May 2013

Consumers, advocacy groups largely silent on sales tax

Shoppers may flock to free shipping offers, but the online sales tax debate hasn't interested consumers nearly as much. Maybe it should.

Sales taxes, after all, can cost as much or more than shipping -- at times about 7% to 8% of a product price. They are just a much grayer area and often are a charge that doesn't show up in the total until it's time to click "purchase." Online retailers currently only have to collect sales tax from buyers who live in states where retailers have a physical presence. That's the result of a 1992 Supreme Court decision. Shoppers in other states are supposed to keep track of their online purchases and pay the equivalent of the sales taxes when they file their state income tax returns. That most taxpayers don't.. Only about 1-in-100 Wisconsin taxpayers submitted sales taxes when they filed their 2010 income taxes, according to a 2012 story by the non-profit public affairs channel WisconsinEye. The proposal passed by the Senate today would change that by requiring retailers to collect applicable state sales tax for all buyers. Shoppers need to keep in mind that sales taxes don't "just pay for the road that connects the consumer's house to the retailer," says Carl Davis, senior analyst for the Institute on Taxation and Economic Policy. The tax benefits consumers in areas from education to police protection.

Internet taxation shapes Amazon-eBay battle

The fate of the Marketplace Fairness Act could tilt the playing field between Amazon.com and eBay.

Amazon, which until recently was dead-set against a national online sales tax, now embraces it as it looks to expand its physical operations across the USA, paving the way for faster, same-day delivery of goods. eBay, Amazon's rival, argues the tax would hinder its sellers who do more than $1 million in out-of-state sales annually. In a letter to eBay sellers, CEO John Donahoe suggested the law should exempt any business with fewer than 50 employees or that make less than $10 million a year on out-of-state sales. Although a national sales tax makes it easier for online players to manage taxes, eBay's largest sellers could take a hit, ultimately impacting eBay, says Greg Girard, an e-commerce analyst at IDC Retail Insights. At the same time, Amazon might use regulation as "a form of suppressing competition" as an industry incumbent, says Eric Goldman, an Internet law professor at Santa Clara University.

FTC Votes Unanimously to Retain July 1 Date for Implementation of the Updated Children’s Online Privacy Protection Rule

The Federal Trade Commission voted unanimously to retain the July 1, 2013 date for implementation of the updated Children’s Online Privacy Protection Rule.

In a letter to industry organizations that had requested that the Commission reconsider the July 1 date, the Commission noted that implementation of the updated rule marks the culmination of a three-year process. The July 1 date was announced last December, providing companies more than six months to prepare. During that period, the Commission noted, FTC staff have conducted numerous meetings and consultations with organizations and individual businesses on how to ensure compliance with the new rule, and recently issued an updated set of frequently asked questions for businesses and parents. In the letter, the Commission also noted the importance of ensuring that the enhanced privacy protections of the revised rule are available to children without delay, especially in the face of rapid evolution in the ways children interact with the Internet. The commission vote approving the issuance of the letter was 4-0.

Give cable TV subscribers more freedom of choice

[Commentary] I can only assume that high on Tom Wheeler's to-do list will be a dismantling of the antiquated business model that forces cable and satellite subscribers to pay for dozens of channels they will never watch. It's also a system that can result in a favorite channel disappearing not because it didn't have an audience but because it didn't generate enough profit for a cable or a satellite provider.

If I have to pay for more than 100 channels that I have no plans to watch, I'd rather pay a few cents a month for a channel that supports the arts instead of the $5 that I have to pay for ESPN, or the $4 each that I have to pay for Time Warner's own Lakers and Dodgers channels. It should be our call, not theirs. The answer, as I've written before, is a la carte programming, which would allow people to pay only for the channels they desire. Some channels would sink, others would swim. The important thing is that the marketplace would decide winners and losers, not a handful of cable execs. Critics say a la carte would cause prices to rise and limit consumer choice. I'm not so sure. Seems to me that forcing channels to compete for our business would keep prices down and promote innovation and quality. I counted more than 100 sports channels on Time Warner's website, including those that run in both standard and high definition. Does anyone really think that with that much competition, these guys would be able to get away with huge price increases?

Clearwire Endorses Sprint Bid While Staying Silent on Dish Offer

In a letter to investors, Clearwire said it was endorsing the $2.97-a-share bid after rejecting an earlier Sprint offer of $2.60. After consulting with independent financial and legal advisers, the board’s special committee concluded that the current price is fair.

Sprint, which already owns more than 50 percent of Clearwire, is seeking to buy the remaining stake in a $2.2 billion deal. “The Clearwire board has unanimously concluded that the proposed transaction with Sprint is the best strategic alternative for stockholders, representing fair, attractive and certain value, especially in light of the company’s limited alternatives and the well-known constraints of its liquidity position,” Clearwire said in a statement. Investors are scheduled to vote on the offer on May 21.

FirstNet to Begin Consultations With State, Tribal, Territorial and Local Entities Nationwide

The First Responder Network Authority (FirstNet) announced that the first in a summer-long series of consultations with states, tribes, territories and localities will take place May 15-16.

FirstNet will conduct regional workshops in six regions and will also meet with each state individually during the consultation process. This portion of FirstNet’s outreach is designed to solicit input from attendees to help in the design of a public safety-grade next-generation wireless network that meets the specific communications requirements of police, firefighters and emergency medical services personnel in their respective jurisdictions. The first regional workshop will be a two-day program beginning with a discussion of the changing nature of public safety since 9/11 and the need for placing next-generation technologies into the hands of first responders. It continues with an update on FirstNet progress, an interactive session on network development and multiple facilitated discussions between participants and FirstNet. Also scheduled are breakout sessions for stakeholders, discussions between registrants and FirstNet, breakouts on specific challenges of implementing the public-safety broadband network and group peer-to-peer exchanges.

Internet Uncertainty

[Commentary] To be more accountable to users, social media platforms should adopt publicly transparent processes allowing a full view of every decision to block content. And these sites should invite feedback from users as a check against abuses. Our Internet freedoms are what we make of them. It's only because so many people have mobilized in defense of the Web in recent years that the Internet pendulum occasionally swings toward the good. But every advance for online expression has come with a fight. As the threat of censorship grows, millions more people must join the movement to protect online speech and deter any corporate or government entity that tries to silence us.

Wireless Carriers Hold Consumers' Loyalty

In the battle of “carrier vs. handset” in building loyalty among wireless customers, the winner is clear: the carrier.

According to research from Market Strategies International, almost three-quarters of consumers (74%) said they consider remaining loyal to their carrier (due to factors such as coverage, customer service and plan) rather than their device (61%) or the operating system (60%) when the time comes to purchase a new plan or phone. “The carriers own the customer, [who] then buys the handset,” Paul Donagher, senior vice president, Communications Division, Market Strategies International, tells Marketing Daily. “Typically, the carrier owns the customer relationship and that probably drives the loyalty.” The one exception is Apple, for whom 82% said they would remain loyal to the device, regardless of the carrier because of the familiarity they have with the phone and its operations. Among the loyalty drivers, 24% of Apple users said they were drawn to the phone’s features (compared with 15% of other phone users), and 20% cited ease of use (compared with 12% of other users).

Pentagon: China Views Information Warfare as Key to Countering US Pacific Forces

China views cyber warfare as the essential element to attack U.S. forces operating in the western Pacific, the Defense Department reported in its annual analysis of that country’s military capabilities.

The Pentagon, in its report “Military and Security Developments Involving the People’s Republic of China,” said the People’s Liberation Army views space operations as “the commanding point for the information battlefield.” The report said PLA documents emphasized the necessity of “destroying, damaging and interfering” with an enemy’s reconnaissance and communications satellite systems. If China goes to war, the report said, the country plans to control information, sometimes to seize the initiative and gain an advantage in the early phases of a campaign to achieve air and sea superiority.

Google’s Eric Schmidt on Data Privacy: The Internet Needs a Delete Button

What will privacy look like in 10 or 20 years, when smartphones became "stone age technology," replaced by wearable gadgets and perhaps even embedded ones?

Economist Nouriel Roubini described a future when we might embed technology into our eyes or skin that could track, say, our heart rates or other consumption patterns. Even Google Glass is a step in this direction. So what could that data mean for corporations? And what would it mean for users?

Google’s Eric Schmidt explained that Roubini's assessment of the future was not one he agreed with. "I think you're describing a world of tracking which I think is highly unlikely to occur, because people will be upset about it in the same way you are," Schmidt said. "Governments won't allow it, and it'll be bad business. And ultimately, in a competitive market, companies want the consumers to be happy. So it's true tracking in this context...you're taking a much broader view of the word ['tracking'] than any I would use. A situation where you go to people and say, 'Oh, here's our phone, and we're going to track you to death,' people are not going to buy that phone. It's just a bad business model." The issue, however, is that it's actually turned out to be a very good business model for many tech companies, especially in the mobile market.

Benton

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