November 20, 2003

Blackout Report: Maintenance, Training and Communication Errors

U.S.-Canada Power System Outage Task Force - Interim Report: Causes of the August 14th Blackout in the United States and Canada (includes links to full report and to component sections in PDF format).

The New York Times says the November 19 report (link to full text above) points to FirstEnergy and its oversight entity, Midwest Independent Transmission System Operator as primarily responsible for allowing initial problems to escalate. Inaction and lack of communication within the network compounded initial failures due to inadequate maintenance, according to the Times story. "Blackout Report Blames Ohio Utility".
(Read more ... )

The Times said, in part that: "Much of the broad picture the report paints of Aug. 14 — the malfunctioning computer systems, the lack of information, the sequence of failures — has been known for months. But the details released today lay out previously unknown layers of dysfunction, presenting the hours leading up to the blackout as almost a comedy of errors among the people who were supposed to know and control what was happening to that section of the power grid."

Students of network science should find this report a valuable case study in the importance of communication within the network in order to address emergent problems. Network scientists such as Barabasi have studied the importance of communication "short-cuts" and human interaction across the network as a means of avoiding the delays and overload that result from reliance upon centric systems for command and control. When time is a critical factor and stakes are high, open network and peer-to-peer communication becomes a vital resource, one that may have been critically lacking here.

See also our September posting on the Blackout of '03: Unintended Consequences: NYT: Elec Grid Overseers Missed Big Picture

Posted by dougsimpson at 07:18 AM | Comments (0) | TrackBack

November 19, 2003

Congressman Posts Diebold Document Excerpts

Ohio Congressman Dennis Kucinich - has posted excerpts from controversial Diebold documents on his website, with commentary on Diebold's position regarding other posters and his intention to investigate and to introduce legislation appropriate to the situation. Thanks to Donna Wentworth at Copyfight for the pointer to this. (Read more ... )

Rep. Kucinich says, at the posting linked to above, that "Diebold has been using coercive legal claims to intimidate internet service providers and even universities to shut down websites with links to its memos and remove the memo content. Under copyright laws, however, universities are exempt, and posting links to the memos is not considered a violation of the law. By abusing the Digital Millennium Copyright Act, Diebold has intimidated numerous internet service providers to comply with its requests. The damage is two-fold: 1) limiting the public’s information about the security of its voting machines, and 2) expanding corporate control over our most free medium of expression, the Internet.

EFF's Cindy Cohn, Counsel to OPG, has written a letter to Judge Fogel stating that Diebold has sent cease and desist letters to San Francisco Indymedia, an alternative media source that has posted excerpts of the controversial material. According to Ms. Cohn's letter, "Diebold claims that Indymedia's hosting of excerpts from the e-mail archives, as part of a story discussing the 'gems' available in the archive, also violates its copyrights."

The facts in this matter are developing in ways like that involving the Brown & Williamson tobacco documents back in 1993-1994. Privileged documents were taken from B&W by one of their paralegals, then released to national media and to Rep. Henry Waxman, then Chair of the House Subcommittee on Health and the Environment. At the time, Rep. Waxman was conducting hearings about health effects of tobacco and manipulation of nicotine levels.

At the time B&W found about the release, they had a pending civil suit in Kentucky against Williams, their former paralegal. In that Kentucky court, they obtained a subpoena for Rep. Waxman to provide them with all copies of the B&W documents he had received, and to submit to a deposition. Rep. Waxman's response was to remove the case to D.C., where the District Court quashed the subpoena as in conflict with the Speech and Debate clause of the United States Constitution.

The resulting opinion of the Court of Appeals for the District of Columbia is illuminating on the Speech and Debate clause and the scope of its immunities, as well as the removal of the Williams case to the District. Brown & Williamson Tobacco Company v. Williams 62 F.3d 408 (D.C. Cir 1995).

Question: Can we expect Diebold to send Congressman Kucinich a cease and desist letter, with a takedown notice to the ISP hosting I'd like to be a fly on the wall when those arrive.

Posted by dougsimpson at 05:43 PM | Comments (0) | TrackBack

November 18, 2003

OPG v. Diebold Tests DMCA

Electronic Frontier Foundation is supporting and publicizing a lawsuit seeking to quash Diebold's notices to ISPs under the DMCA "safe harbor" clauses. EFF: Online Policy Group v. Diebold, Inc. EFF is hosting copies of the parties' pleadings and briefs at its site. Diebold had served DMCA notices on several ISPs (including OPG and Swarthmore College) that were hosting sites containing copies of Diebold emails and other records in which Diebold claims copyright. Swarthmore took down the sites in question, OPG decided to counterattack. OPG's complaint seeks injunctive relief alleging, among other things, copyright abuse. It alleges that the publication of Diebold's material is protected free speech on a matter of public interest: allegations of defects in electronic election systems made by Diebold and widely used in elections in the United States. A hearing was scheduled for 11/17.

Posted by dougsimpson at 07:25 AM | Comments (1) | TrackBack

November 15, 2003

Dartmouth Lawyers Assn New Blog

Dartmouth Lawyers Association has initiated its DLA Weblog edited by yours truly. DLA is the largest lawyers alumni association of a college that has no law school, with about 1500 members. It holds two international meetings annually as well as functions to raise funds to support legal studies programs at Dartmouth College. Its annual membership directory and searchable online directory of members are considered its most popular feature.

Dartmouth Lawyers Association is a non-profit, tax exempt organization managed entirely by volunteer members. More information is available at its website, with news about Dartmouth lawyers in its weblog.

Posted by dougsimpson at 07:55 AM | Comments (1) | TrackBack

November 13, 2003

Online ADR (ODR) has new website

Center for Information Technology and Dispute Resolution (CITDR) has launched a new site - CITDR and weblog.

CITDR is focused on study and implementation of the use of online tools and methods for dispute resolution.

Posted by dougsimpson at 06:36 AM | Comments (0) | TrackBack

November 07, 2003

New Napster Site-Licenses Penn State

18,000 students gain access to Napster's premium service under a site license to Penn State, effective January 12, 2004. The remainder of 83,000 PSU students and (possibly) 150,000 alumni will get access later. 500,000 titles will be in the accessible library, all copyright-legal and CD-burnable, under an agreement with Napster's parent Roxio. The service will be paid for by the university out of funds from existing student fees, all according to a press release Penn State and Napster Team Up and PSU press releases.

An article in the New York Times quoted Robert Haber, chief executive of CMJ Network, who saw such deals as impacting unlicensed competitors: "I don't want to say it's the death of file-sharing services," he said, "but I think it will put a significant dent in them because it's easy to use and it's really a viable alternative." See Amy Harmon, "Penn State Will Pay to Allow Students to Download Music" New York Times November 7, 2003. (free - registration required).

Question: If other universities follow suit, will such site licenses neutralize the P2P threats to the music distribution channel? Do they raise new legal issues?

  • This is an open thread ... Comments and Trackbacks, please. (Read more ...)

    Five years ago, Penn State was an early adopter of USA Today's Collegiate Newspaper Readership Program to provide selected free newspapers to all students, in consideration of a blanket payment to be paid out of pre-existing student fees. The move has been emulated by several hundred other universities, though some student publications have complained that it hurts their sales and advertising revenues. The Cornell Daily Sun noted concerns that the free distribution of certain newspapers could create or foster a monopoly and subsidize their competition. The concerns were debated last year in the student government body, which approved the program pilot.

    A 1999 feature article in the Chronicle of Higher Education discussed the pros and cons of the newspaper program, including the concerns about the impact upon student-run publications if universities use student funds to make commercial competition "free." See "Free Newspapers Prompt Boom in Campus Readership-- But competition from 'USA Today' and 'The New York Times' may threaten student papers" (subscription required). It cited concerns by College Media Advisors, an association of faculty and staff working with student publications.

    The president of CMA, Chris Carroll, was quoted by the Chronicle as saying: "The huge concern of advisers is that this presents a threat to the survival of student newspapers on these campuses, and we're not included in these discussions." John K. Hartman, a journalism professor at Central Michigan University, and author of two books about USA Today, saw the program as a positive, and was quoted as saying that: "If colleges across the country would widely adopt this daily-in-the-dormitory program, it would give young adults a chance to develop a newspaper habit while they're in the formative stage, and it's a way for the newspaper industry to dramatically increase newspaper readership."

    Commentators have contended that the music industry was shortsighted in killing Napster instead of getting control over it to sell licensed music. The central directory structure of the Napster system affords more control over users than does the decentralized system used in Kazaa, Gnutella and others that now have more users than old Napster ever had. This move may indicate that Roxio has capitalized upon the controversial 2002 purchase of the Napster name and technology out of its bankruptcy estate.

    The move also fits in with some aspects of recent economic analysis concluding that providing a low-cost, high-membership system of licensed music distribution in unencrypted MP3 format is the only effective way to depopulate unlicensed P2P networks, and could increase recording industry profitability. See Shuman Ghosemajumder, "Advanced Peer-Based Technology Business Models: A new economic framework for the digital distribution of music, film and other intellectual property works," MIT Sloan School of Management (2002) (pdf).

    Ghosemajumder's ideal system varies in some ways from the Napster/PSU model. His comprehensive article is worthwhile reading just for the statistics on file sharing and music industry profitability, as well as historical notes on copyright enforcement and antitrust controveries involving the music industry in the recent past.

    One question not clear from the announcements is the relative scope of music that will be available through the system. 500 thousand titles are mentioned, but it is unclear what percentage that is of a selection of current popular titles that most students would regard as complete.

    Other questions:

  • What access will Roxio/Napster afford to additional artists and labels who wish to have their music carried on the Napster system?
  • Has Roxio/Napster created the sort of "essential service" that could be interpreted to require it to open the system up to those competing with Roxio's contractual allies?
  • Has it created a distribution bottleneck that could be exploited to exclude competitors?

    Posner on Exclusionary Practices in the New Economy

    Court of Appeals Judge Richard A. Posner has for decades spoken for the "Chicago School" of economic analysis of antitrust law, and views with skepticism charges that unilateral firm action violates antitrust law. In his 2001 edition of Antitrust Law, he analyzes exclusionary practices in the "new economy." In the new economy, he includes software companies, Internet-service companies and the communications providers that enable them.

    The new economy is different from industrial economies. Much of its product is intellectual property and it enjoys economies of scale in consumption ("network effects"). These characteristics of the new economy, "tug it toward monopoly yet, oddly, also toward competition. The paradox is dissolved by remembering that competition to obtain a monopoly is an important form of competition." Posner (2001) p. 248.

    "A firm that will have the protection both of intellectual-property law and of economies of scale in consumption if it is the first to come up with an essential component of a new-economy product or service will have a lucrative monopoly, and this prospect should accelerate the rate of innovation, just as, other things being equal, the more valuable a hoard of buried treasure is, the more rapidly it will be recovered. What is more, the successful monopolist is likely to be a firm that initially charges a very low price for the new product that it has created. ... The prospect of obtaining a network monopoly should thus induce not only a high rate of innovation but also a low-price strategy that induces early joining and compensates the early joiners for the fact that eventually the network entrepreneur may be able to charge a monopoly price." Posner (2001) p. 249.

    The Chicago School accepts the burden of temporary monopoly prices as a cost of attracting new entrants seeking to replace the current monopolist. Judge Posner sees societal benefit in a Schumpterian "gale of creative destruction." Posner (2001) p. 249. Yet, even the Chicago School admits that unilateral acts of a monopolist may rise to the level of exclusionary practices violative of the antitrust laws.

    As an example, Judge Posner points to the Supreme Court decision in Standard Fashion Co. v. Magrane-Houston Co., 258 U.S. 346 (1922). Standard Fashion created popular dress patterns and sold them through thousands of retailers or "pattern agents." Competitors imitated or copied the most popular dress styles and sold them more cheaply than did Standard Fashion, which called the competitors "style pirates." To counter them, Standard Fashion required all of its pattern agents to contract to sell no patterns other than those made by Standard Fashion. Through these exclusive dealing contracts, it controlled about 40% of all pattern agents in the country. The Supreme Court struck down those provisions as violative of Section 3 of the Clayton Act due to their tendency to create a monopoly.

    In its exclusive dealing requirements, Standard Fashion was leveraging its economies of scale in distribution, to increase its monopoly power, as Judge Posner analyzed it. By forcing pattern agents to choose between the dominant provider's full line of products and any new entrant's more limited line, Standard Fashion dramatically increased the business risk to its competitor at little risk to itself, effectively excluding it from competition. In later years, scholars have examined this "raising rival's cost" analysis as a means of excluding competition.

    Judge Posner suggests that the new economy may be in a state of development like that of the retail trade in 1922, "where distribution facilities may be sufficiently limited to create bottlenecks that monopolists can exploit to perpetuate monopoly." Posner (2001) p. 252.

    To test practices that may serve both efficiency and exclusion (such as anti-piracy measures), Judge Posner suggests a comparison of the practice to those employed in markets recognized as competitive. Use of the practice in competitive markets would raise a presumption that it is available to a monopolist. A challenger could rebut that presumption, however, by a showing that the social harm from the practice exceeds the cost to the monopolist of denying its use.

    Roxio/Napster is implementing a methodology already in use at over 200 universities without legal challenge for several years. Besides being potentially successful and effective in deflating music piracy where it is most damaging, it may also fit Judge Posner's comparison test. As the intended effect is to counter copyright violations and widespread music piracy, it has a strong argument that the social merit balance is in its favor.

    For a further exposition of Judge Posner's views, see:

  • Posner, Richard A., "Antitrust in the New Economy" (November 2000). U Chicago Law & Economics, Olin Working Paper No. 106.
  • Richard A. Posner, Antitrust Law (2d Ed. 2001).

    See also:

  • Robert H. Bork, The Antitrust Paradox: A Policy at War with Itself (2d Ed. 1993).
  • Howard P. Marvel, Exclusive Dealing, 25 Journal of Law and Economics 1 (1982).
  • Benjamin Klein and Kevin M. Murphy, Vertical Restraints as Contract Enforcement Mechanisms, 31 Journal of Law and Economics 265 (1988).

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