ACT - Protecting Small Business Innovation

Free Press forgets Day Job, Decides to become Small Business Advocacy Group

Today, Free Press, an organization dedicated to free speech and media on the internet, decided to take on the mantle of a small business advocacy group, without bothering to look what small business actually needs. 

Free Press called for the FCC to "take immediate action to solve to competition problem", but what they want would not result in a single new piece of dark fiber being lit, or even one new rack of edge caching servers being bought. Instead, more lawyers will be paid to argue about new ways to regulate an industry that is already regulated. 

We understand that Free Press thinks the internet is broken and too expensive, but for small businesses cost is simply not the biggest issue. As both consumers and online firms, companies are more interested in getting a faster connection, rather than a cheaper one. 

We'd rather err on the side of getting more infrastructure built out, rather than increasing the number of anti-trust lawyers in DC. Instead of worrying about duopolies, we need to focus on ways to create more opportunities for businesses to get paid for their hard work. Allowing for multiple business models to succeed - or fail, through the old-fashioned method of providing goods and services that customers want. 

The four principles of net neutrality outlined in 2006 provide an excellent roadmap for keeping the internet competitive; any device, any content, any application and any provider provides the tools we need to succeed.

Who's Going Mobile (on the Internet)?

We all know those "hyper-users" that are constantly connected with their cell phones, smartphones, or other mobile device. Often, they're the person next to you on the metro or standing in line. Often, they're young. And according to a new Pew report, most of these young hyper-users are young Latinos and blacks.

NPR had a great segment this morning about the Pew Hispanic Center study. It discussed the "digital divide" and the lack of computers in homes of minority populations. In an interesting twist, the Pew study says that many minorities are just skipping the home computer and upgrading their cell phone plans for data use.

Mobile devices are a great example of leapfrog technology. Who needs a desktop or a laptop when your phone is almost as powerful (and arguably even more useful)?

New Broadband Report Hypes Quality, not Quantity of Connections

According to a new connectivity scorecard created by Leonard Waverman of the London Business School, it's not the pure size of connections that matter, er, it's how we use our broadband that really matters. As a result, Americans are more "connected" than we think. We come out #1 (followed by Sweden and Denmark). The report differs from typical studies that rate the U.S. as 11th or 16th (or whatever the latest number) and generally give countries like Korea high regards for their broadband, per the report's FAQ:

The Connectivity Scorecard is an attempt to capture how "usefully connected" countries around the world really are. Like any Scorecard, ours is essentially a collection of different metrics, but our metrics encompass usage and skills as well as infrastructure. Further, we recognize that the primary driver of productivity and economic growth is the ability of businesses to use ICT effectively. Thus we give business - and those measures related to business infrastructure and usage - the weight that economic statistics suggest it should be given.

So take that, Korea!

Have the Adults Finally Taken Over in the Network Neutrality Food Fight?

Is the war of ideologies, finger-pointing, and childish rhetoric finally over? Can those interested in solving problems and finding common ground in the Network Neutrality debate finally come out of their panic rooms?

Well, it's probably not time to start turning the panic room in a home gym just yet . . . but, things are looking a bit brighter this week.

Following the FCC's clubbing of Comcast for "managing" BitTorrent traffic on the cable company's network, many were expecting the war over NN to be ratcheted back up.  Instead, Papa Cerf, the father of the Internet turned Google's Chief Internet Evangelist, offered up the proverbial fig leaf and Adam Thierer, one of the most thoughtful anti-NN advocates accepted it.

 

Help Us Keep the Broadband Taxman At Bay

As the Wall Street Journal highlighted on today's editorial page, the Internet Access Tax Moratorium is set to expire on November 1^st and the Taxman is ready to "cometh."

The Internet Tax Freedom Act, enacted in 1998 and since extended twice, prevents multiple and discriminatory taxes on the Internet. In other words, different states can't tax the same e-commerce transaction, and states and cities can't create Internet-only taxes that don't exist offline. So, except for a few grandfathered states, Internet access taxes are banned.

But a Congressional failure to extend the moratorium would quickly show up on monthly bills, and not quietly. Taxes on telephone service can run above 20%, more than triple the average general sales tax rate. Absent the moratorium, state revenue departments will begin to issue letters ruling that Internet access services are subject to these same sky-high telephone tax rates. The revenuers will do this because they can (until state courts judge their merit), not because they need the money. State and local governments have enjoyed 17 straight quarters of increasing revenues…

The indirect impact on constituents could be even more significant. A July 2007 Brookings Institution study found that for every 1% increase in broadband penetration, America adds about 300,000 jobs.

ACT is a leading member of the Don't Tax Our Web Coalition which is pushing hard for a permanent moratorium. Without it, new taxes would certainly push broadband further out of the range of affordability for many underprivileged families around the country.

To speak out on this issue, sign up here and let your elected officials know what you think about new taxes on the Internet access.

Sun's Schwartz: Government Shouldn't Mandate Technologies...Unless it's ODF

Sean Garrett over at the 463 blog has a good summary of the TPS interview of Sun Microsystem's CEO Jonathan Schwartz yesterday. Walt Mossberg proved to be a great interviewer (as you would expect) and the discussion ranged across a lot of issues, including broadband policy and the greening of IT.

The one area where Mr. Schwartz provided some interesting commentary was on broadband policy. When asked whether the US should have a government broadband policy, Schwartz argued that government should not get involved in mandating technology. Yet, in the same breath, he said that governments should focus on setting standards (i.e. the ODF-only policies that IBM and to a lesser extent Sun have been pushing around the world).

He would probably defend this obvious contradiction in logic by suggesting that governments have a traditional role in standards setting. There is some truth to that, but in today's world it is increasingly problematic. Rather than look at it from the perspective of the ongoing ODF v OpenXML battle, let's look at the precedent we're setting globally.

If it is OK for the United States government to interfere in the standards setting process, other governments will continue to follow suit. For a nightmare scenario, just look at how China is trying to use government standards setting for WLAN technology for the purposes of base protectionism and industrial espionage. As Government Technology describes it:

WAPI became a subject of controversy in 2003 when Chinese government selected this home-grown technology and controlled by its local companies as its national standard for WLAN and mandated that all WLAN equipment sold in China be WAPI-complaint as of December that year.

This not only meant that all 802.11-compliant equipment without WAPI couldn't be sold in China, but to be able to be WAPI-complaint, international vendors had to partner with government-selected Chinese companies for accessing the secret WAPI block cipher thereby revealing their products to IPR and business risks.

The battle between standards (like ODF v. OpenXML) is best left to the marketplace. The price of government intervention is simply getting too high.

Tech Policy Summit - Bringing Silicon Valley Together with Washington, DC

Today, I'm participating in the Technology Policy Summit in San Jose. It's a great event bringing together the biggest players from Silicon Valley and Washington, DC to discuss key technology policy issues. Disclaimer: ACT is a sponsor of the event, Jonathan Zuck is speaking at the event, and I'm on the Board of Advisors for TPS.

I'll be posting regularly over the next two days with news and analysis from the event. Also keep an eye on the 463 Communications blog, where Sean Garrett is also blogging from the event.

YouTube - A Viable End Run of FCC Indecency Rules?

I'd like to call out an interesting development from the past week that is a great example of how the Internet can do an end run around traditional regulation--in this case, federal broadcast indecency rules.

As described very well in this NY Times article in yesterday's Arts section, Saturday Night Live had a decently funny skit (my friends have thought it to be either hilarious or plain stupid) involving a parody of two boy band singers, one played by Justin Timberlake. The skit was called "Special Treat in a Box" and involved a song about giving a holiday present to their girlfriends--their male anatomy, wrapped up in a box.

Over the air, NBC had to bleep out the 16 references to the anatomy (think other name for Richard) -- but, SNL simultaneously released an uncensored version that made its way to YouTube. Over 2 million people had viewed it on YouTube alone, according to the article.

Lorne Michaels, SNL's producer, predicted that other shows might more actively offer material online that isn't suitable for prime-time broadcast. But in a telling state of the regulatory climate, and its chilling effect on the distribution of content, according to the article:

[Michaels] cautioned in an interview that the strategy of treating Internet users to the equivalent of an authorized “director’s cut” of his late-night show “will be the exception” going forward.

Don't want to anger anyone with power in Washington, DC, or else Internet content could one day receive a not-so-special regulatory treat from the FCC.

Telecom- Brilliantly Lobbying FOR Net Neutrality

Net neutrality may not be going anywhere at the Federal level-at least not this year-but it is making great strides at the state level. And guess who is pro net neutrality? Yep, that's right, the phone companies...the phone companies?

Believe it or not, telecom companies have successfully pushed for net neutrality resolutions at two different organizations of state legislators. At both the American Legislative Exchange Council (ALEC) and the National Conference of State Legislators (NCSL), net neutrality resolutions were recently passed at their behest.

It's a brilliant tactic - a co-opt strategy. The phone companies know they have to play the net neutrality game - so they are firing first and dictating the flow of the debate. They have encouraged state legislators to support a resolution that says if Congress were to act at all, then it should implements principles known as the "four freedoms." But here's the tricky part. There are two sets of "four freedoms" - one from former FCC Chairman Michael Powell and one actually adopted by the FCC - that are similar but differ in one important regard.

But let's get back to what's going on at the state level.The phone companies are pushing resolutions that contain Powell's four freedoms.  For instance, the resolution that passed at ALEC contains these prinicples:

Consumers should:

(1) be permitted to attach any devices they choose to their broadband connection at the consumer's premise, so long as they operate within the bandwidth limits and quality of service of their service plans and do not harm the provider's network or enable theft of services;
(2) have access to their choice of legal Internet content within the bandwidth limits and quality of service of their service plan;
(3) run applications of their choice, within the bandwidth limits and quality of service of their service plans, as long as they do not harm the provider's network; and
(4) receive meaningful information regarding their broadband service plans.

While the first three are the same as the FCC's Broadband Policy Statement of September 23, 2005, (the principles that the House Telecom bill had implemented in its bill). But check out how #4 differs from the principle below from the FCC policy statement:

(4) consumers are entitled to competition among network providers, application and service providers, and content providers.

Receiving meaningful information is nothing near the principle that entitles consumers to competition. This critical freedom was neglected in the ALEC and NCSL resolutions. Is this a ploy from the telephone companies? So are we being set up for a battle of the freedoms? Perhaps.

If Congress doesn't act we may see net neutrality action at the state level, most likely in the form of consumer protection legislation. And as these resolutions illustrate, the phone companies will use their savvy lobbying power to make the most of the situation--to their advantage.