A soon-to-expire ban on Internet access taxes must be made permanent by Congress, two cabinet-level Bush administration officials urged Wednesday.
In a joint statement, U.S. Department of Commerce Secretary Carlos Gutierrez and Treasury Department Secretary Henry Paulson said the "vast potential economic and social benefits of electronic commerce" depend on immortalizing an almost decade-old moratorium on Internet access taxes and discriminatory e-commerce taxes.
Commerce Secretary Gutierrez
"Preventing the taxation of Internet access will help sustain an environment for innovation, ensure that consumers continue to have affordable access to the Internet, especially high-speed Internet, and strengthen the foundations of electronic commerce as a vital and growing part of our economy," they said.
The officials' statement is likely geared toward lighting a fire under a U.S. Senate committee scheduled to vote Thursday on a bill that would merely extend the tax ban for four more years, as opposed to making it everlasting. President Bush in the past has also
Treasury Secretary Paulson
If the moratorium is allowed to expire on November 1, states would be allowed to levy taxes on digital subscriber line, cable modem, wireless and even BlackBerry-type data services. They would also be free to charge different tax rates for goods sold on the Internet and goods sold offline. It's unclear how many states would have immediate plans to enact such laws, though, if the ban lapses.
Because none of the pending permanent tax ban bills has been called up for a vote in the Senate Commerce Committee on Thursday, a temporary extension appears more likely. That approach represents a compromise of sorts with state and local officials who have balked at the idea of never having the opportunity to revisit the potential for Internet access taxes as a revenue source. (Some states are still allowed to levy such fees because of "grandfather" provisions in existing law.)
Both Sen. Daniel Inouye (D-Hawaii), who leads that Senate panel, and Senate Majority Leader Harry Reid (D-Nev.), who exercises ultimate control over the Senate's voting schedule, have pledged to renew the ban, but neither has gone so far as to call for making it permanent--in contrast to some of their Republican colleagues on the chamber's High Tech Task Force.
Editor's note: This story was updated at 10:16 a.m. PDT.
WASHINGTON--A group of state prosecutors led by California on Tuesday told a federal judge that they plan to file a request that Microsoft antitrust oversight be extended until 2012.
Right now, most portions of the settlement reached with the Bush administration and state prosecutors in 2002 are set to expire November 12. Those provisions primarily deal with "middleware," or applications that sit on top of the operating system. One section relating to server protocol licensing has already been extended until 2009.
U.S. District Judge Colleen Kollar-Kotelly said she wasn't immediately prepared to rule on the California group's request or to reach conclusions about the consent decree's effectiveness over the past five years. U.S. Department of Justice and Microsoft attorneys told her they weren't immediately prepared to comment because they both heard about the proposal last week.
Microsoft attorney Rick Rule did say that it was "premature" to talk about extending the server protocol licensing a second time so long before its 2009 expiration date.
The California group's request, which is expected to be described in more detail in a written court filing by October 15, was hardly unexpected. A few weeks ago, that group of plaintiffs--which also includes Connecticut, Iowa, Kansas, Minnesota, Massachusetts and the District of Columbia--filed a report with the court that argued the agreement reached with the government has been largely ineffective in accomplishing its stated goals. They also suggested that a 10-year term, which they characterized as "standard" practice, for the consent decree would be preferable to the existing five-year life span, particularly since Microsoft only recently released Windows Vista.
"The key product markets here are still entirely dominated by Microsoft," Stephen Houck, the attorney representing California, told the judge on Tuesday. He argued that because Redmond's "market power remains undiminished" in the PC operating system and Web browser markets, "there's no guarantee that emerging technologies" will be protected unless the oversight period is extended.
Rule indicated it was curious that the California group was simultaneously decrying the effectiveness of the consent decree while calling for its extension. "We think the picture of the computer industry is much rosier," he told Kollar-Kotelly. "We think the decree has done its job."
The Justice Department and a group of state plaintiffs led by New York also told the judge they believe the decree has been doing its job, echoing statements made in their late-August filing."Obviously we'll continue to monitor matters," Justice Department attorney Aaron Hoag said, adding Vista has undergone testing by a technical committee that all parties agree has played a key role in enforcing the settlement.
Kollar-Kotelly, for her part, said she was "prepared to listen" to whether the oversight period should be lengthened but reminded the plaintiffs to consider what she called the "narrow" framework of previous court findings. Namely, Microsoft was never found to have illegally "obtained" a monopoly in the Intel-based operating system market, she said--rather, it was found to have maintained one by unlawful means. And the goal of the antitrust settlement was not to reduce the company's market share but to "improve" users' opportunities to get access to competing middleware, she added.
"If there are going to be requests to extend (the consent decree)," she said Tuesday, "it would have to be for an identifiable purpose the court would have to consider."
Much has been made of an El Paso Times interview last week in which Director of National Intelligence Mike McConnell acknowledged the "private sector" has assisted in the president's so-called Terrorist Surveillance Program. Some opponents of the phone-call-and-email-snooping regime promptly pounced on the remarks, suggesting they implicate telephone companies like AT&T and Verizon, which have been accused in numerous lawsuits of consumer privacy violations and illicit cooperation with the Bush administration.
"Now if you play out the suits at the value they're claimed, it would bankrupt these companies," McConnell told the paper, according to a transcript. He didn't, however, mention any firms by name.
Excerpt from the Justice Department's August 29 brief in Verizon/MCI case
Arguably revelatory statements like those have prompted new questions about the Bush administration's ability to continue evoking the "state secrets" privilege in the various cases against the telcos, which are currently pending before U.S District Judge Vaughn Walker in San Francisco federal court.
The McConnell interview may play a role in Walker's courtroom on Thursday afternoon, when he's scheduled to hear arguments about dismissal of a set of now-consolidated class action suits against Verizon and then-separate MCI. Those companies have been accused of operating a content surveillance "dragnet" and of turning over subscriber records to the NSA without a warrant. (Verizon, for its part, has publicly denied providing such information to the spy agency.)
Attorneys for the plaintiffs in those suits recently submitted the McConnell transcript for the court record, in an attempt to blunt the government's contentions that proceeding with the case will endanger national security by exposing state secrets.
Not so, the Bush administration countered in a Wednesday court filing seen by CNET News.com. The Justice Department attorneys argue McConnell's statements did nothing to change the fact that it hasn't ever confirmed any of the activities alleged by the class action plaintiffs--and has, in fact, denied the existence of any sort of "dragnet." The arguments made by the class action plaintiffs rest on nothing but "speculation," the attorneys wrote. In the Justice Department's view, litigating the case would still require exposing how the program actually does work--which, it says, would in turn endanger national security.
Verizon declined to comment, but its attorneys have also argued in recent court filings that the state secrets privilege must apply. Walker, for his part, has so far declined to grant that immunity in a related high-profile case against AT&T, and a federal appeals court panel recently indicated unwillingness to side with the government on that front.
Update: Click here for CNET News.com's coverage of Thursday's court arguments about dismissal of this case.
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