Freedom Line Blog

In March of 2014, the Obama Administration foolishly announced its intent to relinquish oversight of Internet domain name functions to the so-called “global stakeholder community.”

That is a dangerous idea for innumerable reasons, as observers like L. Gordon Crovitz of The Wall Street Journal have chronicled well.  Among other risks, consider the piracy threat that surrendering U.S. oversight poses to critical American artistic industries like music and film.  Online piracy already constitutes an enormous problem to those world-leading industries, and allowing Internet governance to drift into a Hobbesian global abyss would only exacerbate that.  Or consider the censorship threat, as Crovitz recently referenced:

Since the launch of the commercial Internet, the Internet Corporation for Assigned Names and Numbers, or Icann, has operated under a contract from the U.S. Commerce Department.  American oversight freed engineers and developers to run the networks without political pressure from other governments.  China and Russia can censor the Internet in their own countries, but not globally because Washington would block tampering with the “root zone” of Web addresses.”

Fortunately, some in Congress aren’t sitting passively as the Obama Administration attempt yet another international capitulation.  In a recent letter to U.S. Comptroller General Gene Dodaro, Senators Charles Grassley (R – Iowa) and Ted Cruz (R – Texas) and Congressmen Bob Goodlatte (R -Virginia) and Darrell Issa (R – California) remind the Administration that it cannot dispose of U.S. property without Congressional consent:

The Internet as we know it has evolved from a network infrastructure first created by Department of Defense researchers.  One key component of that infrastructure is the root zone file, which the federal government currently designates as ‘a national IT asset.’  Creation of the root zone file was funded by the American taxpayer and coordinated by the Department of Defense, and the file has remained under United States control ever since.  Under Article IV, Section 3 of the Constitution, Congress has the exclusive power ‘to dispose of and make all needful rules and regulations respecting the territory or other property belonging to the United States.'”

Surrender of Internet oversight to a “global community” increasingly dominated by the likes of China, Russia, Iran and other rogues poses a terrible risk.  Fortunately, our Constitution presents a roadblock to the Obama Administration’s latest folly.  Even more fortunately, we have people like Senator Grassley, Senator Cruz, Congressman Goodlatte and Congressman Issa ready and willing to defend it.

As we have consistently highlighted, overregulation by Obama’s Federal Communications Commission (FCC) poses a grave threat to private investment in Internet service, which has thrived over two decades during both Democratic (Clinton) and Republican (Bush) presidencies because of a deliberately light regulatory approach.

The Progressive Policy Institute (PPI), in a report released this week, agrees.

In its fourth annual report on investment by American companies entitled “U.S. Investment Heroes of 2015:  Why Innovation Drives Investment,” PPI ranks the top 25 non-financial U.S. companies by their amount of domestic capital spending for 2014.  Notably, the survey highlights the danger that overregulation poses to investment and innovation, particularly in the telecommunications sector:

In the telecom industry, pro-investment policy should support ‘light touch’ regulation.  Here we have the makings of a natural experiment, since the FCC departed from this approach last February by imposing Title II regulations on broadband service.  So far in the first half of 2015, the telecom companies on our list are spending at an 11% slower pace than a year earlier.”

This offers yet another ominous warning, one that cannot be dismissed by Obama or Title II apologists as some sort of right-wing hit job.  The Clinton Administration commenced the regulatory “light touch” approach that PPI’s report references, which continued through the Bush Administration as the Internet remained one of the few bright spots in an otherwise troubled economy since 2008.  The PPI survey shows who the real extremists are, and thankfully offers a bipartisan roadmap for continued Internet investment and innovation:  less federal regulation, not more.

Throughout the “Net Neutrality” debate over whether the federal government should begin regulating Internet service under 1930s Depression-era laws intended for copper wire telephone service, we and others have warned that Obama Administration efforts to impose such regulation would dangerously stifle private investment and innovation in the telecommunications sector.

In his weekly “Information Age” column today, L. Gordon Crovitz highlights how quickly our somber prediction has proven true.  In “Obamanet Is Hurting Broadband,” Crovitz summarizes how “The predictable effect of more regulation has arrived:  Investment is plummeting”:

New data show the Obama Administration’s decision to regulate the Internet as a utility has already caused a steep drop in Internet Investment…  [I]n the first half of 2015, as the new regulations were being crafted in Washington, major ISPs reduced capital expenditure by an average of 12%, while the overall industry average dropped 8%.  Capital spending was down 29% at AT&T and Charter Communications, 10% at Cablevision, and 4% at Verizon. (Comcast increased capital spending, but on a new home-entertainment operating system, not broadband.)  Until now, spending had fallen year-to-year only twice in the history of broadband:  in 2001 after the dot-com bust, and in 2009 after the recession.”  [emphasis added]

Since the 1996 Telecommunications Act, the Internet has thrived and played a central role in maintaining America’s status as the most prosperous, most entrepreneurial and most innovative nation in human history.  That didn’t happen by accident, nor was it due to coincidence.  Rather, it occurred precisely because the federal government during both the Clinton and Bush administrations refrained from suffocating it with destructive and politically-motivated overregulation.  But Obama apparently thought he had a better idea.  Unfortunately, we’re already witnessing the regrettable result.

Meanwhile, Gallup just released its annual survey of public approval of various sectors of American life.  Standing at or near the top once again are the computer industry, the Internet industry and the telephone industry, all with high net positives.  And at the bottom, once again, is the federal government, with an atrocious -29% net negative.

All of this suggests that we would likely be better off if the computer/Internet/telecom industries regulated the federal government, rather than vice-versa.

In this week’s Freedom Minute video, CFIF’s Renee Giachino discusses the plan by President Obama and the FCC to seize unprecedented regulatory control over the Internet by reclassifying Internet service as a public utility. 

In this week’s Freedom Minute, CFIF’s Renee Giachino discusses Barack Obama’s misguided push to have the Federal Communications Commission regulate the Internet like a public utility under telephone and railroad laws drafted in the 1930s – long before the Internet (or computers, for that matter) was even invented.

“I do believe in intellectual property. I do believe you have a right to your property.”

So said Senator Rand Paul (R-KY) in response to a question following his remarks during an event last week at the Heritage Foundation titled, “Will the Real Internet Freedom Please Stand Up?”

In Article I, Section 8 of the U.S. Constitution, our nation’s Founders specifically provided for the protection of intellectual property (IP) in order “To promote the Progress of Science and useful Arts.”  While the fundamental concept of providing artisans, authors and inventors exclusive right to their respective works and discoveries has remained relatively uncontroversial for most of the nation’s history, recent debates regarding what to do about widespread infringement over the Internet have caused some to diminish IP protection by setting it aside as merely some abstract, disposable ideal.

That mindset is dangerous, both in theory and in practice.

First and foremost, intellectual property is vital to free enterprise and drives economic growth. According to a recent study by the Global Intellectual Property Center, IP-intensive industries currently employ more than 55 million Americans and account for 74% of all U.S. exports and $5.8 trillion in GDP.  Without strong IP protections, the incentive to innovate is removed, drying up investment, stalling growth and progress, and thus undercutting the entire economy.

Little if any incentive would exist for an author to write the next great novel, Hollywood to produce the next cinema blockbuster or a pharmaceutical company to develop a cure for cancer if none of them are able to benefit economically from their works.

Moreover, when the importance of IP is diminished or dismissed altogether, its protection is afforded different levels of enforcement not on par with that of physical property.  But the concept of property should not be rooted in its physical existence.  Owning property is a contract that provides the title-holder specific rights that lead to economic benefits, not simply a plot of land. In that way, intellectual property is no different than any other form of property. 

Senator Paul gets it. In his remarks – previewed as “what could be the most significant talk on Internet freedom this year” by the Heritage Foundation’s Robert Bluey – Paul declared, “There are some libertarians who don’t believe in copyright. I am not one of them. I think you have to protect intellectual property.”

Senator Paul’s comments reveal that not only do some libertarians get IP wrong, but that all property needs protection and enforcement thereof. As evidenced by over 200 years of practice, patent, trademark and copyright protections promote the general welfare and lead to great economic advantages by driving innovation and developing capital. The end result comes in the form of countless benefits from millions of IP-intensive jobs, billions in exports and trillions in GDP spilling over to the rest of society.

Property, including intellectual property, is preeminent and deserves strong protections.

2012  may be remembered as the year that Barack Obama dropped the mask. Based on his remarks at a campaign stop in Roanoke, Virginia on Friday, the president has no interest in making his peace with America’s entrepreneurs. In fact, his remarks there should make their blood run cold:

We’ve heard this rap before. It sounds suspiciously like Elizabeth Warren’s pep talk to a room full of agitated Boston liberals. But, if anything, Obama’s remarks are actually worse. Warren didn’t go so far as to denigrate hard work and intelligence, which the president seems to consider middling factors when it comes to being successful in life (note to the president: I’d absolutely love to meet these armies of workaholic geniuses who wouldn’t be succeeding without the federal government).

The asininity per square inch of this speech is pretty daunting, but here are a few corrective notes:

• Notice the examples Obama uses — teachers, firefighters, and infrastructure. These are all (by relatively expansive definitions, anyway) public goods. If there were a caucus of conservatives out there advocating boarding up schools, abolishing fire departments, and moving to a system of rope bridges, the president would have a point, but these are generally uncontroversial examples of public expenditures. Moreover, they’re not areas that are primarily financed by the federal government. Left unsaid is why taxes should increase to fund green-energy boondoggles like Solyndra, PR efforts for the stimulus package, or six-figure salaries for the Interior Department’s Twitter monkey.

• The constant liberal assertion that the economic growth of the 1990s — coming on the heels of Bill Clinton’s tax increases — shows that taxes don’t effect the broader economy confuses correlation with causation and ignores the effects of NAFTA, the IT revolution, welfare reform, etc. In truth, the 90s likely boomed less than they would have without Clinton’s tax hikes, something that the work of Obama’s own economic advisers suggests.

• Liberals love to trot out the example of the internet as government innovation that works, but it’s worth noting that the internet wasn’t designed with commercial purposes in mind, but rather as a communications tool for the military. And, in fact, many of the lingering inefficiencies of the internet stem from its government paternity, and a whole host of the improvements that have been made to it owe to market forces.

On Monday, a U.K. court took the wind out of The Pirate Bay’s sails via a ruling that may sink the popular file sharing website in England’s online seas.  Like other courts in other countries, that court ruled that The Pirate Bay is a copyright infringer because it actively encourages its 30 million worldwide users to engage in widespread theft.

The operators of The Pirate Bay — alongside many other illegal file sharing websites — don’t just passively violate laws.  Rather, they’re downright brazen in using online consumers as pawns for making millions of dollars from illicit activities – up to $3 million per month, according to expert testimony in this case.  The Pirate Bay again illustrates the toxic presence of bad actors out there on the Web who couldn’t care any less about whose property is stolen, whose jobs are threatened or even whose hard drives are being infected by online piracy.  The need to combat digital theft is therefore still very prevalent, and last month’s hysterical website blackout to protest proposed Congressional rogue sites legislation did absolutely nothing to address that issue.

The court will rule this summer on whether or not to block The Pirate Bay from U.K. Internet search results, but this decision comes on the heels of last summer’s blocking of a British content aggregator, Newzbin2, which also facilitated theft of copyrighted content en mass.  Which serves to show that site blocking is already underway in other advanced democratic nations, yet the Internet continues to thrive despite the false predictions of opponents of rogue website legislation.

It all goes to show that it’s time that we here in America also face the music.  Namely, that the U.S. remains behind in enforcing property rights, especially as relating to the online realm.  To be sure, the Internet should remain free within the bounds of law.  But it is not, should not, and cannot be lawless.  Outright theft does not become sacred simply because it occurs on the Internet, and the consequences are compounded when foreign criminal networks (e.g., MegaUpload) are turning illegal clicks into pocket-lining treasures.

This week, CFIF joined dozens of employers, entrepreneurs and groups spanning the political spectrum on Capitol Hill to ask Congress to help put a stop to online theft by rogue websites that steal jobs and cost American businesses $135 billion annually.  In this era it is rare to find an issue that achieves almost complete consensus among ideologies and interest groups, but this is one.

Rogue websites steal intellectual property (IP) through counterfeiting, knockoff goods, piracy and misappropriation of movies, music, books and software.  Such thieves don’t pay taxes, they don’t follow American laws, they cut into American exports at a time of enormous trade deficits and they cut into our jobs and earnings.  Astoundingly, such sites constitute approximately 25% of all Internet traffic (53 billion visits per year), deceive honest customers, spread malware and even threaten lives and health with counterfeit pharmaceuticals and cosmetics.

Simply put, there is no justification or defense whatsoever for rogue websites.  So what to do?

Well, on May 12, 2011 Senators Orrin Hatch (R – Utah), Chuck Grassley (R – Iowa) and Patrick Leahy (D – Vermont) along with nine other original co-sponsors  introduced S. 968, the PROTECT IP Act.  That legislation would at long last halt rogue site access to the American market and help secure the fundamental rule of law.  Because many rogue sites operate outside our borders, the Act would allow the Department of Justice or private individuals to obtain court orders halting search engine connections to sites proven through due process to be “dedicated to infringing activity.”  The Act would also require payment processors and online advertising networks to discontinue payments to rogue sites.

Chances are that you or others close to you are impacted by rogue websites causing inestimable damage to U.S. jobs and prosperity.  We can help put a stop to that travesty by supporting the PROTECT IP Act and asking our Senators and Representatives to do the same.

A group calling itself the “Progressive Change Campaign Committee,” which sounds so 2008 and even employs the same font and shade of blue as Obama’s “Organizing for America” page, is attempting to portray a false consensus in favor of new federal Internet regulation.

The group trumpets its success in getting 95 Democratic House and Senate candidates to sign a pledge favoring Internet regulation via so-called “Net Neutrality.”  But notice an interesting thing about those 95 candidates.  Namely, not a single one is in a race labeled “Solid Democrat,” “Likely Democrat” or even “Lean Democrat” by the Cook Political Report.  Not one.  Of the 95, 79 are in races labeled “Solid Republican,” with 11 in either “Likely Republican” or “Lean Republican,” and only five in races even labeled “Toss Up” by Cook.

In other words, this pledge is a “Hail Mary” by desperate candidates and Internet regulation advocates.  It also reflects the fact that significant majorities of Americans surveyed oppose new Internet regulation by the federal government.  The last thing the Internet needs right now is for the federal government to turn it into the tech version of ObamaCare, and voters shouldn’t be deceived by this sort of silly season antic.

Interesting reading from MSNBC.com explains that 46 states, plus the District of Columbia, already have internet sales taxes on the books.  However, most businesses with an online presence either don’t know or don’t pay.  In many circumstances the sales tax (as it’s called when the seller collects and reports the tax) is turned into a use tax (i.e. shifting collection and reporting to the buyer.)

The State of Alabama is apparently sending out notices for residents to pay up – for purchases over the last three years.

Here’s a list of states considering more direct legislation in order to recoup the estimated $8.6 billion in lost “revenue.”

‘Amazon laws’

States that are currently considering requiring out-of-state retailers to collect sales taxes on online transactions:

• California
• Connecticut
• Illinois
• Iowa
• Maryland
• Minnesota
• New Mexico
• South Carolina
• Tennessee
• Vermont
• Virginia
• Wisconsin

Oh, joy.

Interview with Seton Motley, Editor in Chief of CFIF’s StopNetRegulation.org, regarding the ongoing efforts to stop the Obama Administration’s attempt to regulate the Internet.

Listen to the interview here.

In letters sent today to the Federal Communications Commission (“FCC”), the Center for Individual Freedom (“CFIF”) joined with more than 150 other organizations, state legislators and bloggers in urging the FCC to abandon its plans to regulate the Internet.

The letters were organized by Americans for Tax Reform.  One of the letters reads in part:

Despite universal acknowledgement that Americans enjoy a free, open, and vibrant Internet, the FCC is relentlessly pursuing a massive regulatory regime that would stifle broadband expansion, create congestion, slow Internet speeds, jeopardize job retention and growth, and lead to higher prices for consumers.

We oppose the FCC’s effort to regulate the Internet under Title II of the Communications Act of 1934, which was written during the depression era to regulate telephone monopolies – 60 years before the Internet was ever conceived. … This regulatory ‘reclassification’ would effectively turn innovative private Internet services into a public utility.

“The already free and open Internet has sparked unprecedented growth and innovation over the last decade precisely because it hasn’t been burdened with unnecessary regulation and taxation,” said CFIF President Jeffrey Mazzella.  “The reckless desires of three unelected FCC commissioners and a few radical fringe groups on the left that wish to turn the Internet into a government-controlled public utility now threaten to grind those wheels of Internet growth and innovation to a halt.

“The Courts have spoken.  A rare bipartisan majority in Congress opposes the FCC’s plans.  And, the American people reject this unnecessary and job-killing regulatory regime sought by the FCC,” Mazzella continued.  “It’s past time for the FCC to listen and abandon its plans for a government takeover the Internet.”

To read the letters send to the FCC, click here and here.

The Hill’s popular Hillicon Valley blog mentions the letters here.

While no one in the vast right-wing conspiracy is going to outdo CFIF’s own Timothy Lee for principled and prolonged resistance to the FCC’s attempt at a backdoor takeover of the Internet, we appreciate the assist from the folks at Reason. Here, Nick Gillespie lays out three reasons to oppose Washington’s proposed conquest of cyberspace:

In this week’s Freedom Minute video, CFIF’s Renee Giachino discusses the latest scheme by Obama’s Federal Communications Commission to circumvent a federal court ruling in an effort to regulate the Internet.

The Washington Times today published an op-ed authored by Timothy Lee, CFIF’s VP of Legal and Public Affairs, on the coming Internet tax and other efforts by President Obama’s FCC to over-regulate the world wide web.

Lee writes:

The Obama Era has become a protracted, nightmarish Whack-A-Mole game of tax increases and bureaucratic self-enlargement. In sector after sector of American life, another scheme to expand government and wrench more earnings from Americans’ pockets pops up.

“Its next targeted sector?  The Internet.”

Read the entire piece on the Times’ website here.

Google stands as one of the leading cheerleaders of so-called “Net Neutrality,” that benign-sounding movement to expand government’s regulatory reach over the Internet.

“Net Neutrality” is a bureaucratic “solution” in search of a non-existent Internet problem, and it would stifle incentives for Internet service providers to innovate and expand networks.  Currently, Internet service providers invest $60 billion or more annually toward network buildout and advancement, which is critical in this age of ever-expanding web traffic.  Without that enormous service network investment and expansion, Internet bottlenecks will increase and technological evolution will slow.

But why should Google or other Net regulation proponents worry about its negative impact on consumers, Internet service providers and network expansion?  It’s much easier to remain a free rider on networks that other people have built, and sanctimoniously advocate federal regulations for others.

But a funny thing happened to Google when it attempted to test the waters itself in providing high-speed Internet service.  In a piece this week entitled “Tough Road for Google’s Network,” The Wall Street Journal reports how Google quickly discovered that building Internet service infrastructure isn’t quite as easy as it looks.  Last month, Google announced that it would build high-speed Internet connections for up to 500,000 people in America.  Just one month later, however, Google realizes that “building such a network is a giant construction problem, with the cost potentially surpassing $1 billion.”

According to Jim Baller, an attorney providing consulting services to Google, the experience has been sobering:

Beyond the cost issues and economic challenges in terms of what it takes to develop the infrastructure, to me one of the most significant barriers is that we don’t have a vision of what [ultra-high-speed Internet connections] will enable us to do.”

A Google spokesperson added:

We know that other companies have been in this business a long time.  We’re not pretending to have all the answers.”

Actually, Google did pretend to “have the answers” insofar as it advocated “Net Neutrality” regulations that would do to the Internet what the “Fairness Doctrine” would do to free speech.  Google quickly discovered how difficult life as an Internet service provider can be, and it needs to realize that “Net Neutrality” would only make it tougher.

Hopefully, Google’s experience will encourage it to reconsider its destructive position on “Net Neutrality.”  American consumers, tech sector employers and even Google itself will be better off for it.

In an op-ed publish today by The Daily Caller, CFIF’s Jeffrey Mazzella and Timothy Lee warn that proposed “Net Neutrality” rules being considered by President Obama’s Federal Communications Commission threaten to stifle Internet innovation and cut off tens of billions of dollars in private investment  in the deployment of high-speed broadband networks. 

Thanks to private investments of $60 billion or more annually by Internet service providers, the World Wide Web has blossomed over the past decade into a tool that most Americans use daily to access news, information and entertainment. We also use it to communicate with family and friends, to share photos with loved ones, and for education and civic participation purposes. The Internet drives increased commerce and promises efficiencies in the healthcare and energy sectors. It motivates new innovation and jobs on a pace that continues to surpass our collective imagination.

All this has been made possible primarily because the Internet has remained largely unregulated. Its growth and development have been gated not by federal bureaucrats, but rather by users’ individual wants, needs and dreams.

But all of that could change if net neutrality regulations are put in place. …

Read the full piece here.

Join the fight to stop the government takeover of the Internet here.

The Center for Individual Freedom (“CFIF”) this week unveiled a national grassroots campaign to rally conservatives in opposition to the Obama Administration’s efforts to impose onerous “Net Neutrality” rules on the Internet. The ‘Stop Net Regulation’ campaign, launched during the Conservative Political Action Conference in Washington, D.C., encourages Americans to get active online through a national petition and by contacting their elected officials in opposition to a government takeover of the Internet.

Join the fight by signing the online petition here.

Read CFIF’s media release here.

Despite recent bureaucratic attempts to regulate and control the Internet, there are at least some in Congress who realize that an open Internet cannot coexist with government regulation.

This week, Marsha Blackburn (R-TN) introduced H.R. 3942, a bill to block the FCC’s net neutrality regulations.  As Blackburn lamented, “The Internet is the last truly open public marketplace.  Its openness is the key to its efficiency and success.  Not all public spaces need to be regulated spaces.”

At present, H.R. 3942 has no cosponsors, but that only means you should call your representative and urge them to sign on to support Internet freedom.

Read the text of the bill here.  Read more of CFIF on net neutrality here.