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Tuesday, June 15, 2004

H.R. 107 & the Bells: What the Devil is Going On Here?
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A recent article in TechDaily (subscription required) says that H.R. 107, the Digital Media Consumers' Rights Act, is supported by companies in tech (Gateway, Sun, Philips) and telecom (Verizon, Qwest, BellSouth).

This support, especially from these particular telecoms, is baffling.

HR 107 has two parts.

The first would provide for labeling of copy-protected CDs so that consumers would be alerted to the possibility that a CD might not play on all media. This provision is over-reaction; everyone agrees that consumers should be properly informed, but such problems can be better worked out in the market and by voluntary standards. But the bill is not a killer.

The second part of HR 107 is the killer. It would legalize the distribution of any tool that cracks Digital Rights Management technological protection of intellectual property as long as the tool could be used to enable "significant non-infringing use" of the property. Since many non-infringing uses exist, the result would be the unlimited distribution of code cracking tools, and the utter destruction of the very promising efforts to create markets in creative products based on technological protection of content. All the peddler would have to do is attach a note to its website saying: "Be sure you use this tool only for legitimate purposes (Wink, Wink)."

I know why the academicians support this. They want to destroy the market-based system for creating IP and replace it with a system of government funding.

But I do not understand why the Bells support it. Legalizing cracking tools is a content industry destroyer, and why would the Bells want that? And why would it benefit them?

The position is also inconsistent philosophically. The gist of the Bells' complaint against the regulatory system since the Telecom Act of 1996 has been its disregard of property rights. The system of UNE-P and TELRIC has commandeered their investment in facilities to allow all comers to free ride, to the detriment of the companies, the telecom network, and consumers. (If you don't know what UNE-P and TELRIC are, count yourself lucky, and take my word for it. Or scroll through earlier entries in this blog and get enlightened.)

So come on you tech and telecom guys -- email me your talking points on why you support this bill and we will put them up on this Website, together with our reactions.

And be sure to explain how you will respond when the same forces that invented H.R. 107 come back for more bites at the apple of property rights and ask Congress to reverse the recent decision of the D.C. Circuit and reinstate UNE-P, or to mandate the doctrine called Net Neutrality, which is another scheme for socializing telecom facilities, or to undermine patents on consumer electronics

posted by James DeLong @ 1:11 PM | General

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