A Quick and Dirty Guide to Net Neutrality

For the past month, the internet has been publishing articles, blogs, opinions, and quotes on “net neutrality.”  It effectively blew up last week when the White House released a statement on net neutrality with President Obama throwing his full support behind it.  However, for well over a year, net neutrality has been a concern for gamers, internet users, and business owners that depend on internet “traffic” for revenue.  I touched on it months ago, but now that it is getting the attention it deserves, it’s time to give people a crash course on net neutrality and the potential effects of what the FCC may decide.

How does the internet currently “work”?

To understand net neutrality, we need a basic understanding of how the internet works.  Admittedly, I lack the technical knowledge to describe the transfer of data and packages between computers in a coherent way.  However, the term “information superhighway,” though dated, is aptly suitable to understand how it works.  Essentially your computer/phone/laptop communicates with other devices or servers.  It does this by sending streams of data through cables or routers.  Imagine your computer as a small shack connected to a 2-way road.  Up the road, it connects to a 4-way road, and further on it connects to a 8-lane highway.  The roads all intertwine and connect to each other, but essentially you are sending data out and also receiving data coming in.  At the top-level of this superhighway are the Internet Service Providers (ISPs).  These establish the rules of the road.  Costs, speeds, usage, and access are controlled by them.  We know of them as Comcast, Time Warner, RCN, AT&T, Verizon, etc.

What has changed?

For the longest time, the internet was governed by a simple principle: all content, know matter its size or origin, should be treated equally.  Data from a Google server travels at the same speed as data from a site bought on GoDaddy.  Furthermore, ISPs could not prevent access to competitors.  This rule was formally established in 2011 by the Federal Communications Commission (FCC).  However, Verizon challenged the rule in court and won.  The result was that the FCC could not enforce net neutrality rules against ISPs as they are not “common carriers.”  Skipping through a lot of legal definitions, the practical result was an elimination of net neutrality.  The FCC announced it would establish new rules, but a new chairman and recent events have given rise to concern as to who would benefit from the new rules.

What are the “Special Lanes” I hear about?

The “special lanes” that keep getting tossed around come from the FCC proposed rules earlier this year.  If put into effect, they would allow ISPs to build special lanes allowing faster internet service to customers for certain websites.  Returning to our highway analogy, let’s imagine the internet having a speed limit of 65mph.  The rule would allow the ISPs to build a special lane with a 90mph speed limit.  However, access to this new lane would cost you.  The ISPs would be able to affect the flow of internet traffic to websites depending on the price they set for faster lanes.

Do you have any examples of such actions?

Yes. Yes I do.  Just this past February, Netflix came to an agreement with Comcast on usage rates, paying a much higher level.  At first, the deal was considered just a market-based agreement to deal with Netflix’s higher demand.  However, something stunk.  Netflix speeds were slowing leading up to the deal and then quickly surged afterwards.  While the surge was expected, some began calling foul play.  Sure enough, the data speeds seemed off than just mere congestion.  In fact, it’s becoming clear that Comcast had decided to start “throttling” Netflix’s usage speeds.  Prior to the negotiations, Netflix used a 3rd party provider that had an agreement with Comcast.  As usage increased with the 3rd party, Comcast would adjust the routes to allow more data to flow freely.  However, once Comcast learned that Netflix was the cause of the increases in usage, the adjustments stopped.  What had been an amicable agreement quickly turned sour as Netflix customers could no longer stream content quickly.  Forced to the table, Netflix eventually paid more money for direct connections through Comcast.  While there was no rule against it, the idea of restricting someone’s access to users in exchange for money starts to feel like extortion pretty quickly.

How can this affect me?

If you stream video, work online, or use the internet regularly, the costs of faster lanes will undoubtedly get passed on to you.  Furthermore, once a precedent of charging for usage is set, ISPs could easily turn it back on customers that have high usage rates as well.

However, the bigger issue is the effect on internet businesses.  As the internet becomes an even more necessary part to running a business, greater rates for more access to customers will become a problem.  The costs for owners to run an online marketplace will increase.  Established companies such as Google, Amazon, and Facebook will survive the rate increases, but the sluggish speeds for smaller companies could easily kill their chances to succeed.  Companies that try to pay the higher rates will eventually pass on the costs to consumers.  Such lanes hurt competition, which hurts consumers.

What else could the ISPs do?

There are major concerns about blocking, throttling, and the effect a lack of regulation would have on both the ISP market and internet businesses.  Let’s look at them individually.

  • Blocking:  Blocking refers to the ISPs blocking access to a website for certain consumers.  For example, Comcast provides television, phone, and internet access.  In addition, the company recently acquired NBC Universal.  As an internet provider, Comcast controls the flow of data from Netflix, YouTube, Amazon, etc. to its consumers.  However, as a television provider and network owner, Comcast also has an incentive to increase viewership of NBC and its television properties.  Since internet video providers are a threat to NBC properties, there is an inherent conflict of interests in having to provide internet access to competitors.  What blocking allows is for Comcast to deny their customers access to competitors.
  • Throttling:  Throttling is the purposeful slowing down of data speeds.  The perfect example is the Netflix and Comcast deal above.  Essentially, ISPs can control the speed of websites as a negotiating tactic.  The problem is that the higher prices of those contracts will get passed on to the average consumer at the end of the day.

Won’t competition among the ISPs keep these things from happening?

Short answer: No.  Long answer: No because competition does not exist.  While there are dozens of internet providers across the country, the top 3 (Comcast, AT&T, and Time Warner) cover the vast majority of Americans (almost 50 million customers).  On top of that, Comcast and Time Warner are still seeking to merge and effectively monopolize the internet.  In Chicago, I currently have a choice between Comcast or AT&T in my building.  While RCN and some smaller providers to exist, their service is only found in certain locations.

The fact is that infrastructure costs, existing market shares, and the opposition of current competitors make it difficult to start an ISPs.  So far only Google and small municipalities have been able to start their own internet services.  While regulation is often seen as the bane of a free market, in this situation a free market simply does not exist.

So what is net neutrality then?

Well, net neutrality can mean a lot of things to a lot of people.  But the overarching theme is equal speeds and equal data.  A rule enforcing net neutrality would seek to outlaw throttling, blocking, and special lanes.

The common idea thrown around is establishing the internet under Title II of the Telecommunications act with forbearance to rate regulation and provisions not related to broadband service.  This would effectively establish net neutrality by equating broadband with your phone service.  Under Title II you are allowed access to a phone line and you cannot be restricted in calling someone else who has another provider.  Basically, it would make it illegal to throttle, block, or prioritize data.  What the forbearance line means is that the government will not set rate prices or use regulations that clearly don’t relate to broadband services.

So why are all these politicians getting involved?

Money, youth vote, anti-government, freedom of internet.  You can pick your reason and find an opinion out there to match.  When President Obama made a statement on the issue, it became the forefront topic of politicians for the week.  Some politicians immediately came out against net neutrality, likening it to “Obamacare”.  However, such rhetoric serves no one.

The simple thing you need to remember is that regardless of your politics, 3.7 million people sent comments to the FCC in favor of Net Neutrality, the most comments on any FCC rule.

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What a Fast Lane on the Internet means for the average consumer.

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Fresh off a defeat in the appellate courts, the Federal Communications Commission decided to tweak its new rules by allowing Internet Service Providers to create fast lanes for web traffic.  Essentially this means that your regular ISP’s will be able to charge companies like Google, Netflix, and Disney for faster service to provide web content.  According to the New York Times, would likely raise prices for streaming video or any other higher volume websites.  While these companies can easily foot the bill for faster speeds, it is unclear to what extent these companies will pass the costs along to the consumer.

Charging more for companies that seem to use more bandwidth makes sense on its face.  But when we dig deeper down, we can see that these new rules will forever change the internet as it exists today and leave loopholes that are rife for abuse.  The first problem is that ISP’s will be able to double bill for their services.  As a middle man, the ISP’s will be able to bill customers and websites for their services.  This might be fine if we had the internet infrastructure like the rest of the industrialized world, but unfortunately we still lag far behind on download/upload speeds and pricing.  Further more, those services can be billed at varying degrees for websites.  If the companies that own the sites are unable to pay for the faster web speed, their traffic (and thus ad revenue will suffer).  While it may be gradual at first, faster internet speeds will be a must for companies that want to survive online.  This will result in the second problem of these new rules: the stifling of innovation

A major part of the internet’s growth and the rise of tech and internet companies has been the ability for programmers, web designers, and entrepreneurs to innovate on the web.  With all companies paying the same price, smaller startups have been able to grow.  Facebook, Twitter, and other common institutes of the internet grew because of high traffic communities.  As ISP’s are able to favor one company over another, smaller startups will be unable to grow.  Their slow speeds will be a turnoff to consumers.

In a previous post, I talked about the conflict of interest of having a cable company also provide the necessary infrastructure for streaming video websites.  With the FCC’s capitulation on Net Neutrality, it would be surprising to see those streaming sites suffer more.  And if you don’t think that the ISP’s are not above playing shady business games and taking any steps to make a profit, ask them what they did with $200 billion of tax payer money.

Bitcoin: What is it and why is it in the news?

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Before Russia quasi-invaded Crimea and before the Malaysian plane disappeared from the Earth, there was a story floating around the news about Bitcoin and something called Mt. Gox. For many people, it was the first time they had ever heard of Bitcoin and while they will probably never look at it again, Bitcoin is a fascinating creation that is growing and shrinking furious fits. Hopefully this post sparks your interest in reading up on Bitcoins.

What is/are Bitcoin(s)?

Well, to put it simply, Bitcoins are a type of digital currency. Often called crypto-currency, Bitcoins are money that can be used to purchase goods and services from places that accept them. Essentially, you can “exchange” real currency (dollars, yuan, euros) for Bitcoins at an online exchange. One Bitcoin can be worth $29 or $1000 depending on the timing of your exchange. The value is determined like any currency. It is based on consumer confidence, exchange trading, and the stability of it. Unlike normal currency, though, you do not hold real Bitcoins. While you can make physical copies, the common holding place for Bitcoins is in a digital wallet. Now of course you have to be asking “Why can’t anyone just make them?” Well when you exchange for a Bitcoin, you receive a code that is unique to that coin. This code ensures that you and you alone may spend the Bitcoin.

Why does it exist in the first place?

Besides the inventiveness of the internet, Bitcoins can be useful in the global economy. As a decentralized currency, it is not tied to any one country and can avoid certain sanctions and problems. It is relatively unregulated, which allows for a wide freedom in its use. But the biggest advantage to Bitcoin is what is known as the “block chain.” The block chain is the public ledger of where Bitcoins are spent or transferred. Every transaction is recorded when the key is entered. This prevents issues like double spending and money laundering because the key can be traced back through the internet.

So why has it been in the news recently?

To put it simply: it imploded. Well not exactly. What happened was one of the largest Bitcoin exchanges (where people can buy Bitcoins and store them until they wish to use or sell them back) collapsed. Mt. Gox (a/k/a Magic the Gathering Online Exchange) was at one time handling 70% of all Bitcoin trades. Then in February of 2014 reports came out that there was a massive security breach. It was unclear the extent of the breach, but Mt. Gox quickly closed ranks and stopped and transactions or withdrawals from happening. It finally came out that the company had lost almost all of their customers Bitcoins totaling around $473,000,000. When the exchange collapsed, about 7% of the total Bitcoins in circulation were lost and the customers seem to have little recourse to recoup their losses.

Why does it matter?

All of this matters to Bitcoin holders because it plays into the volatility of the currency. Unlike most prominent currencies, which remain relatively stable, Bitcoin fluctuates wildly. The volatility prevents companies from wanting to accept them and in turn prevents them from becoming more stable. For those that don’t own Bitcoins, the whole affair is an entertaining view of economics, free markets, and currency on a small scale. It goes to the heart of what makes money valuable. While I am not going to immediately buy into Bitcoin, I will follow them and watch just how far this digital currency will go.

And We’re Back!!

Sorry for the short hiatus, but we’re back!  Here’s a few links to ease you back in:

Spies Infiltrate a Fantasy Realm of Online Games (NY Times)

Cellphone Data Spying: It’s Not Just the NSA (USA Today)

Enjoy!

 

Friday Morning Philosophy: An Inherent Good in the Truth

The Thinker

Wikileaks, Edward Snowden, Anonymous.

We all grow up with a belief that the truth is inherently a good thing.  That while it may cause short term pain, the eventual result of being informed of the truth is to our benefit.  We accept that truth is inherently good.  The question, though, is why?  Why do we freely accept that truth is always a good thing to have?  Most of us assumed the government was able to access our messages, phone calls, and everything else about our life.  We agreed to this when our elected representatives passed the Patriot Act.  We may have disagreed on an individual basis, but our country, through the chosen system of governance, decided that security is paramount over privacy.  So what did we gain through the revelations of Edward Snowden and Bradley Manning?  Anger, distrust, cynicism, and general negative feelings.  But like Pandora’s Box, a positive was revealed.  Truth.  So why do we not feel more positive?  Perhaps not enough time has passed.  Perhaps the changes in governance, culture, society have not yet come about that will create a better world.  We can rationalize our belief in the inherent good in truth, but maybe there is another reality.

For 3 years I was a student of philosophy before continuing my education in law school, which is just another form of philosophy.  While 6 years of philosophical studies does not make me an expert, it has changed the way I examine everything that I know, believe, and hear.  One such change is the blind acceptance of the truth as being inherently good.  To declare something as inherently good is to remove it from context and outcomes, and place it in a bubble.  It states that regardless of whatever happens, knowing the truth is always positive.  But the world does not exist without context or outcome.  And being “good” is more often based in subjective opinions rather than rational fact.  We all seem to declare to know what is good, but when we confront each other over the definition, we find that “good” and “bad” mean very different things.  The family stealing food for survival is “good” in the eyes of the family, but “bad” in the eyes of the worker who is fired for the missing materials.

So what is goodness based in?  Does it come from happiness?  If so, then why do we consider lies as “bad” when they prevent unhappiness.  Does it come from personal satisfaction?  Personal satisfaction varies so much that it would be impossible to find common goods.  But what if we agree that some things are inherently good?  What if we just decide that lying is bad?  Well that leads to moral relativism, which basically is morality by majority.  By determining what is “good” through agreement, we can set anything as good or bad so long as enough people agree.  Perhaps truth is “good” just because?  This may be the most believable, but when we dig deeper, we end up in the same place.  Where does this universal fact come from?  How do we know that this is a universal fact while this other thing is not?  We find ourselves in a never-ending cycle of questioning until we become a cynic and accept nothing as “good” or “bad.”

Knowing this now, can we still claim an inherent good in the truth?  Or are we reacting emotionally to the fact that we were lied to?  Do we believe in the goodness of the truth simply because we react negatively emotionally to being lied to?  Perhaps emotion determines what is “good” and “bad.”  Regardless, there is a greater discussion that must be had when a new leak emerges.  Beyond what truth have we learned, are we better off knowing it?  Is truth an inherently “good” thing?  I want to say yes, but after 6 years, I can only know one thing for certain:  the answer is never simply yes or no.

Not Just a Series of Tubes

This is where it began.

On June 28, 2006, Sen. Ted Stevens (R-Alaska) made the statement above.  He was talking about his opposition to “Net Neutrality” and allowing internet providers to charge companies fees for a higher priority in traffic.  Net Neutrality is essentially the belief that all data on the internet should be treated equally, rather than allowing services to slow, impede, or outright block internet content as they see fit.  He was also the chairman of the United States Senate Committee on Commerce, Science and Transportation.  This is the committee that oversaw internet laws and regulations  The ranking member proceed to describes the internet saying “It’s not a big truck.  It’s a series of tubes,” he blamed bandwidth problems for email issues when that is not plausible, he confused the term “internet” with “email,” and demonstrated a basic lack of knowledge of how the internet worked.  While it was only 2006, it was still shocking that the ranking member of the regulation of the internet had such a strong opinion based on a gross misunderstanding of the topic.  This is what first sparked my interest in the internet and the law.

Clickwrap Agreements: Why Clicking “I agree” Binds You to a Contract

Every time we download or install an product we go through the same steps.  We click “Next” over and over until we see the bar pop up showing how long it will take to install the product and we can leave to do something more productive.  Yet during those initial clicks, there is one that always stand out as different.  A text box will pop up with the words “User License Agreement” somewhere on the front and we can scroll down to read what the document says.  We also have to click on a button or check a box that says something to the effect of “I agree to the Terms and Conditions.”  Of course we don’t read what it says.  No one does.  We’ve never had a problem with it and we assume it is just useless legal jargon to limit liability in the case of a bear attack or something.  Unfortunately, by clicking “I agree” we have likely entered into a contract.  The question now is what have we agreed to.

But how can they do this?  Well our friends in the 7th Circuit established “Clickwrap Agreements” as a valid form of contracts.  In ProCD v. Zeidenberg, the court held that such agreements, though unilaterally made, are valid because the purchaser can always return the item or choose not to download it.  The fact that the person did not read the terms is his own fault.  You always have the duty to read the terms of a contract before agreeing to it.  Since he accepted an offer that he had the right and ability to refuse, the court found that clickwrap agreements were valid contracts.

Every Wednesday, we hope to cover a User License Agreement that a vast amount of people have likely agreed to and summarize what is in the terms.

So be warned: just because you don’t know what the agreement says, that doesn’t mean you won’t be bound by it.

[For more in-depth discussion, check out:  The Clicks That Bind: Ways Users “Agree to Online Terms of Service]

Disclaimer:  This information is not for use as legal advice, in litigation, or in any other way that concerns the practice of law.  Any legal questions should be directed to a practicing attorney in your area.  This information is for news and opinion purposes only and is intended to promote discussion and further research.  This is not to be relied on for legal purposes.

Wednesday ULA: iTunes for Windows

It’s time for our Wednesday User License Agreement.

Today’s is iTunes for Windows (click on the link for the full document).

Here are some highlights:

  1. The software is being licensed to you, not sold.  This enables Apple to limit property and ownership rights that you would normally have if you owned iTunes.
  2. You cannot disassembled or reverse engineer the software…among other things.
  3. You can only make a one-time permanent lending of the software provided that all parts are transferred, you do not retain any copies, and the receiving party reads and agrees to the license.
  4. You can limit ad-tracking by opting out of program.  Go to settings in iTunes and clicking “Limit Ad Tracking” setting.  This won’t eliminate ads, but it will prevent the companies from targeting you with specific ones.
  5. Privacy policy is located at www.apple.com/privacy/.
  6. iTunes Store and other Services are a pile of overlapping agreements allowing them to use data and other information from your use of them.
  7. Your rights under the license are terminated automatically, without notice, by Apple if you fail to comply to the terms in the agreement.
  8. As a consumer (not for business, trade, or profession) that use of the software is at your own risk, as permitted by law.
  9. All warranties are disclaimed, expressed or implied, including merchantability and many others, as permitted by law.
  10. Apple does not warrant against interruption of service or use, discontinuation of a service, or that defects will be corrected.
  11. Apples will not be liable for personal injury or any consequential or incidental damages whatsoever. (unless allowed by law; details in the terms)
  12. In no event shall Apple’s total liability exceed $50 (other than required by law).
  13. The governing law will be of California.

The agreement has much more detail so I recommend reading it.  Hopefully you have a better idea of what you have agreed to.

Disclaimer:  This information is not for use as legal advice, in litigation, or in any other way that concerns the practice of law.  Any legal questions should be directed to a practicing attorney in your area.  This information is for news and opinion purposes only and is intended to promote discussion and further research.  This is not to be relied on for legal purposes.

5 Hacking Myths You Probably Believe (Thanks to Movies)

 

[Courtesy of Cracked.com]

The Law of the Internet

There are many types of law across the country.  Between the laws written by states and laws written by the federal government, it seems that there is a law covering every topic.  The truth, though, is much different.  There is contract law, copyright law, personal injury law, but not everything has a specific law for it.  In the 1990’s, the legal discussion on cyberlaw revolved around the study of the internet as a unique area of study and litigation.  Judge Easterbrook of the 7th Circuit described cyberlaw as the “Law of the Horse.”  He  cited Gerhard Casper in using the phrase.  Casper had used it to argue against the expansion of unique areas of law.  Because horses are involved in so many various transactions that the best way to learn about the specialized issues, like horse, is to look at general principles of contract, personal injury, and other law.

While Easterbrook and Casper’s arguments are valid for many endeavors, the internet is quite different from a horse.  Besides being a medium for the transfer of money, ideas, news, videos, etc., the internet exists as a new frontier for humanity that is unrivaled.  It is a second reality that contains our medical histories, finances, locations, likes and dislikes, friends, hopes, dreams, and skeletons.  It is capable of great good and great harm.  While many of the general principles of law can be used in dealing with internet litigation and studies, there will need to be more tailored studies and laws for the internet as it expands and grows.  Much like the West, in time the internet will be tamed.  The only question is whether we can do it with level heads and forward thinking, rather than archaic principles and out-dated laws.

Hopefully this site will be capable of showing you that the internet is more than a series of tubes.  The complexities of its usage and how cultures, economies, and the world are shaped by it will show that there needs to be the law of the internet.