Subtitle 

See monopolies for what they are, and how they harm European diversity and economy

03.06.2012 - 23:36

If it's one thing pirates fight against, it's monopolies, and how they harm Europe and our heritage from the Enlightenment with respect for civil liberties, our economy, and our culture. In this article, I'll outline three of the most problematic monopolies in Europe today from a pirate perspective.

The first of the three is the copyright monopoly. It has derailed ridiculously, and harsher - draconian, actually - enforcement has not only proven to be utterly ineffective in stopping citizens from sharing culture and knowledge; enforcement of the copyright monopoly is now threatening our most fundamental rights, such as freedom of speech and secrecy of communications.

Before we go on: Yes, copyright is a monopoly. It has nothing to do with property: in fact, it is a limitation of property rights. If you buy a DVD, the copyright monopoly on that DVD limits what you can do with the property you have legitimately bought, things you could normally do with property. If you buy an empty hard drive, the copyright monopoly limits the bitpatterns of data you can use it to store, despite the hard drive being your property. (If you have ever listened to copyright lawyers speaking, you'll notice that they are talking about "exclusive rights", not property; in more everyday language, exclusive rights is simply a "monopoly".)

Further, the so-called pirates don't just share culture and knowledge - they also preserve it, in violation of the monopoly laws, but it wouldn't have been preserved otherwise. Today, the vast majority of our common culture from the last century is literally rotting away in vaults, becoming unreadable and unplayable, because the monopoly constructs make it more profitable to keep arbitrary 70-year-old assets still on the books, rather than making them available to the public. Were it not for pirates who have shared what they could, this culture would have been lost forever, seriously harming European cultural diversity.

But it's not just a matter of civil liberties, impossible enforcement against the lifestyle of voters in the hundreds of millions, or of European cultural diversity. At the end of the day, the copyright monopoly conflict is also a trade conflict, primarily driven from the United States. It is, frankly, not in Europe's economic interest to prop up this monopoly. A publication from the European Commission reveals that the United States gain from the copyright monopoly, but the European Union loses massively - specifically, the copyright/patent loss for the European Union is 24 billion USD yearly. (In contrast, the United States gains as massively.)

With the European Union being the world's largest economy, there is absolutely no reason for us to accept these conditions. If we decide to change which monopolies we honor (and we should!), the rest of the world has no alternative but to respect that, and it is the duty of European politicians to care for Europe first. We have absolutely nothing to gain from taking orders from the United States here - put bluntly - to hand over European citizens' money to the United States.

(Read more about the trade war: "Information Feudalism: Who owns the knowledge economy?" by Peter Drahos and John Braithwhite, detailing the origins of the TRIPs agreement.)

This brings me to the second problematic monopoly, which is how the European Patent Office keeps awarding patent monopolies in violation of the law. Despite the European directives clearly saying that computer programs as such fall outside of patentable matter, software patents keep being awarded in violation of  these directives. When threatened over an awarded patent monopoly, it is less of a business loss for most entrepreneurs to pay the demanded license fees rather than challenge the patent's validity in court, and so, a vicious cycle is created, where patent hoarders drain money from innovation without contributing to the economy.

In the United States alone, patent monopolies held by so-called "non-practicing entities" - also known as "patent trolls" - have drained 500 billion USD, half a trillion dollars, from the innovation sector. This is according to a recent study from Boston University. The vast majority of these are software patents. Today, the dysfunctional patent system drains over one-quarter of innovation funding.

The only people gaining from these borderline-illegal software patents (technically they're only invalid, not illegal, but they still cost tons of money to defend against) are the patent lawyers. Others are, rightfully, furious. The business angels and venture capitalists who fund our startups have had more than enough. One investment capitalist recently went on record saying - quote - "I can't believe our government allows this shit to go on" - endquote.

The third monopoly is the old national telecom monopolies, which have now bought out the vast majority of wired and wireless internet bandwidth. This presents a strategic growth problem, as these telecom companies will delay the rollout of a functioning net as long as they possibly can: it will disintegrate their sunk investments and cash cows. (The thought of paying per minute for a 9.6-kilobit connection that can only be used for voice communications appears laughable and ridiculous when you have a general-purpose, fixed-fee, unmetered 100-megabit connection.) To trust the old national telecom monopolies with rolling out the net at the pace that is optimal for the growth of overall European economy is like trusting the fox to guard the henhouse: it's just not going to happen. In this case, the special interest of the telecom companies - specifically, their luggage of obsolete investments - is actively counteracting the public interest of economy-boosting, ubiquitous bandwidth.

Let's take a tangible example, data roaming. There's regulation coming down the pipe to make that situation just slightly less unbearable in the coming years, but it's still nowhere good enough. A company in a healthy market can have a 5-10% profit margin on a specific product. For data roaming, the profit margins typically vary between 100,000 and 1,000,000 per cent. (Yes, you read that right.) This can only happen in a thoroughly oligopolized or monopolized market, in which case regulation is required to restore free-market functionality.

The right regulation in this case would not necessarily have been a price ceiling. Rather, if our dream is a seamless Europe, it would have been to regulate plans to treat the single market as exactly that - a single market, disallowing its segmentation. Disallowing premium charges for traffic originating or terminating in other member states. (The extra operating costs for the telecom companies are, as we have already seen, negligible.) Only then, when crossing borders of member states wouldn't matter for our citizens and entrepreneurs, would we start to see free movement of business and economy across borders, integrating Europe in the strategic way needed.

It is entirely unreasonable that we should let a legacy industry's sunk, obsolete investments stand in the way of this unified vision.

Medium- to long-term, we should regard an anonymous, loginless, and publicly-operated wireless network coverage in urban areas to be as basic a public service as streetlighting or fire stations.