Joe Tighe, an IT Infrastructure Consultant, has an interesting essay up over at Circle ID. He takes a hard look at Rep. Ed Markey’s proposed “Internet Freedom Preservation Act of 2009” and makes an argument that many of us here have made ad nauseum — regulation involves trade-offs and unintended consequences:
One of the main problems with the proposed legislation is the lack of recognition of costs to provide internet services. Some applications, such as video are bandwidth hogs and require significantly greater network infrastructure and associated costs to deliver when compared to the network infrastructure costs to deliver email access. Under the proposed legislation, services providers would have to charge the low bandwidth users (casual browsers and email readers) more to offset the higher costs of the video users. One result of the proposed legislation would be less consumer choice and a hidden “bandwidth hog tax”. Today, most service providers offer tiered products and pricing to consumers and businesses to account for the additional costs to deliver bandwidth intensive applications. You pay more if you use more under the tiered pricing model. These are not “discriminatory” practices. Rather, tiered pricing and application prioritization are sound business models delivering reliable, profitable product choices and unburdened internet ecommerce. Consumers and businesses currently have choices. The proposed legislation takes away choice and increases costs to consumers and businesses.
Quite right. Read the whole essay here.
Adam Thierer and I have warned that neutrality regulation, once imposed on broadband providers, will
extend to other Internet services wherever “gatekeepers” are alleged to control access to a platform used by others. In short, the slippery slope of creeping common carriage is real and we’re already heading down it, with cyber-collectivist “luminaries” like Jonathan Zittrain and Frank Pasquale demanding neutrality regulation for devices, application platforms like iTunes and Facebook, and search!
TLF Reader Jim Reardon made a particularly astute observation on my post asking whether Americans really want net neutrality regulation:
Regulation of any service, product or industry is preceded by definition. Once defined, it is subject to taxation.
[Net Neutrality regulation] is a prelude to taxation of Internet products and services. It will likely start with telephony services and proceed accordingly to financial services, and continue from there.
As such, the activity is essentially neutral insofar as technology innovation is concerned — so long as applicable taxes are paid the government will ensure that the service is not disfavored by the network operators.
Absolutely right! One of the greatest barriers to government regulation and taxation of the Internet today is the lack of clear definitions: The FCC rules will tell you precisely what “cable television” or “commercial radio” mean, but the concepts of “social networking,” “Internet video,” “blogging,” and even “search” are indeterminate and constantly evolving.
Ronald Reagan once quipped:
Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
Fortunately, government’s
ability to implement this view depends—to paraphrase President Clinton—”on what the meaning of the word ‘is’ ‘it’ is”: Allowing “it” to remain beautifully amorphous may be the best way to keep government at bay.
by Adam Thierer & Berin Szoka — (Ver. 1.0 — Summer 2009)
We are attempting to articulate the core principles of cyber-libertarianism to provide the public and policymakers with a better understanding of this alternative vision for ordering the affairs of cyberspace. We invite comments and suggestions regarding how we should refine and build-out this outline. We hope this outline serves as the foundation of a book we eventually want to pen defending what we regard as “Real Internet Freedom.” [Note: Here’s a printer-friendly version, which we also have embedded down below as a Scribd document.]
I. What is Cyber-Libertarianism?
Cyber-libertarianism refers to the belief that individuals—acting in whatever capacity they choose (as citizens, consumers, companies, or collectives)—should be at liberty to pursue their own tastes and interests online.
Generally speaking, the cyber-libertarian’s motto is “Live & Let Live” and “Hands Off the Internet!” The cyber-libertarian aims to minimize the scope of state coercion in solving social and economic problems and looks instead to voluntary solutions and mutual consent-based arrangements.
Cyber-libertarians believe true “Internet freedom” is freedom
from state action; not freedom for the State to reorder our affairs to supposedly make certain people or groups better off or to improve some amorphous “public interest”—an all-to convenient facade behind which unaccountable elites can impose their will on the rest of us.
Continue reading →
Watch out for a bill that will be heard in committee today in the North Carolina General Assembly that could be the first example (that I know) of a tax that on its face discriminates against the Internet. Senate Bill 99 singles-out the Internet ticket resale market for a “privilege tax”, and because it only applies to Internet sales, it violates the federal moratorium on “multiple or discriminatory taxes on electronic commerce.”
The Internet Tax Freedom Act Amendment Acts of 2007 (Public Law No: 110-108) provides a moratorium through November 1, 2014 that bars federal, state and local governments from imposing discriminatory Internet-only taxes such as bit taxes, bandwidth taxes, and email taxes.
It also prohibits the sort of
prima facie discrimination exhibited by SB 99—“Reselling or offering to resell admission tickets on the Internet…”). Because this tax applies to revenues received from Internet transactions but not to offline sales, it clearly violates the Internet Tax Freedom Act.
Here’s where it gets even more interesting — this tax could even be an example of a “multiple” tax. SB 99 imposes a privilege tax on Internet ticket sales that amounts to double taxation. Income earned ticket reselling is already taxed. Companies and individuals that earn revenue from reselling tickets already pay income tax. Moreover, the same ticket could be resold numerous times, resulting in multiple taxation of the same increment over face value.
There are other problems with SB 99 that we lay out in our NetChoice letter, but federal law seems to be clearly against the bill.
ICANN has just released a second draft of its Applicant Guidebook, which would guide the creation of new generic topmore generic top-level domains (gTLDs) such as .BLOG, .NYC or .BMW. As ICANN itself declared (PDF), “New gTLDs will bring about the biggest change in the Internet since its inception nearly 40 years ago.” PFF Adjunct Fellow Michael Palage and former ICANN Board member addressed the key problems with ICANN’s original proposal in his paper ICANN’s “Go/ No-Go” Decision Concerning New gTLDs (PDF & embedded below), released earlier this week.
ICANN deserves credit for its detailed analysis of the many comments on the original draft which Mike summarized back in December. ICANN also deserved credit for addressing two strong concerns of the global Internet community in response to the first draft:
- ICANN has removed its proposed 5% global domain name tax on all registry services, something Mike explains in greater detail in his “Go/No-Go” paper.
- ICANN has commissioned a badly-needed economic study on the dynamics of the domain name system “in broad.” But such a study must address how the fees ICANN collects from specific user communities relate to the actual costs of the services ICANN provides. The study should also consider why gTLDs should continue to provide such a disproportionate percentage of ICANN’s funding—currently 90%—given increasing competition between gTLDs and ccTLDs (e.g., the increasing use of .CN in China instead of .COM).
These concerns are part of a broader debate: Will ICANN abide by its mandate to justify its fees based on recovering the costs of services associated with those fees, or will ICANN be free to continue “leveraging its monopoly over an essential facility of the Internet (
i.e., recommending additions to the Internet’s Root A Server) to charge whatever fees it wants?” If, as Mike has discussed, ICANN walks away from its existing contractual relationship with the Department of Commerce and claims “fee simple absolute” ownership of the domain name system, who will enforce such a cost-recovery mandate?
But ICANN simply “kicked the can down the road on the biggest concern”: how to minimize abusive domain name registrations (
e.g., cybersquatting, typosquatting, phishing, etc.) and reduce their impact on consumers. Continue reading →
I have an editorial appearing on CNet News today about “New Mexico’s video game nanny tax.” Quick background: The New Mexico legislature has introduced a new tax measure that would force consumers to pay a 1 percent excise tax on purchases of video games, gaming consoles, and TVs. The revenue generated from the game and TV tax would be used to fund a new state educational effort aimed at getting kids out of the house more. True to the aim of the measure, they have even given the bill the creative title, “The Leave No Child Inside Act.” In my editorial, I argue that:
legislators shouldn’t be using the tax code to play the role of nanny for our kids. It is the responsibility and right of parents to determine how their kids are raised. Many of us would agree that more outdoor time is a laudable goal. But should the government be using the tax code to accomplish that objective?
I point out that the proposal raises serious fairness questions that makes a constitutional challenge likely since older court cases dealing with other media have also made it clear that public-policy makers are forbidden from using the power to tax in an effort to discriminate against speech or expression that they disfavor. Moreover, on the fairness point:
Why just blame video games for kids not getting enough time outdoors? How about a tax on social-networking Web sites or instant messaging? Many kids are spending almost as much time online right now as they do playing video games. And what about other types of non-digital games that might keep kids indoors? My daughter spends a lot of time playing Sudoku puzzles, for example. Perhaps we should tax Sudoku books, chess boards, and even arts and crafts! After all, the goal here is to do whatever it takes to get kids outside, right? Or is it really just to get kids to stop playing video games?
Read the entire piece here if you are interested.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.