an even higher marginal benefit than the U.S. because their economies have not experienced as much innovation as countries with strong IP rights protections in place. In general, and all else equal, developing countries grow faster than developed countries when there is an expansion in global trade. 

Perhaps, the President-elect views the trade agreement as problematic because he considers global trade as an “us versus them” phenomenon. In other words, he may consider global trade as a zero-sum game, when, in actuality, it is a variable-sum game. For example, even if Vietnam benefits more from TPP than the United States, this does not mean the U.S. loses. Both countries are better off, even if the marginal benefit might be greater for one country over another.

President-elect Trump should revive TPP during his administration. It is vital that this trade agreement be adopted to encourage the creation of jobs and to foster greater innovation and investment in the United States and in the Pacific Rim. Mr. Trump’s campaign primarily focused on creating jobs in the United States. TPP is a win for American workers and consumers because it would expand economic activity around the world, increasing American imports and exports.

In 2014, U.S. imports and exports from IP-intensive industries were valued at $1.4 trillion and $842 billion, respectively. Those values likely would increase if IP rights are enhanced around the world. (NDP Analytics projects that TPP will increase annual U.S. exports by up to $26 billion.)

With the adoption of TPP, President-elect Trump could help spur the economy, which is clearly a top priority. Let’s hope that Mr. Trump changes his mind about TPP.

New FCC Report Shows Increased Broadband Quality for Consumers

On December 1, 2016, the FCC published its sixth Measuring Broadband America report, which examines the speeds, latency, and consumer trends of fixed broadband services nationwide. Here are some of the key findings from the report:

Significant growth in broadband speeds available to consumers, though the results are not uniform across technologies. The median download speed, averaged across all participating ISPs, has almost quadrupled, from approximately 10 Mbps in March 2011, to approximately 39 Mbps in September 2015. Compared to last year’s value of 32 Mbps, this year’s median download speed was an increase of approximately 22%.  

Since the first Measuring Broadband America report in August 2011, the average annual increase in median download speeds by technology is 47% for cable, and 14% for fiber, while popular DSL speeds have remained largely the same. (See the chart below for the growth in the median download speed over the past five years.)

Actual speeds experienced by most consumers meet or exceed advertised speeds. All ISPs using cable, fiber or satellite technologies advertise speeds for services that, on average, are close to the actual speeds experienced by their subscribers. Fixed cable and fiber broadband customers experienced speeds that were 100% or better than advertised.

The chart below shows the ratio of weighted median speed to advertised speed for a number of broadband providers. Of the 16 providers included in the sample, nine of them delivered actual download and upload speeds that are greater than the advertised speeds.

Consumers with access to faster services continue to migrate to higher service tiers. Data shows that panelists subscribed in September 2014 to service tiers with advertised download speeds between 15 Mbps to 50 Mbps are the most likely to have migrated towards higher service tiers. In contrast, among panelists subscribed in September 2014 to service tiers with advertised download speeds of less than 15 Mbps – offered mostly by DSL services – only a few percent migrated within the following year to a service tier with a higher download speed.

Latency and packet loss vary by technologies. Consumers generally experienced low latency – the time it takes for a data packet to travel from one point to another in a network – on DSL, cable and fiber systems. Higher latency in satellite services may affect the perceived quality of highly interactive applications such as VoIP calls, video chat and multiplayer games. Consumers generally experienced low packet loss – the percentage of packets that are sent by the source but not received by the destination – on cable, satellite and fiber systems.

The results of the FCC’s sixth Measuring Broadband America report show that the quality of broadband is increasing throughout the United States. Despite regulatory barriers that may have slowed investment and innovation in broadband technologies, the broadband market remains dynamically competitive and consumers are benefiting from faster speeds and more reliable connections.

CenturyLink Will Become More Heavily Business Focused

Here's an interesting take in Telecompetitor on CenturyLink's acquisition of Level 3 and how the merger will transform CenturyLink's business. CenturyLink would become the most heavily business-focused service provider of the five largest national telecom carriers.

DirecTV Now Will Connect Cord-Cutters to Live Programming

On November 28, 2016, The Wall Street Journal featured an article about AT&T's new DirecTV Now [Subscription Required], an over-the-top (OTT) video service with more than 100 live streaming television channels for $35 a month. Featuring content from some of the biggest companies in the world, including 21^st Century Fox, Walt Disney Company, and Time Warner, DirecTV Now will be an OTT competitor to traditional pay-TV providers. DirecTV Now will allow cord-cutters to access live programing and likely will incentivize other pay-TV competitors to develop similar services to account for an increasing number of cord-cutters. 

Mark Zuckerberg on Facebook and Fake News

So-called “fake news” has been in the news recently – whether in the “real news” or more supposed “fake news” sites – I’ll leave to you to decide. On November 19, Facebook’s CEO Mark Zuckerberg posted his views on the subject. I commend Mr. Zuckerberg’s thoughtful post as well worth a read. 

Right now, in the post-election environment, passions on behalf of some are running high, too high in some quarters. And when passions run high, oftentimes there are pleas for action, even when the solutions offered might be worse than the supposed ills. 

Read Mr. Zuckerberg’s entire post, but here is a brief excerpt that makes a lot of sense:

“The problems here are complex, both technically and philosophically. We believe in giving people a voice, which means erring on the side of letting people share what they want whenever possible. We need to be careful not to discourage sharing of opinions or to mistakenly restrict accurate content. We do not want to be arbiters of truth ourselves, but instead rely on our community and trusted third parties.” 

Mr. Zuckerberg goes on to say that “the percentage of misinformation is relatively small.” On this point, it’s worth taking a look at A. Barton Hinkle’s November 23 post at Reason, “The Fake News Epidemic of Fake News.” Mr. Hinkle contends there are at least two problems with the recent Buzzfeed story upon which so much of the buzz surrounding “fake news” rests: “First, the epidemic of fake news is overstated. Second, fake news is far from new.” 

In any event, in his post, Mr. Zuckerberg commendably outlines some measures Facebook itself is considering to address the fake news issue. Several look promising, at least in theory. You can decide for yourself. 

But the main point is that to the extent “fake news” is a serious problem at all, it should be left to the platforms themselves – and interested private third parties – to address it, not the government. 

As a matter of sound policy, the government should stay out of the business of evaluating the truthfulness of news, except, for example, in rare instances involving public health and safety. And as a matter of law, the First Amendment’s free speech clause demands no less.