[12656] in Commercialization & Privatization of the Internet
EFF and the big bad T (tax) word [long]
daemon@ATHENA.MIT.EDU (Daniel J. Weitzner)
Wed May 25 20:23:50 1994
Date: Wed, 25 May 1994 13:45:24 -0600
To: com-priv@psi.com, alt-politics-datahighway@cs.utexas.edu
From: djw@eff.org (Daniel J. Weitzner)
Cc: frezza@radiomail.net, don.wills@swc.com
Frezza is at it again, flooding the net with his extreme right wing
diatribes. He uses the term "tax" the same way that the word "communist"
was used in the 50s during the red scares. Well, EFF has been "tax-baited"
by someone who disagrees with our politics in the same way as HUAC used the
epithet Communist to discredit political opponents.
EFF has never directly called for an "information tax," in Frezza's words,
but everyone should be aware that we have supported two kinds of public
support for net/information access, which, certainly could be characterized
as taxes. They are these:
1. Universal services in the current telephone rate structure: In the
current telephone rate structure there are many internal funding flows from
certain classes of users to others. For example, it costs more to provide
telephone service to some users than to other, either because of distance
or population densities. We implicitly support this kind of rate structure
in the current monopoly residential phone market. We explicitly rely on
this kind of pricing to keep single user access to the Internet, other
information services/networks, and ISDN affordable.
There are those who would argue that this internal cross-subsidy is a form
of tax inasmuch as it forces some users to pay more than they might for a
service and directs that money to the "socialistic" end of providing
affordable service for all. I don't think that there is anything wrong
with taxing for important social purposes. But if you don't like the T
word, then you can look at these funding flows as rational choices about
how to distribute the common costs of keeping a national network of
networks in operation. A network that only serves a limited part of the
population is useless, therefore it makes sense to price it so that
everyone (almost) can be online.
What will happen to this subsidy source in the future, as monopoly phone
services become more competitive? In the ideal world, competitive pressure
will force prices down to the point that less support is needed in order to
keep services affordable. But, it is unlikely that this will happen all of
a sudden, and quite poossible that many areas will not experience the
benefits of competition for some time. Until and unless the market works
perfectly, some form of subsidy (whether internal or external) will be
required. The precise choice of mechanism will depend on what the market
structure looks like, and EFF is not in a position to predict that. We
will have to deal with that over time as actual competition evolves.
2. Direct subsidy to end users: EFF has supported direct goverment support
to subsidize network access for libraries, schools, and other public
institutions, where those institutions could not otherwise afford to be
online. We first made these arguments during congressional debates about
internet commercialization, and still, as far as I know, support this
notion. In 1992, when internet commercialization was still a relatively
unknown quantity, we predicted that market forces would go a long way
toward lowering prices and increases access, but that some institutions
might still need direct support. At the time, the monopoly internet
provider (ANS/Merit) and its supporters argued that if you opened the
internet market to competition, then many public institutions would never
be able to afford net access. As an alternative, EFF favored direct
support as a way to enable users to purchase service on the competitive
market, and because we recognized that some institutions would just never
have the resources to purchase access to the net.
All of these issues have been previously addressed in our written policy
statements, and in previous postings to this and other groups.
For those who are interested, I repost this initial reply to EFF critics on
this issue from just a few weeks ago:
[Reposted from May 2, 1994]
For the last few weeks, disputes have been raging about EFF's Open
Platform position. I regret that I have not been able to participate more
actively in these discussions, but I do want to add a clarifying word or
two here.
Frezza seems to suggest that any and all regulation is, of
necessity, a bad thing. His test for wise telecommunications policy is:
"less is more." If you believe that anything government does can come to
nothing but evil, then this is probably a good maxim. In fact, if your
political beliefs run in this direction, then you'll probably be
disappointed with most of what EFF does in the policy realm.
Stahlman has accused of being Bell Company running dogs by
including broadband services in our policy discussion and by allegedly
dropping our initial support for widespread deployment of ISDN. Since he
believes that mass-market access to interactive, high capacity transport
services is a myth for all time, he believes that we've bought into a lot
of misguided rhetoric.
These comments are specifically in response to some of the concerns that
Bill Frezza and Mark Stahlman have raised:
What if Stahlman and Frezza were around when the Communications Act
of 1934 was debated? That law guarantees all of us access to affordable
telephone service. Frezza would probably have railed against the
"entitlements program" being created, claiming that we should just let the
market take care of providing phone service to rural areas and
hard-to-serve regions. Stahlman would have mandated for time immemorial
crank-up phones with multiparty line access only, on the theory that this
whole "telephone age" was just a bunch of hype.
The Electronic Frontier Foundation (EFF) believes that markets do a
great job of generating technological innovations. However, sometimes
markets fail to distribute goods equitably around the country. Where the
"good", in this case communication, is essential to democracy, we believe
that government has a role to ensure that universal access to basic
communication service is available.
For the last two years, EFF has been at the forefront of crafting
policies that promote an open, accessible information infrastructure. To
correct Stahlman's erroneous assertions, we have not given up on ISDN. To
the contrary, EFF has succeeded in having legislative provisions designed
to encourage near-term deployment of Open Platform services (including but
not limited to ISDN) included in major telecommunications legislation now
working its way through Congress. We have also worked for affordable ISDN
tariffs in a number of states. Switched, digital services are an important
first step in providing access to an increasingly high-capacity information
infrastructure.
EFF believes that there is a need to gradually upgrade the
definition of universal services, so that if and when people come to depend
on multimedia information access for important economic and political
activities, that no one will be denied access to such services solely
because they can't afford the cost of transport. I should emphasize that
this redefinition of universal services is and should be an incremental
process. No one is going to wave a magic wand (or Federal Register) and
declare that there should be immediate switched broadband access to every
home. Rather, as people come to use advanced services more and more, we
should look at policy mechanisms to keep this service affordable and
accessible. Market forces will hopefully play a role in keeping prices low
and quality high, but we should not be so naive as to expect that the
market alone will meet all needs.
This kind of regulation is not a matter of charity to poor, but
serves to ensure that we have a seamless national communications system.
Ironically, in light of Frezza's sharp critique of
EFF-as-welfare-statist, we believe that the Open Platform proposal is
critical for promoting the emergence of a free, open market in new digital
information services. Our support for ISDN began and continues because of
the realization that this switched digital technology can be the basis for
many new, innovative services, but that most telephone companies (the only
ones able to provide this service) were failing to deploy it or price it
affordably. This is the kind of regulation that even a free-marketeer
ought to love: it creates that platform for a free market.
In the end, I doubt that Frezza or Stahlman want to live in a
totally deregulated communications environment. Frezza relies on
orderliness in the airwaves so that messages he sends out via RadioMail
arrive without interference from other services. Federal regulation
maintains this order. Stahlman has nationwide access to MCI Mail because
of a ubiquitous, affordable telephone network, another result of government
regulation.
In closing I want to stress that comments made by Stahlman and
others on these lists have been of real help to EFF's internal policymaking
process, just as I hope that they are informative for others on the net.
EFF makes no promises shape our policies for every political stripe of the
online world, but we will do our best to listen and engage in active
dialogue about these issues.
**************************************************************************
"Only in a police state is the job of a policeman easy."
--Orson Welles
......................................................................
Daniel J. Weitzner, Deputy Policy Director <djw@eff.org>
Electronic Frontier Foundation 202-347-5400 (v)
1001 G St, NW Suite 950 East 202-393-5509 (f)
Washington, DC 20001
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