Jeffrey Benner

The trend profoundly concerns consumer advocates and some Internet policy experts. They warn that if the FCC goes through with its plans, cable companies and the Baby Bells will quickly establish a monopoly on broadband service over their own networks. Consumers accustomed to thousands of competing ISPs to choose from for dial-up narrowband Internet access will be left with just one or two options for broadband service. One worry is that the lack of competition will yield high prices and poor service. But the far more urgent concern is that media conglomerates will use their control over broadband pipes to restrict access to content, information, or technologies that compete with their own content or otherwise threaten their interests.

“The past two decades on the Internet have been a uniquely consumer-friendly environment,” says Mark Cooper, research director at the Consumer Federation of America. “Now that is up for grabs. The essential ingredient of the Internet was preventing the owner of the facilities from dictating content. Now, eight cable companies will decide what the public will be offered, not 8,000 ISPs.” The CFA, along with the Media Access Project, the Center for Digital Democracy, and the Consumers Union are challenging the FCC ruling on cable broadband in federal court.

Despite those dire warnings, the FCC’s policy on broadband enjoys strong support. Companies with a stake in the matter are gung-ho for it, at least for their own networks, and many independent economists and public policy experts also find the FCC’s deregulatory approach to broadband enlightened and long overdue. They scoff at the idea that the freewheeling Internet can be controlled by any company or group of companies. And they argue that the current regulations, particularly the open-access requirements for DSL, actually discourage private investment in new broadband infrastructure and technology. Who wants to build a new network — whether it’s DSL, satellite, or “fiber to the home” — if you then have to share it with competitors?

If the government steps aside, they say, robust competition will develop between different technology “platforms” such as cable, phone, satellite and local wireless, giving consumers plenty of choices and stimulating a build-out of broadband infrastructure at the same time.

“If you have competition between platforms, consumers will be better off,” says Randolph May, a communications policy expert with the Progress and Freedom Foundation. “The problem is that [regulation] impedes investment and new entrants to the market.”

Further complicating the picture is the massive consolidation in the media and telecommunications industries that has been building for years. That consolidation is expected to accelerate as the FCC throws out limits on how large and broad media companies can grow. Once those limits are gone — some have already been eliminated — it is quite plausible that a single media company could control the broadcast television stations, newspapers, radio and broadband Internet access in a single city.

Even some conservatives worry about this concentration of power among the very companies seeking unregulated control over broadband Internet access. Kenneth Arrow, a Stanford economist who won the Nobel Prize for his free-market theories, supports the deregulation of broadband. But he also expresses concern about pushing reliance on the free market too far. “I am worried about concentration in the media,” he says. “That does bother me.”

The heart of the anti-deregulation camp’s argument is that the narrowband Internet owes its phenomenal success as an engine of innovation, creativity and economic growth to government regulations that guaranteed open competition. Current telecommunications regulations, originally written to break up the Bell telephone monopoly, require open access to phone lines for all ISPs and forbid the Baby Bells to tweak with the content flowing over their networks. If such protections are not extended to broadband service over cable, and are lifted from DSL over the phone lines, those against deregulation fear that the openness, innovation, and creativity that made the narrowband Internet revolutionary will wilt in the tight fist of corporate control. Huge media companies — increasingly fearful of the threat posed by the Internet to their proprietary content — will jump at the chance, they say, to lock things down.

“There is a fundamental battle going on,” said Larry Lessig, a Stanford law professor and an expert on Internet history and policy. “There is a strong political movement to remove all obligations to keep the network open [and] the Internet as we knew it.”

On March 13 the FCC commissioners ruled, 3-1, that cable broadband is an “information service” rather than a “telecommunications service.” By toggling definitions just so, the commission cleverly managed to exempt cable broadband — widely acknowledged as the key communications network of the future — from all the rules that apply to telecommunications services under the Telecommunications Act of 1996. The most important piece of telecom legislation in 60 years, the act, among other things, requires telecommunications companies to open up their networks to competition.

This open-access requirement is the reason you can choose from among hundreds of long-distance carriers and from among thousands of ISPs for dial-up access to the Internet. Under the law, local phone companies must allow other companies to sell services over the phone lines, even if they compete with the phone company’s own services or products. The Telecommunications Act also forbids network owners from meddling with content on their network. This is why narrowband users — and thus far, DSL users — can fax, or talk, or download music off the Internet without permission or fear of interference from the local phone company. The rules were written to prevent the owners of the telephone wires from using their power over the lines to control content or stifle competition.

Over the past several years, as cable companies have begun offering services generally considered to be telecommunications — Internet access, digital telephone service, video conferencing — there has been an increasingly bitter battle between cable companies and consumer advocates over whether open-access requirements and other regulations that apply to telecommunications should also apply to cable. The March ruling settled the question: Telecom rules won’t apply to cable broadband.

The 1996 act defines “telecommunications” as simply “the transmission, between or among points specified by the user, of information of the user’s choosing, without change in the form or content of the information as sent and received.” Consumer advocates argue this should apply to cable broadband. Although the act, and the FCC, have long referred to high-speed Internet access as “advanced telecommunications services,” the FCC decided in its March ruling that cable broadband is really better described as an information service. Although technically still under FCC jurisdiction, there are no significant regulations on information services, which include services like voice mail. As a “declaratory ruling,” the commission reached its decision without a hearing or public comment period.

FCC commissioner Michael Copps, the lone Democrat on the four-member commission, wrote in his dissenting statement that the ruling amounted to a breach of the Constitution.

“Today we take a gigantic leap down the road of removing core communications services from the statutory frameworks established by Congress,” Copps wrote, “substituting our own judgment for that of Congress and playing a game of regulatory musical chairs by moving technologies and services from one statutory definition to another. Last month I remarked that we were out-driving the range of our headlights. Today I think we are out-flying the range of our most advanced radar.”

But the FCC is not stopping there.

For years there has been clamoring from all sides that the same regulations should apply to all types of broadband access, although opinions differ on what the rules should be, or if there should be any at all. Public policy for broadband is particularly confusing, because the service is offered over cable, phone and wireless connections, and each of those sectors has traditionally had a separate set of regulations. Chairman Powell has made it plain he would like to clear up the confusion and have consistent rules.

In February, the FCC proposed lifting the current open-access requirement for DSL service. No decision has been reached yet, but now that the FCC has ruled that cable companies will not have to open their networks to competition, and given Powell’s enthusiasm for consistent regulations — or lack of them — it seems a safe bet the FCC will let the Baby Bells shut out their competitors, too. The logic is essentially that one monopoly deserves another.

The prospect of broadband provision reduced to a few competitors, each with a monopoly on their own platform, scares the hell out of consumer groups that have fought the creation of corporate monopolies over media and information sources for years. Because media conglomerates such as AOL have begun buying up the pipes that deliver the content they produce, the situation seems even more ominous. In short, consumer advocates worry these companies will mess with content in order to force the Internet to serve their own interests. They argue, for example, that a cable company will never allow streaming video to flow over its cable broadband lines if it competes with its cable television service. Even the right to “click through” to the Web won’t be guaranteed, they warn, and companies are likely to turn the Internet into walled gardens of their own content — think AOL with no escape hatch to Google.

“The path the FCC is currently on will change the Internet that you know,” said Cheryl Leanza of the Media Access Project (MAP), a public interest telecommunications law firm. “Currently, rules prevent phone companies from controlling content in any way. There is no content protection for cable, and the FCC has proposed to take away the protections on content discrimination for DSL. The impact will be breathtaking.”

Like consumer advocates, free-market supporters trumpet the importance of competition among ISPs, and fear a monopoly on broadband. But they think the access requirements and the other rules in the Telecom Act stifle rather than secure competition, innovation and investment, and the monopolist they are concerned about is Uncle Sam. “I’m a lot more worried about John Ashcroft than John Malone,” quipped Gerald Faulhaber, chief economist of the FCC from 2000 to 2001, referring to the attorney general and to one of the top power brokers in the cable industry.

At the heart of the argument that the free market will save us lies the belief that competition between DSL, cable, satellite, local wireless and other technology “platforms” not yet imagined will be more than enough to guarantee that consumers will get the Internet when, where, and however they want it. Even if one company enjoys a monopoly on one of those platforms, the theory goes, it will not amount to a monopoly on high-speed Internet access overall. Better still, they say, encouraging a horse race between platforms will mean that billions of dollars in private investment will pour into broadband infrastructure and equipment.

“It’s clear the FCC is moving toward putting cable off-limits to regulation [under the Telecommunications Act], and I think that’s a great idea,” said Faulhaber, who now teaches economics at Wharton. “I wish Michael Powell would do more to encourage platform competition. As long as people think this will be regulated, no [competitor] is going to jump in.”

Competition between platforms would indeed steal an awful lot of thunder from those making dire predictions that mega-corporations are about to capture control over the next generation of the Internet. If my cable company won’t let me click through to the Web or get streaming video, I can get DSL, or a satellite dish, or a wireless connection.

But the likelihood that robust competition will actually develop for a majority of households remains a hotly contested question. As of June 2001, the latest official statistics available from the FCC show 2.7 million U.S. households using DSL, 5.2 million using cable modem, and 200,000 broadband via satellite. Fifty-eight percent of U.S. zip codes (not necessarily households) had more than one broadband option available. Twenty percent of zip codes had no broadband service at all.

Advocates of broadband deregulation tend to be very optimistic about the potential for interplatform competition to improve; its critics are not.

The pessimists say that cable is too far ahead, that DSL doesn’t have the bandwidth to compete with cable on key applications like video streaming, and that satellite broadband — besides its tiny market share — works well for downloading but not uploading. “In the abstract, no one would deny that 10 different platforms would be good,” said Leanza of the Media Access Project. “But it’s naive to assume that most people will have more than one platform available.”

Optimists point out that DSL is catching up and network upgrades would make it just as fast as cable modem, that satellite is a real option just needing time to develop, and that new options like local wireless, fiber to the home, even networks over power lines, will take off if local, state and federal bureaucracies would stop standing in the way.

In the most extensive independent study of broadband to date, the National Research Council came to a mixed conclusion regarding interplatform competition. The report found that interplatform, or “facilities based,” competition, is important and should be encouraged. But it also predicted it would not take hold everywhere and should not be relied on exclusively for consumer protection.

“The report found that facilities-based competition is important, but don’t assume you’re going to get it,” says David Clark, a computer scientist at MIT and a coauthor of the NRC study. Some locations, like big cities, might get three competitors, others two, and some just one, he said. Nevertheless, Clark cautiously endorsed the current FCC policy of deregulation.

“The gamble is to get broadband out there, no matter what it looks like,” Clark said. “You might try for a level of competition you don’t get. You might gamble and lose. But I would say, get it out there.”

That is a gamble consumer advocates are not willing to take. In their view, the best possible outcome of the bet is bad, the worst case catastrophic. “Even if three top platforms reached every household, we will be trading hundreds of [ISP] choices for three,” says Leanza, but she thinks even that number is too much to hope for. “Deregulation can only work if competition is in place,” Leanza says. “You can’t have both deregulation and monopoly, and that is where we are headed.”

Viewed in the context of the FCC’s campaign to deregulate media and telecommunications in general, the concerns about who will control broadband become even more urgent. With quite a bit of prodding from the courts, the FCC has been tossing out or rewriting rules, called “ownership caps,” that limit how large and broad media conglomerates can grow. The cap on how large cable companies can grow is gone. So is a limit on how many broadcast television stations one company can own. A “cross-ownership” rule forbidding cable companies from buying broadcast television stations has been scrapped. Another that forbids ownership of newspapers and television stations in the same market is under review, as is a restriction against owning more than one broadcast television station in the same city.

Analysts agree the regulatory changes already made will soon unleash a new wave of consolidation in the media sector. Among companies that deliver broadband, the consolidation is already under way. In December, AT&T agreed to sell its cable division to Comcast, in a deal valued at $72 billion. If approved, the combined company will have 27 million subscribers, or about 40 percent of the cable market. EchoStar and DirecTV, the top two satellite television companies, have also announced plans to merge. The combined company would essentially have a monopoly on satellite television. The two companies argue they need to merge in order to compete with the likes of AT&T Comcast.

“At the end of this, one company in a community could own the newspaper, several TV and radio stations, the cable company, the principal ISP — maybe even the phone company!” said Jeff Chester, director of the Center for Digital Democracy. “This stands the First Amendment rights of citizens in the digital age on its head.”

For those who, like Chester, are worried that deregulation will result in a dangerous consolidation of power among a handful of media companies in traditional media like television, print, and radio, keeping the Internet out of their control has become all the more urgent. In their minds, the battle for broadband could amount to democracy’s last stand. “This is a war for the heart of the Internet,” Chester said. “Will a few telecoms be allowed to seize control of it, or will it be preserved as a democratic resource? It’s David versus Goliath.”

The cable companies and Baby Bells disagree, arguing that there is sufficient competition both within and between platforms and that more can be expected. AT&T’s cable division has voluntarily agreed to let EarthLink sell cable modem service over AT&T-owned cable in Boston and Seattle, and it is promising to open more markets soon. But skeptics say the company has been dragging its feet on opening access for years and is giving token access now to head off mandatory requirements as a condition of its pending merger with Comcast, another major cable company. As a condition of the merger between AOL and Time Warner last year, the Federal Trade Commission required the combined company to open its lines to at least three competing ISPs.

But, oddly, the same cable corporations that oppose mandatory open access for their own cable networks are among the most eloquent and spirited advocates of continued mandatory access for the telephone lines. Both AT&T and AOL Time Warner have asked the FCC to maintain open access for DSL — a market both would like to crack — arguing that the rules protect consumers. Both companies oppose placing the same requirements on their cable networks, markets they would like to protect.

“For decades, the FCC has successfully promoted the openness of our nation’s wireline infrastructure,” AOL Time Warner lawyers wrote in comments submitted to the FCC on its proposal to eliminate open-access requirements for DSL. “It understood that by ensuring non-discriminatory access to wireline networks, consumer welfare would be optimized.”

Hearing AOL laud the benefits that open access offers consumers on DSL, despite its opposition to such access for cable, triggers eye-rolling fits among consumer advocates who want open access for both cable broadband and DSL. “This double standard illustrates what’s at stake,” said Chester. “Media giants are manipulating broadband for their own purposes — not the public interest.”

Asked why AT&T supported open-access requirements for phone lines of local carriers, but not for its own cable network, AT&T spokeswoman Claudia Jones said: “Cable and telephone are different animals. There is ubiquitous competition for cable. Satellite is really bringing competition to the cable market. But there is virtually no competition in the local telephone market. The Bells can’t get what they wanted in Congress, so they are looking to the regulators.”

“The hypocrisy is outrageous,” said the Consumer Federation of America’s Mark Cooper. He thinks getting regulators to overrule Congress is exactly what AT&T’s cable division has done by successfully persuading the FCC not to apply open-access requirements to cable broadband.

In the end, the battle over broadband is about who has control over information. One unlikely but eloquent spokesman for the importance of fair access to information is FCC chairman Powell himself. Speaking at the Broadband Technology Summit in April, an event sponsored by the U.S. Chamber of Commerce, Powell said:

“You name it, and information plays a vital role in making a decision, making a commitment, taking a risk, or agreeing to part with something of value. Often in these transactions the information one has will determine if the transaction is fair, or whether someone gets taken — the taker having superior knowledge about the deal.”

For those who are convinced Powell’s policy on broadband could permanently tip the balance of power over information toward massive corporations, the irony of his statement must be almost unbearable.

But catastrophe is hardly assured. Perhaps technology and the free market will come to the rescue. They have before. What is certain is that by deregulating broadband, the FCC is taking a tremendous risk that could have unforeseen consequences. A risk few people even know they are taking, fewer still understand, and only four get to vote on.

The scenario is not new. In 1981, Congress quietly eased restrictions on savings and loan houses, allowing them to invest their federally insured deposits however they pleased, even in, say, junk bonds. In the mid-1990s, the SEC softened rules that had prevented accounting firms from consulting for their auditing clients. Aside from a few stray government watchdogs, a handful of Beltway bureaucrats, and a clutch of corporate lawyers, those obscure but radical experiments in deregulation went unnoticed — until it was too late.

“It’s awful, the fact no one is willing to challenge this,” says Al Gidari, a lawyer who advises telecom firms on compliance with government surveillance issues. “It’s a sign of the times after 9/11. No one wants to be perceived as anti-government or anti-law enforcement.”

CALEA requires telecom companies to be able to provide police and federal agents with two kinds of surveillance: a full wiretap, which reveals the content of a communication, and a more limited tap that provides “call-identifying information.” Call-identifying information has traditionally been gathered via two kinds of taps: a “pen register,” named after an old-fashioned device that when hooked up to a phone can pick up the numbers dialed, and a “trap and trace,” which reveals the number of an incoming call, just like a caller I.D. box.

The controversy over CALEA and the upgrades sought by the FBI centers on the kind of information that will be provided to police with a pen register or a trap and trace. For a full wiretap, police must demonstrate to a judge that there is probable cause to believe the subject of the surveillance has committed a crime, the same standard for search warrants. But to gather call-identifying information — by pen register or trap and trace — police need only file a certificate with the court that asserts the information is “relevant to an ongoing criminal investigation.”

A judge cannot reject the request; the court merely certifies and files it. Because of this low legal standard, privacy advocates are very skittish about any blurring of the lines between call-identifying information and the actual content of calls, which is supposed to be accessible only with a wiretap warrant.

Civil liberties groups argue that “call-identifying information” is just an awkward term Congress used in reference to phone numbers of calls dialed and received. But the FBI has long sought a much broader definition, arguing that it should comprise much more than just telephone numbers. The FBI wants call-identifying information to include whether the “flash” button is hit to access call waiting, whether the caller gets a busy signal, and what parties are in on a conference call; and it wants all the digits dialed during a phone call — obtained through a process known as “dialed-digit extraction.”

What most concerns civil liberties watchdogs is dialed-digit extraction. Once activated, this handy feature enables police to detect what numbers are dialed during a call. Critics worry that police could use this capability to get bank information, voice-mail passwords, and the like with nothing more than a rubber-stamped order for a trap and trace or pen register.

The deadline for filing an objection to the FCC order has already passed, and the only complaint filed was from a group of rural telecom carriers worried that the upgrades will cost too much. In the post-9/11 era, denying the FBI anything it says it needs is a far more daunting proposition than it was 10 months ago. What was once a bitter battle for the FBI has become an uncontested jog into the end zone. And, some observers fear, the real issues at stake aren’t limited to phone calls. The big game being targeted by the FBI is communication via the Internet.

The last time the FCC ordered the telecom industry to build the expanded wiretapping capabilities the FBI wanted, in August 1999, the American Civil Liberties Union, the Electronic Frontier Foundation, the Electronic Privacy Information Center and the Center for Democracy and Technology promptly filed suit to block the FBI’s attempt, arguing that the changes expanded CALEA far beyond what Congress intended and that it set a dangerous precedent of designing telecommunications networks for new spy capabilities.

The United States Telecom Association filed a separate suit, saying that the industry’s existing standards for filling surveillance requests were adequate and should not have to be changed. The two groups then joined forces and took the FCC to court, hiring Theodore B. Olson, now the solicitor general of the United States (the man who represents the federal government before the Supreme Court), to plead their case.

The industry-advocate coalition won a key victory in August 2000. The U.S. Court of Appeals in Washington blocked four of the six changes the FBI sought and the FCC had ordered, sending them back to the FCC with instructions to better explain why the changes were necessary and how they would balance the needs of law enforcement, the public’s right to privacy, and industry’s right to a cost-effective way to enforce the law. The FBI took no further action for over a year, and it seemed possible the agency would admit defeat and let the issue die.

Then terrorists attacked the United States, and the picture changed overnight. Responding to frantic calls for improved domestic security, Congress hastily passed the USA Patriot Act. The act expands the kinds of information that law enforcement can collect without a warrant for a full wiretap, undermining a key argument the coalition used to beat back the FCC order in 2000. The attacks also skewed public opinion on the proper balance between privacy and security, making the public relations cost of fighting increased surveillance a dicey proposition for any company or organization. The FCC brushed off the old order, tacked on the additional explaining the court had asked for, and reissued its demands in April.

David Sobel, lead counsel for the Electronic and Privacy Information Center, was among the attorneys that successfully held back the FBI in court two years ago. He denied that 9/11 or the Patriot Act had influenced EPIC’s decision not to contest the FCC order this time around. Although he remains concerned about the expansion of FBI power, Sobel argued that the earlier court decision had addressed his key concerns. “We thought the big issues were resolved in 2000,” Sobel said. He cited, for example, the court’s rejection of the FCC request that call-identifying information include a cellphone caller’s location, something that is not back on the table this time. The court also made clear that FCC requirements cannot be construed as a legal definition for what qualifies as “call-identifying information,” leaving open the opportunity to challenge any abuse of the new surveillance capabilities being built into the telecommunications system.

But Gidari, who has consulted closely with privacy groups on the issue for years, doesn’t buy Sobel’s explanation. He argues the issues are just as pressing as ever, if not more so, but privacy and industry groups have given in to pressure. “The government has effectively cowed all of them,” Gidari said. “The order significantly alters the landscape of what surveillance has meant up to now. It is a huge expansion of the law, rewriting the rules of the game, and David knows that.”

Jerry Berman, executive directive of the Center for Democracy and Technology, agreed that the issue is still of deep concern to his organization, and conceded that the changes the country has seen since 9/11 made it difficult to mount a fight this time, primarily because of limited resources and a growing number of urgent battles.

“We’re essentially under siege,” Berman said, ticking off issues that had recently come up: the new Homeland Defense Department, new FBI data-mining rules, the Patriot Act. “Would we be challenging this if it were September 10th? Absolutely. The problem is priorities and resources, but don’t count us out yet.”

Berman and his CDT colleague Jim Dempsey actually helped draft the CALEA legislation, but they now fear the FBI has burst through the limits they tried so hard to write into the law. “It is essential we find away to draw a line around the original CALEA,” Berman said.

Dempsey, who helped put together the case against the FCC in 1999, agrees. “We opposed the [FBI] add-ons, and we still oppose them,” he said. “We have been very disappointed that the [FCC] did not do its job under CALEA; it was supposed to be a break on the FBI demands. The FBI used CALEA to get a lot of bells and whistles built into the system it never had before. This sets an unfortunate precedent for designing information systems for surveillance at the behest of the government. That is not what Congress intended.”

The FBI argues that the proliferation of calling cards requires the bureau to have access to numbers dialed after a connection is first made to a phone company via a toll-free number. The FCC order does not stipulate what kind of court order collecting those digits will require and also mandates that a “toggle” be built into the digit-extraction service so it can be turned off. But the concern is that once the system is rigged to collect them, those digits will be tossed in automatically when filling a trap-and-trace or pen-register order. The logic is, if you build it, they will spy.

So why are telecom companies agreeing to build it without a fight this time? According to Mike Altschul, general counsel for the Cellular Telecommunications and Internet Association, it is because the FBI found a way around the court order and has already gotten its standards built into 90 percent of the wireless and wired switches in the telecom network. Now all the FCC order does is instruct most companies to throw the switch.

“The reality is that these new capabilities have already been developed through the FBI and telecom switch vendors,” Altschul said. “So these features are readily available to industry.”

How did this happen? As part of CALEA, Congress set aside $500 million to defray costs the industry would incur to make the necessary upgrades to comply with the law. The FBI disburses this money. So, even though the court blocked four of the six items on its wish list in 2000, the bureau went ahead and cut deals with all the major telecom switch manufacturers. They agreed to build their equipment according to the FBI standards, and the FBI paid them millions to do it.

This is all backwards, according to Gidari. The upgrades preceded an FCC order for them, but the manufacturers (distinct from the telecom carriers) were afraid to build their equipment without the FBI standards, for fear they would have to add them in later. “When the court of appeals decision came down and remanded to the FCC, the manufacturers said, ‘We can’t wait. We have to have it ready to go,’” he explained. “The privacy groups should have been screaming, but they were asleep. They have limited resources.”

After Sept. 11, resisting the FBI’s overtures became even more difficult for his clients, Gidari said. “The FBI has said these changes are crucial for law enforcement, and no carrier wants to be named as the problem.” He said that the bureau is currently working behind the scenes with other standards-making bodies to get the surveillance capabilities it wants built into Internet Protocol telephony, DSL, the wireless Web, and other communications platforms, even some that are exempt from CALEA. “The standards groups are caving in to the FBI,” he said. “We are designing systems for surveillance.”

The debate over the interpretation of CALEA centers on the same vexing ambiguity that plagues nearly all telecom regulation: How do rules written for the old analog phone system apply to a digital, wireless, networked world? The answer is always open to interpretation, and special interests pick the one that suits them best.

Understanding this is the key to understanding why civil liberties activists care so much about how many digits the FBI gets when it traces a call. CALEA was written with phones in mind, and the FCC order sounds as though it’s about phone calls. But between the lines, the debate is all about the Internet. How should spying rules written for phones apply to digital communications like e-mail and Web browsing?

The FBI believes the CALEA guidelines apply to Internet and digital phone communications, and Congress gave that interpretation a huge boost in the Patriot Act. The new law makes it clear that an order for a pen register or trap and trace applies to e-mail and Internet communications as well. The huge problem with this from a privacy standpoint is that with digital communications, the destination of a message, the call-identifying information, and the content of the message come in the same digital packet. If law enforcement gets one, it gets the all the others.

The concern is that if the FBI is to get the digits dialed during a call sent over a digital network, for example, the telecom company will have to dig into all the packets of the call and either extract the digits or just send the whole stream of digital packets over to law enforcement and let them sort it out.

According to Gidari, who advises huge telecom companies of their obligations under CALEA, the packet issue is what makes the FCC order to implement digit-extraction capability so radical.

“That order basically says, If the voice goes over the network, you have to listen to it and pull out the digits,” Gidari says. “Now we have to dig into the packet to extract the digits. The serving carrier should not be in the business of listening in to your calls. But now we will be a content invader on a simple trap-and-trace order.”

Similarly, to find out the destination of an e-mail message — the equivalent of call-identifying information for a phone call — a telecom carrier or ISP will have to crack open packets that also contain the text of the message.

If the carrier does not do the extracting and just sends the whole packet, it will be up to law enforcement not to “peek” at the text. Leaving this job to the police makes civil liberties groups nervous, and it concerns Gidari too. “People have failed to recognize the impact this has on Internet communications,” he said.

But in the post Sept. 11 world, does anyone care?

Many would regard giving the Internet to the world as a benevolent act fitting for one of the world’s great public universities. But Bill Hoskins, who is currently in charge of protecting the intellectual property produced at U.C. Berkeley, thinks it must have been a mistake. “Whoever released the code for the Internet probably didn’t understand what they were doing,” he says.

Had his predecessors understood how huge the Internet would turn out to be, Hoskins figures, they would surely have licensed the protocols, sold the rights to a corporation and collected a royalty for the U.C. Regents on Internet usage years into the future. It is the kind of deal his department, the Office of Technology Licensing, cuts all the time.

Hoskins’ “privatize it” attitude has become the norm among administrators at many universities and federal labs across the country. As a result, computer-science professors and researchers who want to release their work to the public as open-source software often face an uphill battle.

Some familiar with the situation say the problem is that universities and federal research labs have become more interested in making money than serving the public interest.

Larry Smarr, a professor of computer science at U.C. San Diego and one of the country’s top experts on supercomputing, is one of them. As former director of the National Center for Supercomputing Applications at the University of Illinois, where the original Mosaic Web browser was created, he’s quite familiar with both sides of the debate.

“Some universities are dead set against giving [software code] away,” says Smarr. “But I don’t think universities should be in the moneymaking business. They ought to be in the changing-the-world business, and open source is a great vehicle for changing the world.”

Open-source software describes program code that is made publicly available for anyone to copy, change or even sell. The best-known open-source programs, such as Linux and Apache, are the product of a collaborative process of software development that takes advantage of the contributions of thousands of programmers all over the world. It’s not only a cheap way to produce software; with so many eyes looking at the code, the theory is, bugs are found and fixed more quickly than with proprietary software.

Over the past several years, open-source software development has won high-profile adherents in the business world — including the likes of IBM and Sun Microsystems. But it has always had its strongest fans in the academic world, where open-source software is seen as a natural extension of the idea that the fruits of academic research should be shared with everyone.

But now some academic programmers on the cutting edge have found that the licensing office is proving a more formidable obstacle to progress than the limits of their imagination and skill.

Pete Beckman, formerly a senior computer scientist at the federal laboratory in Los Alamos, N.M., is a pioneer in creating clusters of servers that rival the power of mainframe supercomputers. He had to fight with lab lawyers for months before receiving permission to open-source his department’s work on the clusters.

Part of the lab’s reticence was concern about letting computer technology fall into the hands of America’s enemies, according to Beckman. “But the lab’s other motive for keeping technology private is the misguided belief they can license it and make money on the lab system,” he says. “They have whole departments dedicated to extracting intellectual property from the labbies.”

Before Beckman led the fight at Los Alamos to establish a protocol for making lab software public, “the only way to get your code released [open source] was to declare it worthless,” he says. Beckman won his fight back in 1999, but the old standard still applies at other federal labs.

“Some federal labs can release code, others can’t,” Beckman says. “There are whole departments that create valuable new technology, and they can’t get it out to the world because [the lab] is trying to make money off it.” Software for modeling global climate change, the behavior of viral epidemics and traffic patterns are among the programs researchers can’t get released, he says.

In a white paper Beckman authored on the problem, he wrote, “Seeking to control computer-science research by putting intellectual property concerns before the goal of good science has destroyed countless projects.”

Just how many is hard to say. Most researchers are reluctant to criticize their administrators. It is rare that universities flat out refuse a request to release software, but the hassle of getting permission can discourage those who might otherwise release their work. “It’s tricky to find examples,” says Rebecca Eisenberg, a law professor at the University of Michigan who specializes in intellectual property policy. “Because most technology fails, it’s hard to say something would have succeeded” if only it had been put in the public domain.

Nevertheless, Eisenberg is convinced that university interest in licensing intellectual property for profit is often at odds with the advancement of science. “You can make a clear case that research is being slowed by intellectual property claims,” she says.

“Universities aren’t distinguishing between times when it’s important to have a patent in place to get something disseminated and times when it’s not,” Eisenberg says. “They’re just looking to see if they can make money. It retards innovation and taxes development.”

It took Chris Johnson, a computer-science professor at the University of Utah, several years of negotiation with his technology transfer office to get permission to make public a program his team had worked on for years.

Called SCIRun (pronounced “ski run”), the program is a software platform for modeling and solving all sorts of complicated scientific problems. One of its most promising applications is as a tool for designing new medical devices. Because it is a foundation upon which other programs can be built, Johnson felt that making it an open-source-code project was fundamental to its value.

“The hope is people will take this and put in their own applications and share those back with the community,” Johnson says. But to do that, they have to be able to see and use the code without having to pay for it or get permission. “A lot of smart people out there can show you new and better ways for you, if they can see under the hood,” Johnson says.

But when he tried to explain to the university administration that the best way to maximize the value of SCIRun was to give it away, he ran into a roadblock. “We wanted to open-source it,” Johnson says. “But they said that would undermine its commercial value.”

The negotiations began, a clash of differing cultures and interests. “No one really knew what we were doing at the beginning,” Johnson says. “We didn’t really understand intellectual property law, and they didn’t really understand open source. The university just didn’t want to let commercial value go. We’re academics who wanted to push the envelope.”

After two years of haggling, they reached a compromise. In March, the software was released under a license that allows academics free access to the code but reserves the right to royalties if the code makes its way into a commercial software product.

It hasn’t always been this way. In the eighties, UC Berkeley was a pioneer in giving away software for the betterment of society. The rapid dissemination of “BSD Unix” allowed Internet-connected computers to speak the same language, helping to make our networked world possible.

But now the University of California is often mentioned as one of the institutions that have taken the craze for exclusive patents and licenses too far. “It changed in the late eighties and early nineties,” says Susan Graham, a professor of computer science at Berkeley. She didn’t remember there even being an Office of Technology Licensing back when the department gave away Unix and the Internet protocols.

If those innovations were discovered today, Graham worries they would end up in corporate hands. “I don’t know whether they would let us release software like TCP/IP today,” she says. “If they thought it had monetary value, they would want a revenue stream. There would be companies who could pay for it. I’m not sure we would have the same outcome [as in the past], and that’s what concerns me.”

The trend at universities toward trying to profit from intellectual property began with the passage of the Bayh-Dole Act in 1980. Bayh-Dole allows institutions doing research for the federal government — mostly universities — to own the intellectual property they produce, and sell the rights to private companies. Because most cutting-edge research at both public and private universities involves some federal funding, Bayh-Dole allows universities to lay claim to many of their faculty’s inventions. The same rights were later extended to the federal research labs.

The philosophy behind Bayh-Dole is economic stimulation through privatization. When the law passed, the federal government held roughly 28,000 patents, but fewer than 5 percent of these were licensed to industry for development of commercial products, according to the Council on Government Relations, a lobbying group for research universities. By giving contractors a chance to sell the rights to technology developed in the course of publicly funded research, Congress hoped to spark an economic boom with taxpayer-funded technology.

Overall, the model has been a dramatic success. The transfer of technology from university labs into offices, factories and stores was fundamental to the growth of Silicon Valley and the success of the new economy. Since 1980, university inventions licensed to the private sector under Bayh-Dole have spawned over 2,200 new companies that generate about $30 billion in economic activity every year, according to the Association of University Technology Managers.

Statistics like these explain the enduring enthusiasm among most policy experts for privatizing the public’s intellectual property. But a few eloquent dissenters have begun to argue that taking privatization of the nation’s intellectual property too far could stifle innovation and suffocate economic growth.

The champion of this broad thesis is Stanford law professor Larry Lessig, who has just outlined this argument in a new book, “The Future of Ideas.” Lessig worries that the proper balance between private intellectual property (Microsoft) and the public good (the Internet) has been lost, and our society is blindly moving toward too much private control over intellectual property. “The shift is not occurring with the idea of balance in mind,” he wrote; “instead, the shift proceeds as if control were the only value.”

The most powerful examples that privatizing technology does not always equal progress are public code like the Internet’s and open-source software. They are cases of technology that derive their value from being public and free; fences kill them. “The open-source movement is an endorsement of the value of the public domain,” Eisenberg says. “It’s a striking counter-example to the bias of public policy: that the public domain dooms technology to obscurity.”

The systemic bias toward privatization, which Bayh-Dole codified into law, has the scientists working on improved versions of the Internet worried.

“For the last 20 years, public money has backed proprietary systems software,” says Rick Stevens, who is working on “grid computing” software at Argonne National Lab. “We’re saying, stop putting public money there.”

Ian Foster, another computer scientist working at Argonne, agrees. “I believe that in almost all cases, the interests of science and society alike are best served by free distribution of software produced in research labs and universities. Unfortunately, there are still institutions that place significant obstacles in the way of researchers who wish to follow this path. Agencies funding research could help things by making strong statements in favor of open source, so that this is the norm rather than the exception.”

Some government agencies are starting to get the message. Open-source development for grid software and other supercomputing applications is getting some government funding. The Department of Energy, which runs Argonne, has been supporting open-source projects for years. In April, the National Security Agency announced it would help to make a version of the Linux-based operating system secure enough for the Defense Department to use.

Universities are starting to rediscover the value of open-sourcing software, too. Stanford, the institution at the hub of Silicon Valley, lets its faculty release software under a public license. “We pretty much go with what our faculty members want to do,” says Kathy Ku, who heads the licensing office there. “We care about the academic mission more that the money.”

Elsewhere, the struggle goes on. “It’s trying to find a balance between the academic mission and commercialization,” Johnson, the Utah professor, says. “This is a hot topic in universities right now, and everyone is really struggling with it. Some universities have really gone overboard. It’s not going to be an easy thing to resolve.”