Archive for the 'policy' Category

Should Governments Specify Licence Conditions?

I have been made aware of a meme passing around Government purchasing circles to the effect that Government ought not to be dictating licence terms in the course of procurement.  This has two variants, a strong variant that Government ought not be specifying, for example, a class of licence that ought to apply to the procurement and a less strong variant to the effect that Government ought not be specifying particular licence terms. Of course, the underlying aim of this meme is that if a Government can’t dictate licence terms then it can’t require open source.

To argue these positions requires a complete lack of understanding of the role that a licence plays in an acquisition.  I will take software as an example, but any procurement involving a licence would serve as well.   When anyone “acquires” a piece of software they, primarily, acquire two things.  The first, is a copy of the software being acquired.  The second is a licence in relation to that software.  Neither is useful without the other.  A copy, even legitimately acquired, can’t be used* without a licence and a licence can’t be exercised without a copy.   However, of these two components – the licence and the copy, the licence is by far the more important because it demarcates the whole of the uses to which the copy can be put.  If your licence is good enough, you can dispense with the provision of a copy because you can acquire the copy from elsewhere.   The acquisition of the licence, and the terms of the licence are the greater part of the substance of the procurement.

To take a practical example, if I were to buy a copy of Office from Microsoft I can choose from Office Home and Student 2013 or Office Home and Business 2013.   Microsoft provides a comparison chart which discloses that the main difference between these two packages is that the first can only be used for “Home Use” while the second can be used for “Home or Business Use”.  Now, the purpose for which I might use Microsoft Office is not a function of the copy of the software I acquire.  It is wholly derived from the licence terms which apply to that copy.  To argue that the Government is not able to specify the characteristics of a licence is to literally prohibit Government from discriminating between a licence which permits only home use (which would be useless to the Government) and one which permits use in the course of business.

For a public servant to even entertain the possibility of a broad based limitation on specifying licence characteristics would be to demonstrate a total failure to understand the subject matter.  The licence is the substance of any software acquisition.  To not be able to specify licence characteristics is equivalent to not being able to include technical specifications in any other sort of acquisition.  It is a nonsense.

The only time where specifying a licence ought to be prohibited is where the licence terms effect an exclusionary dealing.  So, if the licence terms permitted use only by persons who had signed up for some form of online service being offered by a third party, that would be anticompetitive because it would require bidder’s  customers to be funneled through to the a third party.  Open source licences do not have these dependencies.

* technically, some uses may be permitted if they do not involve an infringement.  However, the scope of things which count as an infringement these days is so broad that in any practical scenario the use of software will involve performing an activity which would, in the absence of a licence, infringe copyright.

UK Cabinet Office releases Open Standards Principles

UK Cabinet Office releases Open Standards Principles

Following on from the earlier standards consultation process, the UK Government has now released open standards principles.  I have had a quick flick through and am still coming to terms with them.  On the plus side they say all the right things, and they seem to have rejected RAND/FRAND/RANDZ etc licensing requirements in their definition of a standard – “royalty free basis that is compatible with both open source and proprietary licensed solutions.  These rights should be irrevocable unless there is a breach of licence conditions.” which is good.

For my views on open standards in Government see the paper I prepared for Linux Australia.

iiNet and the Sinking of the NBN?

iiNet and the Sinking of the NBN?

There is a major problem with the recent report into the NBN, and, indeed, with all costings for the NBN that I  have seen.  They all ignore a major risk – regulatory risk.  Or, to be more specific, the impact of further changes to the Copyright Act.  There are currently a couple of proposals on the cards which will have a substantial effect on ISPs’ businesses.  The proposals are: ISP liability and the creation of a three strikes scheme for terminating copyright infringers’ internet access.

Liability for Innocent ISPs

In a recent case in the Federal Court, a variety of copyright interests ran the argument that innocent ISPs should be liable when their customers infringe copyright (otherwise known as the iiNet case).  The argument went that if a copyright litigant had sent enough notices to an innocent ISP over time alleging that its customers were infringing copyright and they don’t stop it well then, that was enough for the ISP to be liable.   Sort of like the RTA (ie traffic authority) telling the operator of the M4 (a toll road in Sydney) that cars using it are speeding.  If it happens enough, the argument seems to be, then the operator of the M4 ought to be liable.  Under Australian copyright law this argument is not as ridiculous as it ought to be – the University of NSW was found liable for copyright infringement by students because it put a photocopier in a library in the 1970s.  In the 90s, Telstra, a local telco, was found liable because its customers played music on hold over its network…

Nonetheless, the court at first instance downed the argument (quite extensively in fact).   That decision is now on appeal and whatever the outcome it will likely go to the High Court.    In the end ISPs will be held liable (see below).

This will either mean that ISPs will have to implement something like a three strikes arrangement as a “reasonable measure” to prevent infringement (see next section) or they will need to charge extra to pay off ‘the industry’.   How a pay off would be costed is hard to say, but presumably it would be similar to how cable TV is priced at the moment (perhaps less per person if the cost of infringers is amortised over the whole user base) – FetchTV’s pricing, once available, may give some indication (rumours are it is around $30 per month).   This will add a substantial component to the price of a month’s broadband access (guess = on the order of 20-30%).  In addition there is the possibility that an enormous pipe brings with it greatly increased infringement and therefore an even higher copyright tax.

I note also that ISP liability will, in practice, add ‘the industry’ as a gate keeper for all innovation on the network.  As a consequence ISPs will forego or delay new services if they are likely to have a copyright impact.   Moreover, ISPs will even be gun shy about their customer’s use of the services – because, hey, the ISP is liable after all.  The innovation that the NBN is supposed to unleash will be dampened.  That under-innovation will have a subsequent impact on uptake.  Why would someone, for example, pay extra to get the same old TV on digital rather than analogue transmitters (we should not forget that this issue delayed uptake of digital TV in Australia for years)?

Three Strikes

The other likely modification to hit the statute books in the next few years is extrajudicial punishment.  Under this regime if you thrice accuse someone of infringing copyright then an ISP will be forced to disconnect their internet service.  It may not be so abrupt initially, but that is certainly the destination  that  democratic legislatures are being ordered to go to.

Exactly how many people this would affect is not clear.  For example, it is difficult to get any reliable (<- note this word) data on what percentage of people infringe copyright through the use of an internet connection.   Apparently in Canada, “Throughout 2007 and 2008, copyright lobby groups were busted for making up statistics about Canadian piracy rates. The statistics went all over the board including 10%-20%, 20%-30%, 50%, 70%, 75%, 85%, and even 90%. An incredible margin of error of 80%.”  Let’s assume [1] that 20% of  users are infringing users (this is at the lower end of the scale for estimates given by ‘the industry’).

From here let’s try to map some impacts on the NBN.  First, we need to realise that infringing users will likely get more utility from the high speeds that will be offered by the NBN than other users.  So they are likely to be overrrepresented in any take-up figures for the NBN.  So, what happens to the NBN if they are all kicked off?  All of a sudden, the NBN’s take up will be down substantially so the rest of the subscribers will need to pick up the slack.  These remaining subscribers can either be charged a substantially higher rate to cover the build costs (which will mean that a further portion of them will choose not to take up the service…) or the horizon for amortizing NBN Co’s costs will need to be substantially pushed back.

You might argue that whatever percentage are infringing, as soon as a couple of people are disconnected, the rest of the infringers will stop.  That may well happen, however, if that’s the case why would they continue to take a premium priced broadband service?

The bottom line is, either three strikes will not have any substantive effect on copyright infringement, or the NBN’s costs will increase substantially.

The Legislation Will Change

So, what if the iiNet case makes it to the High Court and the argument is still downed?  Well, it seems like that won’t be the end of the matter.  Rather, the movie studios will simply be able to argue that they have exhausted common law avenues so a legislative response is now appropriate.  When asking the Australian Government to change the law they may well remind the Government of what the Minister is reported to have said on the topic in 2009:

“I saw iiNet’s defence in court under oath … they have no idea if their customers are downloading illegally music or movies,” he said today at the Commsday summit in Sydney. “Stunning defence, stunning defence,” he continued in what appeared to be a sarcastic comment.

“I thought a defence in terms of ‘we had no idea’ … belongs in a Yes Minister episode.”

That would be an interesting discussion….

In any event the Australian Government has a poor record of protecting each citizen’s rights against expansion of the Copyright Act.  When the first major case on copyright was decided in the mid 80s (which found that copying of object code for computer software was not an infringement under the Copyright Act) the then Labor Government took all of 6 months to ensure that the legislation was changed to bring it into line with the then US policy on the issue.   Indeed, the then Minister only took a handful of days from the decision (and before holding any inquiry) to give public assurances (to the US?) that the legislation would be changed to fix the decision.

I think it would be fair to say that whatever the US movie houses have asked for over the past 20 years or so they have gotten, and they have gotten it from both sides of politics, and they have gotten it despite reservations or outright opposition from parliamentary committees which have reported on whatever issue was up for discussion.   And, they’re asking for ISP liability and three strikes, so it’s coming and the NBN hasn’t been costed for it.

The NBN costing should include an allowance for this.  If they don’t the copyright amendment bills should have something in their economic impact statements.  They won’t, of course.


[1] The established procedure in this field seems to be choosing a number which suits, without any real basis or evidence for it.

Words in Copyright Act vs Time

Words in Copyright Act vs Time

I have run some numbers on how the size of the (Australian) Copyright Act has changed over the past century or so.  With one exception, these numbers were generated automatically from electronic versions of the legislation.   Before counting the words I stripped out the table of contents and everything from “The Schedule” on.  This is because a bigger Act automatically means a larger table of contents and an older Act means more notes about when sections came into force, were repealed etc.  The one exception is the Copyright Act of 1905, a word count for which was estimated by manually counting words on 3 pages, generating an average per page and multiplying by the number of pages. There are a couple of versions of the Act from between 1905 and the 1970s which are not plotted (as I don’t have access to a full copy of them) but everything I could find from 1970 on is there.

The Statute of Anne (1709) has about 2,500 words in it.  It took roughly 200 years to reach 7,500 (in our 1905 Act).  For your reference, the NSW Conveyancing Act 1919 No6 (which actually does deal with property) has about 82,000 words (ie about the number of words added to the Copyright Act in the last 10 years).  We might speculate whether there will be enough paper in the world to even print the Act in 20 years’ time.

Here is the period from 1992

And, for a laugh, the BSAA reported piracy rate (from the annual reports produced by IDC etc) overlaid.  I would not want to endorse the BSAA numbers as they don’t seem to me to be well founded and any variation in them can easily be explained by changes in IDC’s sampling procedures/calculation methods.  In addition, they are advocacy documents so need to be taken with a grain of salt.

It is hard to see any relationship between the amount of legislation and the reported rate of piracy (which seems to be in a long term, albeit slow, decline).  To the extent there is a relationship, the reported rate seems to lead changes in legislation.

Disgruntled Lego Customer

Disgruntled Lego Customer

The process of acquiring a Mindstorms robot kit has left an extremely bad taste in my mouth.  Lego apparently has something of a reputation for openness with the Mindstorms Kit (although the programming software is both closed and won’t run on Linux – and you’re not licensed to develop commercial applications with it).  However, they do not seem to have a reputation for free trade.  Pricing for the kit on Amazon equated to about AU$330 delivered (Amazon have just sent me an email suggesting I buy it from them based on my earlier searching – which has set off this post).  This compares very favourably to local pricing of AU$450 (not delivered).   Or, it would compare favourably if someone was willing to ship one to me from overseas.  While there are a couple of small places that will, they don’t have the volume, so shipping costs are very high.  Amazon claims “warranty issues” as the reason.  For a bunch of plastic which runs off AA batteries, and for which an identical product is sold here?  GMAB – I call baloney.  I can only assume that distributors have been heavied by Lego.  This reeks of market segmentation.

In rough terms,  for every two sets an Australian school can buy,  a US school can buy three.  Yet another example of how copyright hobbles innovation in this country.

Update: I’m not being particularly critical of Amazon (except perhaps for sending me an email asking me to buy a product that it has already refused to ship to me) because a number of suppliers wouldn’t ship it (including from Singapore and Hong Kong) – this might not have been obvious from the post.  It would be nice if this was all just a coincidence

How Copyright Ideology Costs the Country

How Copyright Ideology Costs the Country

Booktopia price for Beginning Game Development with Python and Pygame: From Novice to Professional (Paperback):  $67.50 + $6.50 shipping = AU$74 delivered

Amazon price US$21.12+US$9.98 = US$31.10 ~ AU$35.34 delivered (@AU$1=US$0.88)

US list price: US$39.99 (ie ~AU$45.44)


R18+ Games and Internet Censorship

R18+ Games and Internet Censorship

The Federal Government has decided to go ahead with Internet Censorship in Australia. At much the same time, the Government has also announced an intention to consult on whether an R18+ classification should be introduced for video games.  I would guess that these two are related, because the absence of an R18+ classification means that (to quote from the AG’s discussion paper on the R18+ classification):

Computer games that are unsuitable for a minor to see must be classified Refused Classification (RC).

Which would mean that a non trivial number of computer games available overseas would be classified RC in Australia (anything which would exceed an MA 15+ rating), so accessing them (or to websites selling them) will presumably become illegal (?)

It seems like an R18+ classification for games is already a done deal because its absence would cause terrible trouble for the proposed internet censorship regime.  Or maybe this is just co-incidence and access to your overseas computer game store might be suddenly cut off just before the next election.

Rene comments on a mailing list (click link for full email):

However, I don't agree with your conclusion that:
	"It seems like an R18+ classification for games is already a done deal 
because its absence would cause terrible trouble for the proposed internet 
censorship regime." 

Imo, it is not a done deal because there is no way SA A-G Atkinson is going 
to agree to R18+ for games just because the Cth wants to introduce 
mandatory blocking. 

Record Company Piracy = $6bn Losses

Record Company Piracy = $6bn Losses

How ironic.  Major record companies in Canada are facing a lawsuit for copyright infringement.  Apparently, these companies have a long standing practice of including songs on compilation CDs without paying the authors for doing so.  So, Michael Geist is helping them sue CRIA in Canada.   The record companies have successfully lobbied for excessive copyright damages to be enshrined in legislation.  Now they are potentially on the receiving end of them – at $20,000 per song for 300,000 songs, gives $6e9 (ie $6 billion Canadian dollars).  To use their (incorrect) rhetoric, they have ‘stolen’ this money from artists.   Presumably the cut and thrust of this sort of action would result in the parties reaching a settlement for a sum substantially less than this.  It will be interesting to see whether record companies argue that the full amount of such penalty damages should only be awarded for individual file sharers who do not profit from their infringement and not in the case of the organised infringement for profit that they have apparently been engaging in.   That would qualify them as unethical, as the essence of ethics is to not make an exception of yourself.

Further, of course, if there were any justice, then the Attorney General should be bringing criminal actions against them, since commercial infringement for profit typically brings with it criminal sanctions.  I suspect this won’t happen either.  Should the State pursue individuals at the record company’s behest, but fail to prosecute them in worse circumstances, that would be corruption.   What happens in Canada will determine whether or not widespread cynicism about copyright is justified.

No Cost Too Great for Copyright

No Cost Too Great for Copyright,

Brendan Scott

How timely.  Soon after my post on confirmation bias in copyright came two examples of it in action.

First, the Coshocton Tribune reports that, a public service wifi system has been shut down because a single (unidentified) person  is accused of illegally downloading a single movie over it.  According to the report, the service had apparently been put in place five years ago and provided free wireless Internet access in the city block around the local courthouse.  Further, Sony Pictures sent an infringement allegation to the ISP running the service, who on forwarded it to the county.  The county decided to shut the service down as a result.   The report does not disclose whether the county just took Sony’s word for it, or whether the infringement was proven with any degree of rigor.  Second, CNet reports that a pub in the UK was ‘fined’ £8,000 (probably a settlement rather than a fine as the article refers to it as a civil action) because someone downloaded copyright material over the pub’s open WiFi network.

The whole issue here is one of the climate of fear which the legislature (aided somewhat by the courts) have created around copyright and copyright infringement.   This climate of fear creates extreme risks for honest, law abiding citizens who find themselves in a copyright dispute.   In theory, Sony ought to have had to prove: that copyright subsisted in the movie, that the copyright was held by Sony, that Sony had not granted an exclusive right over the copyright, that the movie was copied, that copying was an infringement.  What happens in practice is that people receive one of these notices and realize that because the legislature has vastly inflated the consequences of copyright infringement that they must err exceedingly on the side of caution.  Presumably that happened in this case, with the county shutting down a wi-fi network which served up to 100 people a day during its peak times.

There is a ‘solution’ – acquire a filtering solution for $3000 ish up front, and $1000 ish per year.  These sorts of costs are prohibitive in the context of a small initiative like that in Coshocton.  Morover, they add nothing to the service – indeed, they put a drag on the service by requiring traffic to pass through the filter.   This lost innovation is an enormous cost to the community in order to protect a $20 movie.  The provision of a free Internet wi-fi service is a valuable local innovation.  It provided a substantial contribution to the administration of justice (police parked nearby and filed incident reports over it) and to commerce (with vendors using the network for processing payments during festival times).   It is just the sort of local innovation by the aggregation and propagation of which our society advances.  Once you start imposing such large costs on innovation, you cut its throat.  You also destroy the benefits which flow from it.  Outcomes such as these may well spell the death of open WiFi for example, yet no one mentions this category of cost when discussing taking further rights from citizens under the copyright law.

Of course, we should also ask whether this corresponds in any reasonable manner with our ordinary everyday lives.  Imagine for example, if someone unidentified got off a bus outside some department store, went in, shoplifted and then left.  The store, analogously to Sony here, could well send a letter to the bus company complaining about authorising the shoplifting.  They have, after all, clearly provided the means for the person to access the material which was taken.  The bus company could easily put in place measures to prevent this sort of thing happening.  They could easily prevent known shoplifters from riding on the bus, for example.  What’s stopping the drivers from having a list of faces in the cabin?  Or from having a face recognition system?  Or requiring the use of electronic tickets which uniquely identify the passengers? Passengers could be required to wear clothing with few, small pockets. Sure, these things may be a little expensive, but we’re talking about stealing here – don’t you care about property rights?

None of these things are impractical in the sense that a bus operator could implement them if they had to.  The only question would be the cost, and the inconvenience that would be involved.  In the real world we give credence to the costs which we impose on innocent third parties even when they are carriers of or faciliators of law breakers.  Indeed, I don’t believe people would change their view even if the store had repeatedly been the subject of shoplifting by passengers of the bus company, or if the store had told the bus company about the shoplifting and/or the possibility of the shoplifting by its customers.  Despite the fact that connecting the bus operator with the shoplifting done by a passenger would be considered by many to be, well, frankly insane, courts have been particularly willing to engage in a form of cognitive dissonance and think it completely rational to make this connection as between ISPs and their customers.

Presumably courts are more willing to ping ISPs because they are perceived as having more capacity than a bus company to control the actions of their passengers, but this is an illusion.  A bus company has much the same ability to control its passengers, as an ISP does its users.  The difference however is that courts respect the rights of passengers, but don’t respect the rights of users.  The bus company’s passengers have a right not to be subject to a demeaning search by the bus company and courts are happy to respect that right.  However, courts do not afford the same respect to passengers when the fire up their internet browser.  They ought to.

Copyright and Confirmation Bias

Copyright and Confirmation Bias

Brendan Scott

see also: No Cost Too Great for Copyright

An old (2005) post about Napster was recently brought to my attention.   In it, Don Dodge, a former VP of product development at Napster  maps out what happened to the company, how they pleaded with the music industry to provide a better solution to them (which was more or less reinvented/reimplemented many years later by iTunes) and how the music industry had put itself in such a position as to be literally unable to act in its own best interests, or the interests of its artists.    Dodge estimates, based on internal Napster research, that Napster could have generated $3 billion per year for the industry, with minimal overhead.

I talk to people at copyright conferences and they will make some observation such as copyright has managed to support specific identified individuals and therefore it’s a good thing (most recently it was specific teachers whose retirement was funded by their textbook sales).   However, to rely on this sort of evidence in policy making is basic bad practice.  It seeks out only the evidence which supports the proposition, when it should be critically analysing it.  A proper analysis would look at how many people paid more than they ought to have for a book, and whether some people went without because the cost was too high.  Moreover, it would look at the also-rans who devoted much time to writing a textbook only to have it fail in the market.  It would look at the books which were substandard and were not improved because of copyright restrictions.  For every success there are orders of magnitude more failures.  Proper policy would be more circumspect in trying to entice, through the incentive of copyright, the unwary into the market.

Copyright costs the community.  That cost is never factored into any copyright policy – at least, so far as I have been able to tell.  Most recently, the prohibition on parallel importing of books is an obvious example.  The Productivity Commission put out a report which set out, in bare, incontrovertible terms, the damage that this particular aspect of copyright does to the community.  After a long period of merciless lobbying the proposals to remove the anti-consumer restrictions on parallel importing have been defeated (ironically, the report was criticised for being considered analysis, it was even expanded to cover some of the criticisms of it).

Copyright, and IP policy in general seems to exist in a twilight zone in which reality is not permitted to reach.   Copyright holders have express exemptions to the Trade Practices Act that property owners can only dream of.   They are funded by the government to lobby for more copyright and then, of course, use their monopoly profits to lobby for more funding.  They are allowed to sing the benefits while policy makers fail to even seek out evidence of the costs.   Despite the concept of natural rights of copyright being expressly repudiated by parliament and judiciary they are allowed to persist in their rhetoric of rights.  Despite the copyright monopoly having little in common with property, they continue to talk as if it does.

In the case of Napster, the copyright monopoly seems to have delayed the innovation we now call iTunes by a good part of a decade, and diddled musicians out of billions of dollars in the process, but copyright ideologues will not hear of it.

[Update: Professor Alan Fels (the former head of the Competition and Consumer Commission) is quoted as being critical of the parallel import decision:

Professor Fels said the decision to explicitly reject a recommendation of the Productivity Commission meant that ”every time one of our more than 10 million book readers visit a bookshop and pay more for books, the Government will be and should be held responsible”.

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