July 2013

A new study, titled “Unrepentant Policy Failure: Universal Service Subsidies in Voice & Broadband,” written by George Mason University Professor Thomas Hazlett and Scott J. Wallsten, vice president for research and a senior fellow at the Technology Policy Institute and at Georgetown University Center for Business and Public Policy, is highly critical of the Federal Communications Commission’s high-cost Universal Service Fund, which pays part of the cost of delivering communications services in rural areas where the costs of providing service are high.

Rural telephone companies are “laughing all the way to the bank,” said Dave Herman, vice president of policy for the Alliance for Generational Equity. In the study, the authors argue that “any plausible cost-benefit test reveals that economic welfare would increase were the entire $9 billion per year USF program eliminated.” The $9 billion number that the authors cite includes not only the high-cost Universal Service program but also several other components of the program that target low-income users, rural healthcare providers and schools and libraries. The authors also argue that in transitioning today’s voice-focused high-cost program to a broadband-focused Connect America Fund, the FCC is providing “a new rationale for subsidies.”

Apple has vowed to appeal a federal judge’s ruling that it colluded with five publishers to raise the retail price of e-books and break Amazon’s choke hold on the nascent market. And the company thinks its chances are pretty good. But legal scholars aren’t so sure.

Those who’ve read U.S. District Judge Denise Cote’s decision say its extensive factual findings and careful application of law will make it difficult to fight. According to Pam Samuelson, the Richard M. Sherman Distinguished Professor of Law and Information at the University of California, Berkeley, Apple’s task on appeal is a daunting one.

A federal judge found that Apple violated antitrust law in helping raise the retail price of e-books, saying the company “played a central role in facilitating and executing” a conspiracy with five big publishers.

“Without Apple’s orchestration of this conspiracy, it would not have succeeded as it did in the spring of 2010,” the judge, Denise L. Cote of United States District Court in Manhattan, said in her ruling. She said a trial for damages would follow. The Justice Department said the judge’s decision was a victory for people who buy e-books. “Companies cannot ignore the antitrust laws when they believe it is in their economic self-interest to do so,” the Justice Department said in a statement. “This decision by the court is a critical step in undoing the harm caused by Apple’s illegal actions.” It appears unlikely that the ruling will have an immediate effect on the book-buying public. The publishers who have already settled with the government are operating under the settlement’s terms, which prohibit publishers from restricting a retailer’s ability to discount books. Since those settlements have gone into effect, prices on many newly released and best-selling e-books have gone down. Keith Hylton, a professor at Boston University’s School of Law, said that Apple should have some good arguments to back its appeal, but it will be a difficult fight. “The new problem Apple faces is that the judge’s massive opinion relies so heavily on facts and inferences that an appellate court is unlikely to have room to modify the decision substantially.

Recent debate over U.S. government surveillance has focused on the information that American technology companies secretly provide to the National Security Agency. But that is only one of the ways the NSA eavesdrops on international communications. A classified NSA slide obtained by The Washington Post lists “Two Types of Collection.”

One is PRISM, the NSA program that collects information from technology companies, which was first revealed in reports by the Post and Britain’s Guardian newspaper last month. The slide also shows a separate category labeled “Upstream,” described as accessing “communications on fiber cables and infrastructure as data flows past.” The interaction between Upstream and PRISM — which could be considered “downstream” collection because the data is already processed by tech companies — is not entirely clear from the slide. In addition, its description of PRISM as “collection directly from the servers” of technology giants such as Google, Microsoft and Facebook has been disputed by many of the companies involved. However PRISM works, the NSA slide makes clear that the two collection methods operate in parallel, instructing analysts that “You Should Use Both.” Arrows point to both “Upstream” and “PRISM.”