Homeowner's Blog

Should the Internet be Regulated?

Up until a recent court decision it was assumed that the Federal Communications Commission had the necessary authority to make sure consumers had the right to access legal websites and use legal applications. The FCC has needed to use that power only rarely, and consumers have enjoyed the benefits of this "network neutrality". The recent court decision was that in fact Congress had never granted the FCC such authority. FCC Chairman Genachowski has proposed an alternative approach, and has also promised that, if it is approved, the FCC will continue to use the same light regulatory hand that it has always used. Opponents of his proposal fear that it goes too far, creating the potential of regulations that could have detrimental side effects.

We believe that there must be a mutually acceptable middle ground somewhere in this debate. The telecoms all say they continue to support network neutrality, but are concerned that some future FCC may not adhere to its light regulatory approach. The companies claim that the Internet were to be heavily regulated, it could undermine continued private investment that is critical to achieve universal broadband availability. This is a credible argument - infrastructure  investment in this sector continues to be impressive despite middling profit levels, and continued federal budget realities are such that universal broadband availability will not be achieved anytime soon without that investment. With these factors in mind it would seem that there must be some formula that would give the FCC just enough authority to protect maintain network neutrality should some company violate Network Neutrality principles in the future, but not so much authority that investors or consumers need fear that private sector investment might be threatened by a heavy-handed regulatory approach by a future FCC.

BP Oil Spill

The U.S. Gulf Coast will probably suffer long term environmental consequences as a result of the explosion and sinking of the Deepwater Horizon oil rig last week.  Not only were 11 lives lost, but the effect on the environmentally sensitive coastal areas and on the coastal fishing economy may likely be far worse and longer lasting than the consequence of the Exxon Valdez tanker oil spill in Alaska. One of the saddest things about the disaster is that it might have been prevented if the rig had been equipped with an acoustic switch. This remote controlled underwater valve serves as a backup to primary shut-off systems, and is intended to enable oil rig crews to  shut down the well even if the oil rig is damaged.

Acoustic switches are mandated on offshore oil rigs by Norway and Brazil, and some major oil companies install them even where they are not required. The Mineral Management Service (MMS) of the U.S. Department of the Interior, which regulates U.S. offshore oil rig safety procedures, concluded that the $500,000 devices are not necessary in light of other existing emergency shut-off alternatives. The oil industry has raised doubts about the effectiveness of acoustic switches, which fortunately have not yet been put to a real life test. The MMS was clearly wrong about the need for additional backups, but the oil industry could be right about the effectiveness of the as yet untested  acoustic switches. The solution is to ban all new U.S. offshore oil exploration and oil production rigs until independant rigorous testing confirms that acoustic switches are fail safe, and to require their installation (or the installation of a fail safe alternative), on all new exploratory and working offshore oil rigs in the future. MMS should also re-inspect all existing U.S. offshore oil rigs and require the installation of additional safety measures as appropriate.

Go Bravely Forward

President Obama and Congressional Democrats are headed for a fight with the GOP and  Wall Street over financial services regulatory reform. The results of the financial meltdown have been disastrous, and clearly strong regulation is needed to prevent similar irresponsible actions by financial services executives. At the same time it is also possible to go too far, and some types of regulation could indeed hurt the economy more than they could contribute to preventing another meltdown.

Opinions on the latter vary greatly, and those opinions are mainly conjecture no matter which side they fall on. In the opinion of the financial services sector, all substantial regulatory changes are risky. If we heed their opinion, there will very little protection against another meltdown in the future. We've seen the results of the meltdown, and we would rather risk over-regulation than leave ourselves exposed to another financial meltdown. Besides, any regulatory excess will soon be corrected anyway. We can trust the financial services sector to get right to work on correcting any such excesses, even before President Obama signs the bill! That would be a productive use of their time and money. For that matter, even if the bill was virtually toothless, we can also count on the financial services sector to get right to work on watering it down further before President Obama signs the bill. Better that they productively spend their time and money bringing the measure back to neutral rather than gutting a weak bill entirely. At least that way we'll buy ourselves a couple extra years before the next meltdown.


Continue reading Go Bravely Forward.

A Plan to Provide Broadband to all Americans

Many rural and other homeowners either do not have access to broadband or don't have Internet access at fast enough speeds and affordable costs to support home-based businesses or sophisticated healthcare applications that would allow them to remain in their homes instead of moving to nursing facilities. Chairman Genachowski  and the staff of the Federal Communications Commission have developed a proposed National Broadband Plan for dramatically improving broadband networks and extending their benefits to all Americans. In terms of the practical impact of technology on the daily lives of most Americans, this effort far surpasses the importance of the space program other technology-related areas. As Chairman Genachowski noted, "The starting point to solve these problems is a set of goals that are ambitious but achievable with a national commitment."

The proposed National Broadband Plan is the first step to reaching a common agreement on the specifics and priorities of those goals. Once we reach a consensus on the goals, we will face significant challenges regarding the mechanics of its implementation. Those challenges will involve complicated decisions between alternative ways to achieve the nation's broadband goals. Policymakers will have to make those tough choices, but the Plan is the critical precursor to the day when all American homeowners and other consumers can fully realize the benefits of broadband.

Chairman Genachowski  and the staff of the Federal Communications Commission deserve our thanks for taking this first step.

Don't Tax Internet Purchases

Colorado last week joined a growing list of states that are expanding Internet sales tax collection. North Carolina and Rhode Island last year passed similar laws. We sympathize with the need of many states to raise money in this troubled economy, but state lawmakers have no business promoting the collection of a tax so widely disliked by their constituents. According to a Parade Magazine reader survey, 85% of consumers oppose sales taxes on Internet sales. Not that consumers are big fans of new taxes, but surveys show consumers are much less opposed to other types of taxes if necessary to plug budget gaps. By substantial margins they prefer alternatives such as higher sin taxes, income surtaxes on the wealthy, etc. to address budget shortfalls. In addition, taxes on alcohol and tobacco tend to discourage behavior that is very costly to society, and U.S. taxes on the wealthy, thanks to a series of tax cuts over the last half century, are among the lowest among the developed countries.


Continue reading Don't Tax Internet Purchases.