FCC Gets Hands Slapped

[Gaspar]

Page 58
RECOMMENDATION 4.20:  The federal government should investigate establishing a national framework for digital goods and services taxation. 
      The National Broadband Plan is focused on increasing beneficial use of the Internet, including e-commerce and new innovative business models.  The current patchwork of state and local laws and regulations relating to taxation of digital goods and services (such as ringtones, digital music, etc.) may hinder new investment and business models.  Entrepreneurs and small businesses in particular may lack the resources to understand and comply with the various tax regimes. 
      Recognizing that state and local governments pursue varying approaches to raising tax revenues, a national framework for digital goods and services taxation would reduce uncertainty and remove one barrier to online entrepreneurship and investment.

[nathanm]

Would probably not be of as much concern under any other administration, but we know that the push in this proposal is not the neutrality issue, but the tax issue.  

I have no problem with companies doing battle over bandwidth.  Those that engage in ruthless tactics will ultimately pay the price.  Internet commerce and the battle for bandwidth has worked this way for years.

For most of those years, there has been healthy competition in the eyeball networks. Now there is not.

Secondly, this issue was also pushed by the previous administration's FCC, it's not new by any means. Keep digging that hole..

[Gaspar]

For most of those years, there has been healthy competition in the eyeball networks. Now there is not.

Secondly, this issue was also pushed by the previous administration's FCC, it's not new by any means. Keep digging that hole..

It's been tried since 87'

[sgrizzle]

I am not convinced free enterprise is going to make everything peachy. As said before we only have two real ISP's in Tulsa and the US is one of the slowest in the world when it comes to internet availability and speed. The same companies giving us limited competition and slow speeds are wanting to control what you access and eliminate "unlimited" plans in favor of going back to cost per mb.



Like it or not, high speed internet cannot be considered an open enterprise. If AT&T and COX decide to block youtube, then no-one in Tulsa gets youtube. There is no ability to switch to "vote with your dollars."

[guido911]

Here is the opinion:

http://pacer.cadc.uscourts.gov/common/opinions/201004/08-1291-1238302.pdf

The money shot:

It is true that “Congress gave the [Commission] broad
and adaptable jurisdiction so that it can keep pace with rapidly
evolving communications technologies.” Resp’t’s Br. 19. It
is also true that “[t]he Internet is such a technology,” id.,
indeed, “arguably the most important innovation in
communications in a generation,” id. at 30. Yet
notwithstanding the “difficult regulatory problem of rapid
technological change” posed by the communications industry,
“the allowance of wide latitude in the exercise of delegated
powers is not the equivalent of untrammeled freedom to
regulate activities over which the statute fails to confer . . .
Commission authority.” NARUC II, 533 F.2d at 618 (internal
quotation marks and footnote omitted). Because the
Commission has failed to tie its assertion of ancillary
authority over Comcast’s Internet service to any “statutorily
mandated responsibility,” Am. Library, 406 F.3d at 692, we
grant the petition for review and vacate the Order.
So ordered.

Net neutrality got trashed because the D.C. circuit found an absence of ancillary jurisdiction by the FCC. One would think that an agency lacking jurisdiction over a matter and getting called out would be appreciated by all.

[we vs us]

We know that the push in this proposal is not the neutrality issue, but the tax issue.  

We don't know this.  You believe this.

[Gaspar]

I am not convinced free enterprise is going to make everything peachy. As said before we only have two real ISP's in Tulsa and the US is one of the slowest in the world when it comes to internet availability and speed. The same companies giving us limited competition and slow speeds are wanting to control what you access and eliminate "unlimited" plans in favor of going back to cost per mb.



Like it or not, high speed internet cannot be considered an open enterprise. If AT&T and COX decide to block youtube, then no-one in Tulsa gets youtube. There is no ability to switch to "vote with your dollars."

Sure it does.  Opens the market to a competitor.  May take time for that competitor to emerge, but it does open the market.  EasyTel, Version, GrizzleTel, someone would move into the vacuum.  

It's like if McDonald's decided not to offer French fries any more in a town where there was only one burger joint (a McDonald's).  Someone would take advantage of the "engineered" competitive weakness.

If a market exists a marketer will emerge.  This is only false in regulated systems where market offering is determined by outside entities (government).

God, I'm tired of beating this horse.

[sgrizzle]

If a market exists a marketer will emerge.  This is only false in regulated systems where market offering is determined by outside entities (government).

SWBell has been our telephone company for how many decades? How exactly is a new phone or cable company going to be able to swoop in when the regulated giants control all the infrastructure?

[swake]

Page 58
RECOMMENDATION 4.20:  The federal government should investigate establishing a national framework for digital goods and services taxation. 
      The National Broadband Plan is focused on increasing beneficial use of the Internet, including e-commerce and new innovative business models.  The current patchwork of state and local laws and regulations relating to taxation of digital goods and services (such as ringtones, digital music, etc.) may hinder new investment and business models.  Entrepreneurs and small businesses in particular may lack the resources to understand and comply with the various tax regimes. 
      Recognizing that state and local governments pursue varying approaches to raising tax revenues, a national framework for digital goods and services taxation would reduce uncertainty and remove one barrier to online entrepreneurship and investment.

I see that now, it's recommendation 4.2, not section.

But this is just calling out the method of taxation and standardizing it. I don't see anything sinister here.

[Gaspar]

I see that now, it's recommendation 4.2, not section.

But this is just calling out the method of taxation and standardizing it. I don't see anything sinister here.

Do you think that a standard method of internet taxation will not be acted on immediately?

I anticipate it will take about 2.1 seconds for the bills to flood congress, and another 1.6 seconds for the 4,000 page internet tax bill to be written. 

With the door cracked open to trillions in taxable transactions, Pelosi will be on this faster than Al Gore's G5 flying over Texas.

[swake]

Do you think that a standard method of internet taxation will not be acted on immediately?

I anticipate it will take about 2.1 seconds for the bills to flood congress, and another 1.6 seconds for the 4,000 page internet tax bill to be written. 

With the door cracked open to trillions in taxable transactions, Pelosi will be on this faster than Al Gore's G5 flying over Texas.

the internet can be taxed at any time today, all it takes is a decision by congress to do it. This does not change that, it just makes taxation easier on the entity being taxed.

[Gaspar]

the internet can be taxed at any time today, all it takes is a decision by congress to do it. This does not change that, it just makes taxation easier on the entity being taxed.

All anything takes is a decision by congress, but currently The Internet Tax Freedom Act Amendments Act of 2007, and it's extension to 2014 prevents such taxation.  This is an extension of the 2004 law.

Yes, congress could change the law, but it's easier to nibble than bite.  If the jurisdiction for an internet tax structure can be shifted to FCC control than taxation can begin through regulation and fines.  Over time this makes it easier to adopt a federal tax structure for the internet.

[waterboy]

Sure it does.  Opens the market to a competitor.  May take time for that competitor to emerge, but it does open the market.  EasyTel, Version, GrizzleTel, someone would move into the vacuum.  

It's like if McDonald's decided not to offer French fries any more in a town where there was only one burger joint (a McDonald's).  Someone would take advantage of the "engineered" competitive weakness.

If a market exists a marketer will emerge.  This is only false in regulated systems where market offering is determined by outside entities (government).

God, I'm tired of beating this horse.

Gotta' go with Grizz on this. We'll keep beating your horse till you admit its your horse. Your view of markets emerging because of competitive weakness is sophomoric. Its straight out of Econ 10 and lacking in reality. First off McDonalds probably wouldn't locate as the only burger joint in a small town. Secondly, McDonalds relies on more than french fries to succeed and offering french fries will not be enough to make any competitor (who isn't backed up with professional site selection, advertising and research) actually compete against them. This view is an outgrowth of your simple solutions mindset.

Either pick another example or admit that the myth of "the better mousetrap" or the myth of free market competition among giant corporations that own congress, is ...mythical...when you're talking huge investments in infrastructure.

But my real purpose in posting is to question the theme of neutrality or "free internets". It all confuses the hell out of me as an end user.  I appreciate the insights you all have given me. But, why would this form of retailing be immune from taxation anyway? What makes it so special that cities like ours,  that rely on sales taxes, should suffer because retailers start making change without closing the till? I ask this not as a Lib or a pro tax and spend, blah, blah, blah.Don't go there. But just out of curiosity.

Nothing is free and when one door closes another opens. Since more sales are being made online without taxes being collected, I am in reality paying less taxes. Everyone who buys online is. That's great for some, a loss for others. But think about this. Should I decide to buy a magazine at the book store, I pay a tax on it. Yet, when I obtain that same text through the magazine's website, I do not. The price at the local bookstore also includes the city property taxes, license fees, etc. that goes towards improving streets, protecting the public etc. The website does not. They make their money from advertising I suppose. Isn't that patently unfair to the bricks and mortar store who committed to my community?  Aren't they sucking the life out of my community by avoiding the traditional costs of doing business?

So, why is this form of retailing being pleasured with no taxes? Markets change and the way we do business changes but death and taxes are always the cost of life. Why do you want these giant companies to monopolize AND get a free ride?

[nathanm]

There is no ability to switch to "vote with your dollars."

This is why I am strongly in favor local/state funded last mile fiber with strong open access rules. Basically, a city or state should issue bonds to build a fiber network which they both run an ISP over (to jump-start things) and offer nondiscriminatory access to other ISPs to offer whatever service tiers they desire for a delivery price high enough to cover the capex and ongoing maintenance of the fiber and necessary infrastructure to provide the back-end stuff needed to connect the various ISPs to the network.

The "ISP" could easily offer TV service, site-to-site transport within town, or any number of other value-adds.

The last mile part is more akin to roads or sewers from my perspective, while I think there's plenty of room for competition in what services the ISPs provide over the government-owned fiber.

As far as "Internet taxation," many states already require ISPs to collect sales tax for their services, and I personally have no problem with Internet-based retailers being required to collect sales tax in the buyer's jurisdiction, just like any other store. Use tax is so widely ignored it's beyond ridiculous. The states have collectively worked hard and come up with a pretty good system that makes it easy for retailers to determine the tax rate applicable to any sale, and even offer a SOAP interface to determine the appropriate tax rate so the process can be automated in a way that puts almost no burden on those retailing over the Internet.

[Red Arrow]

I don't know if any gets distributed to "your home town" but please see Line 20 of Form 511, OK State Income Tax where you get to add the Use Tax for items you didn't pay sales tax on.  

I try to buy from local merchants when I can, just to support local business.  Internet competition has brought down prices locally in many cases because the local merchants do have to compete with the internet vendors.  Good for consumers and makes it easier to want to buy locally.  Unfortunately, too many times I have to go the internet to get what I want.  Before  the internet I used the phone and advertisements in magazines etc.