Startup Toolbox

Jay Parkhill July 23rd, 2007

The FCC is putting up for auction next year a slice of radio spectrum that will go dark when analog TV is shut down net year, and is due to set the rules for the auction in the next few weeks. To the great pleasure of many, Google plans to bid on a portion of that spectrum, with the intent of providing carrier-neutral cellphone service. In other words, consumers with phones that use the spectrum could freely jump around to any carrier. No more 2 year contracts.

Google’s bid depends on the FCC approving this use along with other conditions that go along with it, like (somehow) requiring handset makers to make phones using the new 700mhz spectrum. The network would need to be built out as well, so I guess the handsets go, err, hand in hand with cell site relays that can handle the traffic, etc.

The major carriers were up in arms about Google’s bid at first. They claimed that Google was stifling competition by imposing these conditions and that the spectrum should simply go to the highest bidder- no conditions, just whoever can pony up the most cash. More recently, AT&T had an about-face and endorsed the FCC’s proposed rules, which largely accept Google’s proposal, but also impose a reserve price so that if the bids aren’t low enough the FCC can re-run the auction.

Phew! So the carriers are slamming Google for being anti-competitive, Google says its conditions are necessary in order to allow anyone other than the major carriers to compete in the space, and some third parties are lambasting the FCC’s reserve bid rule as anticompetitive insofar as it prevents startups with shallow pockets, like Cyren Call and Frontier Wireless from making a bid.

Here’s my take. People are wary of Google and more and more seem to take the “don’t be evil” motto with a big grain of salt. On the other hand, consumers hate their wireless carriers about as much as they love the convenience of their mobile phones. So when Google and the carriers start slinging “anticompetitive” mud at each other it’s no big surprise which side wins and which gets told to ease up on the chutzpah.

Personally, I think “wireless network neutrality” will fill a niche in the industry, especially for early adopters (such as iPhone buyers) willing to pay more for handsets. If consumer ability to jump carriers easily pushes carriers a bit then that would be great as well- maybe they will stop charging more to buy a ringtone than it costs to buy the whole song on iTunes. It will be a great experiment, if nothing else.

• Broadband , Google , wireless

Jay Parkhill March 26th, 2007

I have just finished reading the opinion in the Twentieth Century Fox v. Cablevision case from the Southern District of New York and boy, is it ever a stinker (to use the legal jargon).

Briefly, Fox sued Cablevision for setting up a “network digital video recorder”, a device that operates like a DVR, but uses equipment sitting in Cablevision’s facility rather than in a box in the consumer’s house. The court held that such a system violates Fox’s copyrights in its programming because Cablevision both copies and transmits the content to consumers without the proper licenses from Fox.

My first thought on reading the case was that it focused on extremely technical details only to reach a completely anachronistic ruling. In the age of Software as a Service, we have all gotten pretty used to the idea that technology can be administered remotely. We don’t need to have the set-top box, many of us may be happy not to have to plug yet another device into our TVs, and the end result for consumers is exactly the same. As Sherwin Siy notes, the main difference is the length of the cable.

Unfortunately, the more I think about it, the more it seems like it is the Copyright Act that has it wrong these days. Distinctions that used to matter no longer make a difference.

The court talked extensively about the fact that Cablevision was “transmitting” the content. Cablevision tried to argue that the consumers were actually doing the transmitting when they choose which programs to watch, but it doesn’t take much to see that argument as a loser.

A little tricker was Cablevision’s similar line of reasoning that consumers actually do the “copying” as well, another basis for finding copyright infringement. Consumer-copiers can rely on a fair use exception for home use of content, but Cablevision can’t. The court really didn’t like this argument either. It left the door open a crack based on Cablevision’s complex N-DVR architecture, but held that the copies were made on Cablevision equipment maintained by Cablevision personnel in Cablevision facilities, so Cablevision was really the copier.

The place where it all starts to come apart is where the court tries to distinguish “devices” from “services”. Sony’s Betamax is the precedent-setting case here, from 1984. Consumers could install a Betamax machine and have nothing further to do with Sony. The court found that the N-DVR was nothing like a Betamax, because consumers subscribed to the “service” to get the DVR functions.

Of course, this is only a hair removed from every other type of DVR, including the Tivo in my house. Sure, I record content onto my Tivo within the walls of my own house, but my “device” would be useless without the “service” that tells my Tivo what is on which channels.

My own belief is that the judge realized this and the focus on technical operation was his attempt to confine his ruling to the narrow N-DVR issue in front of him rather than come out of left field with an opinion that could be read to say every DVR everywhere (and probably VCR+ scheduling codes as well) are copyright-infringing.

The scorecard, then, is something like this:

Judge Chin gets the law right, even if he doesn’t seem to like the result.
Prof. Eric Goldman sums up the issues nicely.
Mark Cuban gets it right for sure when he says Fox is far better off distributing content this way than to see it pirated, or just losing the distribution channel entirely as the Internet changes video progamming models.
Copyright law is the big loser for foisting arbitrary rulings like this on consumers. Trying to draw a line between hardware and software isn’t going to make for happy caselaw.

• Broadband , Copyright

Jay Parkhill January 17th, 2007

Ok, I will admit that I have spent a week scanning stories (ever more quickly) about the iPhone and trying not to get sucked up in the hype. The phone looks beautiful, it will probably work reasonably well, and successively better and at lower price points with each generation. That part is not very exciting.

What has me interested is comparing the (perceived) relationships between the iPhone and the wireless carriers, and the iPod and the music and video content studios. It makes me think of something I once read about logging.

In the heyday of the logging industry, timber would be cut and floated downstream to sawmills. Frequently logs would pile up into a logjam and experts would be called into determine which logs needed to be freed to release the entire jam. The handful of logs tying up the entire bunch were referred to as the “key logs” and the people who could find the key logs were extremely important resources in the logging industry.

In the modern era, logjams are metaphorical and sometimes only visible as such in hindsight. Looking back to 2000, the music industry had clearly gotten itself stuck behind a rights-based logjam of sorts. At risk of losing a big piece of its harvest to piracy, the industry was unable to figure out how to let consumers buy music online. Apple’s iPod and iTunes store may not have broken the jam completely, but let the industry bring a bunch of its timber downstream and earn revenue from music sales. Studios are slowly allowing iTunes to do the same for video content.

In a similar way, the wireless carriers have created a logjam of wireless services. Consumers want wi-fi/wireless connectivity and access to services that aren’t necessarily offered through the carriers. The carriers have consumers locked in to the wireless networks with little or no ability to work around the jam. Thus, consumers pay $2 for a ringtone from Cingular, but $0.99 for the entire song on iTunes. To date, no handset manufacturer has been able to break the jam and give consumers what they really want- fast, inexpensive internet access to online content.

This is where the iPhone comes in. Time will tell whether reality lives up to the promise, but Apple is saying that the iPhone has built-in wi-fi as well as Cingular Edge support. That means I could use Edge to get online (slowly) from just about anywhere, and jump to a wi-fi network for a much better online experience where wi-fi services are available.

At least for me, the winner there is likely to be T-Mobile, since it runs the most reliable wi-fi networks around where I live and being able to get online from my iPhone *and* my laptop would be enough for me to spring for a T-Mobile wi-fi account.

That’s the short term, though. If I am writing this then Cingular and every other carrier must have figured it out as well and are working on their own wi-fi networks. Here’s hoping that if nothing else, the iPhone will break the online access logjam created by wireless carriers, allowing consumers to get fast, cheap connectivity and the carriers to find a new revenue stream.

• Apple , Broadband