Jerry Brito

A coalition of online travel sites, including Kayak, Expedia, and Travelocity, has recently formed in opposition to Google’s purchase of travel search services firm ITA, according to the WSJ. The group is “launching a lobbying blitz on Capitol Hill, making the case to members of Congress that the deal would allow Google to dominate the online air-travel market by giving it control over the software that powers many of its rivals in the travel search business.” Microsoft also opposes the deal, noting that its Bing search engine relies on ITA information. Alas, I don’t think we’ll ever see an end to corporations trying to use the antitrust laws to protect themselves with no benefit to consumers.

Let’s be clear about what exactly ITA is, which is a search company. Airlines publish their flights, inventory, prices, and fare rules to computer reservation systems like Worldspan, Sabre, and Apollo. What ITA brings to the table is search technology that lets users sift through that information to find the best flights to suit their needs. They have developed industry-leading algorithms that look at the fare rules and pricing and show you what different flights can be combined to offer the best fare. ITA does not sell anything to consumers. Instead, they license their search technology to companies like Kayak and Orbitz. Unbeknownst to consumers, they use the ITA search engine on those sites and book there.

**ITA does not control any necessary input.* There is no barrier to entry for new competing travel search services firms. They just need to get the flight data from airlines or computer reservation systems. In fact, there are several other competing firms. ITA just happens to be the best one. And there is no guarantee that it always will be. A day after Google acquires the company, some small developer in a garage may unveil a competing algorithm that blows ITA out of the water. That is what is so wonderful about the internet. So what incentive will innovators have if they know that if they become too successful, their clients will incite the state to prevent them from cashing in on their hard work? What incentive will the Bings of the world ever have to innovate or acquire better travel search technology if they can get the government to guarantee them access to the best?

Congress, don’t fall for it.

In the current issue of Foreign Affairs, Deputy Defense Secretary William J. Lynn III, has one of the more sober arguments for government involvement in cybersecurity. Naturally, his focus is on military security and the Pentagon’s efforts to protect the .mil domain and military networks. He does, however, raise the question of whether and how much the military should be involved in protecting civilian networks.

One thing that struck me about Lynn’s article is the wholesale rejection of a Cold War metaphor for cybersecurity. “[The United States] must also recognize that traditional Cold War deterrence models of assured retaliation do not apply to cyberspace, where it is difficult and time consuming to identify an attack’s perpetrator,” he writes. Given the fact that attribution is nearly impossible on the internet, he suggests that the better strategy would be “denying any benefits to attackers [rather] than imposing costs through retaliation.”

What’s interesting about this is that it is in utter contrast to the recommendations of cybersecurity enthusiasts like former NSA chief Michael McConnell, who wrote earlier this year in a 1,400-word op-ed in the Washington Post:

We need to develop an early-warning system to monitor cyberspace, identify intrusions and locate the source of attacks with a trail of evidence that can support diplomatic, military and legal options—-and we must be able to do this in milliseconds. More specifically, we need to reengineer the Internet to make attribution, geolocation, intelligence analysis and impact assessment—-who did it, from where, why and what was the result—-more manageable.

It’s good to see that DoD is facing the fact that “reengineering the internet” in the name of attribution is not a practical possibility. Lynn seems to be saying that what the military needs to focus on is better security hygiene and network resiliency. It’s therefore interesting that the two data points he provides as evidence of a threat are

1. The oft-cited factoid that “Every day, U.S. military and civilian networks are probed thousands of times and scanned millions of times.”

2. A now declassified episode in 2008 in which classified military networks were severely compromised by a foreign intelligence agency. How? “[A]n infected flash drive was inserted into a U.S. military laptop at a base in the Middle East.”

Probing and scanning networks are the digital equivalent of trying doorknobs to see if they are unlocked—-a maneuver available to even the most unsophisticated hackers. And since the days of War Games, the Pentagon has been a favorite target. That a major attack must rely on social engineering—-that is, tricking an insider into connecting an infected USB thumb drive—gives me some reassurance about the military’s ability to protect against “probes and scans.” (Note also that the attack vector of the recently discovered Stuxnet worm was also flash drive.) It also tells me that the best defense against any kind of security breach is still an educated computer user.

Lynn also writes that,

The U.S. government has only just begun to broach the larger question of whether it is necessary and appropriate to use national resources, such as the defenses that now guard military networks, to protect civilian infrastructure. Policymakers need to consider, among other things, applying the National Security Agency’s defense capabilities beyond the “.gov” domain, such as to domains that undergird the commercial defense industry. U.S. defense contractors have already been targeted for intrusion, and sensitive weapons systems have been compromised. The Pentagon is therefore working with the Department of Homeland Security and the private sector to look for innovative ways to use the military’s cyberdefense capabilities to protect the defense industry.

For folks like McConnell, the answer is obvious. “[T]he reality is that while the lion’s share of cybersecurity expertise lies in the federal government, more than 90 percent of the physical infrastructure of the Web is owned by private industry,” he wrote in the Post. As a result, intermingling is inevitable.

First, I’m not sure I’m willing to stipulate that the federal government is the technical leader in network security. What is the evidence for that claim? (Jim Harper has previously pointed this out.) Second, if DoD is concerned about the network security of defense contractors, it can rely on them less or it can contractually require more stringent practices. As the ACLU recently warned, a partnership between DHS and DoD (read NSA) could pose a threat to civil liberties. Let’s never forget this is the agency that made warrantless domestic surveillance possible. Finally, while it may start with defense contractors, regulation and “public-private partnerships” tend to have a ratcheting effect that grow bureaucracies and crowd out innovation. It’s time to slow down this cybersecurity train before it loses control.

It’s wonderful to see that the FCC is putting spectrum front and center on its agenda. Yesterday it held a spectrum “summit” at which it released several papers looking at the challenges and opportunities mobile broadband faces, and it was announced that at its November meeting, the chairman will introduce several items related to spectrum reallocation. NTIA is keeping pace, identifying over 100 MHz now in federal hands (mostly DoD) to be moved over for commercial use.

The consensus that has led us to this happy time is that there is a spectrum “shortage” or spectrum “crunch,” as many said yesterday. Here’s how Chairman Genachowski explained it:

The explosive growth in mobile communications is outpacing our ability to keep up. If we don’t act to update our spectrum policies for the 21st century, we’re going to run into a wall—-a spectrum crunch—-that will stifle American innovation and economic growth and cost us the opportunity to lead the world in mobile communications.

Spectrum is finite. Demand will soon outpace the supply available for mobile broadband.

Every natural resource is finite, however. So how exactly did we end up with this “spectrum crunch”?

Spectrum is a vital input to the mobile industry, just as steel is for the automobile industry or timber is for housing and paper products. Yet even during the productive peaks of those industries, we never saw any meaningful shortages of resources. That is because (aside from some government interference here and there) those resources are freely traded in a market. If demand for them increases, prices rise accordingly, and supply moves to better uses. Higher prices will also create an incentive for entrepreneurs to develop more efficient uses of finite resources.

In contrast, spectrum is barely traded in a market. It’s uses are largely mandated by government fiat. For example, less than 15 percent of U.S. households depend on over-the-air TV broadcasts because they do not subscribe to cable or satellite. Yet our most valuable spectrum is in the hands of broadcasters, with no easy exit, thanks to government regulation. This is the cause of the “shortage,” and we shouldn’t forget that as we move to reallocate spectrum.

The incentive auctions and secondary market rules the FCC will consider steps in the right direction. But once the spectrum is released from the grasp of old and inefficient technology, we should make sure we don’t make the same mistake again. Television and radio were the most important technologies in the world at one point, which is why they were given so much spectrum by government. Today it’s mobile broadband, and that’s where we want the spectrum to go. But let’s be careful we don’t earmark the spectrum in any way so that fifty years from now we find that we have a spectrum crunch for teleportation because it’s in the hands of broadband.

Reallocated spectrum should be made as property-like as possible. Exclusive, flexible, and tradable. The spectrum “crunch” is another instance of the government stepping in to clean up a mess it made. Let’s hope they get it right this time.

As we enter day 5 of the standoff between Cablevision and News Corp. over the retransmission of local Fox stations, the controversy over a supposed net neutrality violation has died down, but pressure on the FCC to interfere with the parties’ negotiations is mounting. Sen. Kerry has also released a draft bill [PDF] that would reform the Cable Act’s retransmission consent rules to force TV stations to accept FCC mediation and allow carriage of their signals during a contract dispute.

It’s almost ironic that some would call for more FCC interference to solve a problem that is at least partly caused by FCC regulation. Cablevision is in New York, and what it wants is to carry Fox programming. The local Fox stations, owned and operated by News Corp., are demanding what Cablevision considers too high a price. So why wouldn’t Cablevision just turn to a Fox affiliate in Michigan for the content? The answer is that FCC regulations authorized by the Cable Act take that excellent bargaining chip away from video providers.

Randy May explains this in a great little primer on retransmission consent:

The FCC’s network non-duplication regulations allow local stations to block cable systems from importing network programming from another affiliate of the same broadcast network—-even if the out-of-market broadcast affiliate and the cable network otherwise could reach a negotiated agreement. negotiated agreement. Similarly, syndicated exclusivity regulations allow local stations providing syndicated broadcast programming to prevent cable systems from carrying the same programs broadcast by out-of-market broadcast stations.

Without this prohibition, we may have already seen a resolution to the Cablevision-Fox dispute. So it’s amazing that the FCC is being called on to interfere in the negotiations when they already have a thumb on the scales.

The lesson of this latest confrontation should not be that we need to “reform” retransmission consent rules to add FCC arbitration as Sen. Kerry and some broadcasters and video distributors are suggesting. Instead, it’s that given a competitive market for programming, as the FCC has acknowledged exists in New York, we should plain and simply get rid of must-carry and retransmission consent rules altogether and allow a real free market to work. Without such a move, I see a lot more blackouts in the future.

I’ve been looking into the cybersecurity issue lately, and I finally took the time to do an in-depth read of the Securing Cyberspace for the 44th Presidency report, which is frequently cited as one of the soundest analyses of the issue. It was written by something of a self-appointed presidential transition commission called the “Commission on Cybersecurity for the 44th President,” chaired by two congressmen and with a membership of notables from the IT industry, defense contractors, and academia, and sponsored by CSIS.

What I was struck by is the complete lack of any verifiable evidence to support the report’s claim that “cybersecurity is now a major national security problem for the United states[.]” While it offers many assertions about the sorry state of security in government and private networks, the report advances no reviewable evidence to explain the scope or probability of the supposed threat. The implication seems to be that the authors are working from classified sources, but the “if you only knew what we know” argument from authority didn’t work out for us in the run up to the Iraq war, and we should be wary of it now.

Now, while they may not say much about what exactly the threat is, they do tell us exactly how they’d like to fix it: “Regulate for Cyberspace,” they say in a chapter heading. This includes mandatory security standards and mandatory authentication of identity using government-issued credentials for access to critical infrastructure. (Who gets to decide what counts as critical infrastructure?) The report asserts plainly:

It is undeniable that an appropriate level of cybersecurity cannot be achieved without regulation, as market forces alone will never provide the level of security necessary to achieve national security objectives.

But without any verifiable evidence of the threat, how are we to know what exactly is the “appropriate level of cybersecurity,” and whether market forces are providing it? To its credit, the Commission recognizes that over-classification is a problem and recommends more information sharing. Until the public can see some evidence of a threat, and as long as less sober proponents of cybersecurity regulation and spending are using alarmist rhetoric to push their agenda, we should hope Congress takes it slow on the issue.

Bonus: The CSIS Commission is apparently very security conscious. The report, which is made available as a PDF, is somehow encrypted in a way that does not allow one to copy and paste or search within the document. You can copy, but when you try to paste you get garbage. Searching returns no results. Kinda not the way a free exchange of ideas happens online.

I’d like to draw your attention to a recently released GAO report analyzing the challenge of implementing the 200+ recommendations included in the FCC’s Broadband Plan and comparing the U.S. to broadband efforts in other countries. Turns out things are not as dire as the FCC and the Administration would have us believe. Some highlights:

• Broadband internet is available to 95 percent of American households. This is comparable to other developed nations despite the U.S.’s larger geographic size and population.

• “[T]he United States has more subscribers than any other OECD country—-81 million, or more than twice as many as Japan, which has 31 million, the second highest number of subscribers.”

• The U.S. broadband adoption rate is 26.4 subscriber lines per 100 inhabitants, which is higher than the 23.3 average for developed countries.

So we have more subscribers than any other developed nation by more than double, and almost all households have access to broadband. I know it’s not fashionable to say, but it looks like we’re doing pretty damn well.

This might explain the results of a Pew Internet and American Life survey released last month that found that “A majority of Americans (53%) do not believe that increasing the availability of affordable high-speed internet connections should be a federal government priority.” Interestingly, Americans who do not use the Internet are the least interested in seeing government spending on broadband—-presumably for them. “Fully 45% of non-users say the government should not attempt to make affordable broadband available to everyone, just 5% say access should be a top priority.”

Today’s hot topic is that thousands of Cablevision customers in New York were faced with blacked out News Corp. channels, including Fox, when the two companies were not able to come to an agreement on fees. As a result, Cablevision did not carry the Giants-Lions game and may not carry the next game against the Cowboys. Glee on Tuesday is certainly threatened, and I feel for Cablevision because I wouldn’t wish a spurned Glee fan’s wrath on anyone.

The beautiful thing about this event is that the FCC has put out a Consumer Advisory enumerating all the various choices available to consumers. They can switch to a different pay service, and the FCC counts five: “AT&T, DIRECTV, DISH Network, RCN (limited areas of Brooklyn), and Verizon FIOS.” They can also tune in via over-the-air (rabbit ears) broadcast.

This hasn’t stopped Congress or “consumer advocates” from going apoplectic over American’s god-given right to the Simpsons. And, since it seems News Corp. cut access to Fox shows on Hulu.com and Fox.com for Cablevision internet service subscribers, they fear this is terrible violation of net neutrality.

Let’s put aside for a moment whether it’s a net neutrality violation or not since it’s difficult to tell what that means. (Notice that in this case is not big telecom carriers blocking access to content they don’t like, it’s a content provider blocking an ISP.) What exactly is the problem here?

Given that the FCC has helpfully pointed out all the options available to Consumers, there’s little chance that a consumer who wants to get Fox content won’t be able to do so. If Cablevision and News Corp. don’t come to an agreement, and Cablevision doesn’t carry Fox, consumers who value Fox will switch to a different service. The same goes for Internet service. The important issue here is not a universal human right to content or a net neutrality principle, but choice.

As long as there is market competition and consumer choice, we don’t need the FCC or Ed Markey to ensure that the we’ll get the Giants and the Cowboys in HD and Glee on Fox.com.

I would like to take this opportunity to pour some cold water on any prospects for lasting reduction in the size of government or sensible budget reform. Here are some tidbits from a recent national poll by the Washington Post, the Kaiser Family Foundation, and Harvard:

• “Americans who say they want more limited government also call Social Security and Medicare ‘very important.’ They want Washington to be involved in schools and to help reduce poverty. Nearly half want the government to maintain a role in regulating health care.”

• “Nearly six in 10 say they want their congressional representatives to fight for additional government spending in their districts to spur job creation; fewer (39 percent) want their member of Congress to cut spending, even if that means not as many local jobs. This is a turnabout from September 1994, when 53 percent said they wanted their representative to battle against spending and 42 percent were on the other side.”

• “[H]alf the country thinks the federal government can balance its budget by simply cutting wasteful spending.”

To paraphrase Mencken, Americans are going to get what they want, and they’re going to get it good and hard. The 70 percent coalition wants to be left alone as long as they get their Medicare. I almost feel bad for the politicians who have to pander to this kind of schizophrenia. And if Americans had their way, they’d just get rid of the middleman:

• “Fifty-six percent of those polled say things would be better if there were a national referendum system enabling all citizens to vote on major national issues. At least on this point, there is rare general agreement among Democrats, Republicans and independents.”

California, here we come. As Tocqueville prophesied, there’s no democratic solution to the problem that emerges once the public discovers that it can vote itself largesse from the public coffers. Add to that the largesse to special interests that voters would oppose if only it was worth their while to care, and you end up with a pretty bleak picture.

If there is a solution within the context of democracy, I think we have to hit rock bottom first, like an obese person who is forced to go on a diet only after a heart attack. Even then there will likely be a relapse. More likely though, we don’t have a heart attack. we just get fatter, and our breath becomes shallower, but we hang on, getting lipo every once in a while, enough to let us stuff our faces a few years more.

A new Pew poll being widely reported says that while Hispanics strongly lean Democratic, they are less likely to go to the polls in November than the average registered voter. Here’s how the NYT frames it:

Arizona’s controversial immigration law has prompted denunciations, demonstrations, boycotts and a federal lawsuit. But it may not bring the protest vote many Democrats had hoped would stem a Republican onslaught in races across the country.

That’s because although many voters are disillusioned with the political process, Latino voters are particularly dejected, and many may sit these elections out, according to voters, Latino organizations, and political consultants and candidates. A poll released Tuesday found that though Latinos strongly back Democrats over Republicans, 65 percent to 22 percent, in the Congressional elections just four weeks away, only 51 percent of Latino registered voters say they will absolutely go to the polls, compared to 70 percent of all registered voters.

The Times, the Pew report, and a quick scan of other news articles about the poll look at the results in terms of the immigration issue. The implication is that Hispanics are “particularly dejected” and surprisingly acting against their self-interest. Two things come to mind.

First, if Democrats are disproportionately represented among Hispanics, and if (as is often reported) Democrats are generally unenthusiastic about the coming election, then isn’t it unsurprising that Hispanics would be less likely than the average voter to go to the polls? Maybe someone more technically inclined than me can run the numbers, but it seems to me Hispanics might be acting like every other voter.

Second, the same Pew poll finds that immigration was listed as the fifth most important issue in the minds of Hispanic voters, behind education, jobs, health care, and the federal budget deficit. (A fact that is relegated to a parenthetical in the NYT piece.) That sounds like Hispanic voters are a lot like all American voters—irrational for a host of other reasons.

As a Hispanic, let me tell you: regardless what “Latino organizations” or Democratic candidates say, Hispanic voters are not animated by the immigration issue any more than voters in general. And Hispanics are certainly not single-issue voters. Don’t believe anything to the contrary.

Bonus: In its poll, Pew also asked, “The terms Hispanic and Latino are both used to describe people who are of Hispanic or Latino origin or descent. Do you happen to prefer one of these terms more than the other?” Thirty-three percent preferred Hispanic, 13 percent preferred Latino, and 54 percent indicated no preference. So why does Pew and the NYT insist on using Latino?

The Senate yesterday passed a bill (previously passed by the House) that bans loud commercials on television. This has prompted some to ask whether Congress has nothing better to do with its time.

Is this all this Democrats-run senate can do? Turn down the volume when the country is in a recession and jobs are vanishing? Tsk, tsk-time to kick Harry Reid out of his seat!!!

That’s a reader comment on the story from USA Today. (I would point out to the commenter that it was a unanimous Senate that passed the bill.) There are many more like it. See these great comments at The Hill.

To me the real surprise would have been if the Senate hadn’t passed the bill this Congress.

From a Senator’s perspective, what’s not to love about this? The broadcasters pick up the tab for complying with the law, and the politicians get the credit. Credit for what? Doing exactly what their constituents want. The average American watches almost 5 hours of television a day, up 20 percent from 10 years ago. People who don’t write or comment on blogs likely think a ban is a great idea. I mean, loud commercials are pretty terrible after all.

Here’s what I’m trying to figure out, though. Consumers Union endorsed the bill and testified on its behalf, so they’re the Baptists in this story. Who are the bootleggers?