Communications Insights: Trends and Cool Stuff

I finally just had a chance to read the FNPRM for the rules governing the C Block in FCC’s recently concluded 700 MHz Auction and it says “handsets”! Why is this significant?

For the C Block, comprising 22 MHz in the upper 700 MHz band, the FCC created special open access provisions. The FCC will require licensees to provide a platform that is open to third party devices and applications. Specifically, licensees must allow customers, device manufacturers, third-party application developers, and others to use any device or application of their choice on their networks in this band, subject to certain limited conditions. Licensees may not “lock” handsets to prevent their transfer from one system to another, or to other services that compete with wireless service providers’ own offerings. The FCC concluded that these rules were justified because it did not find “that competition in the [mobile] marketplace is ensuring that consumers drive handset and application choices, especially in the emerging wireless broadband market…. it is easy for consumers to differentiate among providers by price, most consumers are unaware when carriers block or degrade applications and of the implications of such actions, thus making it difficult for providers to differentiate themselves on this score.”

Insight: Beware the law of unintended consequences. Here it is not the proverbial monkey wrench, but a pair of bolts, literally, which could bring the FCC’s policy to a grinding halt. Implicit in the service rules is the assumption that the band will evolve to resemble the next generation of the current mobile market in the US. But assumptions like this never last. I wonder if it is possible for clever operator could escape the open handset requirement by providing fixed services. The 700 MHz spectrum is particularly well suited to a variety of applications, one of which might be fixed broadband. In rural and suburban areas fixed wireless broadband could be an effective competitor to wireline. Presumably these areas would be sufficiently competitive that the FCC’s finding would not hold (remember it is limited to handsets, and not even service plans). Thus, if the licensee is bolting “pizza boxes” to the side of homes, would this type of network not be subject to the open access provisions? It’s unclear, but something to think about.

Anyone who knows me for 2.5 seconds knows: 1) that I cannot leave well enough alone and 2) that I cannot stand Microsoft operating systems.  So, I am curious to see what happens when you run network neutrality full speed into 18th Century copyright law.

Network neutrality is a broad, sweeping concept intended to maintain the open and interconnected characteristics of the Internet.  One of the central principles of network neutrality is the freedom to attach any “legal” device which does not harm the network and run any application over it.  I am not quite sure what an illegal network device is, perhaps a digital Kalashnikov (though if the Supreme Court reinterprets the Second Amendment, even that might not apply).

Enter the Hackintosh.  A Hackintosh is a PC which, with a few a modifications, can run the Mac OS X (called OSx86 for the IBM/Intel 8086, 386, 486, 586, etc., architecture). This is apparently not hard to do since Apple started using Intel chipsets. Moreover, the modifications are made to the bios and harddrive of the underlying computer, and not to the Mac OS. However, it is Apple’s contention that it is violation of its copyrights to run OS X on anything but one of their machines.

So, if a computer is attached to the Internet, would Apple’s prohibition violate the principle of network neutrality?  Well, it turns on whether the Hackintosh is a legal device. I am not an expert in intellectual property law anymore, but to my mind it would be illegal tying and bundling to require that OS X could only be run on Apple machines. Can you imagine if Sony sold me a record (vinyl or shellac) and in the liner notes stated that I do not have permission to play it on a Victrola, only a Sony turntable?

Next, let’s consider the DMCA.  The Digital Millennium Copyright Act makes it a crime to circumvent technical prevention measures (TPM) in order to illegally copy copyrighted electronic materials. Running OS X on a machine other than a Mac does not necessitate an illegal duplication.  Under the first sale doctrine, one can buy a valid copy of OS X Tiger on eBay for about $75.FN Apple cannot say that it is an illegal copy to put the OS on a computer - that’s purpose the software was sold for.  Further, they cannot restrict the device with which you read the OS, back to the Victorla… could GE prevent you from reading a book published by NBC Universal under a Sylvania light bulb?

So, let assume that Apple does not sell their operating system (but they do), rather they license a complete device, called a Macintosh. Presumably, then the operating system is part of a useful article, and not a writing. It would therefore not be copyrightable. So, Apple would not have any valid copyrights to be violated by duplication and modification of the OS.  Further, since duplicating it is not illegal, the DMCA does not apply. Loading OS X on a machine other than an Apple might be breach of contract, but not a copyright violation.

Insight: I am not sure that Hackintosh is a legal device, but it probably is not an illegal device. I am curious to hear the opinions of the network neutrality and copyright experts. So, in this high speed collision between the broad, sweeping principles of network neutrality or arcane copyright law which survives?