October 2010

Republicans See a Political Motive in IRS Audits

With growing scrutiny of the role of tax-exempt groups in political campaigns, Congressional Republicans are pushing back against Democrats by warning about the possible misuse of the Internal Revenue Service to audit conservative groups.

Leading Republicans are suggesting that a senior official in the Obama administration may have improperly accessed the tax records of Koch Industries, an oil company whose owners are major conservative donors. And the Republicans are also upset about an IRS review requested by Senator Max Baucus, the Montana Democrat who leads the Finance Committee, into the political activities of tax-exempt groups. Such a review threatens to "chill the legitimate exercise of First Amendment rights," wrote Sens Orrin G. Hatch (R-UT) and Jon Kyl (R-AZ) in a letter sent to the IRS. Democrats dismissed the Republicans' complaints as groundless, but the accusations have already gained some traction with Republican lawmakers.

Law enforcement's limits in wiretapping the Internet

[Commentary] Wiretapping the Internet is nothing new. Law enforcement agencies for years have been able to seize information from communications providers, as long as they obtain a court order. But new technologies have hampered law enforcement officials' ability to quickly retrieve information that a judge has determined they are entitled to. Some problems appear to have relatively easy fixes. For example, some e-mail services are not subject to the wiretap law because their parent companies are classified as information services and not as communications providers. A change in the statute to include all e-mail -- regardless of the classification of the parent company -- should bring such products into the fold.

The tougher choices involve products such as Research in Motion's BlackBerrys, which are attractive to consumers precisely because they provide highly secure means of communication. The FBI is drafting a proposal that would require the retrofit of such products to allow for quicker and easier access to targeted communications. The proposal , which likely would not be introduced as legislation until early 2011, would also require new products to have these capacities built in. Manufacturers would decide how to achieve the desired result and would be responsible for retrieving the information. The FBI would simply get the results after a judge's approval.

The policy question is not difficult: The FBI should be able to quickly obtain court-approved information, particularly data related to a national security probe. Companies should work with the FBI to determine whether there are safe ways to provide access without inviting unwanted intrusions. In the end, there may not be a way to perfectly protect both interests -- and the current state of technology may prove an impenetrable obstacle. But the FBI is right to seek a way forward, and companies would be smart to work in good faith to try to fashion a solution.

Baker: Cable, Satellite Need Freedom To Package Programming

Speaking to the Media Institute, Federal Communications Commission member Meredith Attwell Baker stood up for cable operators' freedom to package their programming as they see fit, argued that the government should not rush to regulate online content, and suggested there were online speech implications to the network neutrality debate that bear close inspection.

"Content providers and distributors have First Amendment rights about how their content reaches their audience that must be respected," she said. "ESPN, Comcast, and DirecTV are speakers, and must remain free to create compelling programming in packages of their own choosing." She pointed to the Supreme Court's finding that when government defends its speech regulation, its defense must be more than that there is a "potential problem to be cured," adding: "We must protect that heightened standard. Baker's central point was that quality content is not free. She said that Googling "free TV shows" yields over 300 million hits. Next, she said, try Googling 'high-quality, expensive TV programming" and the result is zero hits. She said that more people last year watched Dexter and Heroes illegally than legally. "It is next to impossible to compete with free," she said, "yet this is the central challenge" to so many.

McSlarrow: First Amendment Is Shield, Not Sword

Accepting the Media Institute's First Amendment, National Cable & Telecommunications Association President Kyle McSlarrow said the trend lines in the daily battle of ideas are not comforting.

He suggested that in that battle, his opponents are using the First Amendment, when they are thinking about it at all, as a sword in the hands of government to promote their values, rather then the shield he believes it should be against "government encroachment." That observation drew applause from the media execs in the crowd. He pointed out that the Media Institute does not have the funding to match a lot of other organizations and think tanks, and that the Progress & Freedom Foundation, another Washington-based First Amendment/free market think tank, had just shut its doors due in part to lack of funding. He contrasted that with "large donors and philanthropic groups" pouring "millions of dollar"s into groups and organizations that have "a very different view of how they would shape the media and telecommunications landscape."

Illinois court decision could jeopardize ComEd smart grid initiative

An Illinois appellate court decision this week suggested that state regulators goofed big time when they allowed Commonwealth Edison to pass on specified costs to residential consumers, and the decision could have a number of far-reaching consequences — and cost ComEd and its parent company millions.

The court decision sets a new precedent for how utility rates are set that includes asset depreciation, which means ComEd and the state's other utilities can't pass on those costs of doing business." The decision could mean ComEd customers may get a rebate of more than $48 million (about $12 per customer). ComEd officials said the court decision will jeopardize a multi-faceted smart grid pilot project, but that the utility will try to find alternate ways to pay for it.

BT Must Let Its Competitors Access Fiber Broadband Network, UK Regulator Says

BT, the UK's largest phone company, must allow competitors to control fiber lines in its high-speed broadband network, regulator Ofcom said. Rivals including TalkTalk should have access to BT's fiber lines through a "virtual link" or could deploy their own fiber via BT's underground ducts and overhead telegraph poles, Ofcom said. The regulator decided not to set pricing for access to the lines. Virgin Media had asked Ofcom to set fees, arguing that the absence of any pricing controls could undermine alternative network investment, according to the regulator. BT's charges will be subject to rules against anti-competitive pricing, Ofcom said.

Writers Guild wants Comcast cash for public programming

The Writers Guild of America East wants Comcast and NBC Universal to set aside at least $100 million for public affairs programming as a condition for approving their proposed merger.

Writers Guild president Michael Winship wrote to Federal Communications Commission Chairman Julius Genachowski and the Department of Justice requesting that if the transaction is approved, the new entity be required to set aside at least $10 million per year for ten years "for the creation of thoughtful, independent, well-researched public affairs programs for television and the Internet." Winship argued the merger would limit the amount of independent content produced and distributed, particularly in the areas of news and public affairs programming. "Fewer and fewer entities creating news and public affairs programming for broadcast or cable television or for the Internet means less diversity of news content," Winship wrote. "By definition, fewer points of view are presented, fewer stories are reported in-depth and fewer resources are utilized to pursue them. True investigative reporting has almost vanished completely from commercial on-air news or has often been reduced to sensationalized, trivial coverage of no lasting significance."

Lawmakers tell FCC that CenturyLink-Qwest merger will benefit rural America

A bipartisan group of 21 House members wrote the Federal Communications Commission hailing the potential benefits of the merger between CenturyLink and Qwest Communications, which they said would help bring technology services to the most rural regions of the country.

"We believe this merger will benefit consumers in rural America by enhancing the new company's ability to invest in much-needed broadband infrastructure and expand its offerings of innovative services," the letter said. "Continued investment in broadband networks in rural areas will enhance the economic competitiveness of each community served." The group encouraged "timely consideration" of the companies' application. The merger has won the approval of the Justice Department and the Federal Trade Commission.

The letter included House Communications Subcommittee leaders Reps. Rick Boucher (D-VA) and Cliff Stearns (R-FL), as well as Reps Lee Terry (R-NE), Bart Stupak (D-MI), Betsy Markey (D-CO), and others. Many of the signatories come from rural districts.

CTIA Semi-Annual Wireless Industry Survey

CTIA, the wireless industry's lobbying organization, released the results of the association's bi-annual report documenting trends in wireless subscribership, revenue, capital investment and infrastructure.

Among the many results showing the wireless industry's growth, there were dramatic increases in wireless data usage, smart phone adoption, capital expenditures and SMS and MMS traffic. The survey, which tracks data submitted by carriers through June 2010, proves yet again that U.S. consumers are benefiting from the wireless innovation and competition made possible in the current light regulatory environment. The survey found that wireless subscriber connections rose to 292.8 million, an increase of roughly 16 million since June 2009 and represents a penetration rate of 93 percent. These subscribers used 2.26 trillion minutes (up by 19 billion minutes), 1.8 trillion SMS messages (up by 33 percent) and 56.3 billion MMS messages (an increase of 187 percent). Despite these increases in usage, the average local monthly bill fell by 4.2 percent to $47.47 over the same period. Smart phones and wireless-enabled PDAs also grew substantially over the past year, increasing from 40.7 million in July 2009 to 61.2 million in June 2010. This brings the total number of data-capable devices on carriers' networks to 264.5 million. Wireless carriers reported handling 161.5 billion megabytes of data in the six months ending in June 2010, up 49.8 percent from the last half of 2009. SMS-capable devices increased to 243.7 million as of June 2010, which is up from 235.3 million in June 2009. There were more than 243.5 million Internet-capable devices during this survey period, which was an increase of more than 6.4 million since June 2009. While there are challenging economic conditions, the industry continued to invest heavily in wireless infrastructure. Starting in of July 2009, carriers spent $21.6 billion in capital expenditures in the past year for a cumulative total of $295.2 billion since CTIA began tracking the data in 1985.

Meet Ari Ne'eman

A Q&A with Ari Ne'eman. In December, Ne'eman was nominated by President Barack Obama to the National Council on Disability (NCD), a panel that advises the President and Congress on ways of reforming health care, schools, support services and employment policy to make society more equitable for people with all forms of disability. Ne'eman himself is autistic and is the first openly autistic White House appointee in history -- and one of the youngest at age 22.

His nomination proved controversial, in part because some self-proclaimed allies of the autistic community think national dialogue on the subject should focus primarily on finding causes and cures so that autism can be prevented in future generations. In March, the editor of an anti-vaccine website called The Age of Autism challenged Ne'eman's ability to serve the needs of more profoundly impaired autistic people. "Do the highest functioning with the community," wrote Kim Stagliano, "have a right to dictate the services and research that should be available for their less fortunate 'peers?' I don't think so." Some of these online attacks escalated into threats. In the wake of the controversy, an anonymous Senate hold was put on Ne'eman's nomination. While this hold was in place, he was unavailable to talk to the press.

Benton

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