Katie McAuliffe

Circus at the Antitrust Hearing

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Posted by Katie McAuliffe, Laurel Duggan on Thursday, July 30th, 2020, 3:03 PM PERMALINK

Congressional hearings of tech CEOs Sundar Pichai (Google), Jeff Bezos (Amazon), Mark Zuckerberg (Facebook), and Tim Cook (Apple) devolved into an hours-long circus as Democrats used the opportunity to create reelection campaign fodder.

The purpose of this hearing was to investigate alleged anticompetitive behaviors of dominant tech companies. About 25% of the questioning was somewhat related to antitrust policy—and this is a generous estimate. The remainder of questions revolved around partisan talking points like online hate speech, YouTube radicalization, and conservative censorship.

Antitrust law under the consumer welfare standard is designed to protect consumers from harm by monopolistic companies, not to protect companies from each other. None of the companies called before the Antitrust Subcommittee can be considered monopolies. Each one of them competes with other companies, tech or otherwise, both small and large, for revenue. And they are not using their strong positions in the market to harm consumers. Rather, they have each been using their resources to provide better products and slash prices.

Representative Armstrong (R-N.D.) wisely noted the harms of sweeping expanses of government power targeting certain companies, rather than going through the Federal Trade Commission’s already existent enforcement authority under the consumer welfare standard that operates on a case by case basis:

“When we try to hurt large companies, we entrench large actors and lock out new, smaller competitors."

On the rare occasion that Democrats’ questions were related to antitrust, the line of questioning belied the entire premise of the hearing: that concentration in tech is harming consumers. Time and time again, members of Congress asserted that Amazon and Facebook’s competitive strategies were harming their competitors by driving down prices. But the purpose of antitrust is to protect consumers, not competitors.

The mere fact that Apple was called to testify tells us that the hearing is not about antitrust; the hearing is about anger. Anger at tech for a number of reasons, but mostly because they are big.

Apple is in no way a violator of competition policy. Their primary business is hardware and software, not advertising, not data. They only hold 20% of the smartphone market13% of the personal computer market, and 28% of the tablet market. Tablets are the only personal device market in which Apple is dominant, and their share of that market is shrinking. As for operating systems, Android has more than double the market share as compared to Apple.  

“Apple does not have a dominant market share in any market where we do business. That is not just true for iPhone; it is true for any product category." ~Tim Cook

Apple created the entire App environment. Rather than keeping it as a closed system, they allowed individuals to create Apps which, once in line with certain conditions that provide security and support, can be downloaded by anyone on the App store. Some have complained that Apple’s App store discriminates against Apps that are not its own, but that opinion can’t be held for very long after looking into Apple’s policies, which they are very transparent about.

If Apple is a gatekeeper, what we have done is open the gate wider. We want to get every app we can on the Store, not keep them off.” ~Tim Cook 

In a particularly misguided line of questioning, Rep. Cicilline (D-R.I.) harangued Jeff Bezos for Amazon’s treatment of third-party sellers. “You say Amazon is only focused on what’s best for the customer. How is that possible when you undercut your prices and compete directly with third-party sellers?” Rep. Cicilline sees a conflict of interest between hosting outside retailers and offering low prices to consumers. He somehow fails to see that the diversity of retailers on Amazon drives down their prices, making products cheaper for consumers. 

Rep Cicilline went on to accuse Amazon of a litany of abusive business practices against retailers on its own site. He, along with several other members of Congress, claimed that Amazon exploited the small businesses it hosts through predatory pricing, and claimed that these businesses had no option other than Amazon.

There are 1.7M small & medium-sized businesses selling in Amazon’s stores. 200,000+ entrepreneurs surpassed $100,000 in sales in our stores in 2019. We estimate that third-party businesses selling in Amazon’s stores have created over 2.2M new jobs. ~Jeff Bezos 

In reality, Amazon has to compete with all retail, including Target, Costco, Kroger and Walmart, in addition to numerous online platforms that host third-party retailers, including Etsy, Facebook Market, EBay and Google Shopping. Even if this wasn’t the case, Amazon would have no obligation to host retailers on its privately-owned platform, and retailers have no obligation to use their services.

Like any retailer, Amazon could have chosen to keep their stores a closed system, selling only their own products. Instead, they opened the platform to hundreds of thousands of third-party retailers, many of whom are small businesses.

20 years ago, we welcomed 3rd-party sellers into our stores & enabling them to offer their products alongside our own. We didn’t have to invite third-party sellers into the store. We could have kept this valuable real estate for ourselves.” ~Jeff Bezos

Rep. Raskin (D-Md.) complained that Amazon’s Alexa was a monopoly, since it holds a 60% share of the smart speaker market. But if you define any market this narrowly, you’ll find monopolies everywhere you look. If you define your neighborhood as a market, your local gas station is a monopoly. Of course, Alexa devices compete in a much broader market than that; the device competes with smartphones, tablets, and personal computers, all of which conduct most or all of the same functions.

Rep Jayapal (D-Wash.) and Rep. Neguse (D-Colo.) both incorrectly called Facebook a monopoly. Not only is Facebook not a monopoly, they are not even the dominant firm in their market—the largest social media platform is YouTube. Additionally, Facebook’s primary revenue source is advertising. They aren’t dominant in that market either; Google beats them out by a wide margin.

In many areas, we are behind our competitors. The fastest growing app is #TikTok, and the largest messaging app is iMessage.” ~ Mark Zuckerberg

To provide one example, the cost of online advertising has plummeted 40% in the last decade. If Google has monopolistic power in the advertising realm, why aren’t they raising prices? The obvious answer is that there is robust competition in online advertising. Google competes with Facebook, Twitter, Pinterest, Comcast, and countless others for ad revenue. 

“Competition in ads — from Twitter, Instagram, Pinterest, Comcast & others — has helped lower online advertising costs by 40% over the last 10 years, with these savings passed down to consumers through lower prices.” ~ Sundar Pichai 

Democrats were also hostile to acquisitions and mergers, which they claimed were harmful to both consumers and competitors somehow. Rep. Neguse questioned Zuckerberg about acquisitions, condemning how successfully Facebook had acquired and improved various products and services. Never mind that these acquisitions improved the apps’ privacy and security features while making more apps free to the public. If the success of American businesses makes Democrats uncomfortable, then by all means we should let them weaponize antitrust law to beat private businesses into submission.

Those who want to expand government power favor a narrow definition of tech markets because they have no real evidence in terms of demonstrable consumer harm or rising prices. It allows them to build an antitrust case out of bitterness, and little else.

The presence of four companies—all of which compete with each other—should be sufficient evidence that there is no risk of monopolization. Competition in tech—from hardware to software to advertising—is robust. 

Photo Credit: POMED


The 4th Amendment is a Right - No Need to EARN IT

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Posted by Katie McAuliffe, Laurel Duggan on Monday, July 27th, 2020, 2:44 PM PERMALINK

It is easy for those in power and the broader public to see new technologies—the telephone, email, cloud storage, or end-to-end encryption—as somehow exempt from the privacy laws which govern other communications. But as technologies become more widely used for business and personal communication, we all come to understand the need to protect our interactions from surveillance.

Encryption is not a force for evil. It is used by businesses across the country to prevent online attacks and theft. It is common practice for hackers to target retailers in the U.S. to steal customer data and access their bank accounts, but attacks like these are largely impeded by encryption. When hackers stole the banking information of millions of customers in Target’s infamous data breech, the victims’ bank accounts were protected because their PINs were encrypted.

Encryption also promotes innovation. Businesses and individuals have little incentive to create and discover if their intellectual property will simply be stolen by criminals or foreign actors.  Innovation requires protection of proprietary data.

Building in a systemic weakness, while it may make law enforcement’s job easier, does not make anyone safer. Creating backdoors for law enforcement to get around encryption would weaken the technology as a whole; backdoors can be exploited by criminals to access users’ personal data.

The tension between the Fourth Amendment and Law Enforcement goals is not new and is important to preserve. Officials claim that encrypted data is “warrant-proof,” but this misrepresents the purpose of a warrant. Search warrants allow law enforcement to search for evidence, but do not guarantee that they will find evidence supporting or leading to any conclusions.

Encryption doesn’t just protect us from criminals; it protects us from the prying eyes of the government. The FBI has waged a years-long battle against encryption, which it views as an impediment to investigations. The federal government has been intercepting electronic communications for as long as it has been possible; federal agents began wiretapping phone calls in the 1920s. It tends to take the government years to adjust to changes in communications technology; it took decades for the Supreme Court to place limits on warrantless electronic surveillance.

Following years of unsuccessfully pressuring tech companies to give the government a backdoor to encrypted data, Congress and the Department of Justice changed their strategy. A high profile letter sent by U.S. intelligence agencies and numerous international allies linked end-to-end encryption with child sexual exploitation, claiming that Facebook would be harming children by offering encryption on its messaging services.

Reframing the encryption debate around the most heinous crimes imaginable is dishonest; it posits that, because criminals use their privacy to exploit the most vulnerable people in society, no one has a right to privacy. This line of thinking also presupposes that Big Brother is unfailingly benevolent; the FBI will have a backdoor to all online communications, but not to worry: they will only spy on you if you deserve it.

In a misguided attempt to address the very real problem of online child exploitation, Senators Lindsey Graham (R-S.C.) and Richard Blumenthal (D-Conn) introduced the EARN It Act. The legislation has honorable goals, but in practice would limit the ability of tech firms to offer encryption to users. This would restrict the ability of all Americans—including survivors of abuse—to protect their privacy and personal safety while online.

After a firestorm of criticism from across the political spectrum, the Senate Judiciary Committee approved a manager’s amendment to the EARN It Act. The amendment resolves the aspects of the original bill that would have threatened encryption most seriously: businesses cannot be held liable simply for failing to take actions that would undermine encryption services, and offering encryption will not be automatic grounds for liability for child sexual abuse material (CSAM). Critics point out that the amendment provides only a defense against liability, not immunity; the threat of litigation will still be sufficient to discourage tech companies from providing secure end-to-end encryption.

The amendment removes the legal authority initially granted to the commission created in the bill; the commission’s standards will be recommendations, not legal requirements. It also extends the amount of time that providers can preserve the contents of a report, which will help with the development of algorithms made to detect CSAM. 

However, the manager’s amendment brings a new set of problems to the table. It allows states to penalize companies with both civil and criminal liability. In addition to balkanizing the legal landscape for a business model that naturally crosses state lines, this would leave American tech businesses vulnerable to a firehose of destructive lawsuits. Endless litigation would likely lead to the end of America’s global leadership in tech. 

The amendment also revokes tech companies’ liability protection based on “actual knowledge” of the existence of CSAM. This is a step up from the “recklessness” standard in the earlier version of the bill, but it still creates perverse incentives that discourage tech companies from investigating CSAM. When knowledge triggers liability, companies will avoid learning about potential CSAM cases. This will lead to less, not more, action by tech companies to stop the spread of CSAM.

The ability to use privacy services provided by a private business is part of what makes our country great and distinguishes us from authoritarian countries like China, where the government is entitled to the private data of citizens. Efforts by the government to weaken encryption should raise red flags and inspire a continued effort to protect encryption.

Photo Credit: Jonathan McIntosh


Coalition Supports Digital Goods and Services Tax Fairness Act

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Posted by Katie McAuliffe on Tuesday, July 21st, 2020, 4:33 PM PERMALINK

Americans for Tax Reform has released a coalition letter with 19 signers supporting the Digital Goods and Services Tax Fairness Act. The full letter can be read below, and here.

 

Support S. 765 & H.R. 1725 the “Digital Goods and Services Tax Fairness Act of 2019”

Dear Majority Leader McConnell, Minority Leader Schumer, Speaker Pelosi, and Republican Leader McCarthy,  

We urge you to support the Digital Goods and Services Tax Fairness Act of 2019, introduced by Senators John Thune (R-SD) and Ron Wyden (D-OR) and Representatives Steve Cohen (D-TN) and John Ratcliffe (R-Texas) as S. 3581 and H.R. 7058 respectively. This legislation would set up a framework for states to prevent duplicative and discriminatory taxation on the digital economy, if and only if, a state chooses to tax such commerce.

It is important to clarify that this bill would not mandate any state to tax a digital good or service, nor would it establish any sort of national sales tax on digital commerce. The framework provides legal certainty for how and when state and local taxes can be applied to the digital economy. The state in which a customer legally resides would determine the tax status of the digital transaction. It would also eliminate confusion for consumers and businesses by ensuring the taxation of a digital song or software downloads is the same as the tax rates imposed on music or software CDs purchased at the local store.

Given the unique way digital commerce is transacted, it is currently possible for multiple states to claim the right to impose taxes on a given digital transaction, leaving the consumer potentially subject to multiple and duplicative taxes. Congress has previously addressed a very similar disruptive tax situation with the use of mobile phones by clearly identifying which state has the right to tax wireless services. The existing state laws governing interstate commerce are outdated to the point where they cannot adequately address the complexities that surface in digital sales. Considering how rapidly the digital market is growing, the need for this legislation is imperative to provide a clear roadmap for states to follow, if they so choose, to fairly impose taxes on digital goods and services in today’s new economy.

This bill would also prevent discriminatory state and local taxes that single out digital goods and services merely because they are transmitted over the internet. Right now, states can choose to impose higher tax rates on digital subscriptions than are imposed on physical subscriptions. For example, a state could tax an online newspaper subscription at 5% and a physical subscription at 3%. If a product is subject to tax collection, it should not matter whether it is received digitally. This type of tax discrimination unfairly penalizes people participating in the digital economy.

Accordingly, we urge you to enact the Digital Goods and Services Tax Fairness Act of 2019 before the end of this Congress.

 

Respectfully,

 

Grover G. Norquist

President

Americans for Tax Reform 

 

Lisa B. Nelson

CEO

ALEC Action

 

Steve Pociask

President / CEO

American Consumer Institute

 

Ryan Ellis

President

Center for a Free Economy

 

Andrew F. Quinlan

President

Center for Freedom and Prosperity

 

Curt Levey 

President

Committee for Justice

 

Matthew Kandrach

President

Consumer Action for a Strong Economy

 

Tom Shatz

President

Council for Citizens Against Government Waste

 

Katie McAuliffe

Executive Director

Digital Liberty

 

George Landrith

President 

Frontiers of Freedom

 

Mario H. Lopez

President

Hispanic Leadership Fund

 

Bartlett Cleland

Executive Director

Innovation Economy Institute

 

Andrew Langer

President

Institute for Liberty 

 

Seton Motley

President

Less Government

 

Pete Sepp

President

National Taxpayers Union

 

Karen Kerrigan

President & CEO

Small Business & Entrepreneurship Council

 

David Williams

President

Taxpayers Protection Alliance

 

James L. Martin

Founder & Chairman

60 Plus Association

 

Saulius “Saul” Anuzis

President

60 Plus Association

Photo Credit: Marco Verch


Coalition Opposes SCRIPT Act

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Posted by Katie McAuliffe on Wednesday, July 15th, 2020, 1:39 PM PERMALINK

Americans for Tax Reform has released a coalition letter with 16 signers opposing the SCRIPT Act. The full letter can be read below, and here

 

July 15, 2020

RE: Stopping Censorship, Restoring Integrity, and Protecting Talkies Act, SCRIPT Act, S. 3835

Dear Senators:

Conservatives and libertarians are rightly concerned about censorship. While we must be zealous in guarding our 1st Amendment rights at home, conservative and libertarian leaders are also right to be deeply concerned about totalitarian regimes around the world and the restrictions they impose on freedom of thought -- from the Great Firewall of China to social media censorship in the Middle East to Russian threats to freedom of the press.

As a part of this justified vigilance, some have expressed concerns that China’s role in American filmmaking may result in censorship that extends even beyond China’s borders. This worry is most clearly expressed in S.3835, the SCRIPT Act, introduced by Senator Ted Cruz. 

The SCRIPT Act would sever all federal government cooperation for at least three years with any production company found by the Department of Commerce to have edited a film for any reason, no matter how innocuous, in order to exhibit it in China. 

While we share the Senator’s concern with reports about Chinese censorship of American films, we think this legislation will do more harm than good for two main reasons: first because the remedy suggested would have a negative effect on the interests of the US military, and second because the legislation itself uses as its remedy the application of a government penalty toward artists, which ironically would impinge at least on the spirit of our freedom of expression.

Filmmakers rely on cooperation with the government for basic production needs – not just access to fighter jets and battleships. For example, filming with drones is subject to Federal Aviation Administration rules, and filming on public lands requires permits from the Department of the Interior. These and other unglamorous – but commonplace and vital use cases – would be jeopardized by the SCRIPT Act.

The military’s involvement with Hollywood is not guaranteed. The DoD regularly denies requests from filmmakers to allow access to bases, training or equipment. However, sometimes the DoD does choose to assist in filmmaking and when it does, it is reimbursed for its time and provides valuable portraits of American military achievements that are both more realistic and engaging for audiences, while safeguarding classified or sensitive information. These accurate but vetted depictions, and the resulting favorable treatment of the US military, benefit our military recruitment and is conducive to fostering an American culture that looks favorably on military service. Withholding this cooperation for any reason would not be in the interests of the United States military.

It should also be considered that this bill itself ironically directs government action regarding the decisions filmmakers make on the cutting room floor. Bringing this coercion, however mild, and for whatever reason, to bear on this process from the United States seems ill-advised in our effort to tear down the walls of censorship erected by totalitarian regimes. 

China admits very few films into its market, but when it does, scenes that many Americans take for granted - plentiful grocery stores, assembled protests, university experiences, dinners out - present the benefits of democracy and capitalism in ways that are both understandable and relatable to international audiences. These scenes have been effective historically in influencing populations around the globe, for example in the former Eastern Bloc. 

These new regulations would handicap one of America’s leading export industries into all international markets, including regimes practicing censorship, to the benefit of their foreign competitors. Today, the U.S. film and television industry accounts for a $9.4 billion trade surplus, more than telecommunications, transportation, insurance, or health services. This policy would ultimately weaken America in the long-term economic competition with our international rivals.

Censorship internationally is a legitimate concern and we support efforts to address these issues. However, solutions should honor American free-market and limited government principles. It is China, after all, that routinely intrudes on the private dealings of business and suppresses private sector success.

We respectfully oppose the SCRIPT Act, and instead suggest lawmakers focus on stronger more direct solutions to the economic, cultural and geopolitical challenges represented by China and other totalitarian regimes.

 

Sincerely,

 

Grover Norquist

President

Americans for Tax Reform

 

Phil Kerpen

President

American Commitment

 

Krisztina Pusok

Director of Policy Research

American Consumer Institute

Center for Citizen Research

 

Andrew F. Quinlan

President

Center for Freedom and Prosperity

 

Jeffrey Mazzella

President

Center for Individual Freedom

 

Ashley Baker

Director of Public Policy

The Committee for Justice 

 

James Edwards

Executive Director

Conservatives for Property Rights

 

Matthew Kandrach

President 

Consumer Action for a Strong Economy

 

Thomas Schatz

President

Council for Citizens Against Government Waste

 

Katie McAuliffe

Executive Director

Digital Liberty

 

Hance Haney

Senior Fellow

Discovery Institute

 

George Landrith 

President & CEO

Frontiers of Freedom

 

Mario H. Lopez

President

Hispanic Leadership Fund

 

Tom Giovanetti

President

Institute for Policy Innovation

 

Brandon Arnold

Executive Vice President

National Taxpayers Union

 

David Williams

President

Taxpayers Protection Alliance

Photo Credit: Vincent Diamante

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ATR Supports Reconfirmation of Mike O'Rielly to FCC

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Posted by Katie McAuliffe on Tuesday, June 16th, 2020, 2:45 PM PERMALINK

​​​​​ATR President Grover Norquist has released a letter in support of the reconfirmation of Commissioner Michael O’Rielly to the Federal Communications Commission.

 

June 16, 2020

The Honorable Roger F. Wicker

Chairman United States Senate Committee

on Commerce, Science, and Transportation

555 Dirksen Senate Office Building

Washington, DC 20510

 

Re: Support of Nomination of Michael P. O’Rielly, Federal Communications Commission

Dear Chairman Wicker & Member of the Senate Committee on Commerce, Science and Transportation.

I write in support of Michael O’Rielly’s re-nomination to the Federal Communications Commission.

Since his first nomination in 2014, he has proven his commitment to American leadership in communications. He has a strong record of defending American interests globally and promoting economic development domestically, and his leadership will be essential to American efforts to win the race to 5G in the coming years. 

Free market principles and American leadership have been central to Commissioner O’Rielly’s work at the FCC. He has successfully pushed to make more C-Band spectrum commercially available, allowing the United States to come out ahead of China in the race to 5G. This is of vital importance both economically and in terms of national security. He also been a leader in many other spectrum proceedings, including TV white spaces, 6 GHz, 5.9 GHz, and 900 MHz.

Commissioner O’Rielly’s regulatory policy is grounded in Constitutional principles. He has promoted regulatory modernization efforts which emphasize economic freedom and limited government. Regulatory reform efforts have facilitated broadband expansion across the United States and allowed our industries to become globally competitive. The success of these efforts had been evident throughout the COVID-19 crisis, as our networks supported record internet traffic. Commissioner O’Rielly’s work in recent years set up our country for a rapid transition to telehealth, remote work, and distance learning.

While at the FCC, Commissioner O’Rielly has reduced waste and fought against corruption, abuse, and fraud. He demanded increased accountability from the International Telecommunication Union, shed light on states’ misuse of 911 funds, and drew attention to the abuse of the USF Lifeline Program.

Among the commissioner’s most important achievements at the FCC is his fight against the misuse of 911 funds by state governments. Several states habitually diverted money from 911 funds to pay for unrelated expenses in violation of the law. The abuse was egregious, with New Jersey diverting over 90% of its 911 funds to its general fund. Corruption on this scale damages public safety and erodes the public’s trust in our institutions. By shedding light on this issue, Commissioner O’Rielly has proven his commitment to fighting corruption and advancing government transparency.

Commissioner O’Rielly has proven himself to be a principled and effective leader. He has a vital role to play in the implementation of 5G and the modernization of communications regulation in the coming years. Americans for Tax Reform urges the reconfirmation of Commissioner O’Rielly to the FCC. 

 

Onward,

Grover Norquist
President, Americans for Tax Reform

 

Photo Credit: Gage Skidmore

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Fond Farewell to FCC Chairman Ajit Pai

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Posted by Katie McAuliffe on Wednesday, January 20th, 2021, 1:52 PM PERMALINK

Americans for Tax Reform would like to express our gratitude for the important work that Federal Communications Commission Chairman Ajit Pai accomplished throughout his tenure. 

The following statement can be attributed to Grover Norquist, President of Americans for Tax Reform:  

"During the Trump Administration, Ajit Pai’s nomination as Chairman of the FCC was second in importance only to Neil Gorsuch. Chairman Pai stood up to doomsayers prophesizing the destruction of the internet if the government didn't exert more control over the internet's infrastructure. Guess what — It didn’t happen. Even under the added stress of the pandemic, the internet not only worked, it thrived. Congratulations to Chairman Pai's many successes at the helm of the Commission, and I wish him well in his future endeavors."

The following statement can be attributed to Katie McAuliffe, Executive Director of Digital Liberty and Americans for Tax Reform’s Director of Federal Policy

"Chairman Pai led the most transparent and productive FCC in years. No longer are DC insiders the only ones to know beforehand what the Commission is doing. Under his direction, proposed orders and rulemakings had to be publicly available three weeks in-advance of an FCC vote. Before, items were not public until after the Commission voted on them. For daring to remove excessive regulations on the internet, Chairman Pai faced harassment and threats of violence against him and his family. But it was those actions nonetheless that kept the internet working, while connecting more Americans than ever to broadband, throughout this pandemic. I thank him for his service and look forward to what the future has in store for such a dedicated public servant."

The Pai FCC has a long list of accomplishments ranging from internal agency reforms to deregulatory policies that maximized benefits to all Americans. 

During the Pai FCC, the Commission doubled its productivity from previous ones. The average Commission meeting under Chairman Pai voted on 6 items while previous ones ranged 2 – 4. The Pai FCC did this while reaching record levels of bipartisanship as well.   

Chairman Pai remarked that when he was just a staffer at the FCC, he was told dozens of times that agenda items could not be made public before Commission meetings. As Chairman, he changed that policy in the first two weeks to increase transparency. The result was that the American people now have the same access to agency plans that only lobbyists or DC insiders had before. 

Chairman Pai also ensured the FCC would have access to sound economic analysis for agency decision making. During his tenure he advocated for the creation of the Office of Economics and Analytics at the FCC. This new office consolidated economists across the agency which increased independence and added to the professionalism of their work. 

In 2018, the Pai FCC passed the Restoring Internet Freedom (RIF) Order, which repealed short-lived Obama-era regulations on internet-service providers. Activists on the left scare mongered that this would bring “an end to the internet” or that the internet would populate one word at a time. These claims were absolutely baseless. In actuality, in the two after passage of RIF, we saw increases in broadband investment, increases in network speeds, and 10x times the number of cell sites deployed than in previous years. This occurred despite the COVID-19 pandemic where internet traffic dramatically increased. In places like Europe where they held onto their utility-style regulation, they saw decreases in speeds, and had to take preventative measures to prevent networks collapsing.  

The Pai FCC also took unprecedented steps to repurpose spectrum. Spectrum is a finite resource that is necessary for wireless communications. Repurposing spectrum is a must be done, but it can be immensely difficult. To quote the Chairman, “there is no more greenfield spectrum available. That means there are no easy solutions. Whenever you explore new uses for spectrum, you’re going to draw battles with incumbents or others worried about harmful interference.” In 2018 Chairman Pai promised to make more spectrum available for 5G over the next 3 years than what was already available. And he did it. The Pai FCC opened up almost 5,000 megahertz of spectrum for use by 5G technologies. 

Americans now rely on the internet more than ever to go to work, go to school, and receive healthcare. The Pai FCC laid the groundwork to reverse-auction billions in funding to develop rural broadband and telehealth programs; ensuring that American tax dollars will be put to their best use in bridging the digital divide.  

These accomplishments are just a handful of many that will improve the lives of American citizens and businesses in ways obvious, and no-so-obvious ways for a generation to come. We wish the Chairman the very best of luck on what the future has in store for him. 

Photo Credit: Gage Skidmore


COVID Relief Package: Broadband Funding Guardrails

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Posted by Katie McAuliffe on Friday, December 18th, 2020, 12:14 PM PERMALINK

While broadband funding may have a place in an end-of-year COVID Relief Package, the current proposal doesn’t include many of the widely agreed upon goals of extending broadband to unserved areas and looks more like a Trojan Horse for pet projects that don’t actually help Americans dealing with fallout from the pandemic. 

First, it does not include money for mapping, which is a necessary component for identifying areas that actually need federal funding to reach unserved area. 

Second, it lacks any guardrails that would ensure that the money is actually directed at those unserved areas. 

Accordingly, Congress should focus on funding existing FCC plans to improve broadband maps. The Broadband DATA Act requires the FCC to develop these better maps, and the FCC says it needs $65 million to implement the law.   

The FCC has been begging Congress to for these funds, but instead of this minimal spend for maximum benefit, the COVID Relief Package includes expansive pet projects that would lead to network overbuilds and shoddy municipal networks. 

The FCC is already distributing $16 billion for service in unserved areas through the current Rural Digital Opportunity Fund (RDOF) auction. All Commissioners have said time and again that the most pressing need is to develop better maps that can identify census blocks that are partially served so as make these areas eligible for support in a future funding round.   

 If Congress includes new funding for broadband infrastructure as part of a Lame Duck package, it should follow several important principles to actually move the needle on extending broadband to unserved communities and homes:   

  1. focus funding on unserved areas and use a challenge process to verify;  
  2. avoid conditioning funding eligibility on antiquated regulatory classifications that discourage participation from otherwise qualified broadband providers – you shouldn’t be required to offer phone service in order to qualify for funds to provide broadband;  
  3. make awards on a technology-neutral basis (no fiber preferences); and   
  4. include robust accountability measures to ensure funding is used for its intended purpose within specified timeframes.   

 

These are pretty simple requirements that would lead to maximum benefit for people most in need. Building new networks run by in experienced local governments in areas where broadband availability already exists, does not solve the problem. 

We’ve already set aside billions of dollars, outside of the upcoming COVID Package, what needs to be done in the current agreement is fund the mapping process, so dollars go where they are needed most. Not throw billions of taxpayer dollars in the air and see where they land. 

Photo Credit: Wikimedia commons


ATR Supports Nathan Simington for FCC

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Posted by Katie McAuliffe on Tuesday, December 1st, 2020, 9:44 AM PERMALINK

Today, Americans for Tax Reform sent a letter to Majority Leader Mitch McConnell urging him to confirm Nathan Simington as Federal Communications Commissioner before the end of this year.

The continue reading for the full letter text or click here.

 

December 1, 2020

The Honorable Mitch McConnell
Senate Majority Leader
S-230, The Capitol
Washington DC, 20510
 
Re: Support of Nomination of Nathan Simington to the Federal Communications Commission
 

Dear Majority Leader McConnell:

I write in support of Nathan Simington’s nomination to the Federal Communications Commission.

In the past four years, the FCC, under Chairman Ajit Pai’s leadership, has made major accomplishments in promoting resilient networks that spurred broadband deployment and investment. This foresight and swift action during the pandemic, kept Americans connected through the volatile and uncertain times faced by families as COVID-19 emerged globally.

Right now, Joe Biden is poised to inherit a Democrat-led FCC on day one.  Under long-standing tradition, the current Republican FCC Chairman Ajit Pai will step down in January.  Likewise, current Republican FCC Commissioner Mike O’Rielly will leave the agency when Congress adjourns in a few weeks because his term has expired.  This means that the normally five-member FCC would be controlled by Democrats, 2-1, starting on January 20.  That would give the agency the opportunity to jam through a partisan Biden agenda.  While floor time is limited during the Senate’s lame-duck session, confirming Simington this year would ensure a 2-2 FCC that could forestall billions in economic damage.

The Commission’s role in Restoring Internet Freedom to stop so-called net neutrality prevented regulations that would have treated broadband providers like utilities under Title II of the Communications Act. This created an environment for $80 billion of dollars in investment from 2018 through 2019.  It also prevented giving states and localities the ability to institute their own taxes and fees on broadband networks.

Republicans should not underestimate the harm that a Democrat-led FCC could impose on the American economy during Biden’s first 100 days.

A Biden Administration will likely lean on the FCC to help push through an agenda focused on taxpayer funded broadband, as it did during the Obama years. Many states have opposed taxpayer funded municipal broadband networks, while other states have pursued this path. The courts prevent the Obama era FCC from inserting itself into states who opposed municipal broadband networks. Meanwhile, we have watched networks consistently fail in states that chose to pursue taxpayer funded networks.

A Democrat-controlled FCC is expected to significantly increase its spending of Americans’ hard-earned dollars.  They can do so immediately through the FCC’s Universal Service Fund without any input or check from the Senate simply by adding charges to American’s telephone bills. Democrats have also called for massive increases in in the FCC’s Lifeline and E-Rate programs. Internet connectivity has become even more vital as many of us continue to work, educate, visit doctors, and entertain from home. However, this does not necessarily mean increases in spending are necessary. The FCC has done much to redirect funding  and audit subsidies.

5G connectivity has been a rallying cry across the isles, and while spectrum auctions are sure to continue, another democrat priority may involve rolling back FCC rules that limit how much cities can charge telecom companies for 5G cell sites. Bringing cities in line with market rates has encouraged and expedited the spread of important 5G infrastructure.

By confirming Simington now as Commissioner to the FCC, the Senate can forestall the impending economic harms and damage to deregulatory policies from the last four years.  While the Senate calendar is tight, spending the necessary floor time to get Simington confirmed to the FCC is the most economically beneficial use of Congress’s time.

Americans for Tax Reform urges you to confirm Nathan Simington to the FCC before the end of this year. Simington’s confirmation now would ensure a 2-2 FCC at the outset of a Biden Presidency.  The FCC could continue to pursue important initiatives on a bi-partisan basis, but it would be blocked from jamming through partisan initiatives—whether those involve profligate spending or an anti-growth agenda. Should you have any questions or comments on this matter, please reach out to me, or our Director of Federal Policy, Katie McAuliffe, kmcauliffe@atr.org.

Onward,

Grover G. Norquist
President
Americans for Tax Reform

Photo Credit: David Berkowitz


The Courts Are Cooked - EU Targets American Companies for Budget Shortfalls through Lawsuits

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Posted by Katie McAuliffe on Thursday, November 19th, 2020, 12:16 PM PERMALINK

The European Commission is about to propose a “revolutionary” overhaul of digital regulation. They say it is to protect competition, and the little guy, but it is actually about using fines to fill budget shortfalls. 

These so-called revolutionary digital regulations will specifically target American tech companies, and we can be sure these new rules will be a pathway to target all successful American companies. Today all business is in some part digital. 

The EU through its Commissioner for Competition, Margrethe Vestager, says it wants to make tech giants more responsible for the content on their platforms, and ensure that competitors have a fair chance to succeed against the big firms. This is supposedly being achieved by numerous antitrust proceedings against primarily American companies. This is in combination with an eminent December announcement of the new Digital Services Act, which is expected to overhaul the management of content on platforms like Google and Facebook.

The EU claims to have the interest of fair competition at heart. But we don’t have to look very hard to find the true motives. Money. American money.

In a deal between the European Parliament and the German Council of the EU presidency, instead of requiring EU leaders to reopen a €1.074 trillion budget agreement reached in July, they found a creative way to top-off some programs at a price tag of €15 billion rather than the roughly €110 billion that MEPs had initially demanded. 

How did they get creative? Of the €15 billion, €12.5 billion will come from funding gained through competition fines imposed by the bloc on… American companies. 

This means Vestager has been directed by the EU to fill a budget gap with fines and fees resulting from competition investigations. Any company targeted by an EU competition proceeding can be sure that the proceedings won’t be fair – they are already guilty – and the fines will be high.  

Its no small coincidence that the same day of the agreement, Vestager announced two investigations on Amazon.

This isn’t the first time the EU looked to American companies to fund their budget shortfalls. Back in 2012 they planned to use nearly €3 billion in antitrust fines to fund part of their €11.7 billion budget shortage. Soon thereafter Microsoft lost their long-standing appeal on cases dating back to 1998 and 2008 with fines totaling out at €1.64 billion. At the time these were the largest fines the EU had ever issued, but they are on a serious upward trajectory. 

In 2017 the EU began a three-year series of investigations into Google. The initial fine in 2017 of €2.4 billion is greater than what 18 other countries contributed to the EU’s budget that year. In fact, Google’s fine would contribute more to the EU’s budget than the bottom 9 contributing countries combined.

But it didn’t stop there. Google saw another record breaking fine of €4.3 billion in 2018 and another antitrust fine of €1.5 billion in 2019 for a total of €9.3 billion in fines over three years. All fines are being appealed. 

The EU budget is unsurprisingly convoluted. Transfers from member states are one element of the budget. Fines, when collected, are used to offset transfers from member states. Overall, many states receive more back from Brussels than they contributed, making them net recipients.

The perverse incentive is clear, and the fairness of these proceedings is certainly in question. If these fines contribute more to the budget than most member states and fines are accounted for on the front end to fill budget gaps, no company can expect a fair hearing in the EU. They just want the money and will craft their laws however they need to fleece American companies.

It’s not new behavior either. The EU has been using its courts to fund its budget for decades. The EU levied 38 individual fines totaling €364 million on companies for breaching competition law in 2015. Uncontested fines from 2015 along with penalties collected from earlier cases that were upheld provided €1.4 billion in revenue in 2015, according to the European Commission.

With a total budget of around €165.8 billion in 2019, member states contributing meagerly, and in the wake of a global pandemic, we can be sure that rather than balance their budget or look to their own population and member states, the EU will be heaping on the competition fines for American companies.

Europe desperately crafts their laws for ill-gotten financial gains. They have been pushing a highly predatory digital tax structure that was written in such a way to only hit American companies after numerous European companies, including automotive manufacturers, pointed out that all companies are digital and that European “champions” would be swept up in the cull. This was confirmed when the OECD admitted that it would impossible to separate the digital economy from the rest of the economy for tax purposes. The digital tax structure, which in varying forms has passed in some countries but not EU wide, was revamped to specifically write out European companies. 

We can be sure the “revolutionary” Digital Services Act expected in December will be just another crafty legal avenue for Europe to fill its budget holes.

It doesn’t matter how you feel about any company. What’s alarming is that Vestager has a budget gap she has been directed to fill, meaning fines and settlements with these companies is a forgone conclusion and few of the companies targeted will be European.  

Photo Credit: European Parliament

More from Americans for Tax Reform


ATR Leads Coalition Protecting Satellite Broadband Deployment

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Posted by Katie McAuliffe on Friday, October 16th, 2020, 5:29 PM PERMALINK

Today Americans for Tax Reform led a coalition of conservative groups asking the Federal Communications Commission to deny a request that would revive a dead petition for rulemaking that would allow two-way use in the 12.2 – 12.7 GHz spectrum band. 

See the letter below and linked to here

Allowing this petition to move forward could disrupt the development of certain satellite networks that have the potential of providing high-speed broadband across the entire country. 

Proponents of the petition believe freeing up this portion of the spectrum would speed-up America’s deployment of 5G technologies. However there are no current standards for 5G technology in 12.2 – 12.7 GHz spectrum and it could take the International Telecom Union – the body that allocates spectrum globally – almost a decade to give us 5G access.  

The deployment of 5G technology is critical to American success at home and abroad, but granting this petition would create confusion and actually slow our deployment. 

The opportunities and innovation that will come from providing every American with high-speed broadband outweigh any benefit that could come from allocating this spectrum for 5G. 

You can read our full letter to the FCC below and here.   

October 16, 2020

VIA ECFS 

Marlene H. Dortch
Secretary 
Federal Communications Commission 
445 12th Street, S.W. 
Washington, DC 20554 

Re: Petition for Rulemaking to Permit MVDDS Use of the 12.2-12.7 GHz Band for Two-Way Mobile Broadband Service, RM-11768

Dear Chairman Pai,

The undersigned have a fulsome record supporting the Federal Communications Commission’s efforts to expand access to spectrum that will allow 5G services; however, we respectfully request that the Commission deny the Multichannel Video and Data Distribution Service (MVDDS) petition for rulemaking and calls to move forward with their NPRM regarding two-way use in the 12.2-12.7 GHz band. 

The FCC has made leaps and bounds in connecting the unconnected in unprecedented times. One of the ways the Commission has pursued these goals is by approving novel provisions of broadband service. As such, in 2018 the FCC licensed several Low Earth Orbit (LEO) non-geostationary orbit (NGSO) satellite constellations that will utilize the 12Ghz band, which is shared with Direct Broadcast Satellite (DBS), in order to provide high-speed broadband internet to rural and remote users to help close the digital divide. 

Just two years following FCC authorization in 2018, the U.S. is leading the world with nearly 800 satellites deployed, billions of dollars in private capital invested, thousands of U.S. jobs created, and initial service started.  While satellite broadband service has been available for years this new generation of satellites employs updated technologies that promise to cover the nation with true high-speed broadband, including gigabit speeds, and latency acceptable for a wide variety of uses, including Internet of Things (IoT) which provide exciting opportunities and applications that can only be deployed via satellite.

With the success of these networks, the Commission could achieve at least two of its goals:
1)    Universal high-speed broadband access – the opportunity to connect the unconnected in unserved areas.
2)    Increased competition in the market for the provision of high-speed broadband services, that may drive down consumer costs.
 
In an effort to connect all Americans, this Commission has unanimously supported the deployment of low earth orbit satellite networks. These networks may very well be the solution for closing the digital divide and connecting rural areas without service. While the petitioners’ goal is providing more options and new entrants for 5G, that goal comes at a cost of severe interference to the latest generation of satellite broadband networks that are a year out or less from providing full service.

IP traffic will dramatically increase in the coming years  and these satellite networks will add to the options and opportunities families and businesses have to access the internet and offload mobile traffic. Any arguments citing the expected dramatic increases in internet traffic highlight the need for these new competitive broadband options, not for interfering with them. The Commission should not hamstring these efforts just as they are about to become available to millions of Americans.

Changing the rules now would pull the rug out from U.S. NGSO systems just as broadband service is starting. It would negatively impact investment and materially degrade the ability for these systems to provide service to consumers, especially in remote and rural areas  where 5G is a very very distant reality. 

Competition drives down prices. Research from US Telecom published on September 16, 2020 shows that speeds are increasing and prices are dropping. “The most popular tier of broadband service in 2015 is now priced 20.2 percent lower and offers 15.7 percent faster speeds in 2020,” and “the highest speed offerings in 2015 are now priced 37.7 percent lower and offer 27.7 percent faster speeds in 2020 on an average.”  This is only among residential fixed broadband competitors.

Joining the mix, at least one satellite provider will offer speeds of up to a gigabit per second and latencies from 25 milliseconds to 35 milliseconds.  These speeds will compete in a very real way with fiber, cable, DSL, satellite, 5G, and other broadband offerings. All types of broadband services compete with each other and having more providers in the market drives down prices for everyone – in rural and urban areas. Relegating this service only to rural areas, because of the new interference proposed by Petitioners, could rob the satellite sector from attracting sufficient customers to justify full deployment.

Use of this spectrum would not significantly enhance American’s position in the race to 5G. The 12GHz Band is not optimal for 5G.  The need right now is mid-band spectrum in the range of 2GHz to 6GHz. The 12GHz spectrum clearly has utility, but, due to well-known propagation and capacity constraints, telecom companies actively building and deploying networks have not made it a primary target, especially for deployment into rural areas.

There are no 5G technology standards in the pipeline for this band and receiving new ITU allocations for global 5G access could take nearly a decade. Many in the record have argued that – were the FCC to grant this petition – the spectrum should go back up for auction under the new allocation,  which would further delay deployment for any of the suggested technologies such as, fixed broadband, mobile and IoT. These are all technologies that MVDDS is not likely to deploy quickly since it is not itself a 5G technology nor it has not developed methods of broadband connectivity in the last 15 years.

Deploying 5G technologies is not incompatible with the nation’s goal, and this Commission’s goal, of connecting all Americans to high-speed broadband. However, creating harmful interference with these new satellite networks is incompatible with the nation’s goal of every American having the opportunity to connect to high-speed broadband, if they choose. Satellite systems must be part of the critical infrastructure for delivery into rural areas.

For these reasons, the undersigned request you deny the MVDDS modification petition.

Respectfully,

 
Grover G. Norquist
President
Americans for Tax Reform

Steve Pociask
President / CEO
American Consumer Institute

Krisztina Pusok
Director of Policy and Research
American Consumer Institute
Tom Schatz
President
Citizens Against Government Waste

Jeffery Mazzella 
President
Center for Individual Freedom

Matthew Kandrach
President
Consumer Action for a Strong Economy

Katie McAuliffe
Executive Director
Digital Liberty

Jason Pye
Vice President of Legislative Affairs
FreedomWorks 

Brandon Arnold
Vice President
National Taxpayers Union

James L. Martin
Founder/Chairman
60 Plus Association

Saulius “Saul” Anuzis
President
60 Plus Association

Jim Dunston
General Counsel
TechFreedom

Photo Credit: Steve Jurveston


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