Technology Policy Update | Citizens Against Government Waste

Technology Policy Update

The WasteWatcher

CAGW files comments with FCC on NCTA petition:

On August 16, 2011, CAGW recently filed comments with the Federal Communications Commission (FCC) on a petition from the National Cable and Telecommunications Association (NCTA) seeking clarification on the commission’s interpretation of Section 652 of the Telecommunications Act of 1996. This section imposes cross-ownership restrictions on cable operators and incumbent local exchange carriers (ILECs) in order to prevent the two then-dominant service providers in each local area from merging and thereby controlling the only two wires to a customer’s premises.

The purpose of the petition by NCTA was to obtain clarification on the imposition of the cross-ownership restrictions to transactions between cable operators and competitive local exchange carriers (CLECs), which unlike ILECs do not have control over telephone lines to a customer’s premises. There is no basis to conclude that Congress ever intended to restrict transactions between cable operators and CLECs.

In comments to the FCC, CAGW supported the NCTA petition, stating that:


“…when government dictates which companies can merge together, consumers are harmed by fewer choices and higher prices. The free market is a far better creator of competition than government, and therefore in this case it will benefit consumers if government simply steps out of the way of cable-CLEC transactions.”

Looking Ahead in Technology and Telecommunications:

Broadband Spectrum:

As the federal government and the Joint Select Committee on Deficit Reduction look for ways to reduce spending, and enhance revenues, one area that should receive close scrutiny this fall is the allocation of broadband spectrum and voluntary spectrum auctions. The SPECTRUM Act (S. 911) was introduced earlier this year by Sens. John D. Rockefeller (D-W.Va.) and Kay Bailey Hutchison (R-Texas). This bill would permit re-auctioning of underutilized broadband spectrum in order to fund a first-responder broadband network to enhance emergency services capabilities. The Congressional Budget Office (CBO) has estimated that this legislation would reduce spending by $6.5 billion from 2012 to 2021.

Cloud Computing:

A key component of the Obama administration’s Transforming Federal Information Technology Management Initiative, cloud computing is a method of using a computer or other device to store and access multiple services, such as email and calendar functions, through the Internet or other network connections. Cloud computing offerings can be priced to meet the needs of any customer, and therefore will offer cost savings to taxpayers as the federal government moves toward more cloud computing initiatives. However, a recent article detailed the skepticism among the federal government’s IT workforce in moving toward additional cloud computing initiatives due to security concerns.

Protecting mission critical systems as well as the privacy of personal identifying information maintained by federal agencies must be a high priority for federal agency chief information officers. This also applies to state and local governments. Issues encountered by the city of Los Angeles relating to the deployment of e-mail systems demonstrate complex planning and procurement issues related to cloud computing. Procurement officers must understand their agency’s working needs and mission requirements before contracting with cloud computing vendors in order to ensure that those requirements are adequately met.

Because the potential cost savings and gains in IT flexibility are significant, the proper approach in contracting for cloud services is for procurement officers to become much better educated about the true strengths and weaknesses of the current generation of cloud solutions. They must become more demanding and choosier customers who really understand what the vendors are offering and how the systems fit into their mission critical applications. If these concepts are followed, taxpayers can save billions of dollars and agency IT systems can become more efficient and effective.

Internet Taxes:

In response to concerns by state legislatures and corporations over the lack of tax revenue from Internet sales, Sen. Dick Durbin (D-Ill.) and Rep. John Conyers (D-Mich.) introduced the “Main Street Fairness Act” on July 29, 2011. This legislation promotes a streamlined sales tax to permit states to require businesses to collect sales tax on transactions with out-of-state customers. The Main Street Fairness Act is not really fair, since it imposes burdensome tax collection costs and procedures on small business. These costs will be passed on to consumers through higher retail prices for goods and services, and will make it difficult for small job-creating companies to succeed in today’s marketplace. To learn more, check out our blog post.

Network Neutrality:

On August 22, 2011, Federal Communications Commission (FCC) Chairman Julius Genachowski announced the proposed elimination of 83 outdated rules. Included in the proposed rules for elimination is the “Fairness Doctrine,” which required broadcasters to provide equal access for differing viewpoints and opinions, as well as other rules that no longer have any legal effect or are now obsolete. According to Chairman Genachowski, the Fairness Doctrine is not currently enforced by the FCC and has not been applied for more than 20 years. CAGW and other taxpayer free market groups welcome this long-overdue decision to regarding the Fairness Doctrine.

However, despite some progress being made to eliminate outdated regulations, the FCC continues to push ahead with new unnecessary regulations on the Internet through so-called network neutrality rules, which are anything but neutral or fair. The Internet has been allowed to thrive and grow without regulatory burdens, enabling providers to move technology from a cumbersome, antiquated infrastructure with limited access to the nimble mobile technologies enjoyed by tens of millions of Americans today.

Currently awaiting final approval from the Office of Management and Budget (OMB), the new rules will inhibit innovative growth by placing undue regulatory burdens on Internet Service Providers. CAGW opposes the network neutrality rules, and firmly believes that these rules should not be approved by OMB or implemented by the FCC. Should these regulations be implemented, consumers will suffer through reduced customer service and diminished modernization of the IT marketplace.

The House of Representatives has already taken action to disapprove the new network neutrality rules by passing H. J. Res. 37 on April 8, 2011. The Senate has yet to act on this or similar legislation.

Universal Service Fund Reform:

The federal Universal Service fee is a hidden tax that subscribers to telephone services find in their monthly bill. This fee collects approximately $7.7 billion annually for the Universal Service Fund (USF), which contributes to infrastructure for communications services links for low-income residents in areas that are considered underserved. The FCC is currently examining how to retool the USF to meet twenty-first century communications needs. The FCC’s efforts rest on four pillars: modernizing USF programs to support broadband networks; ensuring fiscal responsibility; demanding accountability; and enacting market-driven and incentive-based policies.

On July 29, 2011, a group of telecommunications providers, which included AT&T, CenturyLink, FairPoint, Frontier, Verizon and Windstream submitted a plan to the FCC for USF reform called the “American Broadband Connectivity” plan, or ABC plan. This plan seeks to provide a framework for reforming the USF in order to provide efficient deployment, operation and enhancement of broadband services in high-cost areas. On August 23, 2011, the American Cable Association and the National Cable & Telecommunications Association (NCTA) weighed in with their comments and concerns regarding the ABC plan, and have each filed comments detailing their own recommendations to reform the high-cost program and intercarrier compensation.

Although 96.2 percent of Americans have the ability to access phone service, companies that provide “high-cost” wire-line service receive more than $4 billion annually from the USF. This subsidy exists despite the fact that wireless service would be more efficient and less costly. In the most remote regions of the country, satellite phones can provide cheaper coverage than landlines to anyone with a clear view of the sky. The E-Rate program, which was designed to equip the nation’s classrooms with the Internet, receives $2 billion annually through the USF. However, the private sector is more than capable of this function, especially through wireless Internet service. The FCC’s decision to evaluate proposals for reform has opened the door for debate on how to best meet broadband connectivity needs for all Americans. CAGW suggests that the hidden and outdated USF tax should be eliminated as part of that plan.

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