July 2011

Californian websites that provide comparison shopping services and discount coupons are seeing their range of offerings narrow as online retailers abandon them to escape a state tax on Internet shopping.

Several online retailers have followed a lead taken by Amazon and severed links to Californian websites that carry advertisements or links to their products, a move that enables them to avoid a new demand to collect sales tax from Californian shoppers. The tax measure was passed in a state budget last month as California struggles to reduce a $9.6bn deficit. It has been backed by traditional retailers such as Walmart and Best Buy, which say it is unfair that most online shoppers do not pay sales tax. But e-commerce executives say that rather than raising tax revenue it will kill off business in the state that is home to Silicon Valley and leave shoppers with fewer options.

Stimulus funds aimed at expanding rural broadband service are not cost effective and often subsidize duplicative coverage, according to a study from Navigant Economics.

The 2009 Recovery Act included more than $7 billion in broadband subsidies including $2.5 billion allotted to the USDA's Rural Utilities Service. Navigant economists Jeff Eisenach and Kevin Caves analyzed three projects that received $231 million of those funds and found the funds were often used for areas already served by one or more broadband providers. “The projects we analyzed show the RUS has continued its practice of subsidizing the deployment of overlapping broadband infrastructures, an approach the FCC has concluded would more triple the cost of providing nationwide ubiquitous broadband coverage," said Eisenach, managing director at Navigant. "As we conclude in the study, this program is ‘not a cost-effective means of extending broadband coverage to un-served households.’”

Reps. John Dingell (D-MI) and Gene Greene (D-TX) introduced the Public Safety Spectrum and Wireless Innovation Act, a version of the Senate incentive auction bill with one key difference: It gives broadcasters many of the protections they have been seeking to insure an incentive auction/spectrum reclamation plan does not marginalize their digital future.

According to a copy of the bill, it would allow for repacking of stations--moving them closer to together to make more room for wireless broadband. But it would only allow that so long as those stations that wanted it were give the same 6 MHz worth of spectrum, and were given a comparable tower heights, power levels and interference protections. It would specify that there be only one auction, and that broadcasters be reimbursed for moving expenses. It would also make it the law that no station could be forced to share facilities, but would be allowed to share a 6 MHz channel so long as each were given primary status for the purposes of must-carry by cable operators. Like the Senate bill, it would allocate the D Block of spectrum for an emergency broadband network, rather than auction it as current law requires. The network will be created and maintained with some of the proceeds from the auction of reclaimed broadcast spectrum.

[Commentary] In case you missed it — all of last year’s hype, shark dodging, name changing and promotional flights of fancy by 1,100 cities pursuing Google’s “Gigabit City” prize — Kansas City (KS) was named leader of the pack in March. Then, just a few weeks later, Google doubled down and announced Kansas City (MO) its second winner.

I recently conducted a site visit to the “Kansas Cities” to get a feel for how things are moving along there as Google ramps up to build 1 Gbps networks there. While lots are folks are happy to have Google as a partner in the pursuit of broadband, it seems the company doles out information reluctantly. I met with several local journalists who indicate everyone short of the neighborhood barber is under a nondisclosure agreement with very little they can talk about publicly. Looking at the various public-private partnerships (PPP) that are working well across the U.S., open communication and full disclosure are the watchwords. Both cities need to assert a role for themselves if they want to reap the many benefits they highlighted when answering Google’s question to applicants: “What would you do with a gigabit?”