A new report in The Hill notes House Republicans’ concern over “dysfunction” at the Federal Communications Commission (FCC) and the need for overhaul. Their primary concerns, at least in the elements of a Republican memo so far available, tend to emphasize the agency’s moving ahead with rulings without full publication, disclosure and opportunity for public comment, and with assuring minimum review periods in the future.
But questions for FCC, its compulsory net neutrality campaign and its enthusiasm for antitrust intervention need to go far deeper than that. To get overhaul, policymakers must themselves reject and then force FCC to reflect on and question the pro-regulatory bias that underlies everything it does. For example:
- What is the agency doing to halt and discourage antitrust interference with communications ventures (like the overly delayed XM-Sirius merger, the delayed Comcast NBC merger, the current AT&T merger with T-Mobile, its yet-to-be-seen response to Microsoft/Skype) in order to foster massive-scale infrastructure competition and rivalrous response that competitors otherwise can forgo?
- Describe FCC’s research into how innovation in user ownership (real estate developers, content companies, etc.) of portions of communications infrastructures offset market power and relax calls for net neutrality?
- Describe FCC’s recent actions to promote alternatives to neutrality regulation such as promoting cross-industry partnerships by calling for the dismantling of regulatory silos that artificially separate infrastructure like electricity, water, rail, sewer, telecommunications and transportation.
- Explain why compulsory net neutrality is the enemy of openness and expansion and what FCC is doing to combat it.
- In what sense does FCC recognize the relevant competitive challenge is not merely the “neutral” transfer of information across today’s existing networks, but the creation of networks as such?
- How does FCC intend to clarify to a confused policy environment that “neutrality” or “openness” represent one of many variable features of many types of networks that potentially can co-exist, than the defining characteristic?
- How is FCC leading efforts to avoid fostering a federally managed communications industry riven with lobbying?
- What is FCC doing to explain network management’s role in expanding infrastructure and bandwidth creation, consumer welfare, child safety, homeland security, network and information security, privacy and other desirable features of content and service, as well as reducing the vulnerability of intellectual property to piracy?
- Describe the proliferation of overlapping networks at the dawn of the communications age, and how, if America could achieve that with 1907′s GDP level, it undermines the case for compulsory net neutrality in 2011.
- Describe results of investigations into other alternatives to neutrality, such as reducing franchise, zoning, and environmental barriers.
- Describe how FCC pledges to repudiate price and entry regulations in the wake of any neutrality mandates.
- Describe how net neutrality will lessen future FCC authority and reduce its budget.
FCC concerns itself with none of these things, which is why overhaul or replacement should be on the congressional to-do list.
Last week, a New Jersey State Assembly committee considered a bill that would make it illegal to photograph minors without parental consent. The committee ultimately decided that the bill was overly broad and needed amending before it could be voted on. 
The bill came together in the aftermath of a local mini-scandal last summer in Ringwood, New Jersey. A 63-year-old man was caught videotaping 8-10 year-old girls’ at a swim meet. He allegedly told police he found the girls “sexy.” The girls’ parents were understandably furious when police informed them that they could charge the man with trespassing and petty disorderly conduct, but nothing more serious since the girls were not nude when videotaped.
Thus, the introduction of bill A3297: Backed by angry parents and tough-on-crime state lawmakers, the bill would criminalize the videotaping or photographing of children if “a reasonable parent or guardian would not expect his child to be the subject of such reproduction.”
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Some people think that the only reason poverty still exists is because Congress hasn’t passed laws guaranteeing the right to decent housing, health, and education.
Some of these people are in Congress. Over at The American Spectator, my colleague Jacqueline Otto and I explain why their hearts are in the right place, but their heads aren’t:
Suppose that poverty really can be abolished by passing a few laws. Jackson isn’t going nearly far enough, then. The Constitution should guarantee everyone not just a decent home, but a mansion filled with servants to take care of every need.
Everyone should have the right to not just a doctor’s visit every 6 months, but a cadre of specialists with access to the latest technologies and tests. This would be a boon for life expectancy.
And why only an iPod and a laptop for children? They deserve supercomputers! And the right to a Harvard Ph.D. Such a law would give America the most educated population in the world; though it would probably know the least.
Congress might as well pass a law guaranteeing an above-average lifestyle for all Americans.
Tech:
Morning Tech Wrap: Microsoft, Skype, Google:
“Microsoft is in talks to buy Skype from eBay and the internet telephone services’s founders for between $7 billion and $8 billion, according to several reports. The deal, which the Wall Street Journal describes as “the most aggressive move yet by Microsoft to play in in the increasingly-converged worlds of communication, information and entertainment”, could be announced as early as Tuesday. The news was first reported by Gigaom. Taking in Skype’s long-term debt, the total value of the deal would be around $8.5 billion. A Skype purchase would be the biggest acquisition in the history of Microsoft. In 2007, the company paid around $6 billion for online advertising firm aQuantive, though many investors reportedly felt the company had overpaid for the deal.”
Apple usurps Google as world’s most valuable brand:
“The iPhone and iPad maker’s brand is now worth $153 billion, almost half Apple’s market capitalization, says the annual BrandZ study of the world’s top 100 brands.”
Confusion Surrounds U.K. Cookie Guidelines:
“If the U.K. Information Commissioner thought that publishing guidance on the implementation of the European Union privacy law was going to calm things down, he seriously miscalculated.”
Biggest BitTorrent Downloading Case in U.S. History Targets 23,000 Defendants:
“At least 23,000 file sharers soon will likely get notified they are being sued for downloading the Expendables in what has become the single largest illegal-BitTorrent-downloading case in U.S. history.”
Global Warming / Environment / Energy:
South Carolina Taking Light Bulb Ban into Its Own Hands:
“Fed up with the federal government’s ban of the traditional incandescent light bulb, state representatives in South Carolina are pushing for the state to produce and use incandescents solely for its state.”
Oil rebounds, Brent jump 2nd biggest day ever:
“Brent crude oil surged more than $6 a barrel on Monday, the second-largest gain on record, snapping back from last week’s near record sell-off on a wave of bargain-hunting and a jump in gasoline futures prices.”
Energy tax credit bill divides conservatives, even splits Ron Paul from group he founded:
“The House is expected to consider a bill soon that would offer $5 billion in tax credits to the natural gas industry, a proposal that is causing a split among conservative members and groups.”
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While some states seem to never change at all, this Monday’s Alcohol Regulation Roundup highlights some pleasant possibilities on the horizon.
Georgia: At the end of April, Georgia Governor Nathan Deal signed the bill approved by the state houses, which will allow local governments to add referendums to elections — putting it up to the voters to decide if they want their town to overturn the statewide ban on Sunday sales of alcohol in convenience and grocery stores.
New Mexico: Governor Martinez approved a Senate bill that gives the green light for residents of the state to have wine directly shipped to their homes. New Mexico was the last state not in compliance with the Supreme Court’s 2005 Granholm v. Heald decision. Beginning on July 1, 2011, wineries will be allowed to apply for $50 annual shipping permit and ship up to two nine-liter cases of a wine a month to residents of the state.
New York: The state assembly has passed a bill that will allow small brewers to get out of contract with distributors, overturning a long-standing lopsided system wherein wholesalers effectively hold craft breweries hostage while neglecting their product. Currently, New York law forces breweries to contract with only one distributor, giving them exclusive rights over their products. However, breaking the distribution agreement with a wholesaler is a long and expensive process — so expensive that many small brewers have no choice but to watch their product languish. That might change this year.
Last year, the Assembly passed a similar bill only to have it vetoed by Gov. Paterson. With Andrew Cuomo now in office, the new bill might have a shot. It would allow brewers that make up less than 3 percent of a distributor’s business to get out of the contract with that distributor after paying a fee for the “fair market value” of the loss of distribution rights.
Pennsylvania: As reported in Wine Spectator magazine, Pennsylvania is one of several states considering legalizing direct wine shipping for residents. No less than four bills related to alcohol regulation have been introduced in the Pennsylvania legislature, all of which allow for direct shipping of wine. According to quotes from Terri Cofer of the Wine Institute, the state’s Liquor Control Board has had a “change of heart” and now supports direct-to-consumer-sales.
I suppose the PALCB knows that during these tough economic times that they could soon be on the chopping block, despite their pathetic attempts to appear as a good use for taxpayer dollars.
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That state and local governments face serious pension funding problems isn’t a particularly controversial contention. However, the question of how much they’re underfunded by is much more contentious.
Last week, the Pew Center on the States released a report that estimates the nation’s total public pension underfunding at $1.26 trillion, based on the discount rate which the Government Accounting Standards Board (GASB) allows fund managers to use in order to determine their level of contributions needed to meet future obligations. The Pew report is significant in that it acknowledges the arguments that the GASB-based estimate may be too low.
Now a new report by the Congressional Budget Office (CBO) follows suit, and goes further. It discusses in some detail the “fair-value approach” advocated by some GASB critics, and estimates what total pension underfunding would be using lower discount rates.
- For assets, the fair value is what an investor would be willing to pay for them—that is, the current market value (or an estimate when market values are unavailable); it is not the averaged, or smoothed, market values that are reported under GASB guidelines.
- For pension liabilities, the fair value can be thought of as what a private insurance company operating in a competitive market would charge to assume responsibility for those obligations.
In the case of state and local pension plans, the discount rate for future benefit payments using the fair-value approach is lower—and, therefore, the estimated present value of those payments is higher—than under the GASB approach. Under the fair-value approach, future cash flows are discounted at a rate that reflects their risk characteristics. Hence, for pension liabilities, the discount rate reflects the fact that the cash flows associated with accrued liabilities are fixed and carry little risk; it is very unlikely that the liabilities will not be honored. By contrast, under the GASB approach, the discount rate used for liabilities reflects the greater risk associated with pension funds’ assets. Under the fair-value approach, one way to approximate the discount rate applied to future benefit payments is by using the interest rate on municipal securities adjusted to remove the effect of tax deductibility): In 2010, the discount rate would have been about half as large as the median discount rate of 8 percent under the GASB guidelines. (For additional discussion of discount rates, see Box 1 on page 6.)
A study published last year that examined the sensitivity of estimates of underfunding to discount rates for pension plans in the Public Fund Survey illustrates the large difference between the GASB and fair-value approaches. Unfunded liabilities in 2009 amount to about $0.7 trillion when liabilities are discounted at 8 percent but total $2.2 trillion when liabilities are discounted at 5 percent and $2.9 trillion when they are discounted at 4 percent (see Table 1). Those unfunded liabilities, as calculated on a fair-value basis, indicate funded ratios of roughly 55 percent and less than 50 percent, respectively.
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After years of the AIDS Healthcare Foundation trashing them in the media, the Adult Industry Medical Foundation (aka AIM) has closed its doors for good, leaving a gap in health care for the more than one thousand adult film actors it previously served. The stated reason for the closure was “financial hardship,” but the true story behind why AIM closed down is far dirtier.
Founded in 1998, AIM was established by and for actors in California’s porn industry and tests all licensed performers on a monthly basis for sexually transmitted diseases. They were known for speedy results and a database that could be accessed by others in the industry to verify the health status of actors.
For years the AIDS Healthcare Foundation (AHF) has attacked the AIM clinic, claiming that it was not sufficiently treating actors and provided a false sense of security. The AIDS Healthcare Foundation was primarily pushing for mandatory condom usage on porn sets. As I wrote last year in the LA Times, it is perplexing that AHF, which supposedly cares about the health and wellness of porn actors, has relentlessly attacked the AIM clinic over many years. Not only has AHF criticized the clinic for its lack of patient confidentiality, but it has also demanded that AIM release patient information to public health officials (which it refused to do citing a patient’s right to medical privacy).
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CEI Weekly is a compilation of articles and blog posts from CEI’s fellows and associates sent out via e-mail every Friday. Also included in the weekly newsletter is a brief description of CEI’s weekly podcast and a feature on a major CEI breakthrough made during the week. To sign up for CEI Weekly, go to http://cei.org/newsletters.
CEI Weekly
May 6, 2011
>>Featured Story
Today, May 6th, is the last day that businesses and unions can apply for the Early Retirement Reinsurance Program (ERRP). ERRP is an Obamacare program intended to help employers cover costs for early retireees. It was 
supposed to last until 2014, but it stopped taking on new applicants far ahead of schedule. That’s probably because groups like the United Auto Workers cashed in early and walked away with millions—in UAW’s case, hundreds of millions—of taxpayer dollars. CEI Labor Policy Counsel Vincent Vernuccio last week exposed ERRP waste in a National Review op-ed. This week, Vernuccio revisited the issue in BigGovernment to mark the final week of the expensive, short-lived program.
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