The problem of spam law: a comment on the Malaysian communications and multimedia commission's discussion paper on regulating unsolicited commercial messages
✍ Scribed by Dennis W.K Khong
- Publisher
- Elsevier Science
- Year
- 2004
- Tongue
- English
- Weight
- 134 KB
- Volume
- 20
- Category
- Article
- ISSN
- 0267-3649
No coin nor oath required. For personal study only.
✦ Synopsis
1 It was undertaken as a precursor to a law to control the problem of junk mails or spam on the Internet and other electronic media. In this article, I intend to explore the problem of regulating spam from an economic point of view, and to discuss the Commission's findings.
A. Nature of the problem
The nature of an electronic communication, and any communication for that matter, is that it is impossible to know, before the communication reaches the recipient, whether it is beneficial to him. Some of these communications are useful to the recipient, some to both the sender and recipient, some only to the sender, and some to no one.
The process of communication is not cost free. Both the sender and the recipient bear some costs. 2 Typical costs of a sender include the cost of identifying to whom the communication is addressed, the cost of framing the content of the communication, and the cost of sending the communication. For the recipient, his costs include the cost of receiving the communication, comprehending the content, and the cost of acting upon it. Where the sender and the recipient are not face-to-face, an intermediary, who also incurs a cost, may be required to convey the content. In some situations, the whole cost is borne by the sender, with adequate compensation to the recipient and the intermediary; while in other situations, the cost is borne by the recipient. However, institutional and technical designs often leave costs where they fall, with unwilling parties bearing a portion of the cost.
From an economic point of view, a communication is welfare enhancing if the total benefit outweighs the total cost. However, before determining whether a communication is welfare enhancing, we need to distinguish expected values from actual values. A value is 'expected' when it is based on a hypothetical measure before the communication commences, i.e. ex-ante. It is 'actual' after the communication has happened and its value measured, i.e. ex-post.
Ideally, all communications should be, ex-post, welfare enhancing. However this is not possible due to the nature of communication itself. As communication is an experiential event, only after the event has passed do we have a measurable value for its cost and benefit. Alas, by this time, the cost is spent and sunk, and no amount of regulation will bring us back in time to stop any welfare-decreasing communications. Therefore, from a regulation point of view, a more practical approach would be to aim for ex-ante welfare-enhancing communications. This is our first policy conclusion.