Mango Pods and the Regulatory State

The Washington Post has called mom-and-pop vape shops “the small business success story of the decade:” a product with high demand and a market with relatively low barrier to entry, there’s a reason you’ve been seeing vape shops pop up everywhere recently. In the Netflix documentary Betting on Zero, Zac Kirby from Ponca City, Oklahoma loses a lot of money with the notorious multi-level marketing company Herbalife. His solution? Turn the brick-and-mortar location he had purchased to hawk Herbalife smoothies into a vape shop. “I was one of the lucky ones,” he says, “who found a new and emerging industry to get into.”

As cigarettes have fallen further out of favor, nicotine and THC vaporizers have started to take their place, with people drawn to the lack of obnoxious smell coupled with a nicotine or THC high. Vaporizers have been around for a while, but their original iteration was large and bulky, and their demographic confined to those who wanted to buy or build something larger than an iPod to get a nicotine fix.

You’ve also likely heard about the spate of vape-related illnesses that have popped up over the past year, capturing huge amounts of media and political attention. President Trump, as he is wont to do, has even threatened executive action to stem the so-called vaping crisis. And while our current administration is much more likely to pass executive orders than previous ones, the federal government actually has little control over the sale of nicotine projects short of executive action.

            In 2009, the Obama administration passed the Family Smoking Prevention and Tobacco Control Act, which gave the FDA the power to regulate certain aspects of the tobacco industry. Importantly, this means that the FDA can pass rules related to tobacco regulation without an explicit mandate from Congress, as long as the rule is within the power granted to the FDA in the Act and enacted in accordance with the administrative procedure act. Prior to the act, tobacco was regulated through a combination of state, federal, and municipal laws, with no federal agency involvement. The Act ceded authority to the FDA over tobacco manufacturing, barring states from passing stricter laws related to that aspect of tobacco regulation. While Beverly Hills is allowed to ban cigarette sales outright, it can’t regulate the way cigarettes are manufactured, because that power lays with the federal government.

            This Act, however, only preempted some forms of state and local regulations against tobacco and preserved others. For instance, states and municipalities still have the power to ban any or all classes of tobacco, but they can’t force more stringent labelling laws than are required by federal statute. In Beverly Hills, for instance, gas stations and convenience stores will be prohibited from selling cigarettes beginning in 2021. 90210 is still an extreme outlier in tobacco regulation; the city was one of the first to ban smoking indoors in the late 80s, and will be one of the only areas of the United States where it’s illegal to sell tobacco products.

            So why have states and municipalities been so quick to ban vape products while leaving traditional cigarettes and other tobacco products on the shelves? Tradition and history likely have a lot to do with it. The Beverly Hills cigarette ban, for instance, has a carve-out for the cigar lounges that have been in the neighborhood since the days of Old Hollywood. Even Auschwitz prisoners—allowed little else– were allotted three cigarettes per week, such was their importance. As unhealthy as cigarettes demonstrably are, and as successful as advocates have been in cutting the number of smokers in America, they’re still an indelible part of at least some corners of social culture. There’s a reason everyone was swooning over that photo of Phoebe Waller-Bridge celebrating at an Emmy’s after-party.

            Vaporizers, on the other hand, are new, and are especially new to a particular class of young urban professional. Much has been written about how the advent of Juul and similar devices, with their sleek, unobtrusive design, has brought vaporizing to the mainstream. Where vaporizing before was an activity limited to those who wanted to buy or build their own large devices, and nicotine oil had to be purchased at specialty shops rather than as gas stations or convenience stores, it’s now been adopted by people in every demographic. Vaporizers just weren’t popular enough to care about before they looked like USBs.

            But Juul and their competitors have changed all of that—the number of high school students who say they have vaped nicotine has doubled since 2017, from 11 percent to nearly 21 percent. The fact that vaporizers have now become the provenance of young urban professionals, however, combined with the fact that there is a legitimate issue with teen use of the products, is arguably what has made vaping such a ripe political target. It’s relatively new, it’s entered the mainstream in a short amount of time, it’s been adopted by teenagers as contraband, it’s made hundreds of people ill—vaporizing was primed to catch the ire of societal moral panic.

            There’s also the issue of the tobacco lobby—or Big Tobacco. Decades of pressure on all levels of government meant a hands-off approach to tobacco regulation prevailed until the 90s. And while the vast majority of states and establishments have chosen to ban smoking indoors, banning cigarettes outright would mean losing monetary support from Big Tobacco and angry constituents, in addition to a host of lawsuits.

Tobacco 21

            You may have seen pro-21-year-old smoking age ads paid for by Juul or Juul’s parent company Altria in magazines or on TV recently. Why on earth, you might wonder, would the companies accused of aggressively marketing to teens supporting raising the age to purchase tobacco products? Because those companies want laws that will raise the smoking age while simultaneously preventing states from passing new tobacco regulations, with the goal of eventually passing a preemptive federal law.

            So if tobacco companies get their way, a federal law that would raise the smoking age would also grant the federal government preemptive authority over other aspects of the tobacco industry, like the ability to ban certain products. This would mean that cities like Beverly Hills that have outlawed cigarettes, and the multitude of other states and municipalities that have banned vaping products recently, would no longer be able to do so. A smoking age of 21 may seem great to most people—which is what tobacco companies are counting on so that they can slide federal preemption of state and municipal power over tobacco into the statute.

Legalize and Regulate

            The Temperance Movement in the United States was the result of a mix of potent cultural forces culminating in the ratification of the 18th Amendment—better known as Prohibition. One of the results of this brief period of constitutional insanity was that on average 1,000 Americans died every year of prohibition from tainted alcohol. Barred from enjoying their vice of choice, prohibition-era Americans would “denature” industrial-strength alcohols like methanol, many times with fatal or paralyzing results. “Blind drunk” became more than a figure of speech.

            There are obvious parallels between prohibition and the current federal legal status of marijuana. When NBC News enlisted cannabis testing agency CannaSafe to run a battery of tests on 18 separate brands of THC vaporizer cartridges, the 3 purchased from legal dispensaries came back negative for pesticides, heavy metals, and solvents. The other 15—purchased on the street—came back positive for at least one. Amanda Chicago Lewis, a prolific cannabis writer and activist, has been warning about the dangers of unregulated vapes for the past few years. A wholesale ban on vaporizers will likely only serve to make the problem worse. When it comes to legitimate THC oil in places where marijuana is legal, for instance, a lot of legal states now limit the parts per million of butane allowed in the oil. Indeed, multiple health professionals and advocates have voiced concerns that traditional cigarette smoking will increase if vapes are banned nationwide. Others fear that the market for THC oil will move further underground with resulting safety concerns. Their fears aren’t unfounded: illegal markets create safety concerns precisely because illegal products and services can’t be regulated or monitored by the government.

Move Fast, Break Things: How carriers could break networks in the race to 5G

In the race to deploy 5G networks across the U.S., the big carriers have adopted a “move fast, break things” mentality that threatens to break existing network architectures for the speculative promise of faster speeds and better networks. This mentality is in large part motivated by the narrative that 5G is a race where the U.S. is competing against China to deploy the next generation mobile network. This narrative of a race even led AT&T to push out an OTA update to certain phones that displayed a “5Ge” logo in the upper-hand corner when users were actually connected to was a legacy 4G LTE network with specialized updates. While modestly faster, it certainly fell short of a generational change in mobile telecommunications. 

What is 5G?

For the uninitiated, 5G refers to refers to a set of standards for the next generation of mobile networks. Here is a good summary for those looking for a deep dive on what makes 5G different. Broadly speaking 5G makes three key improvements over 4G LTE networks: 

(1) higher speeds

(2) lower latency

(3) the ability to connect to more devices at once

Like other mobile networks, 5G depends on spectrum allocations through the Federal Communications Commission (FCC), that authorizes carriers to transmit through cell towers and cell phones at a specific radio frequency. However, unlike other networks, 5G relies on a wider array of spectrum allocations in order to provide more data to consumers. Generally speaking, lower frequency bands provide better coverage over longer distances, but typically don’t provide as much data bandwidth, making low band ideal for rural applications. As frequencies increase, signals typically fall off over a shorter range, but can provide higher data bandwidth. Legacy 4G LTE systems already operate on low and mid band spectrum, but new spectrum allocations in high bands, like millimeter wave (mmWave), promise significantly higher data capacity. 5G also depends on network optimizations to reduce backhaul latency to deliver faster speeds. This is what AT&T tried to argue that they deployed with “5Ge” before eventually settling a lawsuit alleging false advertising.

High Band Issues: Problems with mmWave and the 24 GHz disaster

While new high-band allocations promise the biggest potential in speed gains over legacy 4G LTE networks, these benefits will likely only be available to a select few Americans in specific areas within the biggest metropolitan centers. Due to the propagation characteristics of mmWave technologies, the towers have a very limited range – at best only a couple hundred meters – compared to up to 50-150 km for 3G/4G towers. Thus, to effectively deploy a network using mmWave technologies, a very high degree of “network densification” is necessary to provide service. Essentially, while the 5G towers are smaller, a city needs hundreds, even thousands to reach the density required for a functioning network. While this “densification” is logistically possible and economically feasible in major cities, and football stadiums, the potential promise of downloading movies in seconds will likely remain unavailable for rural Americans. 

Another issue with high-band spectrum is the recent “24 GHz disaster”, which threatens the reliability and accuracy of weather forecasts for the promise of better networks. In the recent “Spectrum Frontiers” auction, the FCC sold access to carriers for blocks of spectrum in the 24 GHz band for use in 5G networks. However, this auction was conducted despite objections from NOAA and NASA that mobile allocations in that band would cause significant interference issues with weather satellites that depend on the unique characteristics of the band 24 GHz to observe water vapor in the atmosphere. Once mobile service is active in the band, interference issues could potentially reduce the accuracy of hurricane forecasts by decreasing the forecast lead time. As strong hurricanes become more common and hit increasingly underprepared cities, this band allocation could result in an increase in property damage and potentially even additional loss of life from superstorms. 

Mid-Band Issues: C-Band & 6 GHz

Beyond the 24 GHz band, other bands the carriers are seeking for 5G have additional interference problems that could threaten incumbent services that are still critical to our telecommunications infrastructure. In the C-Band Proceeding, the FCC is considering a reverse auction to relocate or substantially reduce the number of companies using the using the 3.7-4.2 GHz band for satellite communications. These C-Band incumbents include satellite companies, cable companies, rural broadband providers, and television broadcasters. While a number of these incumbents are likely to participate in the reverse auction and sell their current licenses, some incumbents have indicated that they are either unwilling or unable to relocate their services out of the band. Mobile carriers and satellite incumbents are also fighting over exactly how the 500 MHz of spectrum should be divided between incumbents and entrants, and whether or not guard bands are necessary to protect earth stations from interference. Regardless of what decision the FCC makes, there will likely be impacts for rural Americans who depend on satellite services to receive internet, television, or other services. 

In the nearby 6 GHz band carriers are currently in conflict with manufacturers of unlicensed devices (think Wi-Fi routers), over a proposed change for service rules in the band that would allow unlicensed users to share spectrum with licensed users subject to an “automated frequency coordination” scheme designed to prevent interference. This “AFC” technology would be required to be installed on any unlicensed device that operates within the 6 GHz band, and would prevent these devices from broadcasting signals if it might cause interference with a licensed user broadcasting nearby. Unlicensed users argue that as American’s appetite for data increases, more spectrum will need to be allocated for unlicensed use to provide more room for WiFi services. While WiFi devices are predominantly low power and used indoors, mobile carriers argue that AFC rules should be applied to all unlicensed devices operating in the band. AT&T argues that without AFC rules applied to all unlicensed devices, interference with mobile operations will be inevitable. In these arguments the carriers stress that while expanded spectrum for WiFi may be critical, 5G should also be considered a possible solution to America’s expanding appetite for data. 

Dynamic Efficiency: Critics Claim a Flawed Premise for the T-Mobile/Sprint Merger

In their filings and messaging around the proposed merger, T-Mobile/Sprint argue that as a combined firm they will be able to provide better 5G service than any existing carrier will be able to do alone. This assertion is justified in part by the complementary spectrum assignments each company holds (see the figure below.) Together, these assignments will give the ‘New T-Mobile’ access to more spectrum than any other carrier, enabling them to deliver better service. Essentially, a dynamic efficiency gain that outweighs the potential danger of static efficiency losses. 

However, the Department of Justice placed conditions on the merger that require Sprint to sell some of their spectrum to DISH, a company that has a history of hoarding spectrum. According to critics, this idea is unnecessarily complicated as there are currently four carriers, and DISH won’t be a viable option for quite some time. Additionally, the spectrum divestiture somewhat undermines the initial premise of the merger – the combined spectrum portfolios would empower the ‘New T-Mobile’ to provide better service than anyone else.

A false premise of the race to 5G?

Ultimately, the narrative of a race to 5G may turn out more beneficial to carriers than to consumers. Critics of the 5G race argue that there is likely no harm to consumers, and possibly even US carriers, if China succeeds in deploying 5G before the United States – because the Chinese government controls spectrum allocations, major carriers, and device manufacturers, it is significantly easier for China to rapidly deploy 5G. In effect, China can ignore all dissent and centrally manage their economy. In this way, a race analogy benefits US carriers because it motivates the FCC to take a light tough regulatory approach, effectively coordinating or allowing carriers to coordinate in a way that could mirror a centrally managed economy. This may reflect the White House’s focus on delivering “wins” for America, even if those wins come at a heavy cost or start to ape a communist approach to the economy.

Join the CTLJ Content Team at the Silicon Flatirons Saving Our Spectrum Conference on October 10, 2019 at CU Law. Luminaries in the field of spectrum governance and radio propagation will examine these issues, in particular the security vulnerabilities emerging with the next generation of connected devices.

A Day in Your Data

Artwork by Oxyman.

Digital privacy rights remain a fleeting uneasy feeling to most people, mildly relevant during Facebook’s Cambridge Analytica Scandal or data breaches from companies like Equifax and Capital One. Yet, Consumer data is continuously harvested and utilized in a never-ending effort to turn ‘cookies into cash’. Your information, or rather information about you, is big business, more lucrative and exponentially expanding than oil.

This pervasive, essentially unavoidable, collection and commercialization of data creates extensive social costs (legalese for knock-on effects in the economy that hurt people – like pollution). While some social costs are moderate, who might see a job notice for example, some social costs are extreme. As conversations inappropriately recorded and retained by ‘smart’ home assistants like Amazon’s Alexa are used in court, and automated systems without transparency, or indeed even accuracy or accountability, are used to determine sentences, calculate recidivism risks, or award bail, the social costs created from data utilization may eclipse their benefits in certain contexts.

The data economy is full of risks and benefits. In the U.S., consumers are largely responsible for navigating these issues, and are typically bound to whatever decisions they make. Those decisions are of limited value however, as companies routinely disregard their own policies or violate expressed consumer choices; Google retained and utilized the location data of consumers despite those consumers turning off location services in their settings, just as Apple violated its own commitments not to share consumer listening data with third parties. When evaluating a data decision, consumers must evaluate not only the decision, but also the risk that they are engaging with a bad actor.

To help illustrate our contemporary data reality, the CTLJ Digital Content Team crafted a brief hypothetical timeline of the average day of a CTLJ member, given the nom de plume “Bob” to protect their privacy, that catalogs how data about us is implicated in every facet of daily life.

5:30AM – Rise ‘n Shine

On weekdays Bob wakes up at 5:30AM. He uses a Google Assistant “routine” to reads the forecast for the day, based on his current location. It also plays the most recent episode of the WSJ Tech News Briefing.

Bob is receiving some real benefits here, and without spending any money. Benefits include the alarm itself, the forecast, and the podcast. These are real benefits, and most would agree that they are a good result for Bob.

Google also collected useful information about Bob that they can sell, in some form or another, to generate revenue. They track what time he typically gets up in the morning, and potentially how often he snoozes his alarm, which will be integrated into an advertising profile, and possibly a psychographic profile, similar to those created by Cambridge Analytica. They also track his current location and interests based on the “routine”, which could also be used to tailor advertisements, alter the offering of services, influence prices for certain goods for Bob, and may ultimately impact which job or housing postings he has access to.

5:45AM – Struggling to Get Out of Bed

While Bob does occasionally hop straight out of bed in the morning, all too often he spends about 15 minutes lingering under the sheets scrolling through Twitter or Reddit, or watching videos on YouTube. Sometimes Bob stays in bed under the covers all day.

For every YouTube article or Reddit link Bob clicks, more information is added to his various profiles, updating targeting algorithms to serve him ads that he is more likely to find relevant. Most large data collection firms like Facebook have their proprietary profiles, even if you don’t use their service, while data brokers and other ill-defined entities create and trade their own.

7:30AM – Hitting the Gym

If everything is going well for Bob so far this morning, he’s hopefully getting to the gym around 7:30AM. He uses a Garmin Fenix watch which tracks his location and heart rate. Garmin also has an app where Bob can enter details on his height, weight, and age. Their app also contains “badges” that incentivize Bob to do things like record “activities” for 7 days in a row, climb a certain number of floors in a day, or run a certain number of miles in a week. These “badges” show up on a public profile where Bob can compete with locals or people around the globe at a similar level. 

While Bob enjoys these training metrics, and derives motivation from the gamification of workouts, Garmin likely collects a swath of information about Bob. This data may be used in ads, it may also be eventually used to determine his health insurance coverage and premiums or even his ability to get or keep a job. Health trackers in particular have also been implicated in national security issues, revealing not only the location of security installations but also potentially patrol routes and patterns of activity within these installations.

8:45AM – Morning Coffee

On his way home from the gym, Bob might stop to grab a cup of coffee from his local coffee shop. This purchase will be tracked in a number of ways. If location services are enabled on Bob’s phone, and likely even if they’re turned off, Google tracks that he visited the Brewing Market on Baseline, and may prompt him to write a review, in addition to storing that information in his profile and likely sharing it with third parties. If Bob uses his credit card, Wells Fargo tracks when, where, and how much money Bob just spent. If Bob forgot his wallet at home and uses Google Pay, his transaction information is also shared with Google. Additionally, the WiFi router in Brewing Market likely logs when Bob enters and leaves the area and shares it with third parties, even if Bob’s phone is in ‘airplane mode’.

12:00PM – Lunch

On most days Bob packs a lunch, but occasionally he has a lazy morning and resigns himself to eating out for lunch. Because Bob is perpetually indecisive, he usually spends a fair amount of time searching around for a new place to eat before eventually giving up and heading to Qdoba. As he tools around on Google Maps mulling over the menu choices at the newest food truck or fast casual restaurant, every single click is recorded and analyzed. 

Because Bob has location services enabled on his phone, after he leaves wherever he went for lunch that day, he us immediately prompted with a notification asking him how his experience was and prompting him to write a review. Both Bob’s visit itself, as well as any potential review he posts, will be used to improve his search experience next time, as well as to determine if Bob is a good prospect for a job, a service, or advertisements. These profiles can become so accurate at predicting and interpreting human behavior that some people are convinced that their phones are being used to surreptitiously record them. That is possible, but highly unlikely – several studies have debunked this claim. The reality is these algorithms and profiles are finely tuned with access to nearly limitless data about you, so they are simply that good.

1:30PM – Return to Work

Whether Bob is trying to catch up on readings or email, the first thing he does after booting up his computer is fire up a music app. Bob’s usual choice when he’s trying to be productive is the YouTube channel “lofi hip hop radio” (seriously, check it out). As Bob has been going about his day, algorithms have been hard at work updating his profile with all the data they’ve collected. Perhaps he liked a post by one of the outdoor gear companies he follows on Instagram, so he might receive an ad for a new piece of gear, or maybe Google allowed a third party to analyze his emails and found that Bob has an ailing relative, and he might mysteriously receive an ad for a new breakthrough drug for the disease they were just diagnosed with.

5:30PM – Grocery Shopping

Before Bob heads home he takes care of errands, which usually entails a stop for groceries. Most of the time Bob heads for Whole Foods, tempted by the “Prime Deals” available to Amazon Prime members. Bob is incentivized to use his Prime account every time he shops to receive savings, but at the same time he’s providing Amazon with information including what he likes to eat, how often he buys certain items, and when during the day he likes to shop. All this information can be useful to target advertisements for Bob down the road, as well as evaluate his health, future earning potential, or likelihood for certain personality traits.

Data utilization is a mixed bag. There are risks and real benefits to utilizing behavioral data. Perhaps Bob found the more tailored advertising content more relevant than the generic ads for pharmaceuticals that plague network television. Bob likely derived real benefits from the recommendation received from Google on a new taco truck that he should try in the area. Platforms can also use this data to better understand consumer preferences to deliver higher quality content. Netflix uses behavioral data to decide which shows to greenlight, make decisions about the creative team and casting for origional content, and better source recommendations for existing content to users. According to a recent survey, 39% of consumers thought that Netflix had the best original content (vs. 14% for HBO, and 5% for Amazon Prime Video).  These are real, tangible benefits that cannot be discounted when examining data governance

There are also real costs caused by these data mining operations, that aren’t often visible on the surface. For example, when asked about the profiling tool Cambridge Analytica built to study Facebook users, former employee Brittany Kaiser called it “weapons grade” technology. When behavioral data is used to sell us more widgets or promote new content, there is likely a net benefits to society. When data about us is used to influence electoral outcomes, restrict personal and professional opportunities, or expose our deepest secrets, the costs loom.

Join the CTLJ Content Team at the Silicon Flatiorns Near Future of U.S. Privacy Law Conference on September 6, 2019 at CU Law. Luminaries in the field of data governance and privacy will examine these issues, in particular the possibility of a new Federal Law on data privacy rights.