A Collection of Legal Advisories on the New Net Neutrality Rules

The new network neutrality rules have been out for almost a month now. Here is a short collection of legal opinions:

What’s The FCC’s Rush on New Net Neutrality Rules?

Network neutrality rules have failed to pass Congress and the courts countless times, so what’s the FCC’s rush now? Scott Cleland explores in an op-ed at the Daily Caller:

The reality is that “net neutrality,” Internet “blocking,” “throttling” or “paid prioritization” are terms and concepts not found in archaic communications law.

That is the core reason why the FCC’s attempts to effectively legislate new law and policy absent Congress were overturned by the courts in Comcast v. FCC and in Verizon v. FCC.

Someday, the FCC will need Congress to update its authority for the Internet age. Why shouldn’t the FCC start working cooperatively with Congress now?

The bottom line here is that everything that the FCC is and does ultimately comes from Congress.

The FCC is an agency that is “independent” from the executive branch, but not independent of the legislative branch, its constitutional master, or the courts, its constitutional check and balance.

Stopping Easements Through Copyright

A Canadian artist, Peter von Tiesenhausen, has effectively stopped a pipeline through his 800 acre property by covering it with artwork and copyrighting the top six inches of his land as an artwork. Companies could gain use of his property through easements, but they are severely limited by the addition of a copyright. For lawyers and those who believe in property rights, easements are contentious.

Here is some more:

The copyright claim makes his entire property a work of art since he has covered it with visual art scupltures including “a 33-metre-long ship sculpted with willow stalks, winter ice forms, nest-like structures in trees, statuesque towers and a “lifeline” or visual autobiography composed as a white picket fence built in annual sections left to weather naturally”. The copyright also drastically increases the remuneration of around $200 for lost crops to around $600,000 for an ” artistic property disturbance”.

I am assuming they are in court, but I plan to read more about the claims.

FAA Device Rules and the Continuing Problem of Spectrum Interference

This was bound to happen: the proliferation of mobile devices is beginning to cause the “incidents” involving airline passengers to rack up. From Nick Bilton:

In September, a passenger was arrested in El Paso after refusing to turn off his cellphone as the plane was landing. In October, a man in Chicago was arrested because he used his iPad during takeoff. In November, half a dozen police cars raced across the tarmac at La Guardia Airport in New York, surrounding a plane as if there were a terrorist on board. They arrested a 30-year-old man who had also refused to turn off his phone while on the runway… In 2010, a 68-year-old man punched a teenager because he didn’t turn off his phone. Lt. Kent Lipple of the Boise Police Department in Idaho, who arrested the puncher, said the man “felt he was protecting the entire plane and its occupants.” And let’s not forget Alec Baldwin, who was kicked off an American Airlines plane in 2011 for playing Words With Friends online while parked at the gate.

At issue is the largely unproven idea that tablets and phones interfere with a plane’s computers and communication devices. But, the asymmetry in rules for flight and takeoff is especially peculiar. When electromagnetic interference does happen with mobile devices, it is usually limited to a narrowband of the spectrum, due to inadequate filtering, tuning, or poor frequency control. The bands dedicated to aeronautical communication and telemetry are largely devoid of adjacent mobile ones, which does reduce the potential risk. Moreover, if there were interference problems of this sort, one would assume that they would happen during takeoff, landing and in-flight. Admittedly I am no aeronautical engineer, but I am not sure what kind of case for interference would make just takeoff and landing more risky.

Adjacent band interference was at the center of another debate in early 2012: LightSquared’s troubles with GPS devices. Ultimately, the company could not deploy their 4G network because of the interference problems it created for GPS devices, but these were known problems that LightSquared tried to innovate around. As the piece explains, the FAA announced in October that it would review its policies on the use of electronic devices during all stages of flight due partially to Chairman Genachowski’s instance. Being chastised by the FCC that you need to review your rules is bad, especially considering that it still had a number of outdated telegraph laws on the books until the late 1990s. Perhaps others might be able to comment, but I am at a loss to describe the harm imposed by the rules. Sure these rules are inconvenient, but they are actually better at showing the regulatory inertia whenever any rule is adopted, which should make us all a little more wary.

 

Amazon & Their Taxes

Reuters is reporting on the history and legal problems of Amazon’s taxes. Apparently, last year the IRS demanded $1.5 billion in back-taxes from “transfer pricing [of their] our foreign subsidiaries,” amounting to just under a tenth of their gross annual profit.

The article doesn’t take much knowledge of tax law to understand, but for the  tl:dr crowd, here is the gist:

In 1999, Amazon began to bring foreign profits home from their French and British operations to balance the losses in the US, which at the time amounted to over $1 billion. As the domestic business got into the black, a new problem appeared: the American corporate tax rate, which is the highest in the world, was beginning to increase the total tax bill. The solution was to set up a number of companies in Luxembourg, which has comparatively low corporate rates. However this arrangement is not particularly tax efficient. So, in 2005 an inter-company deal began license fee transfers among the Amazon affiliated companies the the small European country. The technology, for which the license fee was being paid, has never been formally revealed, but it has allowed the company to transfer profits from high tax areas to a low tax regime. At the same time, one of the companies began  payments to the domestic office in Nevada. The difference has since stayed in Luxembourg as cash and has allowed them to have a reserve in $ 2 billion.

In total,

Amazon’s Luxembourg arrangements have helped it pay an average tax rate of 5.3 percent on overseas income over the past five years, less than a quarter of the average rate across its major foreign markets.

After the deal was struck, Amazon began to relocate a number of their European staff to Luxembourg and has since beefed up the entire operation, but now the IRS wants their pound of flesh. And $1.5 billion.

Some might think their strategy is dishonest, but I would say otherwise. It is within US tax law to engage in transfers pricing tax-free, a feature of the code that allows the structure to work. And moreover, the corporate tax rate in American is obscene. We should think carefully, as Adam Thierer notes, on whether we want “tax competition or tax collusion.” I would think that tax competition is the better route, because it demands fiscal  responsibility of governments. It adds, as governments need in these times of ballooning budgets, a huge competitive pressure. It is akin to an entrant in the tax collection “industry.”

The Inseparability of Rights and Duties

On rights and duties by James Otteson:

The test of whether one has a “right” to something is whether someone else has a duty to provide it. The two—a right and its correlative duty—are logically inseparable; like mountain and valley or ebb and flow, one exists only with the other. Hence if no one has a duty to provide you something, you have no right to it; and you can claim a right to something only if it is someone else’s duty to provide it for you.

The Multistakeholder Meeting Illuminates Various Problems of Objectivity

At the NTIA Multistakeholder Meeting this week, it was suggested that all those studies submitted and funded by an outside source be disclosed. Later, when the issue of objectivity came up again, it was suggested that the group should rely on professors to provide objective views.  While I am for disclosure in practice and not necessarily against the academy, both of the suggestions belie a flawed, but pervasive, vision on the connection between objectivity and research.

Sure, corporate funded research has lead to foibles in the past, but there is nothing to suggest the mere connection to a company delegitimizes it; nor are researchers swayed by the intentions of the companies they work with, despite what some of the most vociferous commenters might say. The reason why an individual would engage in research or advocacy of this sort is because their interests are aligned beforehand. Furthermore, companies are able to give researchers the kinds of technical and financial resources that cannot be found in the academy. Corporate labs like Bells Labs, PARC, and from an even earlier time, Thomas Edison’s Menlo Park helped to invent and bring to market the carbon microphone, the lightbulb, the transistor, the laser, the personal computer, the laser printer, Ethernet, and the graphical user interface, just to name a few. Each of these were hugely expensive inventions that might not have been pursued had it not been for the freedom of their arrangement.

Moreover, scientific work is not value-free. As the Nobel Prize winning economist Gunnar Myrdal pointed out,

There is an inescapable a priori element in all scientific work. Questions must be asked before answers can be given. The questions are an expression of our interest in the world, they are at bottom valuations.

The values of a person will affect the range of problems that they are willing to analyze, as well as the choice of variables to be included, which in turn determines the grounds on which a study will be judged. This helps to explain why objectivity in research of society and business is more complex than physics or biology. These features, however, are not magically down away with when you get funded by the National Science Foundation.

Even the NSF funded work is not foolproof. Just last week, the blog Neurobonkers posted a lecture by Prof. Dorothy Bishop, a highly respect professor of developmental neuropsychology, who detailed how brain scans and other typical neuroscientific methods attaches gavitas to hypotheses that are just wrong. As she went on to explain, studies like this are rife in her field. In other words, people love to believe a wrong conclusion back up by “neuroscience,” especially when graphs and charts seem scientific but can hardly be deciphered.

All of this is to say that funding sources do not necessarily separate out the objective from the subjective.

Privacy policy is especially troublesome, but for other reasons related to objectivity. Most of the research that is trotted out in favor of stricter privacy regulations comes from polling data. However, a poll does not actually express risk, but the public’s perception of it. There is a fundamental disconnect then between actual harm and the perception of harm.

In a classic study on the concept of risk, participants were first asked to consider two causes of death and then estimate the rate of each and ratios between the two. When compared against recent statistics, the estimations were off by factors. Participants said that both disease and accidents were about as likely to cause death even though death by disease is 18 times more frequent. Strokes cause almost twice as many deaths as all accidents combined, but 80% of respondents judged accidental death to be more likely. Tornados were seen as more likely to kill than asthma, even though the latter causes 20 times more deaths.

Daniel Kahneman, winner of the Nobel prize for his work on the subject, later said,

The world in our heads is not a precise replica of reality; our expectations about the frequency of events are distorted by the prevalence and emotional intensity of the messages to which we are exposed.

This is why during the Multistakeholder Meeting my colleague Berin Szoka asked that we rely upon experimental data and not polling data. He is correct in wanting a level headed approach because there is a lot of hyperbole effectively swaying the range of debate. He hopes, as well as I do, that calmer voices will prevail in the debate because there are tradeoffs inherent in restricting the use of personal data in the name of privacy.

Notes & Quotes from Richard Pipes’ “Property and Freedom”

  • No society has ever existed without some kind of property, the vision of an ideal propertyless world must be grounded not in collective memory but in a collective longing. p 5
  • Politics for those in The Republic were largely a matter of custom, not law. Hence for Plato, the ideal state would have no statutes.  According to Plutarch, Lycurgus would not permit the rules he laid down for Sparta to be committed to writing. p 9
  • The Stoic school emerged with the rise of the Macedonian Empire.  The legal disparities between the different peoples (Armenian, Bactrians, Jews, Egyptians, Indians, etc.) forced an important question that we have never really gotten away from—given all of the conceptions of justice between the different nations, was there no universal standard of right and wrong, or were the diverse legal canons and procedures merely adaptations of the same universal law to local conditions? p 9
  • We tend to think of the effect of the voyages of discovery mainly in political and economic terms, but it has no less a bearing on the social theories of the day. The discovery of America and the South Pacific islands encouraged a utopian idealism that clashed with the pragmatic idealism of Christian theology and new currents of thought associated with the revival of Natural Law theories. p 22
  • Lenin promised that once Communism triumphed globally, gold would be used exclusively for the construction of lavatories on the streets of the some of the largest cities in the world.
  • Beginning with Helvetius, French philosophes maintained that the decisive factor in shaping human attitudes and conduct was education by which they mean in addition to formal schooling, man’s social milieu and laws.  Private property they saw as the principal obstacle to a virtuous life because it corrupted the personality and produced intolerable social inequalities.  p 40
  • Communism was born halfway through the eighteenth century before the emergence of industrial capitalism and the glaring social inequalities to which it would give rise. It was pure intellectual construct, conceived in the imagination of thinkers who looked backward to a Golden Age. p 43
  • It took time for public opinion to become aware that capital was displacing real estate as the principal form of wealth. p 46
  • Engel’s view was that private property developed first through barter with strangers till it reached the form of commodities.  But until very recent times—Engel’s own in fact—the principle form of property has been land, which for most of history was not a commodity in the ordinary sense of the word and which never had any connection with the division of labor. p 53
  • The whole body of German law is in fact a law in which property reigns supreme.  There was no evidence of common ownership of land which would require periodic redistribution of the soil. p 56
  • Rawls nowhere hints as to how the principles are to be realized.  In his quest for justice, Rawls proposes to reform or abolish “laws and institutions, no matter how efficient and well arranged..if they are unjust.” And for Rawls, injustice is inequality. p 60
    • Arguably though, justice and freedom, and all of the ideals we want to see realized in society become policy issues.
    • Rawls is trying to connect the ought with the is, the normative with the descriptive, but he does not talk about the prescriptive.
  • An Irish observer explained as early as 1903 the constant number of birds of the same species in any given area by the fact that only those birds procreate which manage to acquire a territory on which to breed and raise progeny. In other words, territorial constraints act as an efficient means of population control. p 68
  • Animals defend their territory more fiercely as it shrinks. p 69
  • Evidence gathered by child psycholgists indicates the very opposite to be the case, namely that toddlers are exceedingly possessive and learn to share as they grow up because they are taught to do so. p 71
  • The total population of England during the early Paleolithic is estimated at 250 persons and in France 10,000. p 81
  • The whole territory claimed by each tribe was subdivided into tracts owned from time immemorial by the same families and handed down from generation to generation. The almost exact bounds of these territories were known and recognized, and trespass, which indeed was a rare occurrence, was summarily punishable.

Notes & Quotes to Ithiel de Sola Pool’s “Technologies of Freedom”

  • A public network interconnecting computers must be license and, according to present interpretations of the 1934 Communications Act, may be denied a license if the government does not believe that it serves “the public convenience, interest, or necessity” p. 3
  • The Constitution, in Article 1, Section 8, gives the federal government the right to regulate interstate commerce, but in the First Amendment, equally explicitly, it excludes one kind of commerce, namely communication, from government authority. Yet here is the FCC trying to figure out how it can avoid regulating the commerce of the computer industry (an authority Congress could have given, but never did) while continuing to regulate communications whenever it considers this necessary. The Constitution has been turned on its head. p 3
  • The phrase “communications policy” rings oddly in a discussion of freedom from goverment. But freedom is also a policy. The question it poses is how to reduce the public control of communications in an electronic era. A policy of freedom aims at pluralism of expression rather than at dissemination of preferred ideas. p 8
  • Communications policy can be mapped on a few central questions
    • Definition of the domain in which the policy operates
    • Availability of resources
    • Organizations of access to resources
    • Establishment and enforcement of norms and controls
    • Problems at the system boundaries p 9
  • The physical printing plant was potentially hostage to state action and so the physical

‘Filter Bubble Thesis’ Popped by Real-world Evidence

SOPA and PIPA overshadowed a number of newsworthy releases at the end of January, and in the scuffle, a study dissecting Facebook’s information networks seemed to have been lost. However, it lobbed an empirical salvo in the Filter Bubble war.

Working with Facebook, Eytan Bakshy, a newly-minted PhD in information theory, ran an experiment on the social network to better understand how individuals share information through their web of relations. Conducted over seven weeks in the summer of 2010, the experiment randomly suppressed links shared through the Facebook “Like” button—so some users wouldn’t see links that would normally have appeared in the Facebook “News Feed” of content shared by their friends. However, they weren’t completely cut off from these links, as users could still share links through information outlets other than Facebook.

Bakshy’s experiment was not a shot in the dark. In the early 1970s, sociology expanded into network theory when Mark Granovetter published his seminal paper, “The Strength of Weak Ties.” Granovetter studied people who found jobs through personal contacts. Of those surveyed, nearly half said they found their then-current employment from someone that was was “not a friend, an acquaintance”—people that they knew, but had minimal contact with. From this, Granovetter correctly surmised that the people we are not close to (what he called weak ties) play an extremely important role in social cohesion and information sharing.

People who are similar tend to interact with one another. Homophily, as this is called, is a well known social dynamic. Conversely, those who do not interact often tend to be dissimilar, which also extends to the kind of information that they have. As Granovetter helped to show, weak ties tend to have novel information, and thus when the gap between clusters of close relations are bridged, novel information flows between the two groups. However because this doesn’t often occur, any particular piece of information is less likely to flow between two groups.

As Bakshy explains in his summary posted on Facebook,

We found that even though people are more likely to consume and share information that comes from close contacts that they interact with frequently (like discussing a photo from last night’s party), the vast majority of information comes from contacts that they interact with infrequently.  These distant contacts are also more likely to share novel information, demonstrating that social networks can act as a powerful medium for sharing new ideas, highlighting new products and discussing current events.

This finding seriously undermines a number of arguments proclaiming the Internet has a tendency to trap us in echo-chambers. In the most recent example, The Filter Bubble, Eli Pariser questioned the benefits of personalized content like Facebook’s EdgeRank algorithm, Netflix’s movie suggestions and Amazon’s book recommendations. Pariser argued these “filters” narrow the range of voices to which users are exposed, fracturing the “marketplace of ideas” and “enclosing” or “feudalizing” our society’s discourse about key subjects. Pariser should be commended for taking the bulwarks of communication theory (framing, agenda setting, and priming) seriously, but filtering is considerably different problem than media scarcity. Where we now filter views, previously there just wasn’t as many views expressed.

Pariser’s worries are similarly echoed by Cass Sunstein, who noted in Republic.com, that the Internet allows “people [to] restrict themselves to their own points of view—liberals watching and reading mostly or only liberals; moderates, moderates; conservatives, conservatives; Neo-Nazis, Neo-Nazis,” resulting in fewer of the “unplanned, unanticipated encounters central to democracy itself.”

While there is still much to learn about information processing, we know that Facebook and other social networking sites have the tendency to increase weak ties, which, as Bakshy shows, will tend to increase the exposure to novel information.

These notions of feudalizing social discourse are also not informed by history. In The Good Citizen, the most nuanced history of citizenship available, Michael Schudson documents the transformation in our expectations of citizenship. He takes on the idealized “informed citizen,” which, as he rightly points out, was not an expectation in eighteenth-century political circles. Rather, it took hold in the later part of the nineteenth century as education began to spread, finally becoming the yardstick it is today when the Progressives coupled public education and civic participation. His telling of the transformation of late 19th century politics reads as a warning to those who think we are losing the “unplanned, unanticipated encounters central to democracy itself,”

Both sides of this political equation—on the one side, lively political campaign and deeply held political loyalties; on the other, a politics light on ideas or efforts to arrive at a public good, a politics of sections, jobbery, ethnic, racial, and religious scares and slurs—must be recognized as one of the cultural contradictions of democracy…

[As the power of the partisan press begun to diminish] the act of reading a newspaper and the process of political education changed; the discourse of citizenship and citizenship ideals was transformed. The outcome was a world in many respects more democratic, inclusive, and dedicated to public collective goals, and, for all that, less politically engaging.

Schudsen’s history and Bakshy’s research, as well as others, suggest a longer trend in knowledge—rather than becoming more constrained in their views, people are actually becoming more informed about a wide diversity of opinions.

Unsurprisingly, Slate’s coverage attempts to undermine the study’s credibility:

At the same time, there’s an obvious problem with Bakshy’s study: It could only occur with the express consent of Facebook, and in the end it produced a result that is clearly very positive for the social network… If Bakshy’s experiment had come to the opposite conclusion—that, say, the News Feed does seem to echo our own ideas—I suspect they wouldn’t be publicizing it at all.

Although longstanding theory actually predicts this outcome, the benefit for Facebook is far greater than most are pointing out in their coverage (as is the reputational benefit for a network researcher in a tight PhD labor market). Not only does Facebook gets concrete information about the diffusion of information on their social network, it dispels a growing source of concern about Facebook’s effects on society—and, indeed, suggests Facebook probably increases the diversity of our experiences of the world.

Ultimately, this study complements the nuanced view that serious network theorists, communication scholars and psychologists are constructing about knowledge acquisition on the Internet, a nuance that can hardly be extended to policy prescriptions meant to “pop the filter bubbles.” Evgeny Morozov recently suggested that we should  “nudge search engines to take more responsibility for their index and exercise a heavier curatorial control in presenting search results for issues like ‘global warming’ or ‘vaccination.’” Beyond the obvious first amendment issues, Morozov drastically simplifies how information is gathered online. It could be that simple solutions solve complex issues, but having an incomplete grasp of informational diffusion on social networks will never allow for those solutions to be realistic.