A Busy Year for IT in DC

FEATURE: Broadband, Internet tax cuts, spyware and Chinese fair trade issues dominated debates on Capitol Hill this year.
Posted December 17, 2004

Roy Mark

Lawmakers and U.S. regulatory officials wrestled with a packed IT agenda this year, setting a policy course on a number of important and complex issues.

Voice over IP , online fraud, spam and international trade are just a few of the hot topics that flashed across their plates this year. Here is a look at some of them as the 109th Congress prepares to convene in January.

The Congressional Touch

A year ago, Voice over IP barely registered on Washington's tech radar. In 2004, though, it became the star of the show.

As the year began, Congress and the FCC effusively praised Internet telephone service as the Holy Grail for mass-market consumer broadband adoption, much as e-mail was for the dial-up generation. Both lawmakers and regulators vowed to clear the path for IP-based services.

The FCC took initial possession of VoIP regulatory issues, launching a regulatory review that has already yielded a ruling, classifying Internet telephone calls as interstate commerce and not subject to traditional state telephone regulations and tariffs.

Congress' enthusiasm for VoIP, though, began to wane when states started to complain that proposed VoIP legislation held the potential for enormous revenue losses to cities and counties. The VoIP debate -- what it is and what it isn't -- even spilled over into bills that were not VoIP-specific.

Concerned over the scope of IP services contained in legislation designed to extent a tax moratorium on Internet connections, the Senate let the ban expire for more than a year before a compromise could be reached.

Beyond its brief flirtation with VoIP, Congress in 2004 turned its attention to Internet taxes, content (online pornography and gambling, in particular), peer-to-peer (P2P) piracy and spyware. In the end, Congress decided on tax breaks and left the rest to the 109th Congress.

While Congress maintained the status quo on most technology policy issues, President Bush announced his intention to provide universal access to broadband connectivity for all Americans in the next two years. The White House was short on the specifics of this issue, but addressed its commitment to tax cuts, deregulation and more free trade.

After passing the CAN-SPAM Act as its 2003 centerpiece technology legislation, the election-year Congress delivered tax breaks for both Internet consumers and high-tech multinationals.

But on more contentious issues, Congress managed to buy itself an additional two years. Lawmakers kept Internet connections tax-free for the next three years to maintain a six-year-old policy aimed at improving U.S. broadband penetration rates, which remain among the poorest of leading industrialized nations. For corporate tech, Congress threw in a handsome one-year reduction on foreign profits.

And siding with Silicon Valley contentions that technology is neutral, lawmakers rejected, at least for the time being, Hollywood's efforts to criminalize P2P file sharing.

FCC: More Platforms for Broadband Deployment

Though the FCC was knee-deep in VoIP, the powerful agency also managed to move forward on expanding broadband delivery platforms and maintaining holding actions in various challenges to its rulings -- including a controversial spectrum swap between Nextel and first responder networks.

In the course of a yearlong review of all IP-based services, the FCC ruled Internet telephone services must comply with national wiretapping laws. Emergency 911 calling, handicap access and connection fees with the traditional copper-based networks are still to be determined for the fledgling industry.

To foster additional broadband competition for the Bells and the cable companies, the agency cleared the way for commercial deployment of broadband over power lines (BPL), classifying BPL as an unlicensed service and drafting rules primarily aimed at limiting interference with licensed radio services. To spread wireless broadband deployment across rural regions, the FCC voted to allow unlicensed wireless devices to operate at higher power in the 3650 MHz band.

No year at the FCC is complete, however, without controversy, and the agency dealt it up by approving in August Nextel's spectrum license. The company was granted 10 MHz of beachfront spectrum currently used by public safety agencies and private wireless licensees. Those users will be relocated to a portion of the band that Nextel will turn over. Verizon objected, calling the deal a "multi-billion dollar windfall for Nextel at taxpayer expense."

The sides, however, have since made up, with Verizon agreeing to drop its objections if Nextel will relinquish trademark rights to the phrase "push-to-talk," "PTT," and all related "push" names in relation to walkie-talkie technology.

FTC: Battling Congress Over Spyware

Spam and spyware dominated the Federal Trade Commission's agenda in 2004. In addition to drafting the rules and regulations to fully implement the provisions of the 2003 CAN-SPAM Act, the agency also spent the year telling a trigger-happy House of Representatives that federal anti-spyware legislation is not necessary.

The House passed two anti-spyware measures, but House Energy and Commerce Chairman Joe Barton (R-Tex.) was unable to find the "go getters" in the Senate he said he needed.

In the end, the FTC won another two years to prove its premise that the problem is best dealt with by enforcement of existing fraud laws, industry technology solutions and intensive public education campaigns.

The new federal campaign against commercial spammers has had little time to take full effect, but early indications are the landmark legislation is showing promise in controlling content, if not volume. A recent report from enterprise e-mail management firm Postini says spam continues unabated. However, it also notes that sexually explicit e-mail has been reduced by 78 percent since January 2004.


The U.S. Trade Representative won two significant trade compliance issues with emerging technology power China.

In July, Beijing agreed to end China's policy of giving rebates to domestic producers of integrated circuits while levying a 17 percent Value Added Tax (VAT) on imported semiconductors. U.S.-based chipmakers and manufacturers contended that the policy resulted in a tariff designed to keep other competitors out of China's $19 billion market for such chips.

China will no longer certify any new semiconductor products or manufacturers for VAT refunds. In addition, China will not offer VAT refunds that favor semiconductors designed in China. And by April 1, China plans to stop providing VAT refunds on Chinese-produced semiconductors to current beneficiaries.

China also agreed to support a worldwide standards approach to third-generation wireless by indefinitely suspending a deadline to impose a proprietary wireless LAN encryption scheme within its borders.

At the conclusion of intense April trade talks in Washington, China backed away from a plan to require all foreign semiconductor manufacturers to use a little-known standard called the Wired Authentication and Privacy Infrastructure (WAPI), which is incompatible with the open global wireless security standard (IEEE 802.11 and 802.11b) used by chipmakers and electronics manufacturers.

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