Archive | Free Markets

EU: Junckers’ mixed signals on mobile networks

Today the president of the European Commission, Jean-Claude Juncker, gave his “State of the Union” speech in the European Parliament.

EU Observer reports…

Every city in the EU will offer free wireless internet access in its centre by 2020, EU commission president Juncker promised in his state of the EU speech on Wednesday. “We need to be connected. Our economy needs it. People need it,” said Juncker. He also said that a faster mobile network, known as 5G, should be “fully deployed” in the EU by 2025.

Two reflections:

First, it is becoming ever harder for cafés, restaurants, and others to provide free internet access for their customers. The reason is that they can become liable for any copyright infringements their customers may commit. (Mainly because of EU regulations.)

Doesn’t this apply for “cities” as well? Will there be separate rules for free WiFi provided by private and public entities?

Second, there is the matter of what you see and what you don’t see. Free WiFi sounds like a good idea for most people. But what will the effects be on commercial networks? As you cannot compete with free (or rather stuff paid for by the taxpayers) – will this hamper the deployment of e.g. “faster mobile networks”? It seems like Juncker is sending mixed and conflicting signals.

Finally, one must put free, public networks into the context of mass surveillance. Exactly who will operate them – and what law enforcement agencies will these operators collaborate with?

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The underlying problem with EU Copyright Reform

The EU apparatus is back from summer leave, and one of the big issues this coming year will be Copyright Reform.

As I have written before, indications are that the EU Commissions proposal will be lame as well as misguided. This should come as no surprise. The thing is, the system is rigged.

Having worked in the European Parliament, I have learned about the close ties between politicians and the copyright industry.

Big Entertainment and other copyright holders are not interested in real copyright reform. They loathe the Internet and fear the new digital market.

What they want is special legislation. And it doesn’t really have to benefit them directly. They are comfortable with new rules aimed at blocking new competition, like Internet start-ups with new and disrupting business models.

This is crony capitalism, corporatism and the rule of special interests.

The Internet is a unique possibility to develop a really free economy, a free market and competition on a somewhat level playing field. Big Business doesn’t like that. Nor do the politicians and bureaucrats. They are anti-progress.

You should keep that in mind as the battle for EU Copyright Reform begins.

/ HAX

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Bitcoin rate on the move

Right now, we see the Bitcoin (BTC) exchange rate skyrocketing. At the moment, the day to day volatility is some 25 percent – with the price of 1 BTC closing in on USD 550.

This might very well be a temporary fluctuation. But there are telltale signs that we might see the BTC price continue to rise.

One reason is that BTC is becoming increasingly popular with the Chinese. CCN.LA writes…

Started by Arthur Hayes, a former Citigroup trader living in Hong Kong, the goal was to create an exchange where people use cryptocurrency to bet on securities not easily accessible to them in their home markets.

Because China restricts exchanging its yuan for other currencies, citizens find it expensive and difficult to invest in overseas securities. Foreign investors are also restricted in trading China stocks.

Link: Bitcoin Derivatives Exchange Expands, Skirting China’s Currency Curbs »

Then, we have the fact that BTC mining is to be slowed down. The Dollar Vigilante explains…

On July 18th of this year bitcoin undergoes a major event that only happens every four years called a “halving”.

Bitcoins are developed through the process of mining. Only 21 million bitcoins can be in existence at any one time. The value of mining is regulated in order to maintain this number. To prevent miners from surpassing this limit, the currency is designed to cut the value of mining in half every four years. It is as if the Federal Reserve slashed the amount of money-printing it does by half.

This could have a major impact on the overall value of the currency. If demand for bitcoin continues to grow while the number of coins that can be mined is drastically decreased, the value should naturally surge. That’s just the law of supply and demand.

Link: Bitcoin Skyrockets And Is Now Up More Than 100% This Jubilee Year »

The Dollar Vigilante also lists these reasons for BTC increasing in value over time:

  • Bitcoin and Blockchain are the Future of Money and Banking
  • Capital Control Crackdowns, Bank Bail-Ins and Worldwide Taxation Schemes to Drive Bitcoin Growth
  • The Coming Debt Jubilee Could Send Bitcoin Easily above $10,000… Maybe $100,000… Maybe More

A bit optimistic, perhaps. But we really should consider what can happen if there is a USD or Euro crisis. (E.g. a debt crisis, a new bank crisis and/or a haircut on bank savings.)

And the fact that BTC is a decentralised currency out of reach of governments control will always give it a role in a free market.

We live in interesting times.

/ HAX

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This might be the end of a free and open Internet

There has been a long-lasting battle over net neutrality in the European Union. Worries are that Big Telecom will throttle traffic and hold e.g. startups hostage — in order to press them for money, in exchange for giving them access to what can be described as regular Internet services.

All the big telecoms operators replied that they would never do that. So, the EU went along with some seemingly reasonable exceptions in the framework…

The EC has been couching these as “services like IPTV, high-definition videoconferencing or healthcare services like telesurgery” — which it says use the Internet protocol and the same access network but “require a significant improvement in quality or the possibility to guarantee some technical requirements to their end-users”.

This legal framework passed the European Parliament just the other day.

There is demand on the part of providers of content, applications and services to be able to provide electronic communication services other than internet access services, for which specific levels of quality, that are not assured by internet access services, are necessary. Such specific levels of quality are, for instance, required by some services responding to a public interest or by some new machine-to-machine communications services. Providers of electronic communications to the public, including providers of internet access services, and providers of content, applications and services should therefore be free to offer services which are not internet access services and which are optimised for specific content, applications or services, or a combination thereof, where the optimisation is necessary in order to meet the requirements of the content, applications or services for a specific level of quality.

Quickly Deutsche Telecom seized the opportunity…

Writing in a blog post yesterday DT CEO Timotheus Höttges suggests the carrier is preparing to use the provision of specialized services to charge startups for “guaranteed good transmission quality” — arguing this will offer them a way to compete with better resourced rivals, such as large tech platforms like Google.

For smaller companies and startups to have the same access to the Intenet as today (and as Big Business) they would only have to “pay a couple of percent for this in the form of revenue-sharing”.

Until this day, the Internet has been an arena where companies of all sorts and sizes have been able to compete freely on equal terms. The Internet has been free and open for all. Those days of the Internet as a common utility now seems to be over.

Naturally one can argue that carriers can do whatever they want with their net. But with the Internet being a global common infrastructure everything is interconnected and rather complicated.

If big ISP:s starts to throttle and compartmentalize their parts of the network — it will be the end of a free and open Internet as we know it.

And it will be the end of an era of free enterprise for all on a level playing field Internet.

I really hoped that the big carriers would have a reasonable approach to the new EU rules — and only apply exceptions the way they were meant to be applied. But, sadly, the opposite did happen.

I’m all pro free markets. But today, I’m very disappointed with Deutsche Telecom and those carriers who will, no doubt, follow in their steps as this door has now been opened.

For the European Commission and the European Parliament, they just have to realize that they have been royally screwed by the telecoms lobby. However, the EU member states in the Council must be very pleased. They have always represented the interest of their old, ex-monopoly, formerly state-owned telecoms giants.

Link: Carrier DT Targets Startups After Europe Agrees Net Neutrality Rules »

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Update, also read: Deutsche Telekom chief causes uproar over net neutrality »

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Economic evolution, technology and politics

If you order a Über car in Berlin, you will get a classic Berlin cream coloured Mercedes taxi instead. As in many other places special interest groups, politicians and bureaucrats are trying to stop market progress and competition. Sometimes they give somewhat understandable reasons such as insurance and tax issues. Sometimes they don’t.

But what is interesting is that still you will get a car, even though it might not be a black Über one. The service is being upheld, even if it’s only its interface that is used at the moment.

While it might be possible for local governments to prevent the ride-sharing side of Über (for the moment), the technical aspect of the concept seems to be unstoppable. Using the company’s smartphone app is much more cost efficient for taxi operators than having a telephone switchboard and some sort of local radio operated voice or data system to direct cars. And then there is the issue of not having to handle money or credit cards, as the payment function is already built into the system.

The Über concept also has proven to be popular with customers — as it is seen as easy to use, reliable, safe and hassle free. The same app can be used more or less worldwide

There is an underlying, slow but steady change towards a decentralized sharing economy in the western world. (Witch is was Über is really about.) This is a change of an entire market paradigm, allowing ordinary people to provide all different sorts of services to others. But for this to be a truly free and dynamic market it must be defended against over regulation and old business protectionism. For this to happen, it must be backed up by technical development.

It has been said that politics might overpower money — but that technology beats politics. This has proven to be right e.g. when it comes to the Internet, telecommunications and television. And it will be true when it comes to the emerging sharing economy — that is a yet fragile concept that politicians and bureaucrats cannot really get their heads around. (So they should keep out of it, but they rarely do.)

You can argue that cutting edge technology has become a prerequisite for economic freedom and evolution in today’s society. Which makes the fight for a free and open connected world even more important.

It might also be a good idea to hard-wire the new sharing economy with encrypted, decentralized digital currencies and payment methods, such as Bitcoin.

/ HAX

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The strengths of Bitcoin vs. old currencies

So, people say Bitcoin (and Blockchain) is difficult to understand? Well, not if you compare it to our traditional monetary system.

The growth of the number of Bitcoins is foreseeable and limited. At the same time the Fed, the ECB, Bank of England and other central banks can print as much money as they want. And they do, on an unsound scale.

There is a well established procedure for mining Bitcoins. When it comes to the USD, EUR, GBP and other common currencies — they are created out of thin air by central and local banks in an endless debt loop.

The “value” of Bitcoins might be a bit volatile. At the same time old currencies are constantly sliding downhill, with inflation making peoples money and wages worth less. (Thus imposing a stealth tax on the people.) With the limited influx of new Bitcoins (and while being adopted by more and more people and business) their value should steadily increase.

Some argue that there is no underlying value of Bitcoin, but trust. The same can be said about all old currencies. For example, the USD left (what was left of) the coupling to gold in 1973. (Since then inflation has made things ten times more expensive, in absolute terms. During the same time the total money supply has increased 80 times.) And trust is much better upheld in the Blockchain than in banks computers and spreadsheets.

Talking about trust: Bitcoins cannot be controlled or manipulated by banks, central banks or governments. Given that traditional currencies in turmoil obviously results in banks being closed, caps on withdrawals and confiscation of bank deposits (like in Cyprus) — Bitcoins may in some situations be the only usable currency.

More and more people are realising that the old monetary system is questionable and possibly unsustainable. So, I would not be surprised if the Bitcoin Moment will arrive shortly.

/ HAX

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Big Entertainment and Big Media declaring war on VPN

TorrentFreak reports from New Zeeland…

“A pair of Internet providers who defied TV company demands to switch off their VPN services will be sued in the coming days. CallPlus and Bypass Network Services face legal action from media giants including Sky and TVNZ for allowing their customers to use a VPN to buy geo-restricted content.”

This was somehow expected. The copyright industry is very annoyed when it comes to VPN services.

There is reason to believe that the New Zeeland cases will be the start of a series of similar court cases around the world. The entertainment and media industries are essentially multinational. Most likely, this is just a pilot case.

Once again Big Business wants to shut down legitimate Internet services, just to protect their outdated business models. But they can never win. Instead, they should accept and embrace the simple fact that the Internet provides one global media market.

It is ridiculous to believe that people all over the world would refrain from watching their favourite TV series and films if VPN services where to be shut down. It would only bring new life to traditional illegal file sharing.

One must remember that people using media services via VPN are not pirating. They are paying customers – only in another country. All Big Entertainment and Big Media might accomplish by going after VPN services is to turn these paying customers into non-paying pirates.

The fact that the copyright industry refuses to adopt to a global, connected market is nothing new. This seems to be a never ending story.

But VPN is not just about light entertainment. VPN is serious stuff. It is used by companies, organisations, governments and private individuals for security and privacy reasons. It is a way to get round censorship. It is a part of the toolbox that dissidents, opposition groups and activists  use to communicate securely.

There is no way Big Entertainment and Big Media should be allowed to shut down this important instrument of freedom, security and anonymity. Instead, they must learn to adapt to the real world market.

TorrentFreak: TV Companies Will Sue VPN Providers “In Days” »

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