In 1998, Congress recognized that taxation could slow the growth of the Internet adoption and suppress the enormous potential of the digital economy and so it passed the Internet Tax Freedom Act (ITFA) to prohibit states from imposing new taxes on Internet access. After being renewed in 2001, 2004, and 2007, ITFA is once again set to expire and there is a lively debate over whether it should reauthorized and made permanent.
Unfortunately, not all participants in the debate are presenting the facts accurately. Michael Mazerov, a Senior Fellow with the Center on Budget and Policy Priorities’ State Fiscal Project, recently wrote a blog post opposing the extension, and one of his key assertions was that there are no differences in broadband subscription rates between states with and without taxes placed on Internet access. To back this dubious claim, Mazerov cites a 2006 report from the Government Accountability Office (GAO).
But there’s only one problem: the GAO didn’t say this. In fact, when presenting its finding, the GAO states very clearly that their ability to properly analyze the problem was compromised by a lack of broadband pricing data. The only … Read the rest
Internet interconnection usually doesn’t make for big news. The term refers to the agreements that connect up the Internet’s component networks and since they usually “just work” they rarely attract the media’s spotlight. We don’t particularly care how our House of Cards gets to our screen or whether our video bits travel long distance though a transit provider or cached closer to home on a content delivery network (CDN), so long as it works. So long as it works. Now old news, it was around October when some Netflix users first began seeing their streams slow.
This touched off a rather public spat, with a back and forth of blog posts from Netflix and Verizon. Tensions rose after Netflix began placing notices on customer’s screens accusing Verizon’s network for the slow streams. Verizon responded with a cease and desist with which Netflix appears to have complied. On top of all this, FCC Chairman Tom Wheeler recently released a statement announcing a relatively informal investigation into recent interconnection deals.
On Wednesday, at an event hosted by the Congressional Internet Caucus Advisory Committee, David Clark, noted Internet engineer and MIT researcher, … Read the rest
This past Thursday, the FCC voted to kick off a new attempt at open Internet regulations, marking yet another milestone in the history of the net neutrality debate. Over the years ITIF has been at the forefront of this debate, and will continue to do so. Below is a top-10 list of ITIF publications that both explain how advanced IP networks actually work and advance our “third way,” middle-ground approach. To see all of ITIF’s work in this area, please go to www.itif.org and click on “issues: broadband”
In May, 2006 Rob Atkinson and Phil Weiser bemoaned the fact that “the network neutrality debate denies the reasonable concerns articulated by each side and obscures the contours of a sensible solution.” Eight years later, and this paper’s diagnosis and cure still hold value. It argues that policymakers should ensure a baseline of a high-bandwidth, best-efforts Internet connection while taking an “antitrust-like” approach to any discriminatory access arrangements.
One of the meatier ITIF publications on net neutrality, this report digs into the … Read the rest
The Wall Street Journal reported Wednesday that FCC Chairman Tom Wheeler was set to circulate a draft of rules to be proposed to codify net neutrality. This initial story prompted a sudden outpouring of inaccurate reporting and misplaced vitriol. There are a number of unfortunate misunderstandings ITIF would like to help clear up in the hopes that Chairman Wheeler is not deterred from what is a very reasonable approach to a difficult policy problem. The Chairman took to the FCC blog on Thursday to try to “set the record straight,” unfortunately, with today’s powerful echo-chambers and viral proliferation of over-reactions, setting the record straight is a very difficult task.
Chairman Wheeler explained that he intends to propose rules that will allow for a case-by-case analysis of traffic management, allowing practices that are “commercially reasonable” to all on reasonable terms. Any type of practice that harms competition or consumers as a result of abuse of market power would be prohibited. ITIF has long been an advocate for these types of restrictions on broadband providers.
We believe the general direction of Wheeler’s proposals to be a good balance between protecting consumers and … Read the rest
Government funding of broadband networks is once again garnering discussion. FCC Chairman Tom Wheeler’s Feb. 19 announcement on Net Neutrality indicates that the Commission may consider Federal pre-emption of state laws restricting municipal communications networks. On the tail of that announcement comes a report from the Government Accountability Office providing some anecdotal evidence of the way small businesses use ten different federally subsidized or municipally run networks. Unfortunately, it is difficult to draw any general conclusions from the report, as it draws on only a handful of interviews with users of a select few networks – a limitation the report itself acknowledges.
I have no beef with the report itself – this GAO report, like all GAO reports I’ve read, is precise, well-written, and self-aware, though I must say I question the value of a study with such a small sample size and so little information about the networks discussed. My concern is that many are misinterpreting the report as offering broad evidence of the success of government run or funded networks. As the report says, “the results of [the GAO’s] interviews cannot be projected to all service providers and … Read the rest
In arguing that “American regulators should block Comcast’s proposed deal with Time Warner Cable,” a recent article in The Economist displays a surprising number of misunderstandings about how our broadband and television markets work. The magazine argues that the combined firm, by having 30% of pay TV subscribers, will be just too big, a “fearsome” “Goliath” that will force only its own content upon its subscribers and only at a trickle. Strange words from a publication with a column named after Schumpeter.
The first stunner comes with the assertion that Comcast has 55% of TV and broadband subscribers, so long as you ignore . . . subscribers of competing TV and broadband providers. Confused? You aren’t alone. Satellite TV programming, telco operations like AT&T’s U-verse, broadcast, and over-the-top are all substitutable to cable TV. Sure, cable is well-positioned today, but explicitly ignoring competitors in the analysis is too far. The ability for different platforms to compete, now and in the future, is a key premise of our current competition policy. As we continue the convergence on the IP platform, different underlying technologies can compete in the provision of broadband and … Read the rest
Last month something evil happened in Las Vegas: Netflix was invited into the inner cloister of the Last Mile Cabal, where a blood sacrifice sealed a dark pact with Comcast. What was in that pact, what were the terms on which the sacrifice was made? I’ll tell you: a commercial transaction that will reduce congestion at points of interconnection, improving Netflix performance across Comcast’s network, bringing joy and good cheer to video streamers across the country. Wait, what – you may ask – what’s evil about that? I’m not quite sure either, although reading the coverage of this deal, you’d think it was.
To be clear, this is an interconnection issue, not a net neutrality issue. Let me repeat that: this is not a net neutrality issue. It is unfortunate timing for the parties – with the recent opinion from the D.C. Circuit vacating the Commission’s non-discrimination and no-blocking rules some industry watchers are on hair-trigger to find a would-be violation. Accusations that Comcast was “throttling” Netflix, or that Netflix is “paying off” Comcast for a “premium” connection are simply wrong. Netflix is not getting priority treatment of its traffic, … Read the rest
As an American academic in Europe, I find the claims by some American media about an EU broadband utopia curious. Europeans roundly complain about the quality of their broadband, and, there is no European who would say that the US is falling behind Europe. In fact some of the biggest critics of the EU are the EU leaders themselves. Consider EU Commissioner for Digital Life Neelie Kroes:
The world envied Europe as we pioneered the global mobile industry in the early 1990s (GSM), but [because] our industry often has no home market to sell to (for example, 4G) consumers miss out on latest improvements or their devices lack the networks needed to be enjoyed fully. These problems hurt all sectors and rob Europe of jobs it badly needs. EU companies are not global internet players. . . . 4G/LTE reaches only 26% of the European population. In the US one company alone (Verizon) reaches 90%!
Kroes praises the success of the American broadband mode, noting its ability to drive private investment and innovation. She is increasingly joined by other European leaders who recognize that the European approach is not working. … Read the rest
Today marks the 18th Anniversary of the signing of the 1996 Telecom Act. In these 18 years the communications market has changed dramatically – change that warrants an update to our laws. We are all familiar with the recent explosion of services riding over our networks, but a simple thought experiment illustrates just how dramatic the changes of the last twenty years have been. Imagine if Congress had enacted the Telecommunications Act of 1999 instead of the Telecommunications Act of 1996. Would encouraging facilities-based competition in an attempt to build a duplicative phone network have seemed wise when by then it was clear broadband networks were key? Would the rise of the Web and early IP voice communications have given us pause? The changes we have witnessed since the ’96 Act represent a break in our ability to easily understand and predict this complex sector. It is time to update the Act, but not in a way that assumes to know what direction or velocity our communications and media markets are heading or what would be best for them.
In 1996 voice, video, and data were totally separate services … Read the rest
Yesterday two Los Angeles broadcast TV stations announced a plan to enter a pilot program to demonstrate the feasibility of channel sharing. They plan to experiment with broadcasting the streams of both stations over the infrastructure and, more importantly, the spectrum of only one. This is exciting news – channel sharing potentially allows for significant amounts of spectrum to be unleashed for mobile broadband. Broadcasters also win though the deal. When two stations are able to squeeze into a single 6 megahertz channel, they maintain virtually all of their previous revenue streams (including retransmission fees) plus gain a cash infusion by putting their extra spectrum up for sale in the incentive auctions. In the end, channel sharing means more efficient use of valuable low-band frequencies, more spectrum available for mobile broadband, a higher chance of a successful incentive auction, all while those few who watch TV over the air remain able to do so. This is one of those rare win-win-win situations.