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Latest Network Blackout Proves Congress Has Work To Do
CBS and Time Warner Cable are embroiled in a fight over retransmission fees that has left millions of cable subscribers in major metropolitan areas like New York, Los Angeles, Chicago and Dallas without access to the popular network. While this may seem like a typical conflict between two large corporations, it is more complicated than one might think. Because the federal government has created a complex system of laws and regulations dictating the rules of the game, the playing field is strewn with obstacles that increase the likelihood that providers of content and service will end up in a stalemate. NTU has weighed in previously on the need for Congress to update and simplify communications laws. Conflicts like this current one likely won’t be made less onerous for the parties involved by overbearing government. Consumers would benefit from a more thoughtful policy approach that respects the private sector’s capacity to build prosperous markets for video content and service and minimizes the role of the federal government.1 Comments | Post a Comment | Sign up for NTU Action Alerts
All too many federal agencies can be cited for having budgetary skeletons in their closet, and U.S. Customs and Border Protection (CBP) is no exception. From poorly managing a drone fleet purchase, to making questionable demands for more employees, CBP has raised fears for the security of taxpayers’ wallets in the past. Yet, Congress has an opportunity to ease future fears, over a controversial new CBP project, before it can cause a fiscal fright.
Two years ago, the U.S. Department of Homeland Security (DHS) concluded a letter of intent with the United Arab Emirates to build a “pre-clearance” facility at Abu Dhabi airport which would allow travelers to the U.S. to clear customs before arriving on American soil. So far, so good: pre-clearance can not only save time and reduce congestion at U.S. points of entry, it can also help ease the way for tourists who contribute to economic activity while visiting here.
Now for the not-so-good:
All these drawbacks lead to one long question: Given CBP’s service challenges at existing airports, is it really a good idea to plow ahead with a facility whose use will be comparatively scarce in the near term, and give another leg-up to an airline backed by its own government as well as ours, at the expense of an already overtaxed flying public?
And “overtaxed” is an understatement. As NTU has often noted, the typical overall government tax and fee burden of 20 percent on a $300 domestic airfare is higher than the average effective rate a middle-class American is likely to pay on his or her 1040 income tax return. International air travelers can have it even worse, with impositions such as separate departure and arrival taxes along with a passenger agricultural inspection fee (which the Obama Administration ill-advisedly considered raising in 2009) and a customs fee.
Proponents of the CBP station at Abu Dhabi argue that the investment of U.S. tax dollars will be minimal since UAE will pick up 85 percent of the project’s expense under the current agreement. But that’s little comfort to tax-weary travelers in America (see above), who remain worried that whatever share they will be forced to commit could escalate if construction or operating costs are not contained. Meanwhile, there’s that pesky matter of how best to apply CBP’s fee collections as well as appropriations from general funds – should they be used to expedite higher-priority passenger and cargo entry-exit services?
Many Members of Congress seem to think so. In June, the House of Representatives passed an amended FY 2014 DHS Appropriations Bill specifically blocking the Abu Dhabi pre-clearance scheme. In May, a bi-partisan group of 11 Senators echoed the sentiment of their House colleagues in a separate letter to DHS Secretary Janet Napolitano, questioning whether the agency’s “decision was made as a result of a risk based analysis.”
Alas, earlier this month DHS announced it was moving forward with a data-sharing agreement that could pave the way for the facility’s activation, even as it faces a concerted petition effort from interested industry groups with considerable clout.
Regardless of the politics involved, the taxpayer aspects of the issue deserve further exploration – that goes not only for the Abu Dhabi pact but also the ever-troubling direction of the Ex-Im Bank. Allowing the free market and fiscal responsibility to sort out needs from niceties would provide some badly-needed bone-rattling for those accustomed to budgetary business as usual in Washington.1 Comments | Post a Comment | Sign up for NTU Action Alerts
As the economy continues to falter, Congress has an excellent opportunity to provide economic relief to families and businesses. Recently, Sens. Ron Wyden (D-OR) and Pat Toomey (R-PA) reintroduced the Wireless Tax Fairness Act in the Senate. This occurred just weeks after Rep. Zoe Lofgren (D-CA) and Trent Franks (R-AZ) introduced the same bill in the House. This legislation, an earlier version of which was approved by the House in 2011, would ensure that taxes on wireless communications will not increase in any jurisdiction for at least five years. As a recent study indicated, wireless services currently face a higher aggregate tax burden than nearly every other industry. These high taxes stifle job growth in a sector of the economy with proven potential as an engine of prosperity.
Wireless taxes are inherently regressive, which should also concern policymakers. The Pew Internet & American Life Project found that young people as well as those with less financial means shoulder a disproportionate amount of the burden of taxes on telecommunications. Some rely on their wireless device as their sole phone line and means of Internet access, making higher taxes even more disconcerting. In an era when legislators continue to dial in more spending and higher taxes, lawmakers should hang up on all calls for higher taxes and instead pass the Wireless Tax Fairness Act.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Will Congress Finally Treat Video Services Equally?
Telecommunications is once again in the policy spotlight for taxpayers, almost as quickly as the flip of the switch that would activate the spotlight’s shining beam. Earlier this week, the bipartisan Wireless Tax Fairness Act was introduced in the House. This bill, which NTU has long supported, would declare a five-year “time-out” on discriminatory state and local taxes for mobile phone services.
Yesterday, the House’s attention turned to subcommittee hearings of the Energy and Commerce Committee on whether to end, mend, or keep on defending the Satellite Television Extension and Localism Act, or STELA. Whenever government policy toward this technology is discussed, one major issue of concern to taxpayers and consumers is states’ tax treatment of satellite TV services. NTU has endorsed several iterations of the State Video Tax Fairness Act, which would prohibit inequitable tax policies based on the method through which video is delivered to a consumer (e.g., satellite vs. Internet-based). As we pointed out in a 2011 letter to the House:
Telecommunications of all varieties have been targets for disproportionate and punitive taxes since the Spanish-American War, slowing much of the progress and productivity that could have emerged to enrich our society sooner. There is an obvious need to reduce telecommunication tax burdens on all providers, promote consumer choice, and provide a neutral playing field among similar products.
Yet, there are additional matters of equity that arise when deliberating STELA and other TV-related policies, primarily of the regulatory kind – carriage requirements, “retransmission consent” between content and service providers, compulsory licensing, ownership restrictions, and proposals for “a la carte” programming mandates, to name a few. All of them raise weighty questions such as:
To NTU, the answers to all these questions begin with less, not more, red tape from Washington, particularly when it comes to the Federal Communications Commission (FCC). Far from acting as an impartial referee on a level playing field, the FCC has often behaved like an overbearing “amateur” by obstructing the game. (Witness, for example, the FCC’s ongoing attempts, which NTU strenuously opposes, to commit an end-run around Congress and establish “net neutrality” dictates for the online realm). Seasoned free-market observers like Larry Downes and Geoffrey Manne with Tech Liberation Front are calling for a major reassessment of the FCC’s role. Commenting late last year about the FCC’s tendency toward mission creep in evaluating mergers and crafting spectrum policy, Downes and Manne hit on a point that bears relevance to Washington’s entire regulatory stance toward telecom:
Increasingly, the agency is using that limited authority to restructure communications markets, beltway-style, elevating the appearance of increased competition over the substance of an increasingly dynamic, consumer-driven mobile market. Given the very different speeds at which Silicon Valley and Washington operate, the expanding scope of FCC intervention is increasingly doing more harm than good.
As far as video is concerned, the end result of this unnecessary federal roughness serves no one well – whether they’re broadcasters, cable companies, satellite firms, or, especially, their customers. Participants at yesterday’s hearing, however, were somewhat more focused on immediate issues surrounding STELA’s future. Their perspectives often clashed, but each tended to raise some kind of concern about the current regulatory regime.
Testimony on behalf of the National Association of Broadcasters largely supported STELA’s basic precepts and believed any alterations to the law should be “narrowly tailored,” but asked the Subcommittee to “remain vigilant” as the FCC implements an often-criticized incentive auction process for allocating spectrum. DIRECTV’s representative observed a “growing tension between innovation and stale broadcast regulation,” calling on Congress to either “jettison broadcast regulation altogether and create a truly free market” or “make the laws smarter to reflect the 21st century video marketplace.” Geoffrey Manne recommended another course to the panel: instead of reliance on STELA and other regulatory acts, “Government’s role should be [to] protect the copyrights of content owners and police market power through antitrust.”
In short, there are many views in the telecom sphere over where issues like retransmission consent should be headed. One attempt to simplify, rationalize, and minimize government’s role in such matters was the Next Generation Television Marketplace Act (NGTMA), which caught NTU’s eye in the last Congress. Other approaches worth considering (along with, potentially, a new version of NGTMA) are likely to be offered as the session moves forward.
NTU and its members eagerly await lawmakers’ responses to one of the most urgent tasks facing the future of our nation’s economic prosperity: limiting the burden and interference of government so as to allow the continued development of a robust, competitive telecommunications marketplace. The 21st century arrived more than 10 years ago; it’s time for federal policy to recognize that fact.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Learn more about the Wireless Tax Fairness Act HERE.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Last year’s “Middle Class Tax Relief and Job Creation Act” extended a number of tax provisions, including payroll tax reductions, unemployment insurance, and Medicare payment rates. Most of the legislation has since expired, but buried deep in the bill’s 102 pages was perhaps its most important provision – one that remains very relevant today.
Sections 6101 to 6103 of the law require the Federal Communications Commission (FCC) to auction off a large chunk of electromagnetic spectrum. This may sound like technical gobbledygook, but these auctions of federally-owned airwaves could foster economic growth and tremendously benefit both the deficit-plagued government by raising billions of dollars without hiking taxes, as well as telecommunications consumers by allowing for further deployment of advanced broadband networks.
Deficit reduction, job creation, telecommunications improvements – it sounds like a huge win for everyone. But these benefits could be undermined by the bureaucracy. In April, the Department of Justice recommended that the FCC limit the auction to effectively bar the largest two telecommunications companies – Verizon and AT&T – from participating. This threatens both the optimal deployment of the spectrum as well as the financial benefits that the federal government could reap.
In fact, a new paper from Georgetown University’s Center for Business and Public Policy says the cost of following DOJ’s approach could be $12 billion of federal revenues and over 118,000 jobs. And due to complicated auction rules, less of the spectrum would likely be available for advanced broadband technologies, meaning consumers would lose out, too. This is unacceptable.
The spectrum auction is important to economic growth and technological advancement. The FCC should not follow DOJ’s advice and rig the process to benefit some companies at the expense of taxpayers and consumers.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Some politicians in DC have been complaining nonstop about the sequester’s “draconian” spending reductions. By contrast, the House Energy & Commerce Committee’s Subcommittee on Communications & Technology has effectively highlighted why additional spending cuts are very much warranted.
At a hearing yesterday, the Committee examined the roughly $7 billion the federal government allocated to broadband internet grants and loans as part of 2009’s so-called “stimulus” bill. The broadband funding was supposedly one of many “shovel-ready” projects included in President Obama’s plan to jump-start the economy. Four years later, it appears these projects were neither “shovel-ready” nor stimulative. By and large, this massive expenditure was yet another colossal waste of taxpayer dollars.
Take for instance the $4.7 billion given to the National Telecommunications and Information Administration to implement the Broadband Technologies Opportunity Program. Roughly four years later, $1 billion of these funds -- more than 20 percent -- have yet to be disbursed.
Perhaps even worse, much of the money that has been spent has been wasted. A New York Times article from last year highlighted just a few of the program’s many highly questionable expenditures: “In Illinois, for example, a $12 million broadband grant was sanctioned when a subcontractor was caught routing fiber optic cable through neighborhoods where its project engineers lived. A $39 million grant in Arizona was suspended over questionable expenditures on travel, transactions that appeared to involve conflicts of interest and other unbudgeted activities. Broadband grants in Alabama and Louisiana, totaling $140 million, were terminated over undocumented expenditures and failure to adhere to construction plans and schedules. Four other grants, worth $42 million, returned the money before even getting off the ground.”
These anecdotes are particularly relevant as the President and some Members of Congress decry the “disastrous” effects of the sequester’s 2.4 percent cut to the $3.5 trillion federal budget. And unfortunately, these examples of waste are only the tip of the iceberg. So keep them in mind as politicians tell you that the sky is falling because of minor reductions in government expenditures.0 Comments | Post a Comment | Sign up for NTU Action Alerts
The team over at MyWireless.org released a comical new video last week, illustrating just how crowded wireless data networks have gotten. As former NTU Vice President of Government Affairs Andrew Moylan noted back in May, there is a near “unanimous agreement” that more spectrum should be made available in order to build out America’s telecommunications networks, but big government (shocker!) and special interests have so far caused massive headaches for wireless companies and consumers. The tech community has made clear that we could soon face a debilitating bottleneck without swift action to reallocate spectrum where is it most needed. As telecommunications usage continues to grow, it’s important that taxpayers are educated on this issue.
Check out the MyWireless video below:
This week TIME magazine published a very helpful feature on the Federal Trade Commission's Google inquisition. It is worth a read for anyone interested in Internet freedom. TIME's Sam Gustin provides some great background info on the case, and makes some key points on why he says the government should be "careful" about taking action against Google.
He points out Google's strong, and earned, 60 percent-plus market share is not in an of itself a valid basis for anti-trust action. This is why the well-funded Google opponents at 'Fair Search' showed so much love for Europe's much more lenient, and pro-government, "dominance" standards at their panel event.
The article also addresses the key issue of 'consumer harm' and monopolies, "Monopoly power is defined as the “power to control price or exclude competition.” But Google’s search engine is free for users, and it’s not doing anything to prevent users from switching to a rival search engine — other than providing a superior service."
As NTU discovered with our IBOPE/Zogby poll earlier this year, consumers are certainly not feeling any harm or restriction, with 87% saying they felt they could easilty switch to a competing search engine.
TIME's piece calls out the opposition 'Fair Search' coalition as well:
"This loosely knit coalition opposing Google includes the FairSearch.org consortium, which is composed of several of Google’s competitors, most notably Microsoft, which has been waging a not-so-clandestine campaign against Google for years. FairSearch.org argues that Google has been using its market power to harm competitors illegally."
And most scathingly...
"As for Microsoft and its FairSearch.org consortium, there’s something unbecoming about companies that have been beaten in the marketplace appealing to Uncle Sam for relief. It’s kind of like a child who loses a schoolyard ballgame and then runs to the teacher claiming that Johnny didn’t let him win. Microsoft and its anti-Google allies have spent untold millions waging an overt and covert campaign designed to persuade regulators to hobble the search leader. Perhaps if these companies spent a little less time complaining and a little more time innovating, they’d have a better chance of competing in the marketplace."
Perhaps most importantly TIME also brings up the risk and severity of having the government interfere, referencing lawyer Glenn Manishin: "once government deems an economic sector “essential” it takes on an implicit responsibility to regulate everyone, whether they have monopoly power or not."
This is something NTU has been working to sound the alarm bells on with regards to this case. The potential for a permanent government foothold in this market is real. This fact also helps explain WHY the government and FTC are 'under so much pressure' (paraphrasing Gustin) to take action against Google - there is a carrot for government in this case, the FTC is unlikely to be solely interested in helping Google's competition.
This case has also drawn concern from a Democratic congressman, Rep. Jared Polis of Colorado, who told the FTC "I believe that application of anti-trust against Google would be a woefully misguided step that would threaten the very integrity of our anti-trust system, and could ultimately lead to Congressional action." NTU has also sent letters to the FTC among many efforts on this issue.
It's also worth taking a look at Manhattan Chamber of Commerce President Nancy Ploeger's piece in the Huffington Post which criticizes the government for risking the one bright spot in our economy over the past few years, the Internet. Ploeger provides some tremendous numbers on the Internet's contribution to job growth, the vast array of search options, and more.
This case has flown under the radar a bit, but now it is getting proper attention considering the incredible amount that is at stake for Internet freedom, free markets, and consumer choice.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Speaking of Taxpayers, Oct. 12 (AUDIO): VP Debate Dish, and More on Tech Issues
Subscribe to NTU's podcast "Speaking of Taxpayers" via iTunes!
Doug and Pete dish on Thursday's VP debate between Congressman Paul Ryan and Vice President Joe Biden. Also, a discussion of tech issues including municipal broadband.1 Comments | Post a Comment | Sign up for NTU Action Alerts