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Dear Reader:

We wanted to let you know that, after nearly three years of operation on the World Wide Web, National Journal's Insider Update: The Telecom Act ceased publication as of January 1, 2008.

We took this step at a time when the National Journal Group is moving to increase technology coverage -- including reporting on telecommunications and broadcasting issues -- in several of its other publications. In particular, National Journal's CongressDaily -- our twice daily publication for Capitol Hill insiders -- will be adding staff in the coming weeks for this purpose.

CongressDaily will feature the kind of detailed coverage of telecom issues, both on Capitol Hill and at the Federal Communications Commission, that you are accustomed to seeing in Insider Update -- plus a lot more.

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Telecom Chief Says Net Tax Ban Is Critical

By David Hatch

(Friday, June 8) The top telecommunications adviser to the Bush administration said it is "absolutely critical" that Congress temporarily or permanently extend the Internet tax moratorium.

The ban, set to expire Nov. 1, prohibits states and localities from taxing Internet access or imposing discriminatory fees on service providers. It was originally adopted in 1998 and was last extended in 2004. Bills have been offered in both chambers to maintain the prohibition.

"As the president has said, if you want something to grow, you don't tax it," said Assistant Commerce Secretary John Kneuer, the head of the National Telecommunications and Information Administration, which advises the White House on telecom and spectrum policy.

During a speech at a broadband policy conference here, Kneuer said continuing the moratorium would enable companies to recoup their investments in high-speed Internet infrastructure without facing "legacy" regulations.

Kneuer also rejected the view that the broadband marketplace is dominated by a telecom-cable duopoly, instead arguing that emerging technologies such as broadband over power lines will ensure multiple "pipes" into homes.

He painted a rosy picture of domestic broadband adoption, a theme struck at the same event Thursday by Republican FCC Commissioner Robert McDowell. Kneuer said total U.S. broadband lines have grown 2,246 percent in 5.5 years -- from 2.8 million on Dec. 31, 1999, to 64.6 million on June 30, 2006.

The optimistic outlook of Kneuer and McDowell is in stark contrast to concerns raised by Democratic FCC regulators and lawmakers in recent months that America is falling behind other industrialized nations in per-capita subscribers.

Echoing McDowell on another theme, Kneuer questioned the accuracy of worldwide broadband rankings compiled by the Organization for Economic Cooperation and Development that cast the United States unfavorably. He warned that the findings create "disincentives" for developing countries to model their broadband policies after the United States.

Kneuer said NTIA is working with the OECD to ensure that its rankings fully reflect Internet usage here. Consumer and market forces, he emphasized, are a more effective regulator than the government.

Discussing wireless issues, Kneuer coined the term "tech neutrality" to describe the need for licensees to be sheltered from regulations that might prohibit carriers from adopting new mobile technologies. "I don't think we give enough credit to the wireless platform as a competitor to the wireline systems," he added.

Regarding telecom networks run by municipalities, Kneuer said, "If you're going to put public capital in competition with private capital, you ought to have a really good reason to do that." Noting that some municipal networks have not met expectations, he emphasized that if localities decide to offer communications, they should not receive special regulatory treatment.

On a related note, NTIA on Friday issued a report encouraging emergency responders to consider teaming with commercial carriers to construct a nationwide emergency network. Public-private partnerships are being considered by the FCC for spectrum in the 700-megahertz band to be relinquished by analog television broadcasters as they transition to digital signals.


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