Ronald Reagan was fond of reminding us of a fundamental economic truth: “If you want less of something, tax it.”
Of course, President Reagan wasn’t referring to broadband infrastructure at the time. But his observation is no less true in today’s digital economy. In fact, since the earliest days of the commercial internet back in the ‘90s, a bipartisan consensus in Congress has recognized the universal truth of President Reagan’s warning and worked to ensure that local taxes and fees didn’t become an impediment to the build-out of our national broadband infrastructure.
Congress enshrined this prohibition against local taxes on broadband in the bipartisan Internet Tax Freedom Act. Similarly, the Cable Act provides a national framework that encourages network deployment by limiting the power of local governments to impose investment-killing fees.
The success of this light-touch framework is self-evident. Since 1996, broadband providers have invested $1.6 trillion to build out our nation’s broadband infrastructure, deploying high-speed networks at a pace that far exceeds what European countries have managed. And while there are clearly deployment gaps still to be closed – particularly in rural America – the urgent necessity of closing these gaps argues even more strenuously for continuing to heed President Reagan’s warning.
But as sure as the sun rises in the East, there will always be high-tax local jurisdictions eager to treat private sector investments as their own personal piggy bank to be raided to fund big-spending government budgets. Despite the obvious historic success of the federal prohibition on internet taxes and fees – and despite the fact that world-class broadband infrastructure is increasingly become table stakes for any local community that hopes to thrive in the digital age – some localities have challenged the bipartisan pro-investment consensus in court.
Faced with these legal challenges, the FCC is about to kick off a proceeding to clarify its policies limiting how local jurisdictions can use local franchising laws to impose taxes and fees on broadband providers. We strongly urge Commissioners to defend the longstanding, bipartisan consensus pre-empting state and local efforts to add new fees or obstacles to broadband investment.
Make no mistake about it: The internet is an interstate service. Networks – and the packet of data that fly across them at the speed of light – don’t stop at state lines. If ever a technology existed that met the Constitutional definition of “interstate commerce”, it’s the internet. That means it’s up to federal policymakers to defend the (wildly successful) national pro-deployment framework against attacks from local jurisdictions more interested in grabbing a few short-term bucks.
As a nation, we want more broadband investment. It’s one of the few things Democrats and Republicans seem to agree on. So the FCC should remember President Reagan’s wise advice and preempt local governments from adding taxes and fees that will discourage the very investment we all agree is needed.
I’ve done a lot of work on the role of intellectual property in trade agreements, so when nuttiness makes its way into the mainstream, I tend to notice.
If you’re interested in some of the work I’ve done on IP and trade, here’s a little:
- In 2014, during the Trans-Pacific Partnership (TPP) discussions, I spoke as a panelist at a Cato Institute event. The panel was pretty much stacked 3:1 against me, and I think I held my own pretty well. It’s one of the more fun things I’ve done in policy in the last couple of years.
- Why Intellectual Property Should be Included in Trade Agreements
Anyway, recently, the anti-copyright coalition Re:Create’s Executive Director Josh Lamel wrote an op-ed in “The Hill” claiming creative industry calls for modern, strong copyright provisions in NAFTA that reflect lessons learned about internet ills since the DMCA was enacted in 1998 “would cripple the creative economy and the internet economies.”
To support his bizarre and counterintuitive assertions, Lamel relies on dubious claims and ends-driven research. To help everyone see through Re:Create’s artifice, I set the record straight below.
A couple of weeks ago, back on August 29th, the Federal Communications Commission (FCC) once again lost a major case when the US Court of Appeals for the Sixth Circuit ruled unanimously in favor of the states and against the FCC’s brazen attempt to overrule state laws regulating municipal (government-owned) broadband networks.
Here's some language we'd like to see in the appropriate section of the GOP platform. In case anyone's interested:
The Internet is a platform for disruption, allowing individuals, private enterprises and entrepreneurs to communicate and engage in commerce in new ways, breaking down walls of distance, size and established power. Regulators and tax collectors, threatened by the disruptive Internet that empowers people and private businesses, are pushing for their powers to regulate and tax to grow in the same way, across borders and reaching every corner of the Internet. The Republican Party should consistently support Internet policies that allow people and private enterprise to thrive, without providing new and expanded powers to tax and regulate so that the Internet does not become the vehicle for a dramatic expansion of government power. Maintaining fundamental principles of limited government in an increasingly Internet-enabled world is a critical role for the party that puts people ahead of government bureaucracies and regulators.
HBO’s “Silicon Valley” has built a successful show satirizing the real Silicon Valley’s hubris and worst excesses. Many of the funniest moments follow the struggles of the protagonists with various venture capitalists who have invested in their business (Russ Hanneman anyone?). VCs – or “Angel Investors” – are the demigods of Silicon Valley. Their decisions can make or break companies. As such, they hold a special place in tech circles and their opinions are given a lot of deference.
It’s this VC worship that likely led Silicon Valley-backed intellectual property skeptic advocacy group Engine to commission a 2014 survey of investors (and law firms that advise them) concluding VCs may be less likely to invest in “digital content intermediaries” (firms like YouTube) if the company were exposed to legal risk for copyright infringing content on their sites.
The notion that investors account for legal liability as they choose their investments isn’t insightful or new. And the idea that a VC might choose not to invest in a new business built on facilitating access to unlicensed copyrighted content shouldn’t be either.
This “innovation at all costs” mentality, which seems to fuel the Engine report, reminded me of a 2013 Wired article discussing Silicon Valley’s “threadbare nature of digital exceptionalism.”
The undue emphasis placed on entrepreneurship, combined with a limited view of who “counts” as an entrepreneur, functions to exclude entire categories of people from ascending to the upper echelon of the industry. And the ideal of authenticity privileges a particular type of self-presentation that encourages people to strategically apply business logics to the way they see themselves and others.
One argument against the FCC’s recently announced “AllVid” plan to regulate and “open up” the video set-top box is that set-top boxes are NOT a natural monopolistic platform that must be regulated by government in order to allow competition – in fact, set-top boxes are on the verge of being phased out and replaced by a variety of innovative new options. Apple TV, for instance, is an example of innovative new hardware for video access. But even a look at Apple TV lets you quickly see the real future of video access – apps. Put simply, in the normal course of innovation responding to consumer demands, set-top boxes are being replaced by apps on smart TVs, mobile and streaming devices. There may never be a better example of government regulation being behind the pace of innovation.
And today, Comcast announced its Xfinity Partners Program, which will allow Comcast customers to access their Xfinity content through a variety of devices and platforms using an Xfinity TV Partner app. Samsung and Roku have already joined the program, which means Comcast customers simply won’t need a set-top box if they own one of the new Samsung or Roku devices featuring the Xfinity TV app.
Seeing Comcast join the impressive number of over-the-top video providers who allow access to their content through apps demonstrates that the FCC’s AllVid rulemaking is not a response to a problem in the marketplace. The FCC has also done no economic analysis whatsoever to justify its scheme. Nevertheless, the FCC is pushing the Allvid scheme very aggressively with shortened timeframes for comments and public input. One has to wonder what, exactly, is the FCC trying to accomplish? And why the rush?
Meanwhile, industry continues at the speed of innovation while the FCC regulates looking backward.
The Consumer Electronics Show, hosted by CTA, is appropriately lauded for being a showcase of technology and innovation. As they tout themselves, “For 50 years, CES has been the launch pad for new innovation and technology that has changed the world. Held in Las Vegas every year, it is the world’s gathering place for all who thrive on the business of consumer technologies and where next-generation innovations are introduced to the marketplace.”
This year the buzz around the show was even greater than usual, largely because of the promise of a connected life becoming real in so many ways—from cars, to wearables, to thermostats and home alarm systems. Sharper pictures, bendable screens, virtual reality and the reality that your “phone” is rapidly becoming your personal “smart hub” all fought for attention inside the show. But the most accessible innovation may have been happening off of the show floor.
This year Uber, the ride hailing app provider, was operating in Las Vegas during the show. The impact was obvious. The infamous hours-long taxi lines for those trying to leave the convention center were cut by half or more. This year show attendees were able to make productive use of their time instead of waiting thirty minutes or more for a cab from the hotel to the show. As a further customer service, Uber partnered with a Dallas start-up company, Vinli, to provide riders with a Wi-Fi connection while they rode. The entire experience of attending a trade show that attracts 180,000 visitors to Las Vegas changed for the better
We’ve often argued that a combination of government enforcement and private voluntary agreements is necessary to reduce illegal online theft of copyright materials [ex here and here]. Everyone in the online world has an interest in ensuring that a complete array of rich content is easily accessible online, but that requires a healthy Internet environment, which means the rule of law predictably applies in the online world as well as it does in the analog world. That the online community resists the idea that piracy is a “killer app,” either for Internet adoption or for selling advertising.
And it’s entirely consistent with America’s long tradition of civil society and free association for voluntary agreements among Internet players to be a big part in creating this healthy internet ecosystem. That’s why it’s been cheering to see several recent examples of voluntary agreements designed to reduce online piracy.
Last week Donuts—the world’s largest Internet domain name registry and the registrar of the new .MOVIE domain extension, announced that it has entered into an agreement with the Motion Picture Association of America (MPAA).
Essentially, infringement notices from MPAA to Donuts will be treated with high priority, and MPAA’s notices will have a presumption of credibility, so long as MPAA provides sufficient information to Donuts. That information includes:
- A statement that the MPAA is authorized by its members to submit the referral;
- Detailed description of the clear and pervasive copyright infringement occurring on the domain (e.g., sample URLs, screen shots);
- Non-exhaustive identification of the law(s) being violated and a description of why the copyright infringement violates the specified law(s);
- Statement that, prior to sending the referral, the MPAA alerted or attempted to alert the registrar of record and hosting provider, including a description of the response received, if any, from registrar and hosting provider and an explanation of why such responses failed to mitigate the infringement;
- Statement that the referral is submitted with a good faith belief that the information contained therein is true and accurate; and
- Confirmation that the referral was subject to careful human review and not submitted solely based on automated Internet scanning or scraping services.
This is more than enough information to guard against the concerns of copyright critics that such takedown notices are sometimes used nefariously to suppress legitimate content.
IPI commends Donuts for its willingness to work cooperatively with content owners to reduce online piracy. We’ve not simply reproduced the entire agreement in this blog entry, but the agreement is a robust model for other registrars and operators to follow, and we hope further such voluntary agreements are in the offing.
One day soon the streetlight will do far more than simply hold back the darkness. AT&T envisions an entire smart city where such poles might alert citizens to danger, respond to gun shots by enabling all lights in the area to automatically turn on, or determine how to conserve energy and still be effective in providing all the light needed. During the AT&T Developers Summit, held immediately before the Consumer Electronics Show in January, a vision for smarter cities was revealed by AT&T and their partner companies. Their combined vision is the Smart Cities initiative.
Could it be that the connected life that we have seen and heard about since the Jetsons might actually be becoming a reality? The AT&T Developers Summit (https://devsummit.att.com/) painted a picture of just how close we are to that future, and in some cases how we are already there.
The opening session featured Robert Scoble (http://scobleizer.com/), a recognized technology evangelist, interviewed by Andrew Keen (http://www.ajkeen.com/). Scoble delivered an optimistic message about connected technologies now becoming increasingly commonplace and discussed several technologies coming soon. He noted that, despite years of discussion and promise, the “Internet of Things” wave is just now entering homes via Nest thermostats and security systems. He remarked that those technologies essentially establish a beachhead for connected machines, making them more commonplace and understandable for consumers. He also pointed out that the cars in many garages already are or soon will be connected and that an increasing number of appliances will be also.
So, perhaps a bit under the radar, we have moved decisively into a connected world, a world where machines work more for us than ever before. And the advances will continue. Whether in everyday applications of virtual reality, putting the volumes of data we produce to use for own benefit, or through whole cities enabled by connectivity, technological advances that will make our lives even easier and more productive are beginning now. The benefits to society will continue to grow as the trend continues.
But all of this is but a dream if the chaos of invention and the disorder of innovation falls victim to legislation or regulation. As we saw repeatedly in 2015 both in the states and from the feds (with the FCC being the most prominent offender), government cannot seem to keep itself from meddling in innovation.
Almost by definition, the less regulation or legislation, the more experimentation will result. Government has its role but it is not to play nanny attempting to guide the development of technologies and markets as a group of lawyers and bureaucrats would like, with prophylactic measures that as often as not miss the mark and cause unintended consequences. Instead, regulators should sit back and enjoy the wonder of innovation, acting to clear the way rather than obstruct and delay.
You could hardly have a more fluid situation than what is going on right now with regard to future Republican House leadership, so this blog may be out of date before it’s finished. But as I’m writing, several people are maneuvering for leadership positions, and the general grassroots mood is that they want a “real conservative.”
(Of course, what a “real conservative” is differs literally from activist to activist. If they agree with you down the line on every single issue, they are a “real conservative,” and if they disagree with you on anything, they are a RINO. Apparently. Which is the biggest problem the conservative movement has right now. It’s principles, people. Anyway . . . )
One candidate who some feel is the “real conservative” for Speaker of the House is Jason Chaffetz from Utah. Chaffetz is an interesting case. Is Chaffetz the “real conservative” option?
Well, yes, the Obama administration doesn’t like Chaffetz, but that’s largely because he chairs the House Committee on Oversight and Government Reform, and thus has been looking into Executive Branch.
But conservatives mostly define themselves by their principles, and one of the pretty bedrock principles is constitutional federalism. On that front, Chaffetz is troubling, for at least two reasons.
Here's what you probably don't know: A 1986 law, the Electronic Communications Privacy Act (ECPA), governs much of the electronic privacy activities of the government. And here's the weird thing--it provides protections for electronic data that is LESS than 180 days old, but not for data that is OLDER than 180 days.
Why did policy makers think that distinction made sense? I don't know, but it's one example of how a law written 30 years ago is completely out-of-date and incapable of governing the current data storage practices in the Internet Age. And especially in the age of cloud storage.
I've just received a copy of the lawsuit from the State of Tennessee against the Federal Communications Commission (FCC) for the FCC's order that attempts to overturn laws passed in states regulating municipal broadband networks in those states.
The argument is pretty clear and straightforward, as indeed I think it is. This is a most blatant violation of federalism. There is no constitutional grounds for a federal regulator to think it can overturn laws passed by the duly elected legislatures of the states.
In the Order, the FCC preempts Tennessee law pertaining to the operation of municipal electric plants, including the Electric Power Board of Chattanooga, an instrumentality of the City of Chattanooga, created and controlled by the State of Tennessee. In doing so, the FCC has unlawfully inserted itself between the State of Tennessee and the State's own political subdivisions. The State of Tennessee, as a sovereign and a party to the proceeding below, is aggrieved and seeks relief on the grounds that the Order 1) is contrary to the United States Constitution; 2) is in excess of the Commission's authority; 3) is arbitary, capricious and an abuse of discretion within the meaning of the Administrative Procedures Act; and 4) is otherwise contrary to law. . . . Accordingly, the State of Tennessee respectfully requests that this Court hold unlawful, vacate, enjoin, and set aside the Order, and provide such additional relief as may be appropriate.
This morning the Federal Communications Commission (FCC) voted to eliminate its sports blackout rule, which helped the NFL justify blacking out the broadcast of NFL games that were not sold out.
The blackout rule was always a case of the FCC getting government involved in the business model of a company/league, which is always a mistake. Policy and business models should never be confused. Government sets policy, and then people go out and create business models. Government should not be creating or distorting or assisting anyone's business model.