Taxes
Sen. Allen Tries To Address 'Confusion' Over Net Taxes
by Teri Rucker
Sen. George Allen on Monday passionately defended his legislation that would permanently ban taxes on Internet access taxes, saying that he wanted to set the record straight amid all the "confusion, misunderstandings and in some case flat-out wrong statements" over the bill. The Senate is expected to vote on the bill this week.
"I understand that proponents of higher taxes ... have raised concerns" that the definition of "Internet access" in the bill, S. 150, would preclude taxes on property and income of companies that offer Internet access and preclude other taxes currently collected, the Virginia Republican said on the floor. "I want all members of this body to understand ... it does not affect traditional voice or any other communications service that is not directly used to provide Internet access."
The definition has been the sticking point to Senate passage of the legislation. The House bill, H.R. 49, similarly amended the definition with a goal of ensuring that all Internet services are exempt from taxation, whether offered over high-speed wires or by satellite, wireless or dial-up connections.
As state and local groups read it, however, the bill would preclude taxes on much more than Internet access, and they have raised those concerns in Congress. The groups believe that bill drafters did not intend to preclude taxation on anything but Internet access but that their definition would lead to unintended consequences.
Allen also took aim at the complaint of Sen. Lamar Alexander, R-Tenn., about the call for eliminating the exemption that lets several states tax Internet access. Alexander has argued that such a move is tantamount to an "unfunded mandate" on those states and therefore illegal.
When Congress first created the moratorium on taxing Internet access, it exempted from the ban states that already had imposed such taxes. The Senate bill would give those states three years until they no longer could tax access, Allen noted, adding that several states that were originally allowed to tax Internet access since have eliminated "this regressive tax."
Allen warned that any senator who votes against the bill "will be permitting and advocating taxing the Internet." Instead, lawmakers should embrace a policy that would "close the economic digital divide rather than exacerbate it by imposing taxes."
Officials with those senators who have raised concerns about the legislation declined to comment for this story, saying that they prefer to continue their negotiations on the bill.
Budget
Broadband Backers Push To Restore Money For Loans
by Teri Rucker
The bill to fund the Agriculture Department in fiscal 2004 is in line for consideration by the Senate, and that has sparked lobbying to encourage lawmakers to restore funding for a rural loan program for high-speed Internet services eliminated by House and Senate appropriators.
Those people advocating restoration of the funds are optimistic that as they get the word out, lawmakers will respond. Thus far, Sens. Byron Dorgan, D-N.D., and Conrad Burns, R-Mont., have agreed to offer an amendment to restore funding when the bill, S. 1427, is considered.
Both House and Senate bills would turn a $20 million mandatory broadband fund into a discretionary fund and zero out money to administer the loans, eliminating the funds to process the loans and to pay the salaries of those who oversee the program.
"In the mad rush to try to get an appropriations package together, we can see this slipping through the cracks," said Christopher McLean, principal at the e-Copernicus consulting firm, so he has been working to educate lawmakers and win support for the funding.
About $1 billion in loan applications have been filed with the Rural Utilities Service, proving that there is demand for broadband in rural areas and a need for the program, McLean said. The bottom line is that "if we want to have more productivity and more employment," he added, rural America needs these loans. "Hopefully Congress will fix it."
Dorgan and Burns are mulling an amendment that would simply strike the clause that would eliminate money to administer the fund. Ideally, Congress would make the loan dollars mandatory, but McLean said he would settle for anything that gets the money to providers.
The Telecommunications Industry Association (TIA) is sending a letter to Capitol Hill on Monday encouraging lawmakers to support funding for the Rural Utilities Service's broadband loan program. "This broadband loan program is the ONLY federal incentive for rural broadband deployment," the letter says. "At a cost of a few million dollars to the federal treasury, this program creates a loan pool of billions of dollars in private money for the purpose of bringing broadband infrastructure to communities of 20,000 or fewer."
Jon Beamer, the government relations manager at TIA, noted his group aims to ensure that the program is funded in 2004, stressing that it is the only program that helps rural America gain access to technology.
"We certainly understand the budget concerns," said Steve Pastorkovich, a senior policy analyst at the Organization for the Promotion and Advancement of Small Telecommunications Companies. But there has never been a default in the history of a Rural Utilities Service loan program, "so it has not been a money loser for taxpayers," he said.
In fact, the program could provide an economic boost to rural communities, Pastorkovich said, because "that kind of investment can increase economic activity, which, of course, increases tax revenue so it can be seen as a net plus for taxpayers over time."
Intellectual Property
Content Industries' Aims In Trade Talks Trouble Techies
by William New
Language to protect U.S. copyrights can make or break the content industries' decisions about supporting trade agreements under negotiation by the Bush administration, but some provisions that those industries seek are troubling others in the technology industry.
Because there is little on the stalled negotiating agenda at the World Trade Organization, content industries are focusing on bilateral and regional negotiations. U.S. negotiators are using the WTO Agreement on Trade-Related Aspects of Intellectual Property (TRIPs) as the starting point for bilateral and regional talks.
The core language on intellectual property in the U.S.-Singapore trade pact signed this year is seen as a "pretty good model," a content industry source said. That agreement extended copyright terms to 70 years and contains language on anti-piracy technologies and strong enforcement provisions. The recently completed U.S.-Chile agreement is similar.
The United States generally wants countries to adopt two World Intellectual Property Organization (WIPO) treaties, one on copyrights and one on performances, which contain new protections. The focus now is on negotiations with Australia, the Central American Free Trade Area (CAFTA) and Morocco. Negotiators for the Free Trade Area of the Americas have not agreed on the intellectual property or services chapters yet.
Only the CAFTA countries have adopted the WIPO treaties, though the issue of intellectual property remains unresolved in the CAFTA. Industry is not anticipating problems with CAFTA or Morocco, the source said.
The biggest concern is about the Australia negotiation, the industry source said. Despite being the commercially largest market by far of those under negotiation -- and the United States' eighth largest market worldwide -- Australia still has the furthest to go.
In addition to seeking extended copyright terms, U.S. industry wants anti-piracy language that reflects the language of the U.S. Digital Millennium Copyright Act. Many U.S. trading partners have not yet implemented such protections.
Australia has some provisions to combat piracy. Current Australian law protects against devices whose primary purpose is to bypass anti-piracy technologies, for instance, but it does not outlaw those devices. For U.S. industry, getting both is a "critical issue," the source said.
The content industry also seeks to avoid exemption of the cultural sector from trade agreements, which some countries, such as Australia, have sought.
Another key issue is getting "adequate and effective" enforcement of intellectual property rights. The agreements with Singapore and Chile contain concrete enforcement provisions, including imprisonment and monetary fines high enough to try to deter infringement. CAFTA and Morocco appear to be following that track, but it is not clear with Australia, sources said.
The content and technology industries also want non-discriminatory treatment for digital products and customs valuation of optical discs based on the value of the medium, not the content. Copyright holders have riled the makers of tech products by calling for levies on digital goods to compensate performing artists for unauthorized reproductions of their products.
Among the trade negotiations announced by the administration, Thailand appears to be the most important to the content industry because of its commercial value and growing piracy problem.
Intellectual Property
FCC's 'Broadcast Flag' Deadline Passes As Lobbying Continues
by Drew Clark
The FCC on Friday failed to meet its deadline for ratifying the "broadcast flag" sought by Hollywood, as movie studios and technology companies argued about how quickly manufacturers of digital television sets would have to adopt the anti-piracy technology.
Electronics companies are pushing for at least 18 months to implement the technology, or a deadline of July 2005, while Hollywood studios want the mandate to begin by July 2004.
In a Friday filing at the FCC, officials from the Motion Picture Association of America (MPAA), Viacom and News Corp. said that July 2004 makes sense because that is the date that "cable ready" digital TVs must comply with copy-protection rules approved by the FCC. They urged the FCC to link the mandate on the broadcast flag with "plug and play" rules that are designed to let consumers use digital TVs with any digital cable system.
The FCC approved the rules in September after a long negotiation between electronics companies and cable operators.
Electronics companies, meanwhile, are adamant that any deadline for the broadcast flag earlier than July 2005 would jeopardize their protection schedules, and for Sony Electronics -- the sister company to the Sony Pictures studio -- that concern was paramount.
Both the flag proposal and the plug-and-play rules would require electronics companies to use anti-copying technology approved by Hollywood.
A groups of five electronics companies dubbed "5C" makes the main technologies already approved by the studios: Hitachi, Intel, Matsushita, Sony Electronics and Toshiba. In its plug-and-play order in October, the FCC said that it will oversee complaints if studios and cable providers reject the newer technologies.
"What's good enough for plug and play will be good enough for the broadcast flag in the 2004 manufacturing season, and manufacturers will need only to direct content marked with the flag to the very same outputs and recorders" that electronics firms accepted in negotiations with cable providers, according to "talking points" filed by MPAA Executive Vice President Fritz Attaway.
MPAA CEO Jack Valenti also underscored that point in a letter to FCC Chairman Michael Powell. "The commission's plug-and-play order has already given one content protection technology, 5C, a first-mover advantage in the marketplace," Valenti wrote. "All plug-and-play compliant devices will contain 5C protected digital outputs." Extending the requirement to the broadcast flag will not increase anti-competitive effects, he said.
Sony Electronics, itself a member of 5C, said it should not face a July 2004 deadline. "It is impossible for Sony Electronics to assure the commission that any products could be released by July 2004 to satisfy both the plug-and-play and broadcast-flag requirements," said Joel Wiginton, vice president of government affairs for Sony Electronics.
But Wiginton's filing also noted that the studio did not want to delay past July 2004, although "Sony Pictures acknowledges that it does not have specific expertise in electronic product development and defers to the expertise of Sony Electronics."
Taxes
Rep. Thomas Must Persuade GOP To Back Tax Plan
by Martin Vaughan, CongressDaily
House Ways and Means Committee Chairman Bill Thomas and his allies have their work cut out for them in selling a $140 billion tax-cut package, as an initial vote check last week found about 50 undecided Republican members and more than 20 Republicans who said they may vote against Thomas' bill, according to private-sector and Capitol Hill sources.
Despite the large number of members on the fence and those in opposition, backers of the bill in Congress and in the business community are not ready to stop fighting for House approval this year. "There have been worse whip checks in my lifetime where they were still able to get the bill across the finish line," said Ralph Hellmann, senior vice president for the Information Technology Industry Council and a former top GOP leadership aide.
Other lobbyists stressed that they expect the numbers to decline as the business community and Ways and Means members educate GOP members about the measure.
House Speaker Dennis Hastert, R-Ill., has said he supports the effort by Thomas, R-Calif. The legislation is designed to bring the United States into compliance with world trade rules by repealing a tax break for exporters. But Hastert has been less than emphatic in endorsing the substance of Thomas' bill, and some Hill aides speculated that it would take a stronger push from Hastert to coax members into supporting the legislation.
Hastert met with Small Business Committee Chairman Donald Manzullo, R-Ill., last Thursday to discuss Manzullo's objections to the bill, according to knowledgeable sources. Manzullo has been leading a group of Republicans from manufacturing states in opposition to the Thomas bill.
Thomas met Monday with European Union Trade Commissioner Pascal Lamy; they discussed prospects for passage of the bill this year, among other trade topics. Lamy declined to comment after the meeting, saying he would address reporters in a news conference Tuesday.
Crime
Online Child Predators Are Public Enemy No. 1 In Texas
by Maureen Sirhal, for Technology Daily, and Chloe Albanesius
AUSTIN, Texas -- The Lone Star State is no place these days for loners who want to use the Internet to prey on children because Texas' attorney general has a cyber unit that is proactively targeting such criminals.
"Our agenda is to protect the most vulnerable in our society, [and] at the top of that list is doing all we can to protect children," Attorney General Greg Abbott said in a recent interview here. "One of the ways that we have found we can protect children ... is over the Internet."
To that end, Abbott said his office in May created the cyber-crime unit "in part to work on my commitment to protecting the children, in part to making the Internet a safer, more secure place for all users."
"We [have] our investigator log onto chat rooms that would most likely be [dominated] by teens and ... pose as a 13-year-old girl," Abbott said, adding that children have been propositioned "within minutes."
The predators usually attempt to schedule meetings with the "children," but law enforcement officials meet them instead. As of Oct. 23, the unit had obtained 15 indictments for attempted aggravated assault of a child, and it is currently working on another case.
While the unit has been successful in apprehending the individuals, Abbott said he is "alarmed" at the rate of capture. "I think it shows that this crime is much more rampant in our society than anybody knows or appreciates, and it demands much more attention from law enforcement agencies around the country, both federal [and] state and local," he said.
Allocating resources for special projects often is tough in tight budget times. Abbott, however, sees the work of the cyber unit as a "top priority for this administration" because "we are actually protecting a child from being sexually abused, which is worth every penny we devote to it."
To make that point clear to local officials, he said, "we bring in law enforcement officers from around the state ... and train them on what we're doing so they can take that technology expertise back to their local communities."
"But that's also the type of commitment we need from the federal government ... because this is a problem that can only be effectively addressed when it has the sufficient manpower," he said.
Abbott said federal legislation is not necessary unless it makes sexual abuse of a child "a tougher federal crime" and provides more grant money to "hire more people and implement better technology that will allow us to get more of these perverts off the street."
Federal intervention also would be helpful for jurisdictional purposes, he said. "Every case that we've dealt with so far has been a situation where the criminal is located in the state of Texas pursuing a child in the state of Texas, [which] makes our jurisdiction easy to deal with," Abbott said. The Internet, however, makes it easier for predators to target children across state lines.
Education
Laptops Proposal In Minnesota Sparks Taxpayer Outcry
by Marc Hequet for Technology Daily
ST. PAUL, Minn. -- The proposal by a local school board near here to give laptop computers to junior-high students has snapped taxpayers to attention and sparked a flurry of unrest.
Kids are not miniature employees who need computers all day, argued computer consultant Chris Kunze, who was incensed enough by the decision on laptops in Stillwater, Minn., to enter the board race as a write-in candidate. "What I do is different than what students do," the former teacher said. "They're there to learn the basics."
But school board Vice Chairman John Uppgren countered that people who oppose giving children the option of seeking information online must think "we gained an incredible amount of knowledge walking to the library, decoding the Dewey Decimal System and going to the shelf to find a book that isn't there."
Uppgren, the owner of a Stillwater marketing firm, thinks most who oppose laptops for junior-high student also opposed last year's special levy for technology projects. "They were mad when the community, not just the board, supported a special fund for technology," he said, "and now they're mad because we're spending it."
The laptop money comes from a $1.7 million levy for school technology that voters passed in a light 2002 turnout, and last month the board agreed to spend some of that money on laptops from Apple Computer. About 950 kids at Oak-Land Junior High in Lake Elmo, Minn., are set to get iBooks on March 1 and return them at the end of the school year. School staff will reprogram the laptops to prevent downloading of pornography at home.
But foes have other fears -- like kids leaning on laptops for educational help instead of learning math, spelling and grammar. "I know that my writing skills and my spelling skills have gone downhill because I can count on the computer to correct my mistakes," Kunze said.
"How is phys ed going to incorporate this?" asked occupational therapist Nancy Hoffman, a second write-in candidate. "Put personal fitness plans on the computer?" Hoffman said learning online will "take away from a child's ability to be in group discussions" and limit in-person contact with teachers.
Critics also doubt that students can keep track of the $825 laptops, but advocates of the program claim that loss and breakage in other school-laptop programs is just 2 percent.
Steve Kelley, chairman of the state Senate Education Committee, called the initiative "promising" because it could improve productivity. Proponents also predict more one-on-one student-teacher interaction, improved performance, better attendance and fewer discipline problems. And the district will save on textbooks. An $80 text that lasts 10 years costs $8 per year. For $4 per year, kids can access online books.
Board member Mary Cecconi, a former high-school teacher, said the cost of the program ultimately will be about $7.50 per household, per year, and she dismissed the criticism as coming from people who think "schools should look and smell like they looked and smelled when we went to school."
Today's Feature:
Issue of the Week
Senior Writer Drew Clark reports on efforts by the federal government and tech industry to improve the patent system.
Every Monday, read the Issue of the Week by Technology Daily staff
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E-briefs
Civil Liberties: The 2001 anti-terrorism measure known as the USA PATRIOT Act is prompting a decline in membership and donations at mosques, the American Civil Liberties Union (ACLU) contends in a legal brief filed Monday in Detroit. "Sadly, our government has an ugly history of using its investigative powers to squelch dissent," ACLU Associate Legal Director Ann Beeson said. "We saw it during the Japanese internments of World War II, the Red Scare of the 1950s and the civil rights movement of the 1960s, and now we see it in the ... investigations and detention of Arabs and Muslims" since the Sept. 11, 2001, terrorist attacks. The Muslim Community Association of Ann Arbor, Mich., the lead plaintiff in the ACLU lawsuit, said in an affidavit that "attendance at prayer services, educational forums and social events has substantially dropped," as have donations and comments on political matters.
Antitrust: The Center for Internet and Society (CIS) at Stanford University's law school has released a new book criticizing rules that permit increased media consolidation. Mark Cooper, research director of the Consumer Federation of America, authored the book, "Media Ownership and Democracy in the Digital Information Age." It assembles public-interest arguments against the FCC's June decision to ease regulations limiting media companies' ability to own network affiliates and newspapers. Cooper said he is happy that CIS published the book because it supports democratic values in both technology and the law. The book combines a structural analysis of commercial media markets with qualitative analysis of market performance in an attempt to "demonstrate the misguided nature of the decision to essentially eliminate the limits on ownership," Cooper writes. "Previous decisions to relax rules led directly to concentration, consolidation and conglomeration, which had harmful effects on the quality of journalism and democratic discourse."
Security: The National Institute of Standards and Technology (NIST) has issued an initial draft of recommended security controls for federal information systems and is seeking public comments for the next three months. The controls outlined in the document will be published in the fall of 2005 and will be mandatory for all systems at civilian federal agencies, except those designated for national security. NIST is advising private-sector organizations that operate components of critical infrastructure to review the draft. The guidelines, once modified from agency and public comments, will be the basis for NIST's Federal Information Processing Standard. A 2002 information security law requires NIST to develop that standard.
Campaigns: Florida Democrat Bob Graham announced on Monday that he will not seek re-election to the Senate next year, ending his 37-year career in public office. "I do not say this because I feel all of my goals have been accomplished," Graham said in Tallahassee, Fla. "Without question, this has been a difficult decision, but it has been made measurably less so by the confidence I have in the judgment of Floridians to select a new senator to serve them, and all Americans, from among the outstanding Democratic candidates." Graham said he will continue to emphasize education and security issues in retirement. Possible Democratic candidates for the seat include Reps. Peter Deutsch and Alcee Hastings. But Republicans see an opportunity to claim another seat. "This is another big loss for the Democrats," the National Republican Senatorial Committee said in a statement. "They're now forced to defend four seats in the South."
Telecom: The FCC on Monday said it would fine AT&T $780,000 for violating the federal "do not call" rules against telemarketing. The FCC has been fielding complaints against violations of the law, finding that AT&T made telephone solicitations to 29 consumers on 78 separate occasions after they requested that AT&T not call them again. The agency proposed a $10,000 fine for each of the 78 violations. "Today's enforcement action demonstrates our resolve in the fight to protect consumers from unwanted and intrusive telephone calls," FCC Chairman Michael Powell said. "This puts telemarketers on notice that we will take all measures necessary to protect consumers who chose to be left alone in their homes," he said. It was the first major enforcement action since the rules took effect in October, though AT&T emphasized that the fines are not related specifically to that law but to pre-existing complaints.
Campaigns: Boston 2004 Inc., the host committee for the 2004 Democratic National Convention, and Boston Mayor Thomas Menino announced on Monday that they have received a $2 million in-kind donation of computer hardware, including desktop and laptop computers, printers and servers. Under the terms of the gift from IBM, Boston 2004 will donate the hardware to Boston's public schools and nonprofit organizations after the convention. IBM's Center for eBusiness Innovation also redesigned Boston 2004's Web site; the redesign was unveiled on Monday. The new site includes a database for vendors interested in serving the convention, and interested parties may search for small, local, minority-, women- and disabled-owned businesses.
Culture: Married Internet users are more likely to shop online than their single counterparts, according to a new study from Neilsen//NetRatings. Fifty-two percent of married users made an online purchase during fall 2003, compared with 47 percent of singles. The top purchases for married surfers were prescriptions, home-improvement products and educational computer software. Singles gravitated toward student loans, credit cards and videogame equipment. In terms of Web destinations, singles headed for matchmaking sites such as match.com and date.com, while married users favored family-oriented sites such as FamilyFun, BabyCenter and American baby.
Culture: Recording Industry Association of America CEO Mitch Bainwol said last week that recording companies will revise their parent advisory by encouraging legitimate online distributors to include content filters, advisory labels and edited versions of songs that have objectionable lyrics. Speaking at an FTC workshop on "Marketing Violence to Children," Bainwol said the widespread availability of free music on peer-to-peer computer services blows a hole in the existing parental advisory system. Thus far, only the new Napster 2.0 by Roxio and America Online's MusicNet have begun deploying parental filters, but Bainwol said he "spoke with Steve Jobs of [Apple's] iTunes and they are moving" in that direction. Apple, Dell, RealNetworks and Full Audio all also offer parental advisories and edited versions of songs on their services -- something, Bainwol said, that is lacking on P2P sites like Kazaa, eDonkey and iMesh.
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