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 on the wrong end of a lawsuit. There are many examples. Perhaps most famously, the RIAA sued Napster in 1999, charging the file sharing service with “contributory” copyright infringement. After losing several major court decisions, Napster (as we knew it) folded in 2002. At around the same time the RIAA sued and shut down Michael Robertson’s (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 Comcast’s recent throttling back of BitTorrent file sharing. But Comcast may have singled out BitTorrent traffic not because it’s BitTorrent traffic or because it’s file sharing traffic, but because peer-to-peer traffic eats up huge amounts of bandwidth–both upstream and downstream. Still, many people believe that some type of traffic discrimination is inevitable, and that network neutrality principles must be codified into law to prevent it.
Some say that the absence of network neutrality guarantees in existing law is already hurting tech companies, and, by extension, tech consumers. “It fosters an area of uncertainty,” says Art Brodsky of Washington D.C.-based public interest group Public Knowledge. “The point is you have to wonder, if you’re a technologist, and you’d love to get this [service] on the Web, and if I’m competing against another company that has a sweetheart deal with the phone company and they move my packets to the back of the line, am I going to get screwed?”
The companies that own the big broadband pipes remain willing to fight hard against a law restricting their right to discriminate on their networks. A major pro-network neutrality bill cosponsored by Senator Olympia Snowe, R-Maine, and Senator Byron Dorgan, D-North Dakota, failed to pass last year, in part because of a massive lobbying campaign by Big Telco and it allies. The two Senators reintroduced the bill again in January, but little action has been taken on it. The phone companies have already done a lot of talking on Capital Hill to prevent passage of a net neutrality law. And, it should be said, the tech and consumer groups pushing for a law have not always stated their case clearly enough to move lawmakers and their constituents. That situation, I believe, is getting better, but a smoking gun–an obvious net neutrality breach by a large ISP–will likely be needed for Congress to pass a law.
Legions of Lobbyists
The big telcos are very influential in Washington, and rarely loose a fight over something they really want. “They’ve got armies of lobbyists that work for them,” Public Knowledge’s Brodsky says. “They’ve got regiments of lobbyists that are hired guns. They’ve got zillions of dollars to spread around town in campaign contributions and other ancillary supports.”
AT&T has a large contingent of in-house lobbyists in Washington, but also farms out much of the work. AT&T reported almost $19.1 million in lobbying expenses last year, hiring 25 outside firms to do its bidding in the capital. That makes AT&T the fifth-largest lobbying spender in the U.S. for 2006, followed closely by the telcos’ industry group USTelecom, which spent $18.4 million during the year. Verizon and Verizon Wireless together reported $13 million in lobbying expenses, and hired some 45 outside lobbying firms in addition to internal lobbying staff.
One interesting thing about these lobbyists is their somewhat incestuous relationship with the offices in which they lobby. Brodsky says Verizon and AT&T routinely hire lobbyists from the staffs of senators and representatives. “If you look at the lobbying forms for the companies, you’ll see a lot of people that worked for very influential members of Congress and senators and things.” One example is Tom Tauke, a former congressman from Iowa who now heads up Verizon’s lobbying efforts in Washington. Tauke has long been an outspoken critic of network neutrality legislation.
The big phone companies also give generously to the campaigns of federal election candidates. In fact, AT&T was the 2nd largest political donor from 1989 to 2006 at almost $38 million, again according to data from the Center for Responsive Politics. Verizon donated $15.5 million to candidates in federal elections between 1990 and 2005.
4. Verizon, AT&T, Progress and Freedom Foundation
Issue: Broadband Penetration
Just as railroads and highways did in the past, broadband and mobile communications can dramatically increase the productivity and efficiency of the economy. The U.S. government has taken a largely deregulatory approach to the broadband ISP market, based on a belief that competition will compel large ISPs like AT&T, Verizon, and Comcast to sell broadband at the speeds and price points that consumers want.
A study by the Communication Workers of America finds that the average download speed of Internet connections in the U.S. is 1.9 megabits per second. The cost of DSL or cable connections in the U.S. ranges from $15 to $40 per month. Meanwhile, Tokyo residents can buy a 100-mbps connection for the equivalent of $10 per month.
The phone companies and their allies didn’t much like the news from the OECD, and have for months engaged in a campaign to discredit the OECD report. The phone companies also get help from a vocal little spin house called the Progress and Freedom Foundation, which holds seminars, puts out position papers on various telecommunications issues, and lobbies on these issues as well. One of the main jobs of PFF’s commentators has been to espouse the efforts of the phone companies to spread broadband access, while discrediting the OECD report. My sources in Washington tell me that it’s common knowledge that a sizable part of PFF’s roughly $3 million annual budget comes from the big phone companies. The Supporters page at the PFF Website is a Who’s Who of large telco and cable interests.
No Incentive for Growth
The OECD data notwithstanding, the phone and cable companies have had little real incentive to improve the speeds, prices, and reach of their broadband services. Today most Americans, if they have any choice of broadband providers at all, can choose service only from a cable or a telephone company ISP. Meanwhile, the FCC and the courts have consistently ruled that the cable and telephone companies are under no legal obligation to share their broadband lines with would-be competitors. Some argue that federally collected monies and tax incentives helped pay for those lines in the first place, and that the current owners of those facilities have an obligation to share them. Only real competition, not the short-term interests of shareholders, can compel ISPs in the U.S. to boost broadband speeds and lower costs to world-class levels.
The FCC doesn’t help the situation by defining broadband as anything above a decidedly slow 200 kilobits per second. That low threshold allows the FCC and phone and cable companies to make some rosy claims about the state of broadband in the U.S., such as this one, proudly posted at the USTelecom site: “The total number of new high-speed lines (200 kbps in at least one direction) increased by 61% from 51.2 million at the end of 2005, to 82.5 million at the end of 2006.”
The effect of slow broadband speeds and poor availability on tech is obvious. A whole generation of innovative businesses that depend on real broadband is still waiting to come into existence. For now, consumers will have to wait for new, lightning-fast information, media, and telecommunications services that could change the way we work and play.
5. Large Wireless Carriers and…
the Cellular Telecommunications Industry Association (CTIA); TV Broadcasters and the National Association of Broadcasters (NAB)
Issue: Wireless Spectrum
In 2005 Congress passed the Digital Television and Public Safety Act of 2005 (DTV Act), which mandates that the TV broadcasters convert their signals from analog to digital by February 2009. That will make available some tracts of analog wireless spectrum that are valued highly 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.
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