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Tech Industry

An e-contract for the 21st century

Sen. Jim DeMint and former House Majority Leader Dick Armey say it's time to uproot existing communications and Net regulations.

The tech world is on the move, with AT&T's pursuit of BellSouth just the latest sign of a market transforming itself for tomorrow's technologies. Congress must move just as quickly if Americans are to enjoy the full benefits of this new digital age.

Some, like House Minority Leader Nancy Pelosi, believe that the best way to realize the full benefits of emerging technologies lies in more government micromanagement through increased spending, targeted tax incentives and new mandates.

We are reminded of a famous quip from former President Ronald Reagan: "Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it." Innovation is currently being thwarted by regulations impervious to change. We believe consumers will be better served if our government leaders demonstrate the wisdom to simply step out of the way.

To unleash the full potential of the coming technology age, we propose Congress embrace a new "e-Contract" with American consumers that will uproot the existing regulatory paradigm. The results would be unprecedented economic growth, job creation and technological progress, as well as a growing Internet free from government intervention.

1. Open the door to competition. Over the last century, each new technology generated its own regulations: telephones, broadcast media, cable television programming and wireless service. But today, cross-platform competition has become the standard as the ones and zeros of digital technology eliminate distinctions between voice, data and video services. Cable companies already compete in the voice market, and telephone companies stand ready to provide video programming. Wireless and WiMax technologies are eroding "last mile" monopoly problems and creating even more opportunities for competition. Tunnel vision that ignores competition across platforms and technologies must be replaced with a competition standard that opens the market to all competitors.

Congress must extend the tax moratorium to allow the Internet to be protected from piecemeal state and local taxation like we do for other types of interstate commerce.

2. Avoid new mandates that stifle investment in the networks of the future. Open access mandates in the 1996 Telecommunications Act made it difficult to recoup investments in new high-speed networks while leaving regulators to arbitrate who had access to what networks at what prices. Moving forward, "Net neutrality" has become the new rallying cry for those seeking mandated access to new high-speed networks. But these networks will be built only if they can attract the necessary capital. New access mandates and regulatory uncertainty will make this much more difficult to achieve.

3. Extend the Internet access tax moratorium. Pre-emption of state and local Internet access taxes (and discriminatory taxes on Internet goods and services) expires Nov. 1, 2007. Internet commerce reaches far beyond state--even national--borders, and allowing local tollbooths undermines the substantial consumer benefits created by this important dynamic. Congress must extend the tax moratorium to allow the Internet to be protected from piecemeal state and local taxation like we do for other types of interstate commerce. This is sound economic policy, and will allow America to remain one of the most dynamic and productive nations in history.

4. Stop U.N./European Union efforts to control the Internet. As a the result of EU demands to end U.S. control over the Internet's root servers and addressing system, the United Nations will soon launch an official effort to create the Internet Governance Forum (IGF). While the IGF would have no official power, it is the next step in creating a global body to control Internet decision-making. U.N. control poses a number of serious economic, practical, taxation and freedom issues. Currently, Internet management is a private-sector operation overseen by the U.S. government; Congress must ensure the future of this successful model.

5. Reform spectrum policies. Current policies create unnecessary scarcities that limit availability for potential new providers and technologies. Congress must adopt a market-based approach that expands the amount of spectrum available for flexible use while strengthening property rights in spectrum allocations to ensure more efficient outcomes.

6. Achieve the proper balance of federal and state authority. Video franchising laws provide a troubling example of excessive state and local regulations fracturing markets and delaying the deployment of new technologies. Telephone companies that already have access to local rights-of-way must apply for new franchises to add video programming to the list of services they can offer their consumers. With more than 33,000 franchises nationwide, the negotiations are time-consuming and costly. IP technologies are often national in scope, and Congress must ensure that state or local regulations do not keep these technologies out of the hands of consumers.

7. Reform outdated tax and subsidy programs. The telephone excise tax and the Universal Service Fund create distortions and play favorites in ways that will harm a new competitive marketplace. Congress should scrap these cumbersome programs and encourage competition to assure that every American has access to communication services.

8. Preserve free speech online. Pass the bipartisan Online Freedom of Speech Act to continue to exclude blogs and other Internet communications from the straightjacket of current campaign-finance laws.

Many of these essential principals of reform are embodied in S.2113, the DeMint-sponsored, Armey-supported Digital Age Communications Act of 2005. The way forward is clear. In an increasingly competitive global economy, Congress must fulfill its side of the e-Contract bargain by unleashing the competition that will allow Americans to enjoy the full benefits of the electronic economy of the 21st century.