The Lord’s Digital Agenda

On Tuesday the House of Lords Select Committee on Digital Skills released the 144-page report ‘Make or Break: The UK’s Digital Future’. It’s a typical government report, calling for ‘immediate and extensive action’ in something or other — and in this case, unifying government’s current, disjointed digital initiatives with the launch of a grand ‘Digital Agenda’. (This masterplan includes such fabulous ideas as the middle-aged men in central government ‘future-proofing our young people’ through things like bolting-on a digital element to all apprenticeship schemes.)

One of the report’s most newsworthy findings was London’s poor broadband speed, comparative to other European capitals. In a ranking of their average download speed London came 26th — nestled between Warsaw & Minsk —whilst the likes of Bucharest, Paris and Stockholm topped the chart. London also came 38th in a rating of the UK’s cities’ speeds (although it’s worth noting that Bolton, the UK’s fastest city, would make the European capital ranking’s Top 10). The Lord’s report is also concerned with the persistence of internet ‘not spots’ in urban areas, universal internet coverage and the rollout of superfast broadband. In response, it calls on the government to classify the internet as a utility service, with the desirable goal of universal online access.

It goes without saying how vital digital connectivity is to the modern economy, as well as the importance of staying internationally competitive. However, a new, centrally-dictated ‘Digital Agenda’ is probably quite an ineffectual and expensive way of boosting the digital economy.

Despite the House of Lords’ fears about the speed of superfast broadband rollout, coverage has increased from 55-60% of the UK in 2013, to 70-75% in 2014. And, whilst the report holds up Cape Town as an example of a city providing universal broadband, this won’t be ready until 2030. In the time it takes for the state to roll out the chosen digital infrastructure, it may already be out of date. Whilst many are still choosing between regular or fibre optic broadband,  landline-free 4G home broadband is the latest offering to hit London. At the same time, eyes are already on  5G, and the new capabilities it can bring.

Treating the internet as a public utility is also problematic from a free-market standpoint. Doing so could, for example, lead to calls for more government involvement in the deployment and update of internet infrastructure. However, a study by the Mercatus Centre looked at American municipal government investment in broadband networks across 80 cities, and found that for the billions of dollars of public money spent, there was little community or economic benefit.

It’s also the type of thinking which has led to America’s ‘Net Neutrality’ debate, where, on the behest of Obama, the Federal Communications Commission has proposed to regulate internet service providers as ‘common carriers’, and in doing so, subject the net to a 20th century public utility law originally devised to deal with the telephone monopoly. Ostensibly designed to protect consumers from the creation of ‘anti-competitive’ internet fast lanes for big content producers, Net Neutrality legislation threatens not only the speed, price and quality of internet provision, but the autonomy of ISPs and investment at the core of the net.

Whilst the Lord’s proposed ‘Digital Agenda’ might seem far-removed from such heavy-handed state activity, a government who considers it their duty to take online and ‘digitally educate’ every single citizen risks heading down an increasingly interventionist and expensive path.

The best laid plans of mice and men gang aft agley

There’s an interesting reason why politics, the creation of laws and regulations, just isn’t very good as a way of doing things. That being that the world’s a complicated place. And so it is with this idea that every child should be safe from the terrors of pornography on the internet. The powers that be demanded that all such possible access be filtered out unless responsible adults deliberately asked for access to be possible.

And lo! the regulations were made and:

“But it’s very simplistic: URLs with Sussex or Essex in them, for example, are blocked.”

Rather less amusingly the websites of many charities and educational sites are also blocked. If all “porn” is blocked then so will be places that discuss how to escape the porn industry, what to do about an addiction to porn and, a memory so glorious that perhaps we should build a statue to it, the website of the MP who campaigned for there to be an internet porn filter.

The point being that this world of ours is a complicated place. Enough of us now understand Hayek’s point about economic planning, that we can’t for the only thing that we have that is capable of calculating the economy is the economy itself. It’s not possible to run a model and then direct it: what happens is emergent from the very method of calculation. What is less well understood is that this applies to all these other areas of life as well. It’s not possible for us to just gaily insist “porn filters for all!” and for that to be actually implemented.

Therefore, logically, we should stop trying to micromanage life in this manner and go off and do something more useful with our energies. And given that doing pretty much anything would be a more useful use of our energies that leaves us all with a great deal of choice over what to do.

Piracy deal ahoy!

After years of impasse, UK Internet Service Providers and the copyright holders of the entertainment world look set to sign off an agreement on internet piracy.

According to the Beeb  a ‘voluntary copyright alert programme’ is to be agreed. Under this, ISPs will identify the IP addresses of alleged copyright offenders and send them ‘educational’ letters on copyright violation and legal alternatives to piracy. Whilst a similar ‘six strikes’ scheme in America sees ISPs able to impose sanctions (such as slowed internet speeds) on persistent offenders, the UK scheme does not. The amount of letters that ISPs can send is capped, and no individual will receive more than 4 letters. Following these, no further action will be taken.

This voluntary agreement breaks a deadlock between content giants, the government and ISPs caused by the Digital Economy Act (DEA). Rushed through in the parliamentary wash-up of 2010, the DEA’s copyright provisions instruct ISPs to keep a database of persistent downloaders, and to restrict then finally suspend internet access to those who ignore written warnings.

These provisions are deeply problematic. They force ISPs to police their own customers, burden the companies with compliance costs and ask them to protect another’s intellectual property. Punishing alleged copyright infringers without judicial involvement also undermines the rule of law. Criticized by many politicians, civil liberties groups and the ISPs themselves, none of the Act has been actually implemented.

On the face of it, it’s good that the new agreement is such a watered-down version of earlier proposals. It’s certainly a far cry from what the content industries really want: effective barriers to piracy and access to a list of infringers to hit with ‘compensatory’ legal action. Advocates of internet freedom should be pleased. That said, the agreement doesn’t change the power of copyright holders- they can still get infringing content removed and websites blocked under existing legislation.

Furthermore, skeptics might think that the entertainment industry’s acceptance of the new scheme is just them playing the long game. The programme is meant to run for 3 years but be regularly reviewed. Rights holders have warned that should the scheme prove ineffective they will push for the “rapid implementation” of measures in the DEA.

If the objective is to deter piracy it’s obvious that the scheme will be next to useless: sending ‘educational’ letters will do little to change the behavior of serial downloaders. What it does do, however, is let the entertainment industry claim that a soft approach doesn’t work, and gets ISPs creating a database of copyright infringers that rights holders might win access to in the future. Playing ball now gives the copyright giants credibility to push for more extreme measures later on.

This might seem cynical, but the established entertainment bodies are reluctant to let go of their increasingly outdated business models. Returning to the DEA also gets governments back in the picture, whom copyright bodies often have great success in lobbying. From the ‘Mickey Mouse Protection Act’ of 1998 to the recent EU extension of the copyright in sound recordings, entertainment groups have a knack of preventing their goods from falling into the public domain, and ensuring that governments favor their industry’s profits over actual economic sense.

Understandably, media groups want people to stop illegally sharing their stuff. But instead of lobbying for legislation and slapping fines around the most effective deterrent is to understand consumer’s preferences and offer them valuable alternatives to piracy. Whilst movie bodies get angry at Google for linking to copyrighted material without really tackling their problem themselves, Spotify’s quite probably done more to combat music piracy than blocking The Pirate Bay ever has. However, instead of evolving the copyright industry seems to go out of its way to antagonize consumers, rent-seeking and objecting to even the most eminently sensible of copyright reforms.

Given the entertainment industry’s determination to protect their intellectual property, it’s unlikely that efforts to tackle piracy will end with a voluntary alert system. Whilst innovating companies will continue to find new ways of sharing and monetizing content, for the time being the copyright-holding giants of the entertainment world will remain preoccupied with the wrong prescriptions for piracy.

Technology, Privacy and Innovation in 2014

Prediction lists for the coming year are always revealing, though perhaps more of the current public mood than the future. A write-up of the tech trends for 2014 by Fast Company’s design blog is hardly controversial, but what is interesting is how the areas they’ve chosen highlight the existence of two wider and seemingly divergent technological trends. This apparent conflict in the way technology is heading is far from problematic. On the contrary, it shows our success in adapting and experimenting with new ideas and in response to shifts in the social and political context, without the need for any central guidance.

One thing clear from Fast Company’s list is that 2014 will bring a continued increase in the volume and depth of the personal data we create. Things like Google Glass, the ‘quantified self’, hyperpersonalised online experiences and the interconnectivity of theInternet of Things all create new reasons and mechanisms for data capture. This in turn increases the value of our data to ourselves, the companies with access to it and, in some situations, the state.

However, the article also predicts that 2014 will see increasing concerns over cyber-privacy and a movement towards greater digital anonymity. Users will increasingly chose to control their own data and how this is profited from, whilst we will begin to discover the joy of ‘disconnecting’ from the digital world and see the creation of intentional blackspots.

The fact that we seem to be embracing deeper technological integration yet simultaneously finding ways to mitigate and avoid its consequences is certainly interesting. Does this show that we’ve raced forward too fast and are trying to claw back a space we’re realising we’ve lost? It’s perhaps possible that this is the case, but far from giving us cause for concern the two-track path we’re seeing shows the ability of consumers and the tech sector to adapt over time, and in turn gives some hints on the optimal tech policy.

Continue Reading…

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Should fans be concerned by Bitcoin’s fall in value?

The last few months has seen a breathtaking rise in the price of Bitcoin. Starting around $15 at the beginning of the year, Bitcoin’s price went from round $200 to a peak of over $1,200 just during November. Then from early December BTC’s price began to falter, with a sudden drop and a low of $550 on the 18th: less than half its price just weeks before.

Commentary has been just as volatile, with some seeing BTC’s rising price as its explosion onto the scene and proof of its revolutionary potential. Others have scoffed, calling the whole thing a bubble inflated by overoptimistic geeks and people looking for a quick profit. Now that BTC’s price has come tumbling, should proponents of the crypto-currency be humbled and/or worried?

Recent rises and falls in Bitcoin’s price have reflected developments in China.  In November Bitcoin exchange BTC China secured $5m investment from Lightspeed Venture Partners, and surpassed Mt Gox as the largest exchange in terms of trading volume. However, on the 5th December the People’s Bank of China announced that it does not consider Bitcoin a currency, barring banks & other financial institutions from dealing with it. Around this time Bitcoin’s price took a sharp downwards turn. Then, on Monday, the central bank banned 3rd-party payment companies from working with Bitcoin exchanges. This left Chinese exchanges unable to take deposits, and the price cfurther tumbled.

This is potentially bad news for entrepreneurs who want to see Bitcoin widely adopted, as well as for more ideological fans who consider Bitcoin’s strength its decentralised and stateless nature. Governments will never be able to stamp out Bitcoin completely, but making it as difficult as possible to use will hamper the objectives of both groups. The Mercatus Centre’s Bitcoin Primer explicitly urges policy makers to consider the technology morally neutral, warning against restricting its development and its use by non-criminal users. Whilst China cracks down on BTC its uptake in developing countries -particularly amongst the unbanked-is strong, and Denmark has just announced that it will not regulate Bitcoin or its exchange. China may well realise that it is missing a trick and relax its hostility.

Nevertheless, innovation around this problem will occur if it continues. Bitcoin is a global start-up project, with swathes of  passionate and seriously techie fans.

Some take Bitcoin’s crash as proof that that it is an unstable and unsustainable folly- nothing more than a risky virtual commodity bet.

Certainly, Bitcoin’s volatility is an established fact, with its last big crash in April wiping out 80% of Bitcoin’s value over 6 days. Nevertheless, BTC has always recovered and increased in value. Indeed, since the 18th Bitcoin’s price has been creeping up yet again.

Calling bubbles is a funny thing, because both falls in price and continued rises offer ‘proof’ of the hypothesis. It is perhaps more accurate to say that Bitcoin is undergoing a long period of ‘price discovery’. A lot of purchases have been speculative or made out of curiosity, but as more users and ways to spend the currency emerge, so will a clearer and more stable idea of its price. Bitcoin’s shifting price isn’t even that much of an issue for those using it for purchases: vendors adjust their Bitcoin prices regularly to reflect the changing exchange rate. It is short-term investors and those calling Bitcoin the ‘new gold’ who should perhaps be more wary.

Others say that Bitcoin’s falling price reflects underlying concerns with the currency – such as issues with security and fraud, and exchanges’ ability to cope with demand. Some suggest these issues mean that Bitcoin will never be much more than a digital curiosity. But at the early stages of the computer and the internet few thought they would be so transformative, or could imagine how they would evolve. Bitcoin is certainty not ready for mainstream adoption or about to cause a central banking crisis, but that is zero reason to write it off.  So much of how Bitcoin can and should operate is yet to be discovered, let alone decided. Despite all the recent attention it is still in its infancy, and growing pains and price shifts are an inevitable path of its development.

Even if Bitcoin’s price were to come crashing devastatingly down, the world’s first digital, decentralised ledger-based currency has created a new paradigm: a new way of thinking about money, transactions, anonymity and even our relationship with the state. Even some of Bitcoin’s biggest fans say it could one of the alternative, retweaked and ‘improved’ cyrpto-currencies which will really take off.

On which note- why care about the price of Bitcoin when you can be an early adopting millionaire of everyone’s favourite meme-cum-cryptocurrency, the shibe-tastic, very money Dogecoin! (wow)

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