Topic: Telecom, Internet & Information Policy

Summer Regulation: Does the Internet Need Saving?

Yesterday was the first day of Summer, and you know what that means? Sun, sand, the great outdoors…and a new issue of Regulation magazine. This issue contains a number of interesting articles that will be discussed in the coming months.

The cover articles provide perspective on the FCC decision to impose traditional public utility regulation on the internet. “What Hath the FCC Wrought”, by University of Pennsylvania professor and former FCC chief economist Gerald Faulhaber, argues that service quality will suffer to the extent that service providers can’t charge more for streams that require greater provider resources. Kansas State professor Dennis Weisman argues that internet regulation will likely protect competitors from competition rather than serve consumer interests just like the old telephone regulatory scheme.

A pair of articles discuss healthcare policy. West Texas A&M’s Neil Meredith and Heritage Foundation scholar Robert Moffit examine provisions of the Affordable Care Act encouraging the development of multi-state health plans (MSPs) intended to provide larger insurance pools while overcoming some of the regulatory burdens of state-regulated plans. They argue that eliminating questionable requirements would give consumers more opportunities to use MSP insurance.  University of Arizona professors Christopher Robertson and Keith Joiner propose two changes to health insurance to improve efficiency.  The first would set the stop-loss limit as a constant percent of wages rather than a fixed dollar amount.  The second would pay patients directly a portion of the cost of high-cost low-evidence-of-benefit procedures regardless of whether they obtained the procedure.  This would induce patients to think more carefully about the benefits of expensive uncertain-benefit procedures.

This issue continues Regulation’s long history of examining housing policy. Some Federal housing programs subsidize developers through tax credits to build affordable rental housing while other programs provide assistance directly to tenants in the form of vouchers. Edgar Olsen of the University of Virginia makes the case for moving to an all-voucher housing assistance program.

The Social Security Disability Insurance (SSDI) fund will run out of money in 2016. Consultants A. Bentley Hankins and Jeffrey Joy propose five reforms that would update the program to reflect increased life expectancy and the changing skill requirements of jobs.

For many decades, articles in Regulation have referenced work of the late Gordon Tullock to explain the political economy of regulatory policy. Zachary Gochenour examines Tullock’s legacy, and speculates about future trends in the field of public choice economics that he helped build.

For these articles and many more, read the full issue of Regulation here.

The Patent & Trademark Office Has a Slanted View of the First Amendment

Yesterday’s Supreme Court ruling regarding Confederate-flag license plates isn’t the last word on First Amendment protection for “offensive” speech. Indeed, it doesn’t even resolve all the issues related to government-insinuated expression. One case working its way through the lower courts regarding a controversial trademark – but not this one! – illustrates some of the pitfalls inherent in allowing the government to act as censor, for whatever reason.

A musician named Simon Tam wanted to “take back” and “own” what had previously been used as an ethnic slur by calling his Asian-American rock band “The Slants.” The Patent and Trademark Office found that this trademark was disparaging to Asians, however, so refused to register it under § 2(a) of the Lanham Act. This provision says, among other things, that the PTO may refuse to register a trademark that “[c]onsists of … matter which may disparage … persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.”

This refusal to register the trademark was affirmed by a three-judge panel of the U.S. Court of Appeals for the Federal Circuit. But then the entire Federal Circuit—without being asked!—decided to erase that decision and consider whether § 2(a), or at least its application here, violates the First Amendment.

House Leadership Blocks Key Intelligence Reforms

The House GOP leadership’s hostility to reforming the U.S. Intelligence Community is on full display this week. The House Rules Committee (which is controlled by House Speaker John Boehner) blocked several key reform amendments to the annual Intelligence Authorization bill from even reaching the House floor for consideration.

Furious over an op-ed by Privacy and Civil Liberties Board chairman David Medine that called for an independent review of the executive branch’s “assassination-by-drone” policy, House Intelligence Committee chairman Devin Nunes (R-CA) included language in the annual Intelligence Authorization bill banning the PCLOB from examining the “covert” drone program. A bipartisan amendment (led by Rep. Jim Himes of Connecticut) that would have struck that language was barred from consideration.

Last week, the House passed a bipartisan amendment to the annual Defense Department spending bill baring the federal government from using taxpayer dollars to search the stored communications of Americans collected by NSA. That same amendment would also prevent the federal government from mandating that American tech companies build encryption-defeating “back doors” into their products. The authors of that amendment, Democrat Zoe Lofgren of California and Republican Thomas Massie of Kentucky, wanted to make those provisions permanent, but their amendment was also blocked.

#TakenInByDHS

Are journalists across the nation working to establish a national ID in the United States? Most would object, “Certainly not!”

But in reporting uncritically on the Department of Homeland Security’s claimed deadlines for implementing the U.S. national ID law, many journalists are unwittingly helping impose a system that the federal government may one day use to identify, track, and control every American. Today I’ve started Tweeting about news articles in which this occurs with the hashtag #TakenInByDHS.

Under the terms of the REAL ID Act, which became law more than ten years ago, states were supposed to begin issuing licenses according to federal standards by May of 2008. States that didn’t follow federal mandates would see their residents turned away at airports when the Transportation Security Administration declined their drivers’ licenses and ID cards.

The DHS failed to issue implementing regulations timely, and backed off of the statutory deadline by regulatory fiat. No state was in compliance with REAL ID on deadline, and no state is compliant with REAL ID today. Over the years, the Department of Homeland Security has declared a variety of milestones and deadlines in a fairly impotent effort to bring state driver licensing policy under federal control. Many states have resisted.

The reason for DHS’s impotence is that making good on the threat to prevent Americans from traveling would almost surely backfire. If already unpopular TSA agents began refusing Americans their right to travel, it would be federal bureaucrats and members of Congress getting the blame—not state legislators.

But most state legislators haven’t done this calculation. They are reluctant to create a national ID, and they don’t want to expend taxpayer funds on a program that undercuts their constituents’ privacy. But told of their potential responsibility for bedlam at local airports, they will accede to such things.

Snowdenversary Gifts for Privacy Advocates

Today marks the second anniversary of The Guardian’s first blockbuster story derived from files provided by former NSA contractor Edward Snowden—launching what would become an unprecedented deluge of disclosures about the scope and scale of communications surveillance by American intelligence agencies. So it seems appropriate that this week saw not only the passage of the USA Freedom Act, but also the approval in the House of several privacy-protective appropriations amendments, about which more momentarily.  Snowden himself takes a quick victory lap in a New York Times editorial reflecting on the consequences of his disclosures, (very much in line with his remarks during our interview at the inaugural Cato Surveillance Conference):

Privately, there were moments when I worried that we might have put our privileged lives at risk for nothing — that the public would react with indifference, or practiced cynicism, to the revelations.

Never have I been so grateful to have been so wrong.

Two years on, the difference is profound. In a single month, the N.S.A.’s invasive call-tracking program was declared unlawful by the courts and disowned by Congress. After a White House-appointed oversight board investigation found that this program had not stopped a single terrorist attack, even the president who once defended its propriety and criticized its disclosure has now ordered it terminated.

He’s referring here to last month’s appellate court ruling against the notorious telephone records dragnet, followed this week by passage of the USA Freedom Act.  That law should bar bulk collection not only under §215 of the Patriot Act, the basis of the phone program, but also under §214—the “pen register” provision previously used to vacuum up international Internet metadata—and National Security Letters, which can be issued by senior FBI officials without judicial approval.  Since the latter two authorities are permanent, they would not have been affected by what quite a few lazy reporters described as “the expiration of the Patriot Act,” though in fact only about 2 percent of the law’s provisions were actually due to sunset.  While the law is far from ideal, incidentally, I think it does constitute more robust reform than many libertarians fear, for reasons I lay out in this piece at Motherboard and this blog post at Just Security.  It will, of course, be necessary to vigilantly watch for efforts to water down the law’s protection—something the public is finally at least somewhat empowered to do by a transparency provision requiring significant legal interpretations by the secret Foreign Intelligence Surveillance Court to be published in unclassfied form.

Good Precedents against NSA Spying

With debate about NSA spying continuing in the Senate, it’s worth looking at some of the historical and modern precedents for protecting our communications and communications data. A few highlights:

  • The earliest precedent for protection of communications in the United States is the treatment of mail. The founders used postal mail to communicate their revolutionary ideas and even to plan their insurrection against the tyranny of King George, so they prioritized protecting the privacy of the mail. In the Act of Feb. 20, 1792, passed a few short years after ratification of the Constitution, the U.S. Congress enshrined protections for mail in the law, creating heavy fines for opening or delaying mail.
  • The Supreme Court confirmed the existence of constitutional protection for postal communications in Ex Parte Jackson. In that 1877 case, the Court described the Fourth Amendment’s guarantees in very interesting and clear language: “Letters and sealed packages … are as fully guarded from examination and inspection, except as to their outward form and weight, as if they were retained by the parties forwarding them in their own domiciles.” Though we place mail in the hands of government agents, the Fourth Amendment protects it like it’s inside our homes.
  • The year Ex Parte Jackson case was decided, both Western Union and the Bell Company began providing voice telephone service. The Supreme Court addressed constitutional protection for phone calls some decades later in 1928. The Olmstead case was wrongly decided, we now know. It found that telephone communications weren’t protected by the Constitution. So the dissents are where to look for precedential language. Justice Brandeis’s famous dissent spoke of the “right to be let alone,” but Justice Butler provided thinking and language that should have more lasting value: “The contracts between telephone companies and users contemplate the private use of the facilities employed in the service,” he wrote. “The communications belong to the parties between whom they pass.” The communications belong to the parties. That’s a fasacinating and important way to think about our communications, as property that we own.

How Much Profit Is There in Thwarting Financial Innovation?

Ben Lawsky is resigning as superintendent of financial services in New York. The New York Times says he plans to open his own firm and lecture at Stanford University. The Post reports that he will consult on digital currencies such as Bitcoin.

The move West suggests that Lawsky may want a piece of the action in Silicon Valley. If he does, it’s worth noting that the action is not in New York.

Lawsky was a leading Bitcoin antagonist. Bitcoin has not particularly flourished in New York, and Lawsky’s work makes it unlikely that New York will be a Bitcoin-friendly jurisdiction.

Ben Lawsky welcomed Bitcoin in August 2013 by sending out subpoenas to everyone in the Bitcoin world. He went on television talking about the “real dangers” of Bitcoin, including use by “narco-terrorists.” (Asked for evidence of Bitcoin misuse, he cited a centralized digital currency called Liberty Reserve, which is not Bitcoin.)

Around the same time, Lawsky precipitously announced a plan for a special “BitLicense.” Shortly after producing it, his office violated New York’s Freedom of Information Law by refusing to release the research and analysis that it claimed to have done to validate the regulation. The NYDFS found that the BitLicense would have no impact on employment in the state, after which investors poured hundreds of millions of dollars into Bitcoin companies outside of New York. (See my comments to the NYDFS for more.)