December 2010

[Commentary] The Federal Communications Commission's new "net neutrality" rules represent a huge win for a slick lobbying campaign run by liberal activist groups and foundations. The losers are likely to be consumers who will see innovation and investment chilled by regulations that treat the Internet like a public utility.

The net neutrality vision for government regulation of the Internet began with the work of Robert McChesney, a University of Illinois communications professor who founded the liberal lobby Free Press in 2002. Mr. McChesney's agenda? "At the moment, the battle over network neutrality is not to completely eliminate the telephone and cable companies," he told the website SocialistProject in 2009. "But the ultimate goal is to get rid of the media capitalists in the phone and cable companies and to divest them from control." A year earlier, Mr. McChesney wrote in the Marxist journal Monthly Review that "any serious effort to reform the media system would have to necessarily be part of a revolutionary program to overthrow the capitalist system itself." Mr. McChesney told me in an interview that some of his comments have been "taken out of context." He acknowledged that he is a socialist and said he was "hesitant to say I'm not a Marxist." For a man with such radical views, Mr. McChesney and his Free Press group have had astonishing influence.

The FCC's "National Broadband Plan," released last spring, included only five citations of respected think tanks such as the International Technology and Innovation Foundation or the Brookings Institution. But the report cited research from liberal groups such as Free Press, Public Knowledge, Pew and the New America Foundation more than 50 times. So the "media reform" movement paid for research that backed its views, paid activists to promote the research, saw its allies installed in the FCC and other key agencies, and paid for the FCC research that evaluated the research they had already paid for. Now they have their policy. That's quite a coup.

Facing a midnight deadline to avoid a government shutdown, Congress passed a bill Dec 21 that will fund the federal government through March 4.

The bill, which will also freeze federal salaries for two years, narrowly passed the House, 193 to 165, several hours after it easily cleared the Senate in a 79 to 16 vote. President Obama was standing by at the White House to sign the measure. The last-minute scramble was required after the Senate last week withdrew a $1.2 trillion omnibus appropriations bill that included more than $8 billion in earmarks. Republicans successfully forced Senate Majority Leader Harry Reid (D-NV) to pull the measure from the floor and instead take up the stopgap measure, which would increase federal spending by $1.16 billion, an increase of less than 1 percent.

US Internet users would likely welcome a "Do Not Track" measure like the one the Federal Trade Commission is currently considering to keep advertisers from tracking their movements online.

Gallup finds Internet users largely aware that advertisers use their online browsing history to target ads to their interests, but largely opposed to such tactics -- even if they help to keep websites free. In the Gallup survey, 50% of Americans reported using the Internet for more than an hour per day, including 68% of 18- to 34-year-olds, 55% of 35- to 54-year-olds, and 69% of those making at least $75,000 per year. These highly sought-after Internet users are slightly more likely than the oldest and least affluent users to say tracking tactics should be allowed, though they are still largely opposed. Internet users send a mixed message about how much these ads are influencing them. On the one hand, more than 6 in 10 say they have noticed that some ads are targeted specifically to them based on websites they have previously visited. On the other, 9 in 10 say they pay little or no attention to online ads. These assessments vary little by age and income.

The House of Representatives accepted a stripped-down Senate version of the America COMPETES Act, a bill to strengthen research, education, and innovation at several federal agencies.

Now the bill will go to President Barack Obama for his signature. But looming fights over the discretionary budget may make the legislative success a Pyrrhic victory. The sharply partisan nature of the debate on the House floor -- only 16 of 146 Republicans supported its passage, along with all 212 Democrats who voted -- signaled that the new Republican House leadership won't take kindly to bills that promise large increases in federal spending, no matter how worthy the cause. That attitude bodes ill for the likely impact of COMPETES, which puts Congress on record in support of steady increases in the budgets of the National Science Foundation (NSF), the basic science programs at the Department of Energy (DOE), and the National Institute of Standards and Technology. The bill also creates new programs aimed at enhancing science and math education, advanced manufacturing research, and regional innovation and mandates better coordination of them by the White House. And it tweaks the rules governing existing activities, from the fledgling Advanced Research Projects Agency-Energy at DOE to long-running training programs at NSF, with the goal of getting a bigger economic payoff from federal investments.

COMPETES doesn't actually provide any money for any agency. That can has been kicked down the road into the next Congress because legislators couldn't agree on the 2011 budget in their current lame-duck session. But that didn't stop Republicans from railing against the increased "spending" authorized in the bill, which would allow up to $46 billion for those agencies over the next 3 years. And that's after the House accepted Senate changes that sliced the last 2 years off a 5-year authorization and dropped several new programs. Republicans also complained that the bill, which the full House passed in a different form in May and which was vetted by a Senate panel in July, was being crammed down their throats.