July 2010

Americans are turning away from home phone lines and toward mobile, but a federal program continues to pour $8 billion a year into phone service for rural homes and businesses. But as the nation looks to wireless and fiber broadband networks as its on-ramp to e-mail, tweets and Skype calls, lawmakers and regulators have called for sweeping changes to the Universal Service Fund.

AT&T and Verizon were the top recipients of Universal Service Fund grants last year. The companies point to the subsidy as symbol of backward regulation, among a string of policy moves by the federal government that the companies say could hurt the economy. They also have argued against a proposal to redefine broadband as a telecommunications service, saying the move could lead to rate regulation and force them to share their networks with competitors. The FCC has proposed redirecting the program to support broadband. The agency has also suggested that only one provider in a geographic area receive grants.

Public interest groups say there needs to be better oversight of whether firms getting the money truly qualify for it. The groups also say that wireless technology is cheaper to deploy than traditional phone lines or underground fiber networks, but that cellphone companies don't seem to be getting smaller awards. The groups also say the FCC should recalculate how much money it distributes for broadband connections because the return on investment is so much greater for Internet service. That should make companies better able to pay for their own operating costs without federal assistance, said Derek Turner, a policy director for the public interest group Free Press.

Intel, the US chipmaker, is close to settling a long-running antitrust suit with the Federal Trade Commission, bringing to a close a legal battle that has dogged the world's largest chipmaker for more than 10 years.

The settlement will include concessions on its business practices, according to a person familiar with the deal, but will not include fines because the FTC does not have the authority to issue civil penalties. The FTC accused Intel of abusing its dominant position in the chip market over the past 10 years, including using tactics to dissuade customers from buying PC microprocessors (CPUs) from its main rival Advanced Micro Devices. The FTC also said Intel had blocked competition in the graphics chip market. Intel faced similar scrutiny in Europe, Japan and South Korea, and last year regulators in Brussels imposed a record €1.06bn ($1.44bn) fine on the company for breaking competition law.

[Commentary] Annual online sales across the United States will account for nearly $150 billion in 2010. But cash-strapped states, including California, won't get more than a fraction of the $18.6 billion of sales tax they should be collecting.

Congress and state legislatures need to find a way to end online retailers' unfair advantage over brick-and-mortar businesses -- and to reap a fair share of revenue, since so many states rely heavily on sales taxes to balance their budgets. Consumers enjoy the cheaper prices for products online. But local businesses that create jobs and generate revenue for our communities deserve to be on an equal footing with their online competitors as a matter of principle. And we all will benefit from the additional tax revenues that pay for public safety, transportation projects and other services. It's been 15 years since Jeff Bezos launched Amazon.com and introduced large-scale e-commerce to the world. When online companies like his were startups, it made sense to allow them a grace period on collecting sales taxes to promote a new industry. A case still can be made that small Web-based companies with sales of less than $100,000 should be exempt from collecting sales taxes. But too many large online and catalog businesses are enabling their customers to be tax cheats.

If California had collected online tax revenues for the past decade, it would have an additional $10 billion at its disposal today, reducing its deficit by more than half. The Golden State is in no position to let another dollar of potential revenue go uncollected.

Executives from six major media organizations wrote to Reps. Peter King (R-NY) and Steve Israel (D-NY) on July 19 after the pair pushed for an overhaul of retransmission consent rules.

At stake are the regulations governing fee negotiations between broadcasters and paid distributors such as cable and satellite operators. Distributors say television broadcast stations have too much power in the talks because they can pull their content. Broadcasters argue that cable and satellite's dependence on their programming means that broadcasters deserve muscle to negotiate their compensation.

Signed by executives from News Corporation, Walt Disney, CBS Corporation, the National Association of Broadcasters, NBC Universal, and Univision Communications, the Monday letter asked Israel and King to rethink their stance. The pair had circulated a "dear colleague" letter trying to galvanize support for rules changes and calling on the Federal Communications Commission to take up the issue.