cr> Re: FCC Sets Comment Date for Internet Phone Challenge


Sender: "Audrie Krause" <•••@••.•••>

Ed -

Thanks for the clarification.  I'm forwarding your message to the
cyber-rights folks who are working on this issue.

I'll stick with "bypass" in the future.


To:            •••@••.•••
Subject:       Re: FCC Sets Comment Date for Internet Phone Challenge
Date:          Mon, 11 Mar 1996 00:13:38 -0500
From:          Ed Frankenberry <•••@••.•••>

> There are four weeks between now and the April 8 deadline for filing
> comments with the FCC on the "modem tax" issue.

Hi Audrie,
I would avoid using the label "modem tax" in reference to this issue.
As you probably know, there was an internet message containing
misinformation about an alleged FCC modem tax proposal.  This note
was widely circulated and continues to reappear (since it contains
no expiration date).  Any time you refer to "FCC modem tax", it's
likely to cause many people to ignore the message (in the same
vein as chain-letter appeals for Craig Shergold).

Since the issue concerns use of the internet to carry real-time voice
traffic (which the telephone companies and long-distance carriers
consider illegal "bypass"), I don't think "modem tax" even applies.
So in the interests of clarity, perhaps we should refer to the
inquiry as bypass and avoid the confusion surrounding modem tax.

Audrie Krause     * Executive Director *    CPSR
Computer Professionals for Social Responsibility
P.O. Box 717   *   Palo Alto   *   CA   *  94302
Phone: (415) 322-3778    *   Fax: (415) 322-4748
Send E-mail to:                 •••@••.•••
Web page:


Sender: •••@••.•••

Audrie wrote:
  > There are four weeks between now and the April 8 deadline for filing
  > comments with the FCC on the "modem tax" issue.  I would like to
  > encourage the Cyber Rights Working Group to formulate comments to
  > submit to the FCC, and to do so in time for me to ask CPSR's Board
  > of Directors to sign on.
  > From the information I've seen on the cyber-rights discussion list,
  > it appears there are some fundamental economic justice issues at
  > stake in the "modem tax" issue, as well as technical issues about the
  > internet. It seems to be the sort of policy issue where CPSR can
  > bring its unique perspective on socially responsible use of
  > information technology.
  > I'd like to encourage members of the Cyber Rights Working Group to
  > develop a position statement on this issue.
  > Is anyone interested?

I'm interested, but I won't have much time.  This looks like
it may be a *very* tough issue for us.  Part of the difficulty is
how the issue is framed.  Already, the phrase "Modem Tax" has become
an overworked urban legend to many.  Yet that soundbyte will still
generate outrage amoung thousands of newbies, and knee-jerk reactions
among many oldies too, once they realize it's no longer a 100% false alarm.

But more fundamentally, this issue may reveal profound philosophical
and ideological differences between (if you'll permit pure archetypes here)
those who favor government taxation as a means of distributive justice,
vs. those who favor individual/corporate economic freedom, and who
loathe both governments and taxes.

Today's narrow issue seems to be over redistribution of costs from
ISPs to the local phone companies who complete the "last mile" of
a voice connection.  But if local phone companies get squeezed more,
they'll scream even louder about the "onerous burden" of subsidizing
today's notion of "universal lifeline service".

The narrow issue today is voice telephony via the internet, but how can
we (who?) distinguish voice from other content?  Will someone institute
standards (either govt, industry, or net.RFP) for *labelling* content?
Will some entity have the power to determine whether an encrypted stream
is properly content-labelled?

As the Haves increasingly conduct both informal communications and
formal economic commerce on the nets, that removes these flows from
their current channels, in which they are taxed by governments.
As commercial streams are diverted into cyberspace, government
revenue streams will dry up.  See, eg, "Prop 13 Meets the Internet:
How State And Local Government Finances Are Becoming Road Kill
On The Information Superhighway", by the Center for
Community Economic Research (

Content labelling solutions (like the V-chip) bring us further over
the slippery slopes of censorship (both govt and private sector), and
imply a renegotiation of the American balance of power regarding searches.
Yet if, as a society, we do not single-out voice content for taxation
today, how will we ever be able to tax economic transactions in
cyberspace?  How will we ever implement sales or income taxes?

For the record, in situations where economic freedom (for some)
is diametrically opposed to social justice, I support the latter.
Because without measures to achieve some economic parity, those on the
losing end of the economic "free" market find their *political* freedom
gets redistributed to the top 1% of this country, who already control
more wealth (and mass media, and politicians) than the bottom 90%.

 * The average corporate Chief Executive Officer (CEO) in the U.S. now
   brings home 149 times the average factory worker's pay.

 * Based on analysis from the 1992 Census, half of American families had
   net financial assets of less than $1000. The bottom 40 percent of
   families had debts that exceeded their assets.

 * The world's 358 billionaires have a combined net worth of $760 billion
    -- equal to the wealth of the bottom 45% of the world's population.

I oppose my telecom taxes going to fund wars, but I support taxes
that fund telecom devices for the deaf, "universal" access, etc.  I
strongly support the proposed Tobin tax on international currency flows
(arguably one of the best ways to avoid the meltdown of communities and
cultures by unaccountable transnational corporations).  But how to enforce
such taxes without either content-labelling or a per-byte charge?
Seems either a per-month or a workstation tax would be regressive.

One of the keys to this "modem tax" issue will be whether the
funds are earmarked for perceived socially beneficial purposes, and
whether they are administered by a *trustworthy* entity.  But if the
issue is framed so that dominant net.perception views it as money down
the FCC rathole to subsidize "inefficient telco dinosaurs", it'll be tough.

Republican oligarch Steve Forbes seems to think net worth == self worth:
"In America, there's no difference between values and economics.
They are one and the same."  John Malone, head of cable industry leader
TCI (and a big fan of Rush Limbaugh) says, "I tend to look at cable and
telephone as part of one big food chain.  Right now, the higher mammals
are doing the eating."   But what of the Have Nots, the "little people"
at the bottom of that food chain?  Do they deserve any human rights?
Or will net.culture accept the robber barons' Social Darwinist ideology --
that the little people are on the bottom because they deserve to be there
(they lack intelligence, ambition, personal responsibility, and laptops)?

-rick    •••@••.•••

   "Once the great dialectic was capital versus labor. Now it's the conflict
   between the comfortable and the deprived. And the comfortable see
   government as the threat because it is the only hope for the deprived."
              -- John Kenneth Galbraith (in Mother Jones, M/A 1994

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