Gird for Battle against Net Tax Advocates, Congress Members Tell CCIA

Sen. Wyden (D-Ore.) called himself the “Methuselah” of Internet tax moratorium issues, because his allies -- former Sen. Allen (R-Va.) and Rep. Cox (R-Cal.) -- are out of Congress. State and local officials are “licking their lips at the prospect of going after this cash cow,” Wyden said, asking for help to fight off taxation attempts: “I'm up against the NBA all-star team.” Many have forgotten that before the moratorium some newspaper online editions were taxed when print counterparts weren’t, he said. Sen. Sununu (R-N.H.) said: “The power to tax something is the power to destroy it.”

Senate Commerce Ranking Member Stevens (R-Alaska) compared neutrality to an automobile importer demanding a special freeway directly from the port to its plant: “Those who are very large will come in and demand expansion,” and “the cost of that capacity will be borne by those who don’t have it.” Stevens said the “red flag” provision in last year’s telecom bill would protect against network discrimination: “My concept of net neutrality will protect the individual users of the Internet… but not those who insist upon the ability to expand exponentially without really increasing their own costs.”

“Regrettably [net neutrality] has become much of a partisan debate in Congress,” but not in America in general, Wyden said. He called small business “the key constituency” that could tip the partisan split toward net neutrality, and reiterated his call for hearings on explaining neutrality to ordinary people. “The Internet would, in my view, look a lot more like the cable television system” without neutrality, Wyden said.

“Obviously thus far the Congress has not stepped up” in making broadband expansion a priority, Wyden said, citing an average 3 Mbps connection in the U.S. vs. 100 Mbps in “much of Europe and Asia.” 4G technology is a “special opportunity to get a 3rd pipe into the homes of the American people” and current service providers should be prevented from “dominating” the field, lest prices fall too slowly, he said. But Sununu called the U.S. “different and unique” from “densely populated countries” for the purpose of broadband rankings, and the U.S. also had a “somewhat archaic system for allocating spectrum” given its early development of television and radio.

“We have to ensure that nothing will stand as an obstacle to delay” the 700 MHz wireless broadband auction, Stevens said. The auction is “just the start of solving the problem,” Wyden said, also calling for more efficient use of “prime real estate” in spectrum. Rep. Pickering (R-Miss.) called the 700 MHz auction “the most important telecom policy” this Congress, but predicted that after the auction “you will not see as much private-sector promotion” of better spectrum use -- which is a shame because of govt.-controlled spectrum inefficiencies.

Tech mandates should be frowned on by legislators, said Sununu, an MIT-educated engineer: “They haven’t seen how often technologists are wrong.” The Fortran code he had to learn to graduate was obsolete by the time he graduated, Sununu said. In 1996 the biggest telecom issue was thought to be long distance service and selling voice minutes, an assumption that survived 3 years at most, he added. Sununu used the uncertainty of tech advances to argue against Carterfone rules for wireless, calling that market competitive. Raising his voice, Sununu told opponents: “You're predicting what [market leaders'] behavior is going to be in the most rapidly changing environment in industry today.” Providers of “subscriber lines” are “hanging on by the skin of your teeth right now” and can’t afford to discriminate against devices connected to the network, he said.

The Democrats this year can expect to “lay the groundwork through hearings” for more expansive legislative action in future years, Pickering said. Mergers and net neutrality are subject matter closer to antitrust, and states are taking a larger telecom role, he said. -- Greg Piper

CCIA Notebook…

A revised version of the Protecting Children in the 21st Century Act (S-49) (WID Jan 23 p6) is in the works, Senate Commerce Committee Ranking Member Stevens (R-Alaska) said at the meeting. He’s meeting with interested parties. The new draft’s emphasis will be the “voluntary initiatives that can and should be provided” by companies to protect minors online, like the measures that MySpace recently took, he said. Legislation will pass First Amendment muster but Congress needs industry support to get it through, rather than being “sidetracked by theoretical problems” with constitutionality. A committee source told us the draft process is just starting and no document is available. Advocates of Internet freedom need to take into account protecting children online, Stevens said, adding that he supports the right of “all legal content” to be accessible online. If “family groups” aren’t satisfied that minors are shielded from mature content, their opposition will be the “stumbling block of the future of telecommunications and the Internet,” he said. The courts, FCC and FTC will “constantly have litigation and proceedings” on the matter as a result.