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Taxes
Republicans Heighten Push For Internet Tax Ban
by David Hatch
Senate Republicans are ramping up efforts to enact legislation that would extend a federal ban on local and state taxation of Internet access.
On Tuesday evening, Sen. John Sununu, R-N.H., introduced legislation backed by Senate Minority Leader Mitch McConnell, R-Ky., that would make permanent the moratorium that is set to expire Nov. 1. McConnell plans to help Sununu bypass committee action and move the bill directly to the floor for consideration, a Capitol Hill source said.
McConnell released a Web video that details his views. "Letting the moratorium expire is nothing more than a backdoor tax increase," he said. "Democrats in Congress are hoping you won't notice when your bill goes up. But I'm here to stop them. We need to permanently ban taxing Internet access now, before it's too late."
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VIDEO: McConnell on Internet tax ban
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Last week, the Senate Commerce Committee scrapped plans to vote on a bill that would temporarily extend the prohibition amid debate over how long it should last.
Three bills to continue the ban, with one making it permanent, are pending in the House.
At a Wednesday hearing before the House Small Business Committee, Chairwoman Nydia Velazquez, D-N.Y., warned that consumers could face increases of 15 percent to 30 percent on their Internet bills if the ban expires.
"The moratorium was created as an economic policy to allow small businesses to compete," she said during opening remarks at the hearing, during which all five witnesses expressed strong support for lengthening the ban. "The prohibition has made the Internet a gateway for entrepreneurship regardless of race, income or neighborhood."
Panel ranking Republican Steve Chabot of Ohio, who also predicted dire consequences if the ban expires, noted that online retail sales reached $100 billion in 2006.
Many technology companies, including wireless carriers, handset manufacturers and online retailers, are lobbying for a permanent continuation.
Brian Bieron, the senior director of government relations at the Web-based auctioneer eBay, said that fewer small businesses and customers would use the Internet if the ban expires. "That means fewer sales and less opportunity to compete with the mega-retailers," he told the panel.
David McClure, president of the U.S. Internet Industry Association, said that without congressional intervention, the group's members would be subject to "crippling" and "retroactive" taxes, resulting in an "immediate loss of customers."
"Letting it expire now would be a new tax on our business and one we could not afford," testified Brett Dewey, the CEO of WickedCoolStuff.com, a small online retailer.
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Politics
Internet Is A Cost-Efficient Way To Get Small Donors
by Heather Greenfield
As presidential candidates release their third-quarter fundraising figures, one winner may be emerging -- the small donor.
Candidates discovered the Internet as a powerful fundraising tool in 2004, but this cycle they are fine-tuning the message to find new ways to reach donors, motivate them and easily collect small donations in ways that used to be too time-consuming or costly.
Michael Malbin, executive director of the Campaign Finance Institute at George Washington University, said direct-mail donations cost about $5 to solicit and process, but Internet donations are virtually free once an e-mail list is established.
The presidential campaigns have been doing all they can to build their e-mail lists. Republican Mitt Romney collected addresses from people participating in his contest to create a campaign advertisement, while his Republican rival, Rudy Giuliani, collected e-mail from those outraged over an ad by the online activist group MoveOn.org.
Leading Republicans have not released quarterly fundraising numbers.
Leading Democrats also have yet to report breakdowns for how much money was collected from small donors this cycle. Some Democratic contenders, however, are reporting the number of overall donors, which is both a sign of strength and likely a sign of small donors who can be tapped again for contributions.
For the third quarter, which ended Sunday, Barack Obama reported that he has received contributions from an additional 93,000 people. He announced raising $19 million for the primary and $20 million overall.
Hillary Clinton reported contributions from 100,000 donors, $22 million for the primary and $27 million overall -- the highest of any candidate. In an e-mail to supporters, Clinton campaign manager Patti Solis Doyle called it "is our best quarter yet."
Peter Daou, an online strategist for Clinton, said she raised $8 million this quarter online. "It was a good quarter. Online buzz is continuing to grow," Daou said.
Obama, who finished second overall in second-quarter fundraising, is celebrating an unprecedented 352,000 individual contributors so far this year. "The more we engage people, the more they respond," said Jen Psaki, a spokeswoman for Obama. "There are people coming out of the woodwork who have never participated in a campaign."
Democrat John Edwards reported raising $7 million, most of it for the primary. He reached a goal of raising $1 million of it online. The campaign also offered reporters a further breakdown, saying this quarter's total brings the year's total to $30 million from 150,000 individual donors. Edwards Campaign Manager Jonathan Prince said 97 percent of the money came from small donors who have given less than $250.
"Small donors are good for more than money," Malbin said. "Candidates will go back to them to do something more -- volunteer or talk to neighbors." His study on small donors in 2004, released last year, showed 27 percent of those giving less than $100 online also raised contributions from friends.
Malbin said during the 2000 presidential election, a total of 900,000 individuals contributed, but that number jumped to more than 2 million by 2004 when campaign finance reforms forced candidates to cast a wider net. He will be watching to see if the 2008 race tops the previous small-donor record.
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Intellectual Property
Chamber, Others Urge New Action Against Piracy
by Andrew Noyes
Policymakers and the private sector have made great strides in the fight against piracy and counterfeiting in recent years, but more action is needed to combat cunning intellectual property criminals, U.S. Chamber of Commerce President Tom Donohue said Wednesday.
"Despite our efforts, defenders and protectors of IP are still losing the public debate," he said at the business group's annual piracy summit. "We take two steps forward, then four steps back. Those with no regard for IP are not going to lie down. We have to figure out a way to screw them."
To that end, Donohue announced the creation of a global IP center, which will build upon the chamber's existing efforts with a renewed investment in "money, people, research, programs and strong political action." He said he wants to "mobilize the grassroots" and attract and leverage assets of like-minded international allies.
The business sector has "stormed the Hill," and leaders most recently secured help from Sen. George Voinovich to get "an immediate meeting at the White House to take some obstacles out of our way," Donohue said. The Ohio Republican has co-sponsored a broad IP protection bill.
Sen. Orrin Hatch, R-Utah, a longtime IP rights defender on Capitol Hill and former Judiciary Committee chairman, said he is working on a new piece of legislation to better safeguard American ingenuity, which "continues to fuel the economy."
He lauded Donohue's commitment and challenged the roomful of corporate interests to boost their efforts. "You're the creators and innovators," said Hatch, who has written lyrics for several spiritual songs. "You're the people who have the brains and ability and wherewithal to help us find solutions."
Acting Deputy Attorney General Craig Morford offered law enforcement's view, noting that in 2006, the agency convicted 57 percent more defendants in criminal copyright and trademark offenses than it did in 2005. Of those, individuals receiving prison terms of more than two years increased 130 percent, he said.
"Increased enforcement and stiffer sentences sends an important message to IP thieves -- that we take their crimes seriously and we'll punish them for their actions," said Morford, a 20-year veteran of the agency who was appointed in August to replace Paul McNulty.
At the conference, NBC-Universal CEO Jeff Zucker issued a "wake-up call," saying IP theft costs hundreds of billions of dollars and millions of U.S. jobs annually. It also presents "a clear danger" to consumer health and safety, and is the "new face of organized crime." The scourge is "getting worse, not better," he said.
"The truth is that today we're losing the battle," Zucker said, pointing to a new report by the Institute for Policy Innovation that quantified U.S. losses from piracy at $58 billion. The business community "must commit to working together [because] our unified voices will carry far more weight than the pleas of individual industries."
Because of global and U.S.-based piracy of copyrighted material, U.S. workers lose $16.3 billion in earnings annually, including $7.2 billion in earnings from those in the copyright industry or "downstream" retail industries, and $9.1 billion in earnings by workers in other U.S. industries, the IPI study said.
For more on the summit, see our blog, Tech Daily Dose.
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Education
Board Unveils Plan For Improving STEM Education
by Aliya Sternstein
Flanked by lawmakers on Wednesday, officials from the National Science Board presented what they are calling a "national action plan" to ensure that all U.S. students have the skills required for the 21st-century workforce.
The board, which advises the president and Congress on issues related to science research and education, recommended that Congress charter an independent, non-federal council to coordinate science, technology, engineering and mathematics programs known as STEM throughout the country. Chief among the recommendations in the board's plan is the systemization of STEM learning among states and across grade levels, from pre-kindergarten through the first years of college.
After hearing an overview of the STEM strategy at a Capitol Hill briefing, members of Congress commented on the feasibility of the board's ideas in the real world.
Rep. Rush Holt, a New Jersey Democrat and a physicist, said the plan "might correct one of the biggest problems we have had over the past 50 years, and that is sustainability -- something that is not a surge, a fad, a passing fancy."
A STEM education council would be particularly helpful in that regard, he said.
Board Chairman Steven Beering said it is "sad that the very bright recommendations that have been put forth" in numerous reports over the past 25 years "were never implemented."
To further align STEM learning, the board recommended the creation of an assistant secretary for STEM education within the Education Department. The board also called for the creation of a STEM education committee within the White House Office of Science and Technology Policy to coordinate programs across all federal entities.
The second priority within the action plan is a focus on STEM educators -- the hiring and retention of well-qualified, effective teachers. "We are not attracting all of the best and the brightest," said board member Jo Anne Vasquez, noting that students are not choosing to become math and science teachers.
The plan urges developing mechanisms for compensating STEM teachers at market rates.
Rep. Mike Honda, a California Democrat and former teacher, told the board that he would work to incorporate many of the measures into the upcoming renewal of the 2002 education law known as No Child Left Behind Act.
Washington Democrat Brian Baird, chairman of the House Science and Technology Subcommittee on Research and Science Education, said he generally supports the plan. "The only thing I see possibly missing from this report is parents."
Subcommittee ranking Republican Vernon Ehlers of Michigan agreed with Baird, adding that in his experience as a physicist and teacher, the single-most important factor for effective education is involved and active parents.
Brian Washington, the senior press officer for the National Education Association, said his group needs "more time to thoroughly analyze the plan" before responding.
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Crime
Canadian Government Moves To Curb Identity Theft
by Winter Casey
The Canadian government plans to introduce legislation to better combat identity theft by revising the country's criminal code of conduct.
"Canada's new government understands that new and rapidly evolving technologies have made identity theft a widespread criminal activity, especially involving organized crime," Minister of Justice Rob Nicholson said in a statement Tuesday. "This growing issue is harming Canada's families, seniors and businesses, and we are committed to addressing it."
The planned legislation would "permit police to intervene at an earlier stage of criminal operations, before identity fraud or other crimes, which actually cause financial or other harms, are attempted or committed."
Canada's criminal code currently covers the misuse of another person's identity information, but "the preparatory steps of collecting, possessing and trafficking in identity information are generally not captured by existing offences," the government said.
Canadian Privacy Commissioner Jennifer Stoddart welcomed the plan to amend the criminal code to combat ID theft, which is considered a growing problem in Canada.
The announcement by the federal government "promises to provide law enforcement officers with the tools to pursue identity thieves or fraudsters before Canadians suffer actual financial harm," Stoddart said.
She said she still believes, however, that the federal government needs to develop a comprehensive strategy for tackling ID fraud. She said such a strategy should include measures to stop the proliferation of unsolicited e-mail and education campaigns aimed at helping Canadians better protect their personal information.
Stoddart's office said ID thieves often use spam to trick people into revealing personal information, and Canada is the only country among the Group of Eight industrialized countries that does not have an anti-spam law.
The privacy office also said Stoddart would like the government to establish a plan to address "pretexting," which involves someone obtaining personal data such as financial or telephone records by posing as someone authorized to see it.
Stoddart's office further said the government should overhaul the country's outdated Privacy Act "to ensure that personal information collected by federal departments and agencies is adequately protected."
The act, which took effect in 1983, is one of two federal privacy laws. IT requires government entities to respect privacy rights by limiting the collection, use and disclosure of personal information. The act also gives individuals the right to access and request the correction of personal information, according to a government fact sheet.
"Past efforts to combat identity theft and fraud using personal information have been hampered by a lack of coordination among various government departments and agencies, the provinces, law enforcement agencies and private-sector organizations," Stoddart's office said.
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Wired In Washington
Democrats Have Yet To Meet Promises On Telecom
by David Hatch
Immediately after Democrats reclaimed Congress following the 2006 election, they began making promises about their plans for a robust telecommunications and media agenda.
Reinstalled as chairman of the House Energy and Commerce Committee, Michigan Democrat John Dingell spoke of major telecom legislation this year -- despite rumors to the contrary -- and said his panel would play an "activist" role on critical communications issues.
The tough-talking Dingell said that passage of network neutrality safeguards mandating an open, accessible Internet would be a top priority and that the committee would seek to overhaul a federal fund subsidizing telecom service in rural and low-income areas.
Massachusetts Democrat Edward Markey, who took the reins of the Energy and Commerce Telecommunications and the Internet Subcommittee, echoed Dingell's message that a new, regulatory-minded sheriff was in town.
After ascending to the top perch at the Senate Commerce Committee, Hawaii Democrat Daniel Inouye said he would pursue a "series" of communications bills and implied that the Democrats would pick up where Republicans, who failed last year to enact major telecom legislation, left off.
Eleven months after they began making promises, Democrats have little to show for their bluster. In fact, other than stepped-up FCC oversight and a succession of hearings on a range of issues -- the main pledges delivered on -- industry watchers say the big-ticket goals remain unfulfilled.
Inouye's office provided a list of nine communications bills his committee has approved, two of which were enacted. Most deal with relatively noncontentious subjects. An aide emphasized that another year is left in the session and that the senator is tackling subjects one by one.
An industry source gave the majority the benefit of the doubt, suggesting they were sincere about their ambitious agenda but encountered unexpected hurdles. "I think the Democrats are still learning how to lead again," he said. A lobbyist noted the absence of consensus on key issues and drivers for legislation, such as industry backing, that existed last year.
Inertia and political gridlock, meanwhile, are in ample supply. There has been no movement on net neutrality, a reflection of the fact Democrats don't have the votes, particularly in the Senate where they hold power by a one-vote margin. Legislation that Sen. John (Jay) Rockefeller, D-W.Va., promised months ago to permit the FCC to regulate excessively violent television programming has not appeared.
A universal service measure reintroduced on the House side remains stalled, with a key proponent, Nebraska Republican Lee Terry, telling reporters this week that no major telecom bills will emerge from the chamber this year.
Despite pronouncements by Inouye in March that he would ready legislation on the subject, no drafts have surfaced. Inouye's office said he is planning a hearing on the topic, probably late this month.
Meanwhile, a funny thing happened on the way to the Democratic Party: The Republican-controlled FCC grew stronger as industry stakeholders, wary of regulatory-minded lawmakers, shifted their focus to the agency.
Indeed, the saber-rattling by the FCC's overseers appears to have invigorated the agency as it responds to increased congressional pressure.
As a result, the FCC has raced ahead of Congress on several fronts, largely relegating lawmakers to the sidelines. While FCC Chairman Kevin Martin, a Republican, has been careful to craft compromises with his Democratic colleagues to avoid raising the ire of Capitol Hill, his pace seems to have quickened.
"The FCC has become the main event on telecom and media issues, even more than people expected," observed Paul Gallant, a communications analyst with the Stanford Washington Research Group. "There was probably an unwarranted level of optimism among Democrats on [these] issues last fall."
In recent months, the agency has approved new rules addressing the nation's transition to digital television and the parameters for a major spectrum auction. It also has conducted field hearings on media ownership.
Action is coming on regulatory relief sought by telecom carriers, efforts by high-tech companies to tap unused television spectrum to offer Internet access, and revamping the universal service fund. The FCC also is reviewing the proposed merger of the XM and Sirius satellite radio networks.
Martin, whom many thought would buckle under congressional pressure, has demonstrated his political resilience. In July, he successfully won approval of rules governing the upcoming auction of coveted wireless spectrum, giving each side half a loaf and muffling some critics. The rules are facing legal challenges, but Martin scored the political victory he needed to keep Congress at bay.
It all adds up to this: Congressional Democrats might think they're running the show, but to many in telecom and media circles, the FCC is the only game in town.
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Today's Feature:
International Roundup
European Union competition regulators gave the green light Wednesday for the merger of the recorded music businesses of Sony and Bertelsmann after a court ordered a re-evaluation of the joint venture.
Every Wednesday, read the International Roundup by Winter Casey.
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E-briefs
Budget: The Senate voted 95-1 on Wednesday to add $3 billion in emergency spending to the fiscal 2008 Defense Department spending bill to enhance border security efforts and crack down on illegal immigrants. CongressDaily reported that the amendment, sponsored by Sen. Lindsey Graham, R-S.C., would provide funding to hire thousands of border security agents, build hundreds of miles of fences and other barriers and buy surveillance equipment such as unmanned aerial vehicles to monitor the border. "The goal of this amendment is to prove to the public that Congress is very serious about securing our border," Graham said. The Senate approved nearly identical language sponsored by Graham and other Republicans during debate on the fiscal 2008 Homeland Security appropriations bill, which President Bush has threatened to veto because of its level of spending. Sen. George Voinovich, R-Ohio, cast the dissenting vote on the amendment, arguing in a statement that adding $3 billion in emergency spending is fiscally irresponsible. Funds designated as "emergency" are borrowed and add directly to the national debt.
Civil Liberties: Civil libertarians on Wednesday asked the Supreme Court to review a challenge to the White House's anti-terrorism surveillance activities. The American Civil Liberties Union urged the court to take a case challenging the constitutionality of wiretaps conducted by the National Security Agency without warrants. A federal court sided with the ACLU last year, but the Bush administration won an appeal this past summer. According to the ACLU, the appellate court did not uphold the constitutionality of the surveillance program. "Innocent people who are harmed by illegal government surveillance should be able to challenge that surveillance in court," Jameel Jaffer, director of the ACLU's National Security Project, said in a release. "It should not be left to executive branch officials alone to determine what limits apply to government surveillance and whether those limits are being honored."
On The Hill: Senate Judiciary Committee Chairman Patrick Leahy wrote to President Bush's nominee for attorney general on Wednesday, asking him a series of questions relating to "this administration's abuse of secrecy and expansion of executive power." Leahy, D-Vt., said the White House has encouraged the Justice Department to withhold information under the Freedom of Information Act and he asked Michael Mukasey whether he would "commit to review and consider overturning these policies." Leahy also asked whether the former federal judge thought the authorization for the use of military force passed after the Sept. 11, 2001, terrorist attacks or provisions in the Constitution gave Bush the authority to override legal requirements with respect to wiretapping Americans. He also asked whether Mukasey would provide papers the panel has subpoenaed with respect to the Foreign Intelligence Surveillance Act. Leahy requested a meeting with Mukasey on Oct. 16 prior to any confirmation hearings.
Crime: A Republican senator on Wednesday said that pending regulations for the enforcement of a law against Internet gambling should mandate the creation of a list of rogue online gambling firms. Jon Kyl of Arizona said in a statement that the proposed rules, issued earlier this week by the Treasury Department and the Federal Reserve Board, are "consistent with the spirit" of the statute. But he added that it would be ideal if the final rules require a list of unlawful gambling operations. "Internet gambling is the most pernicious form of gambling, and I will oppose any effort to repeal or weaken the enforcement tools provided by last year's bill and other federal laws," he said. Enacted last year, the statute effectively prohibits financial firms from processing payments to online gambling sites.
Politics: Members of the House Judiciary Committee on Wednesday sought answers from the Justice Department on Wednesday about allegations of voter suppression in battleground campaign states. The incidents, which arose in the 2002 and 2004 election cycles, "present extremely disturbing allegations regarding interference with voters' rights," according to the letter sent to Acting Attorney General Peter Keisler. Serious concerns remain regarding whether the agency has "adequately investigated and prosecuted these cases," the letter said. In 2002, New Hampshire Republican operatives reportedly jammed the phone lines of the state's Democratic Party to hamper get-out-the-vote efforts on election day. Two years later, a firm called Sproul and Associates was hired to help register voters in several states but allegedly turned away some Democratic voters and destroyed registration cards. The committee wants answers from Keisler by Oct. 19.
Competitiveness: A study released Wednesday suggests the United States benefits more than some people realized from information technology products made from components produced overseas. Ken Kraemer, who directs the personal computing industry center at the University of California at Irvine, found the United States captures $158 from the sale of a $190 video iPod. If the iPod is sold in Japan, the United States earns $83. A similar analysis of a Hewlett-Packard laptop produced in China found 87 percent of the value is gained by the United States if it is sold in there or 45 percent of the value is captured if the laptop is sold in another country. Much of this U.S. benefit comes from the companies' profits off the items and the distribution and sale of the products in the United States. Robert Atkinson, director of the Information Technology and Innovation Forum, said the study shows the country benefits from having large multinational IT companies. He said it reinforces the need for the United States to develop a more robust innovation strategy.
Television: A representative from Family, Career and Community Leaders of America, a national student organization, said in a conference call Wednesday that it plans to help encourage U.S. households that currently get analog television signals to request coupons for boxes that will convert analog signals to digital. Beginning in January 2008, more than 7,000 chapters of the group will compete to implement community outreach programs to educate consumers about obtaining DTV coupons offered by the National Telecommunications and Information Administration. The most creative projects will receive prizes. The retailer Best Buy said Wednesday that it has donated $50,000 to help the group manage the contest and will provide local Best Buy employees to educate the chapters. NTIA chief John Kneuer said that beginning Saturday, there will be only 500 days until all television signals in the United States must become digital.
Security: The Transportation Security Administration announced Wednesday that it has awarded about $50 million in contracts for technology to scan airplane passenger luggage, bottled liquids, and casts or prosthetics. The agency awarded contracts worth $21 million to Smiths Detection and $9.3 million to Rapiscan Systems for advanced X-ray systems. The agency awarded contracts worth $7.6 million to Analogic Corporation and $5.6 million to Reveal Imaging Technologies for automated explosives detection systems. TSA also awarded Nomadics Inc. a $3.4 million contract for scanning units that can differentiate liquid explosives from common, benign liquids, and $650,000 to Smiths Detection for mobile explosive trace and vapor detection devices. Another $3 million contract went to Planning Systems Inc. for passive millimeter wave technology for use in mass transit environments. And Spectrum San Diego has been awarded a $1.7 million contract for its CastScope cast and prosthetics screening devices. "Better technology leverages the skills of our officers more efficiently and improves our ability to adapt in real time to changes in the threat environment," TSA Administrator Kip Hawley said.
Nanotechnology: Members of a House Science and Technology subcommittee on Tuesday said encouraging nanotechnology education programs is key to keeping the United States at the forefront of scientific research and development in the nanotech science and engineering fields. "Nanotechnology is one of the next frontiers of science, and research in this field directly impacts all sectors of society from health care to energy to national security," Research and Science Education Subcommittee Chairman Brian Baird, D-Wash., said. "As countries like China and India invest in nanotechnology education initiatives, our country too must do all it can to support these research activities to keep us competitive in a 21st century economy." At a hearing on the issue, some witnesses touted a bill that would create a National Science Foundation grant program to make nanotech equipment, relevant software and teacher and faculty development available to high schools and colleges. Nanotechnology involves the manipulation of matter at the molecular level.
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