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2007-12-03 12:25:24
Mark Sullivan, PC World Sun Dec 2, 11:00 PM ET
Their names keep coming up over and over again in courtrooms and corridors of
power across the country--those groups whose interests always seem to run
counter to those of technology companies and consumers. They come in many
forms: associations, think tanks, money-raising organizations, PACs, and even
other tech-oriented industries like telecommunications.
The tech issues that they're concerned with are what you might expect: digital
rights management and fair use, patent law, broadband speed and reach, wireless
spectrum and network neutrality. I talked to a good number of tech and media
policy insiders in Washington, D.C.--mostly off the record--to find out who
these groups are, how they operate, and who pays their bills. We'll start with
the biggest offenders first and work our way down.
1. The Recording Industry Association of America (RIAA) and the Motion Picture
Association of America (MPAA)
Issue: Copyright and Fair Use
The Internet economy should be a boon for digital media companies and for those
of us that like to buy our music and video online. It's also a very powerful
way to connect with people of like mind with a view toward learning about new
things to watch and listen to. Unfortunately, the content owners in the record
and movie industries have mainly seen the Web as a platform for piracy, and
have mainly failed to adapt their businesses to the realities of online, as one
lonely industry executive recently admitted.
The record and film industries are represented in legal and policy matters by
two major organizations--the RIAA and the MPAA--with some key individual
companies like Warner Music Group and Disney acting on their own behalf in
certain cases. The RIAA and MPAA have exercised considerable political and
economic influence to push a legal and policy environment in which the content
owners keep tight control of the way their content is distributed and used. "I
think it's fair to say that their approach is that any innovation that they
haven't signed off on is bad," says Fred von Lohmann, senior intellectual
property attorney at the Electronic Frontier Foundation.
Lots of Lawsuits
Companies distributing music or video in ways the studios or labels don't
approve of have quickly found themselves MP3.com) BeamIt service, which helped
users to upload and store music from their CD collections in an online locker.
Earlier this year Warner Music Group filed an infringement lawsuit against the
social networking site imeem, which allowed its members to post songs on their
profile pages that could be streamed by other users. San Francisco-based imeem
was forced to settle out of court and now can stream only songs from labels
with which it has contract agreements. All other songs run for 20 seconds and
then stop.
On the video side, some major copyright infringement lawsuits against YouTube
(sued by Viacom) and MySpace (sued by Universal) are still in progress. If
these suits end badly, they could further restrict our access to online video
and even endanger the video operations of YouTube and MySpace. Video copyright
lawsuits are also in progress against the DivX Stage 6 and Veoh online
services.
A Chilling Effect
The suits are a real threat to the next generation of bi-directional,
participatory Web services that are the promise of Web 2.0. The Electronic
Frontier Foundation's von Lohmann believes this year's suits against imeem and
others are just "the tip of the Web 2.0 litigation iceberg."
Von Lohmann also thinks the suits may hurt legitimate companies while leaving
the real content pirates untouched. "I think it's fair to say that copyright
threats from entertainment industries are exerting a serious chilling effect on
several companies that are trying to do the right thing, while having little
impact on offshore companies that are more adventurous," von Lohmann says. "In
other words, the innovation that should be fueling our economy is now fueling
someone else's."
Leverage in Washington
The RIAA and MPAA have worked very hard in Washington to apply the aggressive
posture they use in the courts to the policy-making arena. Their attorneys and
lobbyists are constantly meeting with members of Congress and presenting their
side of issues of concern (mainly copyright-related) in front of regulatory
bodies like the Federal Communications (FCC). And, most would agree, they've
been fairly effective at getting their way. "Their combined muscle in lobbying
and inter-corporate pressure is pretty substantial," says von Lohmann says.
Both organizations have their own staffs of lobbyists in Washington, but both
also contract with numerous outside lobbying firms. In 2006 alone, the RIAA
reported lobbying expenses of $1.5 million, while the MPAA reported $1.8
million. The RIAA retained the services of 13 outside lobbying firms in 2006 to
help make its case to lawmakers, while the MPAA used 17 outside lobbying firms.
The content owners also donate to candidates for federal office as a way of
furthering their long-term agendas. For example, Time Warner gave $17 million
to various candidates for federal office between 1989 and 2005, says the Center
for Responsive Politics. The Walt Disney Company donated almost $9.5 million
during that period.
Whether or not the RIAA's and MPAA's tactics have really helped the
entertainment industry is debatable. Their legal and lobbying tactics have put
real limitations on the way that we consumers are allowed to use the digital
content we purchase, causing many of us to wonder if we truly own the digital
content we buy. The digital rights management (DRM) software that the content
owners wrap around our music and video files often prevents us from playing
media on all of our devices, copying it, or owning it forever. This has stirred
up a lot of resentment, even as file sharing continues to be rampant around the
globe.
2. The Pharmaceutical/Biotech Industry
Represented by Pharmaceutical Research and Manufacturers Association (PhRMA)
and Patent Attorneys
Issue: Patent Reform
Over the last ten years it's become increasingly obvious that the system we
have for patenting new tech ideas is broken. The number of tech patents granted
by the U.S. Patent Office has gone way up over the past decade, while the
quality of those patents has gone way down, most analysts agree.
A bad patent can mean one that covers too broad a swath of technology,
preventing others from innovating in that area. It can also mean patents
granted for ideas that are obvious--ideas that aren't really innovative, but
just take the next logical step in the development cycle. When such bad patents
are granted in a certain tech area, it can take away the incentive for other
technologists to innovate and invest in that area. That's bad news for those of
us who expect new and better tech toys every year.
Problem is, tech is not the only industry that uses the patent system to
protect intellectual property. Every other industry uses it too, and some of
them feel strongly that it's working just fine. Enter the pharmaceutical
industry, tech's unlikely adversary in the battle over patent reform. The
pharmaceutical industry (and its attorneys) might end up directly affecting the
state of personal technology for you and me.
"Basically, two constituencies oppose patent reform: The biomedical
industry--pharmaceutical and biotech companies--who rely on patents and want
them to be as strong as possible, and patent lawyers, who are both resistant to
change in general and likely fearful of how reform will affect their
practices," explains Stanford Law Professor Mark Lemley.
Big Pharma in Washington
The big pharmacy companies--think Johnson & Johnson, Pfizer, and Merck--have
megabucks not only to pay attorneys for patent work, but also for lobbying
lawmakers to keep the system the same. Pfizer, for instance, reported $12.2
million in lobbying expenses for 2006 alone.
Much of the pharmaceutical and biotech industries' lobbying work is done by or
through the Pharmaceutical Research and Manufacturers Association (PhRMA),
whose members include practically all of the big pharmaceutical companies with
interests in the U.S. market. PhRMA reported spending $18.1 million in lobbying
expenses in 2006 (ranking it the 7th biggest lobbying organization in the U.S.
for the year), most of which was used to hire the services of 42 external firms
to help influence regulatory bodies and lawmakers. PhRMA has spent more than
$115 million on lobbying since 1998.
Big Pharma also exerts its influence by donating to federal candidates and
political parties, although the biggest money comes directly from the large
pharmaceutical companies themselves, not their industry organization, according
to data from the Center for Responsive Politics. For instance, Pfizer has
donated $11.6 million to various candidates from 1989 through 2006, and
Bristol-Myers Squibb gave $6.8 million to various candidates during the same
period.
But, as Stanford's Lemley points out, Big Pharma isn't the only dog in the
fight. Thousands of patent attorneys represented by the American Intellectual
Property Law Association (AIPLA) also are fighting patent reform. With the
sheer number of patent grants soaring in recent years, being a patent attorney
has never been more lucrative. Not only do inventors need legal help to file
for patents, but there are far more legal squabbles between companies over
patents than ever before; this also keeps patent attorneys' phones ringing.
Battling the Bill
This year both PhRMA and the AIPLA have been out lobbying against a new bill
called The Patent Reform Act of 2007, which would change the patent rules in
favor of tech interests. The bill was passed by the House in September. A
Senate version of the bill was passed in committee but awaits a hearing and
possibly a vote by the full Senate.
Unlike some other tech policy issues, the players involved with patent reform
are not playing rhetorical games on the issue, at least not right now, says one
House staffer. "You have a difference in philosophy between pharma/biotech and
tech," the aide says. "Both sides are being totally forthright about what they
want, but both sides have such different philosophies and they're so different
in the way they use patents that it's almost irreconcilable."
3. Big Telco Companies, Industry Group USTelecom
Issue: Network Neutrality
Network neutrality principles are rules that prevent large Internet service
providers (ISPs) like AT&T, Verizon, and Comcast from giving one Internet
company's traffic priority over another's. Up until now, the Internet has been
a fairly neutral place--we have equal access to any (legal) content we choose
to access. But if the big ISPs begin giving preferential treatment to the
highest-paying Internet sites, they could effectively make it harder for us
consumers to access some of the vast content and services on the Web. The next
Google and Yahoo of tomorrow, now gestating in garages and dorm rooms across
the country, likely wouldn't have the funds to buy enough bandwidth to compete
with the Google, Yahoo, and other giants of today. That's bad for us, because
the companies of tomorrow might simply be better.
The phone companies had at one time reserved the right to parcel out bandwidth
as they saw fit, as evidenced by the words of former AT&T CEO Ed Whitacre in
late 2005:
"How do you think [Internet companies are] going to get to customers? Through a
broadband pipe. Cable companies have them. We have them. Now what they would
like to do is use my pipes free, but I ain't going to let them do that because
we have spent this capital and we have to have a return on it." And so began
the network neutrality fight we know and love today."
What Smoking Gun?
But so far there's been no smoking-gun evidence that the "Internet tollbooths"
Whitacre alludes to are being set up on a large scale--that major net
neutrality breaches are taking place at the big ISPs. We've seen only
borderline offenses like traffic by competing Internet, telecommunications and
broadcasting interests. Such spectrum is considered to be "beachfront
property," partly because the signals that can be sent over it travel over long
distances and can be received well indoors.
The 700-MHz War
The FCC will auction off 60 megahertz (MHz) of that spectrum within the 700 MHz
band in 2008. A coalition of tech and public interest groups led by Google,
called the Coalition for 4G in America, earlier this year argued hard for the
FCC to apply a set of "open" standards to the entire 64-MHz chunk, so that it
would support any device or any application. The FCC eventually agreed to that
requirement for about half of the 64-MHz band of spectrum. Google acted at
least partly out of self interest: The public Internet, whether accessed via
landline or wirelessly, is Google's sole means of getting its services to the
public, so of course it wants its search service to work over as many connected
devices as possible.
Google and its coalition also asked the FCC to require the eventual licensee of
the spectrum to share its network with competing wireless service providers.
Under pressure from big wireless carriers like Verizon Wireless and Sprint, the
FCC refused this last request. The wireless carriers want to be able to utilize
and market that spectrum in the same way they do now--so that only certain
devices work on the system in certain markets, while they remain under no
obligation to share the network with other providers. The carriers accused
Google and friends of simply trying to devalue the spectrum.
They also accused the Google coalition of trying to drive down the value of the
spectrum to those who might build new networks on it. Here's the spin from the
wireless carriers' industry group, the Cellular Telecommunications Industry
Association (CTIA): "CTIA opposes encumbering this valuable spectrum with
unnecessary regulations and restrictions that place bidders on unequal footing,
limit the utility of the spectrum, and ultimately drive down the value to
consumers and the U.S. Treasury." CTIA says the spectrum, unencumbered, will
"drive technological innovation, bring advanced wireless data services to rural
America, and... contribute billions to the U.S. Treasury."
Google and its coalition partners believe that an "open" and nationwide
wireless network using the 700-MHz band could create a third broadband pipe, an
alternative to the cable or DSL lines sold by the cable and telephone
companies. Of course, the big wireless incumbents are against this because they
don't want the competition from a "third pipe." This is a worrisome situation,
since the one person who could require that the band be open, FCC chairman
Kevin Martin, has a long history of deregulatory and Big Telco-friendly
rulings. Indeed, in Washington, if Big Telco really wants something, it usually
gets it.
Between the Channels
After the broadcasters' transition to digital TV in 2009, the spectrum between
54 MHz and 698 MHz (between channels 2 through 51) will be used for digital
television, but there will be spaces left over between the channels that could
be used for other purposes. Those are called "white spaces," and the FCC is
considering auctioning off licenses to that spectrum, too.
Technology companies like Microsoft are hoping to use some of that white space
to connect low-power, mobile devices (such as laptops and iPhone-type PDAs).
But the TV broadcasters, represented by the National Association of
Broadcasters (NAB), have launched a large lobbying campaign against using white
spaces for Internet access. The NAB, through its lobbyists and TV ads, is
saying that such devices will definitely interfere with the digital TV signal,
which they say would result in poor picture quality for the folks watching at
home.
Most recently, the FCC's Office of Engineering and Technology tested a couple
of devices to see if the broadcasters' fears are reasonable. The "High Tech
White Spaces Coalition" (a collection of companies that includes Google,
Microsoft, Dell, and Intel) submitted a device to be tested, as did Philips
Electronics.
The results were complex, and left some doubt about the tech companies' claims
that the devices would not interfere. The NAB immediately seized on this as a
victory, but most observers would agree that more testing is necessary to
decide the issue. The FCC has made no final decision, and the jury is still out
on whether white spaces can be used to improve connectivity in the U.S.
What You Can Do
The outcomes of the legal and policy fights described above will have a direct
affect on the quality, price, and functionality of the technology we consumers
use in the coming years. If you care about such things, there are a number of
ways to put yourself in the arena. The first thing is to get informed about the
tech issues being discussed locally and nationally--PCWorld.com is a good place
to start for that. Once you're armed with enough information to be dangerous,
you can research a little further and discover exactly where your local, state,
and federal representatives stand on the tech issues you care about. If you
don't like what they say, e-mail, call, or write them and ask them to explain.
The Internet has also become a powerful tool for tech advocacy, and for
virtually any major tech issue, you'll find a number of informational sites.
These sites typically offer up-to-date news, opinion blogs, and studies to keep
you informed, as well as petitions, contact information for elected officials,
and form letters to help you make your views known.
Finally, tech policy is a major plank in the platform of any local, state, and
national candidate for public office nowadays. Using resources like On The
Issues.org, you can learn where the candidates stand on the tech issues that
affect you, before giving them your vote.