IT Matters

Technology policy insights

Mobile Phone

Florida’s Cell Phone Tax Cut Could Help Reduce the Digital Divide

Governor Rick Scott (R-FL) is asking the Florida legislature to cut $470 million in taxes that the state collects from residents on their cell phone, satellite, and television bills. This proposal to cut the cellphone and TV tax rate by 3.6 percentage points will not only put money back into the pockets of everyday Floridians, but it is also a positive step in the right direction to help reduce Florida’s digital divide and will enable more innovation though mobile broadband.

Florida has one of the highest tax rates for wireless services (16.59 percent), falling behind only Washington, Nebraska and New York. In fact, consumers in seven states—Washington, Nebraska, Rhode Island, New York, Illinois, Missouri, and Florida—pay in excess of 20 percent of their bills for their combined state and federal tax rates.

So why have these taxes to begin with? States have traditionally turned to taxing services that people consume in their home because it is a reliable form of revenue. Someone in Florida cannot travel to Georgia to get a lower tax rate on their cell phone bill like they could for purchases of goods that include … Read the rest

lego-thief

Advertisers Take Big Step Forward to Reduce Facilitating Piracy

Advertisers often find their ads appearing alongside unlicensed content on web sites or on sites offering counterfeit goods. This taints brands and inadvertently promotes piracy, fraud, and malware. Now the advertising industry is fighting back. The Trustworthy Accountability Group (TAG), with support from a number of industry groups, such as the American Association of Advertising Agencies (4As), the Association of National Advertisers (ANA), and the Interactive Advertising Bureau (IAB), plans to create a new program to identify offending web sites and ensure that ads are no longer placed on them.

The online advertising ecosystem is highly complex, often automated, and involves a vast range of different actors, including the advertisers, ad networks, ad agencies, websites and other online properties where ads are featured. While this dynamic system is essential to funding the vast array of free and legal online content and services, it has not been without its challenges. The foremost of these challenges occur when an advertisement is placed on a website engaged in illegal activities. The advertising industry calls these bad actor websites “ad risk entities.”

These sites are a big problem for the industry because it … Read the rest

Phones

The Miraculous Cell Phone

As the economy emerges from the Great Recession, it is hard to deny that times are still tough for many Americans. Some advocates have attributed difficulties to rising basic costs such as health care and, puzzlingly, cell phones, that limit discretionary spending power. The Wall Street Journal, in an article about rising costs for the middle class, reports that spending on cell phones by the average American middle class family has increased by 49 percent from 2007 to 2013 according to data from the Bureau of Labor Statistics (BLS).  Some have interpreted this as showing that price inflation for these services is growing faster than the overall consumer price index (CPI).

But what it in fact shows is that while Americans are spending more on these telecom services they are getting more.  Americans are spending more on cell phones in part because more Americans have cell phones- the number of cell phones in the United States grew by 17 percent from 2007 to 2013. At the same time, spending on landline telephones declined by 31 percent over the same period. So spending on all phones, the more accurate measure … Read the rest

clock

The Clock Is Ticking on ITFA

Since 1998, the Internet Tax Freedom Act (ITFA) has been essential in promoting the expansion of e-commerce and ensuring a level playing field for Internet businesses. This will change on December 11th without decisive action from Congress.

The moratorium on Internet access taxes has been a central tool in driving innovation and the exponential growth of the Internet over the last two decades. It has spurred development in nearly every sector of the economy from Silicon Valley technology giants to new entrepreneurs to more traditional industries such as manufacturing, health care and education.

Since the ITFA was enacted, the Pew Charitable Trust estimates Internet usage among Americans has grown from below 25 percent in 1998 to over 85 percent today. For minorities, the growth in usage has occurred primarily in the last decade. These gains could be reversed if the act is allowed to expire and costs on Internet access rise.

What’s more, helping consumers, schools and small businesses continue to access the Internet is not a partisan issue. Permanently extending the moratorium on Internet access is widely supported in both the House and Senate by both parties. Everyone agrees: … Read the rest

google pic

EU Guidelines for “Right to Be Forgotten” Harm Transparency and Represent a Vast Overreach on Internet Policy

On November 26, the Article 29 Working Party released guidance for the “Right to be Forgotten”—a policy that allows users to request that search engines remove links from search queries associated with their names, even if the information being removed is accurate. These guidelines will force European privacy laws on other nations and erode free speech rights globally. These new rules will also make it difficult for third-parties to determine when links have been removed, diminishing the ability for websites to appeal removed links.

The working group has stated that Google and other search engines should remove links not only for European-specific domains (e.g. google.fr), but for all global domains (e.g. google.com). In effect, Europe is saying that its rules for the Internet should apply everywhere and trump that of any other nation.

As ITIF has argued previously, Europe should not seek to impose its policies on other autonomous nations, including by extending the Right to be Forgotten beyond the country code top level domains of European nations. Instead, European nations should create domestic Internet policies that do not affect the ability of other nations to set their own policies.… Read the rest

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New York is moving in the right direction on BitLicenses

On July 17, 2014 the New York State Department of Financial Services (NYSDFS) released a proposed regulatory framework for businesses that use virtual currencies (e.g., Bitcoin) to apply for BitLicenses. The proposed policy would regulate businesses if they hold or transmit virtual currency on behalf of others, or if they convert virtual currencies to everyday currencies (e.g., USD). These rules were proposed to bring regulatory certainty, transparency, and clarity to virtual currency businesses (for background on the BitLicensing framework, read our previous post). Seeing areas that were ripe for improvement in these proposed regulations, ITIF filed comments with NYSDFS to encourage innovation, competition, and investment in virtual currency businesses.

Since the comment period ended on October 21, 2014, NYSDFS Superintendent Benjamin Lawsky has signaled that NYSDFS may adopt several of the recommendations outlined in our comments. Among them, Lawsky has signaled that BitLicenses will not apply to virtual currency miners—businesses or individuals that create and circulate virtual currency on the blockchain.  Lawsky has also stated that NYSDFS is considering a transitional BitLicense for startups, and may exempt non-financial blockchain projects. We applaud Superintendent Lawsky and … Read the rest

bitcoin & Litcoin

New York should ensure “BitLicenses” are a Step Forward for Innovation

On July 17, the New York State Department of Financial Services (NYSDFS) released a proposed regulatory framework for virtual currencies, such as Bitcoin, that would require businesses that hold, transmit, or convert virtual currencies to everyday currencies to apply for “BitLicenses.” (For background on the BitLicensing framework, read this previous post.)

The following is a truncated version of the comments we filed with NYSDFS today:

It is important to note that while ITIF applauds the desire to bring regulatory certainty, transparency, and clarity to virtual currency businesses, the State of New York is likely the wrong entity to address these important policy issues. One of the challenges of global systems, such as virtual currencies or the Internet, is that they are subject to multiple jurisdictions by sovereign countries. Subnational governments, like states, should not compound the problem of multiple and varied laws between countries by creating their own additional rules and regulations. A better approach would be for states to either defer to the federal government or work in partnership with all states to create a single, national approach to policy.

However, if NYSDFS continues to pursue these regulations, … Read the rest

Taken by Tom Blackwell

The LEADS Act presents a path forward for cross-border digital searches

Last week, Senators Hatch, Coons and Heller introduced the Law Enforcement Access to Data Stored Abroad (LEADS) Act which seeks to clarify the powers that warrants issued by the U.S. courts have on data stored abroad. The LEADS Act also focuses on reforming the Mutual Legal Assistance Treaty (MLAT) process, which are agreements designed for law enforcement agencies to receive and provide assistance to their counterparts in other countries. If enacted, this law could have both immediate effects on a current court case, and far-reaching effects on international agreements for cross-border access to data for law enforcement purposes.

Until now, the U.S. government has argued that it could use the powers granted to it under the Electronic Communications Privacy Act (ECPA) to gain lawful access to data stored abroad if the company storing it had a presence on U.S. soil. The LEADS Act would clarify ECPA, stating specifically that the U.S. government cannot compel the disclosure of data from U.S. providers stored abroad if accessing that data violates the laws of the country where it is stored or if the data is not associated with a U.S. person—a citizen or … Read the rest

Bitcoin Keychain

“BitLicenses” Explained

In the past few years, virtual currencies, particularly Bitcoin, have jumped from an online experiment to a multi-billion dollar global phenomenon. Now, governments are starting to recognize these currencies, hoping to both legitimize and secure them with proposed regulations. On July 17, the New York State Department of Financial Services (NYSDFS) released a proposed regulatory framework for virtual currency that would require businesses that hold, transmit or convert virtual currencies to everyday currencies to apply for “BitLicenses.” This is one of the first proposed regulations on virtual currencies in the United States since the IRS proclaimed Bitcoin to be property subject to capital gains tax last March. While NYSDFS is still only seeking comments on these rules and nothing is final, I will attempt to break down the proposal as is and provide some initial thoughts on the implications for virtual currencies.

What is the purpose of the regulations?

NYSDFS announced these regulations as a result of public hearings it conducted in January 2014. NYSDFS hopes to use these rules to protect consumers, prevent money laundering, and improve cyber security for businesses that use virtual currencies. These regulations represent … Read the rest

"The Right to be Forgotten"

Another Problem with the “Right to be Forgotten”

History is riddled with examples where attempts to achieve one outcome actually led to the opposite result. In May, the European Court of Justice (ECJ) ruled that Europeans have the “right to be forgotten,” the ability to request search engines to remove links from queries associated with their names if those results are irrelevant, inappropriate, or outdated. Just as Prohibition famously increased alcohol consumption, it would seem the “right to be forgotten,” while intended to increase online privacy, may actually have the opposite effect, both by cataloging shameful information and incentivizing individuals to publicize the very materials people want forgotten.

Since the decision, Google has scrambled to meet Europe’s demands by creating an online form to process removal requests and hiring new personnel to handle compliance. When individuals want information removed about themselves, they must submit verification of their identity, provide the URLs to be removed, and justify why they should be taken down. Google then verifies that the submitted information is accurate and meets the criteria for removal. Then, if the company decides to take the link down, it notifies the website where the content was posted of … Read the rest