World Of Gadget

If you live in the US and have found 3G speeds aren’t cutting it for wireless data, the only game in town has been Sprint/Clearwire, which now offers WiMAX service in over 40 cities in the US. But just about everyone else in the cellular business is backing the alternative 4G wireless protocol, Long Term Evolution (LTE), meaning that the fight for next-generation supremacy will come down to Clearwire’s first mover advantage vs. LTE’s extensive adoption. Verizon appears to be doing its part to reduce that advantage, easily making its self-imposed deadline of starting service deployments in 2009.

As recently as February, Verizon was promising that it would be starting trials of LTE equipment by the time the year was out. The telecom has now announced that the tests had already been successful, with what it termed “data calls” being conducted in both Seattle and Boston. The fact that the company seems to be well ahead of its announced schedule bodes well for its stated plan to have up to 30 cities set for service by the end of next year.

The announcement also made one of LTE’s advantages over WiMax clear: a number of traditional wireless telecom powers were backing it. The tests’ description read a bit like a who’s who of the cellular world. Network equipment came from Starent Networks and Nokia Siemens Networks, Alcatel-Lucent and Ericsson provided the base station hardware, and devices were provided by LG and Samsung.

That’s in addition to LTE’s other advantages, such as higher maximum bandwidth (50-100Mbit/s downstream, depending on the amount of spectrum allocated) and multiple backers (Verizon, AT&T, and T-Mobile in the US), and backwards compatibility with GSM handsets.

But a key factor may ultimately wind up being bank balances. Verizon has continued to grow its earnings throughout the financial crisis, and wireless services account for nearly 90 percent of its income; it can’t afford to appear as an also-ran, and has the money to make sure that it doesn’t. Clearwire benefits from the deep pockets of its backers, most notably Intel, and has nearly $2.5 billion in the bank, according to its recent earnings release. But, at its current rate of operating losses, that cash will last it less than three years.

All of that may give LTE an edge even before AT&T gets involved, which is expected to happen in 2012. Of course, as iPhone users have found out, the company is still straining to provide reliable 3G service, so any expectations about its next steps seem premature.

As hardware and bandwidth costs continue to drop, the biggest expense associated with large data centers has been their power draw; it’s estimated that 1.5 percent of US energy production now goes to feed them. Although there have been a variety of solutions for increasing the energy efficiency of these facilities, a new paper describes another approach to cutting power costs: shifting loads to wherever the power is cheaper.

The study was performed by academics from MIT and Carnegie Mellon, who teamed up with Akamai, a company that runs a content distribution network that caches local copies of frequently requested files near major network hubs. By obtaining data from the requests that pour into Akamai’s facilities and comparing it to spot energy prices from around the country, the authors were able to determine that it’s possible to save the money paid for powering the data centers, though not the electricity itself.

The basic idea is that many companies, especially those heavily invested in IT, have multiple data centers scattered around the country. Thanks to various distributed file systems, each of these will typically have access to all the information needed to respond to a given user’s request. As such, it should be possible to redirect a request to wherever power is the cheapest at a cost in transit time that may be measured in milliseconds if network congestion isn’t bad. Servers in locations where energy costs are high can be allowed to idle, at which point they consume 60 percent or less than they do while under load.

The authors obtained market prices for electricity from a number of locations in the US, which allowed them to confirm that prices varied over time, and that the variations weren’t correlated between locations, meaning that the system was dynamic enough that shifting loads made economic sense. They then stepped through a series of actual load information from Akamai, and modeled datacenter electricity usage with a model that was produced by Google. With a baseline set, they then explored whether money could be saved under various conditions.

Distance played a large role in determining the economics. So, for example, the savings showed big jumps at two specific distance thresholds: when Boston-area traffic could be rerouted to the DC area, and again when it could be sent as far as Chicago. The ability to take advantage of real-time energy prices also played a big role. Prices rose quickly as the time lag to respond stretched from one to three hours, and then continued to rise more gradually out to 12 hours.

But, at the moment, bandwidth costs provide the biggest barrier to optimization. Bandwidth still costs a bit more than power, although its price has been dropping while electricity rates have remained stable or risen, so the relative importance of bandwidth costs is expected to drop. Optimizing the distribution of load while keeping Akamai’s existing bandwidth policy in place cuts the potential savings in electricity costs down to about one-third of what they would be otherwise. Optimizing for both bandwidth and power costs simultaneously, however, had a large impact.

All told, the answer you get depends dramatically upon the assumptions involved. In a worst-case scenario, where the process is optimized for bandwidth costs and the distances loads are shifted are kept short, the savings may be as small as five percent, which is pretty minor unless you happen to be Google or Microsoft. Under the ideal conditions, the cost savings could clear 50 percent—in comparison, moving an entire facility to some place with lower-priced power would only lead to savings of 65 percent.

The authors point out that most companies with profiles like Akamai already have load-balancing software in place that responds to things like congestion, bandwidth prices, and reliability issues; adding energy prices doesn’t represent a big leap. They also describe a whole host of ways that the dynamics could be changed. For example, at colocalation facilities, racks are generally charged based on the amount of power that they could consume, rather than the actual power provided. As demand-response pricing and smart grids become more common, the savings for shifting a load large enough to help a utility avoid a brownout could be substantial. It would also be possible to send loads to where the air is cool, saving money by actually using less power for running air conditioners.

And, ultimately, this may be the sort of technique that enables intermittent renewable sources to be brought into the grid with less disruption. Shifting the load to where the sun’s shining or the wind’s blowing will probably be far easier than producing the infrastructure needed to send power from renewable generating facilities to where the data centers are.

On July 20, Blizzard held an event for the press to allow game writers to get their first taste of StarCraft 2 single-player. Ars Technica received what amounted to a golden ticket for the event, but I was unfortunately busy attending to a personal issue and had to politely decline… no matter how great the temptation. What Blizzard revealed was a completely rethought single-player experience that goes beyond what was attempted in the first game. While some are still hung up on the lack of LAN play, what is offered to those playing alone is substantial.

The single-player game is no longer a linear, mission-to-mission affair. You’ll be given different hubs that allow you to click on people and items in order to gain understanding about the game world, and pick and choose which missions you would like to tackle. “These hubs operate in a similar fashion to briefing rooms from games like Wing Commander or X-Wing, but with an even greater degree of interaction,” Shacknews explains. “You can talk to characters, interact with and examine various items in the environments, upgrade your units, and start up missions.” Successfully completing these missions allows you to unlock new units, as well as cash to hire your own mercenaries to aid you in battle.

“The mercenaries function kind of like Hero Units from the Warcraft games. For a large fee, you can contract with various groups of mercenaries,” Destructoid reports. “Once you’ve contracted them, you can then use them in battle by constructing a Merc Compound and then buying them like any normal unit.”

Single-player gameplay is given some unique twists

The missions described include a race to grab an artifact, and a lava-infused map that includes unique environmental challenges. There was also a mission on display that incorporated a day and night cycle into the strategy. “During the day, it’s build, research and destroy every Zerg infested structure. At night, the player must retreat, as hundreds of infested humans emerge from their hidden burrows, swarming the camp,” Kotaku reveals.

Missions will also include unique units that almost sound like something out of the world of Diablo. “When trying to secure the relic, Raynor’s forces are attacked by a quartet of Stone Zealots, gargantuan statues brought to life to protect the prized artifact,” Kotaku describes from its playthrough. There will also be achievements to unlock during each mission, giving you a reason to go back and improve your performance.

Single-player is no longer just a mutliplayer trainer

These sweeping changes to how single-player missions are organized and how you unlock units and items should make the solo experience a much more fulfilling experience. No longer just a way to learn how to use your units, now it seems as if the single-player will be an almost fully unique experience. If you’re a fan of the world and lore of StarCraft, expect it to be explored in a much deeper-than-expected way.

This also raises some interesting questions about the Zerg and Protoss releases. While Terrans drink in bars and organize their attacks from ships, what will the Zerg hubs be like? It will likely take a while to find out, but it’s a question that should be fun to answer.

While I don’t regret skipping out on Blizzard to take care of my family, this is the one invitation that tempted me to leave the hospital and hop on a plane. A new son… or single-player StarCraft 2? No man should ever have to make that choice. Be sure to read the previews that are scattered around the Internet, there are many interesting tidbits in each one.

Further reading

• Shacknews “First StarCraft 2 Singleplayer Hands-on Preview“
• Destructoid “Preview: StarCraft II single-player“
• Kotaku “First StarCraft II Single Player Campaign Hands-On (With Spoilers)“

Almost a year ago, Comcast pledged that it would sue the Federal Communications Commission over its Order sanctioning the cable ISP for peer-to-peer throttling. Now, the company has filed its case with the United States Court of Appeals for the District of Columbia Circuit. Although Comcast’s legal arguments are complex, the crux is simple: there were and still are no statutes or credible regulations that support the Commission’s authority to act on this matter, the company says.

“For the FCC to conclude that an entity has acted in violation of federal law and to take enforcement action for such a violation, there must have been ‘law’ to violate,” Comcast’s Opening Brief to the court contends. “Here, no such law existed.”

Undoubtedly, many parties will soon file with the court in opposition to and agreement with Comcast’s legal claims. But Comcast had to file first. Here’s a summary of what they say the FCC did wrong in punishing the company.

Doing so 24/7

First, let’s recap: After months of proceedings, hearings, and investigations, the FCC concluded on August 1, 2008 that Comcast was discriminating against certain P2P applications using deep packet inspection techniques. These methods thwarted the ability of users to share video and other files via BitTorrent. “Comcast was delaying subscribers’ downloads and blocking their uploads,” declared then FCC Chair Kevin Martin. “It was doing so 24/7, regardless of the amount of congestion on the network or how small the file might be. Even worse, Comcast was hiding that fact by making effected users think there was a problem with their Internet connection or the application.”

Comcast had an anti-competitive motive for this behavior, the Commission argued, as P2P apps offer consumers a video sharing alternative to cable television. The agency told the company to stop its current practices, disclose what it was actually doing, come up with a new, non-discriminatory system by the end of the year, and let consumers know how the new system will work. The company quickly complied with these orders, and announced the deployment of a new “protocol agnostic” network management system in mid-September.

But months earlier, Comcast Vice President David Cohen had warned the FCC that, in the ISP’s opinion, there was no statutory basis for the actions the agency eventually took. What the company has sent to the DC Circuit Court is an extended version of that letter: no law backs the FCC ruling about Comcast.

“If the Commission truly believed that any statutory provision was directly enforceable against Comcast’s conduct, it would not have premised the Order entirely on ancillary authority,” Comcast writes. “Ancillary authority”—what the hell does that mean?

Ancillary madness

As this legal debate heats up again, you can expect to see the following narcoleptic-coma-inducing question repeatedly asked and debated. Does Title I of the Communications Act gives the FCC “ancillary authority” or “ancillary jurisdiction” over network management issues?

People get thrown by the word “ancillary” here. It essentially means an additional, supplementary, or implied power. Title I outlines the FCC’s job. It’s there “for the purpose of regulating interstate and foreign commerce in communication by wire and radio,” Title I says. And section 230(b) of Title I adds that it is the policy of the United States “to preserve the vibrant and competitive free market that presently exists for the Internet” and “to promote the continued development of the Internet.”

This Title I authority played a large part when the FCC invoked its famous Internet Policy Statement, which plays a big role in the Comcast drama. That’s the 2005 declaration that consumers are entitled to access the lawful Internet content of their choice and are entitled to competition among network providers. In its Comcast Order, the Commission explained that it created the statement in recognition of “its responsibility for overseeing and enforcing the ‘national Internet policy’ Congress had established in section 230(b) of the Communications Act.” The agency was now committed to integrating the Policy Statement into its ongoing policy-making work, it declared.

Show us the rules

So the obsessive-compulsive question for legal beagles is whether Title I gives the FCC the legal cajones to stomp ISPs if they block your efforts to download the movie trailer for District 9 via BitTorrent, Vuze, or some other P2P app. The consumer groups that petitioned the FCC to do something about Comcast’s behavior say that Title I granted the FCC all the authority it needed to act in this situation. Free market groups like the Progress and Freedom Foundation contend this ancillary authority business is way too vague to be used in something as crucial as regulating network management. PFF calls it a “standardless discretion” contrary to “the foundational principle that agencies only have that authority conferred by Congress, which ensures accountability.”

Defenders of the FCC push back, saying that even the Supreme Court recognized ancillary authority in the Brand X decision, a crucial ISP access case, and that Title I has been used repeatedly. Critics say yeah, sure, but only under certain strict circumstances. We leave it to you to follow the rabbit hole down as far as you’d like on this question. The bottom line is that Comcast, as you’ve probably already guessed, argues that Title I doesn’t give the FCC diddley when it comes to overseeing ISPs.

“Section 230(b) does no more than set forth ‘the policy of the United States,’” Comcast notes. “It does not even remotely establish mandatory standards of conduct” for regulating network management. That means, Comcast charges, that the FCC pretty much cracked down on the company’s behavior based on a Policy Statement that was not created by Congress, and which, well, was basically just a policy statement.

Where is this going?

Comcast’s filing even denies that it did anything wrong in the first place, network management-wise. “To prevent P2P usage from degrading all of its customers’ Internet experiences,” the company says for the umpteenth time, “Comcast managed, in limited circumstances and in a limited manner, those P2P protocols that had an objectively demonstrated history of generating excessive burdens on its network. Specifically, it temporarily delayed certain P2P uploads (but not downloads), on a content-agnostic basis.”

But it’s unclear what the cable giant and its supporters think they will accomplish by this aggressive effort to overthrow the FCC’s decision. As veteran telecom attorneys like Andrew Lipman have noted, if the courts do shut down the FCC’s order on Comcast, “expect Congress to move very quickly” on some kind of net neutrality legislation. The usual suspects on Capitol Hill have already got yet another bill in the hopper, and this time they’re in control of all the key committees in the House and Senate. One wonders whether, in the not too distant future, the big ISPs will look nostalgically back on the happy days when the FCC’s Internet Policy Statement was all they had to obey.

Last week, the respected Jon Peddie Research Group released a major report on the history, technology, and future of multi-GPU computing that predicts the now-esoteric technology will experience a major renaissance by 2012, with two-thirds of new desktop systems multi-GPU capable, and fully 30 percent packing two GPUs (not 50 percent, as has been reported elsewhere).  This is a major surprise to Ars, and we’re skeptical of JPR’s reasoning.

The JPR story: 3D gaming and simulation drive demand for multi-GPU

The drive for multi-GPU, JPR reports, comes from performance. High performance is increasingly desirable and attainable in the related fields of gaming and simulation, and the workloads are both highly parallel and totally unsuited for CPU applications. GPUs are needed, and the parallel nature of the rendering workload makes it possible to use multiple GPUs, while escalating performance needs make it necessary.

Meanwhile, software advances will make the performance hits relative to linear scaling smaller and smaller. These forces, JPR asserts, will push multi-GPU computing into more and more systems over time. There are several problems with this line of reasoning.

Die-level integration and manufacturing realities

GPUs are composed of many parallel processing units, so any multi-GPU system involves simply ganging together still more of such small, simple processor cores. Because the cores are small and the workload is parallel, there is no limit on core count analogous to the limit on the number of processors that can profitably be used in a single x86 CPU. The limits on single-die GPU horsepower are manufacturing limits.

In general, the semiconductor industry trends encapsulated in Moore’s law predict that it’s cheaper to put multiple circuit blocks on the same die than to split them across multiple dies, and it’s cheaper to put multiple dies on one PCB than splitting them across multiple PCBs. The number of transistors for which it’s cheaper to do this grows exponentially, doubling roughly every two years with process transitions and yield maturity.

For this reason, single-GPU systems are always more economical except where yield and platter edge concerns make it infeasible (for reasons of yield or wafer edge losses) to place enough silicon on one die to provide the performance needed. The transistor count it’s economical to put on one GPU is probably, right now, somewhere between the 1.4 billion transistors on the die of an NVIDIA GTX295 and the 959 million transistors on the die of an AMD Radeon 4890.

In round terms, then, the current figure is one billion transistors, and the 2012 figure will be in the vicinity of four billion transistors (perhaps more, since Intel’s Larrabee will bring to the GPU market manufacturing prowess much in advance of TSMC’s foundries).

Demand realities: Most systems are satisfied by Moore’s law

Right now, the Moore’s law ceiling for single-GPU systems is more than adequate to meet the demands of all but a small percentage of gaming PCs. Last year, only two percent of all desktop PCs sold carried multiple GPUs. And, indeed, it has been this way through all of history; multi-GPU systems have never been the province of any but a tiny minority of users. In fact, most desktop PCs sold don’t even have discrete GPUs. In the fourth quarter of last year, for instance, 38.5 million desktops shipped, but only 15.2 million discrete GPUs were sold, meaning that less than 40 percent of desktops shipped with discrete GPUs, probably less than a third once multi-GPU systems and upgrades are accounted for. Most desktop users simply aren’t playing 3D games or running 3D simulations, and those that do don’t need multiple GPUs, and likely won’t.

There’s no good reason to believe that a huge percentage of desktop users will develop an intense need for mountains of GPU silicon over the next three years, and if a good reason were to be found, it would be considerably more structural and considerably more detailed than a hand-waving assertion that everybody likes realistic graphics.

Indeed, the trend of two decades in computing has been the exact opposite of JPR’s prediction: more and more functions are subsumed into fewer and fewer silicon dies as times goes on. Sound cards, storage, I/O and networking controllers, and memory controllers—all are onboard. Northbridge functions like memory controllers are migrating to the CPU die. Most desktops shipped now have GPUs in their northbridge dies. In fact, the GPU survives as the only add-in silicon chip of any marketshare significance, the lone survivor of a good half-dozen ISA cards from a typical 1980s workstation. Finally, both major CPU vendors plan to offer, well in advance of 2012, CPUs with onboard GPUs.

How could it happen? Desktop death, and an end to ConSKUsion

So, how could this prediction possibly come true? We’re still pessimistic about it, but there are some forces and possible developments that JPR doesn’t explicitly identify that could push the GPU market more in the direction of multiple GPUs per system.

JPR could be proven right if the desktop PC dies, but the gamers and workstation users die off much more slowly. In the first quarter of 2009, numbers from iSuppli indicate that desktop sales were down 23 percent year over year, while laptop sales grew ten percent. If this trend continues, with everyday home, education, and business users migrating to laptops while workstation users and a winnowing crop of ever-harder core PC gamers soldier on, the percentage of multi-GPU systems could rise somewhat prodigiously.

The other alternative which could bring the JPR prediction true is a miraculous technological advance in the performance scaling of multi-GPU systems. Currently, scaling on 2-GPU SLI and Crossfire systems is lucky to hit 80 percent, if that, while doubling the number of stream processors on one die gets close to 100 percent. If advances in drivers and hardware push that figure closer to one hundred percent for arbitrarily many dies, GPU vendors may design one GPU die in each process generation, with a transistor count much lower than the Moore’s law ceiling, and gang an appropriate number of them together on one PCB.

Something like this approach has already been taken with the Radeon 4870×2 and a number of other less successful projects. The GPU vendors would be able to further shrink their GPU SKU counts, while tailoring performance more precisely. Such a business model would be more sensible at the smaller volumes some predict, as design costs begin to overshadow manufacturing costs in the balance sheets of NVIDIA and AMD.

In the end, though, these possibilities don’t seem likely. It’s more probable that the future won’t hold a renaissance of multi-GPU desktops running free across users’ desks, monitors, and wallets. The decades-long trend will continue, and tomorrow’s desktop will be made up of fewer dies, not more.

Although the US and other nations currently produce ethanol from the sugars and starches of crops like sugar cane and corn, ethanol isn’t a good match for our existing fuel infrastructure—and this form of production runs the risk of putting energy in competition with food production for resources like land and water. As a result, attention has shifted to figuring out how to produce a new generation of biofuels from different sources that more closely approximate the diesel and gasoline in use today.

Yesterday’s edition of Science contained a perspective on the prospects for these next-generation biofuels. Although it’s very short, only a page long, it contains an excellent list of references to very current publications. The diversity of approaches it covers highlights how many options there are to produce different fuels, each with its own advantages and drawbacks. In the following sections, we’ll discuss different methods of producing biofuels; although the text presents them as alternatives, it’s important to emphasize that there are significant overlaps among them, and more than one technology might emerge for widespread use.

Cellulose or lipids: The first question is what you want the initial fuel stock to be. Cellulose, a polymerized sugar, is found in combination with proteins and other compounds; together, they provide plants with their structure. It’s available in abundance, and all sources of cellulose are more or less functionally equivalent, so a cellulose processing facility could work with a huge range of sources: agricultural waste, wood waste from lumber processing, leftover construction material, and dedicated biofuel crops like switchgrass. A recent USDA report suggests that the US has an annual supply of a billion tons of cellulose to work with.

The problem is that cellulose doesn’t break down easily or quickly, and its component parts—sugars and proteins—lend themselves most readily to the production of ethanol. The alternative is to go with something like lipids, which are long-chained hydrocarbons that are chemically more similar to fuels. 

As with cellulose, a lipid is a lipid, regardless of the source. Unfortunately, there are far fewer sources, since plants don’t generally contain an excess of them. In a few cases, lipid-processing facilities have been built to operate using the waste from meat packing plants, but a larger source of lipids would require the development of an algae that grows well in waste or salt water.

Industrial or biological: Once the material itself is isolated, it generally needs processing before it’s ready for use as fuel. Here, working with lipids has huge advantages, as they can generally be fed into the same sort of reactions that are used during oil refining. 

Cellulose is another matter. Several industrial processes can quickly break it down into more chemically-flexible components, but all of them require elevated temperatures and pressures, and thus a substantial energy input.

Once broken down, catalysts can rearrange the simpler components into usable fuels. But there are significant barriers to using the processes which we’ve already developed, designed to handle relatively pure mixtures. It’s difficult to fully eliminate water from cellulose, the plant material contains an unwanted mix of nitrogen and sulfur compounds, and the pH of the reaction material can be difficult to control. Any one of these issues can interfere with the action of an essential catalyst, so finding a combination that provides high energy payback and works well with cellulose isn’t a simple thing.

The alternative is to go biological, as there are organisms that make their living by digesting cellulose. Unfortunately, as anyone knows who has ever seen downed trees rot, the process is extremely slow. There are ways to speed it up, of course, but there’s a very clear trade-off between speed and energy input. Once it’s digested, researchers still face the challenge of finding a way to convert its component sugars to something more useful than ethanol.

Existing or engineered organisms: The ideal situation, of course, would be to have an organism that does everything for us, from digesting ethanol to spitting out some sort of lipid derivative that can be fed directly into fuel tanks. Life, however, is rarely that simple; evolution tends to frown upon organisms that release energetically valuable chemicals into their environments, and we’d be growing any biofuel organisms in the sorts of numbers that allow evolution plenty of opportunity.

That said, there are some organisms that happen to do some very convenient things on their own, like a bacterial strain that stores energy in lipids to such a degree that nearly 80 percent of its dry mass is in lipids. Unfortunately, we know almost nothing else about the strain, including the details of metabolism and whether they can be engineered in the same way we handle more common bacteria, like E. coli. And some form of engineering would almost certainly be needed if we’re going to have them growing on cellulose.

The alternative approach would be to take an organism we do know well, like E. coli, and engineer it so that it could digest cellulose and directly produce a chemical that could be easily converted to fuel. (A review of microbial fuels lists a variety of intermediate-chain hydrocarbons and alcohols that might work.) A sufficiently hydrophobic liquid, once outside the cell, should separate from the liquid the bacteria are growing in, allowing easy harvesting. But, at the moment, we only have limited experience with re-engineering an organism’s metabolism to do something that might not do said organism much good.

Because of all the complex trade-offs, it’s likely that there won’t be a one-size-fits-all biofuel solution, but the energy available to us (based on the USDA report) is substantial and could dramatically cut our imports of fossil fuels—up to 30 percent, based on a report that predates the recently tightened fuel economy standards. 

Fortunately, it appears that the market is taking the advice of the National Academies and developing a portfolio of approaches. The Science perspective notes that a handful of companies already claim they’re on track to begin producing non-ethanol biofuels on the scale of millions of gallons within the next five years, and more will join them within the next decade. Although none of them are giving away the precise details of what they’re up to, it’s clear that they are taking a variety of different approaches to producing that fuel. Gas has never looked greener.

As expected, Redbox filed a lawsuit against 20th Century Fox this week after the movie studio tried to keep its new releases out of Redbox’s DVD rental kiosks. Redbox says that the lawsuit aims to protect consumers’ rights to have access to new release DVDs, and that it plans to continue offering all major new releases—including 20th Century Fox’s—at its 15,000 rental locations.

Redbox took legal action less than a week after Fox ordered wholesalers to stop supplying Redbox with Fox DVDs until 30 days after release. The Redbox kiosks, which each house more than 600 DVDs, rent out movies for $1 per day and sell used movies for $7. The company has more kiosks than Blockbuster has stores, and each kiosk rents out an average of 50 movies per day. 

Fox believes that outlets like Redbox are ruining its business. “Having our [movies] rented at $1 in the rental window is grossly undervaluing our products,” News Corp COO Chase Carey said at the time.

Fox also said that it was prepared for a lawsuit from Redbox, and the studio now has what it asked for. In a complaint filed on Tuesday, Redbox said that “Fox seeks to strangle” the low-priced rental market in order to maintain its own “artificially high” pricing scheme. Redbox emphasizes that it has a contractual relationship with the two suppliers in question, Ingram and VPD, but that the two will be forced to stop filling Redbox’s orders for Fox DVDs due to coercion from Fox.

As a result, Redbox accuses Fox of copyright misuse by violating Ingram and VPD’s first sale rights, violating the Sherman Antitrust Act’s Quick Look Doctrine by “restraining trade,” and misuse of the Copyright Act by trying to meddle with the distribution rights of third parties. Additionally, Redbox accuses Fox of engaging in unlawful boycotts—”Fox has orchestrated this boycott to artificially restrain output, raise prices and give Fox a bigger cut of rental revenues, or in the alternative to force Redbox out of business,” reads the complaint. Redbox demands a jury trial in order to resolve these issues with Fox.

This pattern follows one set by Universal last year when it decided to order wholesalers to stop supplying DVDs to Redbox until 45 days after their release. Redbox promptly sued Universal for engaging in anticompetitive behavior and abusing copyright law, as well as trying to use coercive tactics to get Redbox to shell out 40 percent of its total gross revenues in exchange for new releases. Universal responded by countersuing; a decision on the case is expected to land soon.

While Fox and Universal declare war on Redbox’s business, other movie studios are embracing the kiosks. Both Sony and Lions Gate have entered into five-year deals to allow Redbox to distribute their DVDs at release time. Meanwhile, Redbox plans to continue offering new releases from all studios, even if it means employees have to buy the DVDs at retail price the old-fashioned way.

Further reading:

• Search the federal court’s PACER system for case number 1:09-cv-00592-UNA in the District of Delaware

Today, the World Trade Organization handed down a ruling on a complaint lodged against Chinese media laws by the US and most of the developed world. The laws require that various forms of imported media, from books to movies, be distributed by a single, state-owned company. It also limits foreign ownership of Chinese media companies and allows content produced by domestic companies to skip the trip to the state censors. A lot of that, according to the WTO, runs afoul of the agreements that China signed when it entered the body. The ruling opens the door for China’s trading partners to impose punitive tariffs on its exports, meaning that China may face a choice between exports and control.

To understand the consequences of this ruling, you need to understand a bit about how the WTO works. It’s a voluntary group, and its members sign up by agreeing to reduce tariffs and open their domestic markets to foreign competitors. Any actions that go against the documents specifying the details of this agreement allow the other members to request mediation and file formal complaints. If the complaints are upheld, the complainant gains the right to impose trade sanctions on the offender that would normally otherwise be prohibited by WTO rules. In theory, those punitive actions are supposed to be proportional and focused on the markets where the trade violations took place.

The original complaint was filed by the US in 2007 (the WTO has a brief history of it available), or you can go straight to the 469 page monster that details the entire proceedings). Over time, the EU, Japan, Korea, and Taiwan joined as interested parties. The gist of the complaint is that Chinese law discriminates against non-domestic media companies in fields like books and other publications, music, and movies, despite promising to level the playing field in its WTO Accession Protocol.

Basically, China has different rules for domestic companies, domestic companies backed by foreign investors, and foreign companies. So, for example, if a movie is burned to disk and packaged overseas, the only entity allowed to import it is the state-owned CNPIEC. If, in contrast, the movie is brought in digital form and then burned to disk and packaged within China, the process can be handled by a variety of companies, but all of them are also state-owned. Similar rules apply to print and music.

Part of this is old-fashioned protectionism, but China’s emphasis on social control is also considered a trade barrier, as this section on the country’s content review policies makes clear:

China requires all sound recordings, including sound recordings intended for electronic distribution, to undergo content review. The nature of that review, however, varies substantially depending on whether the sound recording is imported or domestic. China’s measures require imported sound recordings to undergo content review and approval by the Chinese Government prior to their electronic distribution. In contrast, domestic sound recordings do not have to receive prior approval from the Chinese Government. Instead, they undergo internal company content review, and they simply are registered with the Ministry of Culture.

It’s not so much that the review happens, it’s just that domestic companies are presumably more sensitive to the consequences of releasing content that the government disapproves of, so they’re trusted to run the review process on their own.

China’s response to the complaint, for the most part, is that it’s a mix of cultural imperialism and an attempt to undercut the morals of Chinese citizens. “Cultural goods and services have in common the fact of being vectors of cultural identity and values and, as such, of justifying the implementation of specific, yet WTO compliant, regulatory measures,” states its formal response, which noted elsewhere that, “It is of vital interest for China to impose a high level of protection of public morals through an appropriate content review mechanism that prohibits any cultural goods with a content that could have a negative impact on public morals.”

The actual decision portion of the document is entirely incomprehensible without field guides to Chinese law and its WTO Accession Protocol. (There are nine pages of statements like “The United States has not established that Article 8 of the 1997 Electronic Publications Regulation results in China acting inconsistently with paragraph 5.2 or paragraph 84(b).”) Although it’s clear that the US failed to make its case on a variety of points, it appears to have succeeded in quite a few of them. The final words on page 469 are “We recommend that the Dispute Settlement Body request China to bring the relevant measures into conformity with its obligations under those agreements.”

Although it’s clearly a victory for the US, there’s obviously little chance that China will ease up on its political censorship or anti-porn crusades. China can appeal the decision and, even if it loses, other nations may struggle to find punitive measures that are proportionate and strike at the equivalent markets. There’s also the very real problem that China’s written laws and the facts on the ground are often two very different things. Still, trade negotiations are an ongoing affair, and being able to bring a WTO decision to the table will undoubtedly be a useful tool.