Why Should I Care About CES?

In Las Vegas this week, approximately 150,000 consumer electronics manufacturers, retailers, content providers and creators, broadband developers, wireless carriers, cable and satellite TV providers, installers, engineers, corporate buyers, government leaders, financial analysts and the media gathered for the International Consumer Electronics Show (CES) to see and showcase new and upcoming products.

Writing in the Washington Post, Hayley Tsukayama asked a provocative question: why bother? You see, CES gets a bad rap these days — and there are a lot of reasons why. Major companies pull out of the show to set their own announcement agendas (see: Apple, Microsoft). And many of the show’s “hot products” of the year don’t always pan out in the real world, have super limited appeal, or simply never come out at all. In many ways, CES has earned its reputation as a disconnected confab and echo chamber. The most-pointed criticism is that CES is a hardware show in a software world. Innovation is increasingly coming from the software side of things, from content partnerships and novel applications of technology, which make gadget-driven news a little less interesting.

So we ask this week, ‘Why should public interest advocates care about CES?’

Tsukayama’s answer is that CES is still one of the best places to see what’s coming down the pike and what companies are dreaming up. And, to be sure, we’ve relayed this week in Headlines some of the product announcements – like GoSafe, a new personal emergency response system that will get you help wherever you are. In fact, it will know whether you've fallen and will summon help if you don't respond, whether you're at home or out and about.

The convention offers a space to examine trends that are bigger than just consumer electronics. The devices on display indicated that wireless carriers aren't just for smartphones anymore. The carriers are directing customers to other devices that connect to the network, such as those that control a home's energy use. The move is meant to increase the carriers' reach into customers' lives, enabling the company to sell buckets of data and making it harder for subscribers to switch providers.

CES still has “big name” drawing power: former President Bill Clinton made a presentation for Samsung in which he stressed that efforts to get smartphones into the hands of people in impoverished rural areas should be a priority in world humanitarian efforts. For many, the cellphone is the first — and only — point of entry to having a bank account, or to standardize commodity food prices across their particular region.

But perhaps the most obvious reason to care about CES is that scattered about the displays and launches of new hi-def televisions, cutting-edge tablets and more is a sea of federal lawmakers and regulators, many of whom return home leery to learn there’s a gap between the new tech on display and the laws that are supposed to govern their use.

The conference is a gathering at which to talk about the big policy developments of the past year. Ambassador David Gross and Federal Communications Commission member Robert McDowell were at CES to talk about the International Telecommunications Union meeting in Dubai last month – and efforts by the United Nations’ body to extend its reach to the Internet.

The in-car computers populating the show floor may woo audiences. But they also should remind regulators there’s work to do to ensure the old rules of the road — literally — apply to cars that are as much computers as they are engines. And the explosion of start-ups — many of which aren’t device manufacturers but app makers — represents the front lines of many debates over spectrum, e-health policy, venture capital and more now happening on Capitol Hill.

It’s in some ways the battlefield in the implicit war between Silicon Valley and Washington over the need for new regulation in the digital age — a fight that often can have serious political consequences.

CES is run by the Consumer Electronics Association, an active player in Washington (DC). This year, the issues topping CEA’s wish list are high-skilled immigration reform and a return to the patent debate to stop the smartphone wars. And there’s an even stronger push by CEA CEO Gary Shapiro and his group to see many of the proposed changes to start-up investor rules — byproducts of the Jumpstart Our Business Start-ups Act — implemented more quickly. Rep. Zoe Lofgren (D-CA), a newcomer to CES, said she and many others are working on both sets of issues — keeping an eye on venture funding, which is “not as robust as people would like,” and immigration, an area in which Rep Lofgren is a key voice. She said she has her eye on reform, while she’s “urging the Administration to make changes they can make within the law.” Rep Lofgren has been aggressively trying to get a meaningful, comprehensive immigration bill passed for many years. She said that if the Republicans have any hope of regaining the White House in four years, they must reach out to a broader slice of the population. And immigration reform could be a big winner if they play their political cards right.

FCC Chairman Julius Genachowski was interviewed by CEA’s Gary Shapiro in an event that stressed the industry’s and the Administration’s common goal: freeing up spectrum for mobile services. Shapiro went as far as dubbing Genachowski the “spectrum chairman.” Chairman Genachowski used the occasion to announce that the FCC will soon kick-off a government-wide effort to increase speeds and alleviate Wi-Fi congestion at major hubs, such as airports, convention centers and large conference gatherings. Chairman Genachowski said that the FCC will take the first steps next month to unleash up to 195 megahertz of spectrum in the 5 gigahertz band. This would be the largest block of unlicensed spectrum to be made available for expansion of Wi-Fi since 2003. The idea is to free up the unlicensed spectrum available for ultra-high-speed, high-capacity Wi-Fi - known as “Gigabit Wi-Fi” - by up to 35 percent. This effort will enable higher data speeds and greater capacity – most notably, improved high definition video distribution capability. Because the 5 gigahertz band is already used for other purposes by both federal and non-federal users, the effort will require significant collaboration with other federal agencies. The FCC announcement even garnered praise from the Republican leadership of the House Communications and Technology Subcommittee.

Chairman Genachowski and others also addressed the FCC’s major effort to free up spectrum currently reserved for television broadcasting for mobile services. A law passed last year allows the FCC to conduct auctions so broadcasters will be reimbursed for relinquishing their spectrum licenses. The FCC is currently collecting public comment on how best to implement these “incentive auctions.” Chairman Genachowski noted that once the incentive auctions are completed and the broadcast spectrum is repackaged, there would continue to be space between broadcasters. These white spaces will open up opportunities to free up additional spectrum, he said. Former FCC Chairman Reed Hundt, who oversaw the first spectrum auction, said Genachowski is doing "a great job." Hundt conceded that one had to be a "game theorist" rather than a "mere lawyer" to understand all the intricacies of the incentive auction -- which is a double-sided auction. But he said the main thing was that it was not difficult to bring about profound change if "you really focus on it." The FCC wants to hold the auctions in 2014 and some involved say that’s possible, but others claim there are too many complications and details that must be worked out to make sure the very complicated process goes smoothly. FCC Commissioner Robert McDowell told the CES audience: “So, while I hope it’s 2014 … folks just need to realistically understand that history tells us that these things can take longer than you hope or expect, especially when you have literally the most complicated spectrum auction in world history.” National Association of Broadcasters lobbyist (and former FCC staffer) Rick Kaplan said that the success of the auctions could hinge on not "rushing" before resolving border issues with Canada and Mexico.

At CES 2011, the Stop Online Piracy Act (SOPA) was a major topic of discussion and consternation. Content companies used to getting their way on Capitol Hill got humbled last January when an unprecedented wave of public protest shut down the SOPA proposal that would have regulated online copyright. Now that the public has been awakened to the issue, those interested in a more balanced copyright system are thinking over their strategy. "Everything is on the table, including copyright terms," said Gigi Sohn, the president of Public Knowledge. "Let's put it to those who want greater, longer, stronger CR enforcement... why shouldn't we have some balance? Let's turn the clock back and think about the original need for copyright." This year, says Sohn, will be the year "we push our own, affirmative, agenda."

On January 9, Senator Ron Wyden (D-OR) offered his ideas to tackle the big challenges that he sees down the field – he called his agenda guaranteeing innovators the Freedom to Compete. The freedom to compete in the marketplace, he said means:

1. Access to the Internet: Internet Service Providers – wired or wireless – must be barred from practices that discriminate against specific content. The Open Internet order established by the FCC is a good start but it doesn’t go far enough because, in reality, it is not comprehensive. If a provider wishes to slow consumers’ Internet connections in order to discriminate against a provider of content, Wyden’s view is that they should face the anti-trust laws. He and Senator Al Franken (D-MN) are working on legislation to do just that -- to strengthen the anti-trust laws in order to ensure that the major ISPs cannot use their market dominance to pick online winners and losers.
2. Limiting broadband data caps: There is a case for data caps that manage congestion – manage a scarcity of bandwidth – but they shouldn’t be used to create scarcity in order to monetize data. He highlighted his legislation, first introduced in the last Congress, that would establish disciplines on data caps that give innovators and entrepreneurs the to compete.
3. A Congressional review of software patents’ contribution to the economy: The acquisition of these patents appears less about deploying innovation and more about employing a legal arsenal. The patent system should not operate as a tax on innovation, as it does now. How are you promoting innovation if you stand behind a law that enables a few lines of code to be patentable for 20 years? Software is different than a new invention. It is a building block -- a new set of instructions -- that should be continually built upon and improved.
4. Privacy: it is particularly troubling that the documents Americans leave lying around their kitchen counter receive more privacy protections than the content Americans store in the cloud. A rewrite of the Electronic Communications Privacy Act should address this imbalance.
5. Balanced Approach to Cybersecurity: addressing the vulnerability of critical infrastructure to cyberattack without creating a cyber-industrial complex that would produce an endless, losing, cat-and-mouse game in which nimble hackers win all the time. Cybersecurity should not used in a way that exposes the electronic communication of every American to government and corporate snoops.
6. Copyrights and Patents: what chills the sharing of ideas and collaboration is the maximalist approach to copyrights and patents. Rights-holders are too eager to use their power to scare off challenges to the status quo, and this perpetuates stagnation. Protecting intellectual property is important – the balance between providing rights-holders a monopoly and promoting competition and innovation is just as important. Members of Congress are going to file legislation that would penalize false representations, strengthen Fair Use, and provide real due process and for seizures of property.
7. International Trade: countries are increasingly imposing barriers to digital goods and digital services for non-competitive purposes. It’s anti-competitive protectionism. The Obama Administration needs clear, statutory negotiating instructions that require it seek open Internet disciplines in all trade discussions.

[Our friends at Public Knowledge have been blogging extensively about Sen Wyden’s speech. To learn more, see Data Caps Undermine the Freedom to Compete , Wyden Calls for Copyright Reform at CES, Protecting the Freedom to Compete by Reforming Competition Law, and Wyden Calls for Trade Agreements that respect Open Internet Principles]

Finally, two months ago, AT&T petitioned the FCC to plan for the retirement of traditional phone networks and transition to what AT&T sees as an inevitability: the all-IP telco. This petition and, perhaps, legislative efforts along the same vein could be the key telecommunications issue on 2013. At CES, Hank Hultquist, vice president of AT&T's federal regulatory division, shared the company’s pitch to regulators. "This telephone network we've grown up with is now an obsolete platform, or at least a rapidly obsolescing platform," Hultquist said. "It will not be sustainable for the indefinite future. Nobody's making this network technology anymore. It's become more and more difficult to find spare parts for it. And it's becoming more and more difficult to find trained technicians and engineers to work on it." Although going all-IP signals the death of traditional telephone networks, Hultquist believes Internet Protocol-based networks will give voice calls a higher quality and greater importance. He looks forward to the integration of voice throughout the Web, something that is already happening with the likes of Skype on Facebook and Google Hangouts. Currently, AT&T is proposing testing all-IP networks by allowing telephone companies to retire their legacy networks in specific cities or regions. The FCC is taking public comments on AT&T's proposal.

When asked at CES, Vint Cerf, co-creator of the Internet, said he is troubled by the prospect of companies like AT&T avoiding government regulation after the transition from traditional phone technology to all-IP networks. Already, he said, competition was decimated when the Internet moved from dial-up providers to cable companies and telcos. He said:

My first observation is that it is vital that we maintain openness and neutral access to the Internet's capabilities. The fact that you can carry voice over the Internet is almost incidental to the fact that you can carry any digital content over the Internet. I would not wish to see the question of regulation turn on the notion that Voice over IP is [public switched telephone network] or is a replacement for PSTN. It is a replacement for almost everything we can do, all of the old network functions can be done on the Internet.

If no regulation leads to your loss of choice of access to applications and content, then that is not an acceptable outcome. If that's what the telcos are trying to accomplish, I am opposed. If all they're trying to accomplish is to make sure the Internet stays as widely open as possible, and they are willing to provide competitive access and give us choice, that's another story.

I have to tell you that in the 1990s there were 7 or 8,000 Internet service providers because the Internet was provided through dial-up. If you wanted to switch you just changed the telephone number you call. When broadband came along the number of choices you had telescoped down to one or two: either a telco or cable company or both, and so competition evaporated. There isn't enough of it. Getting access to competition to discipline the market and give you choice is still an important consideration.

So why should you care about CES? Well, because what happens in Las Vegas at the annual Consumer Electronics Show certainly doesn’t stay in Las Vegas, at least not as far as Washington is concerned. Sen Wyden went so far as to suggest throwing out the old adage ‘What happens in Vegas, stays in Vegas.’ “Instead, he said, “let’s establish that ‘What innovation is demonstrated in Vegas, needs to be disseminated around the world.’”