Mitch McConnell Using Section 230 Repeal As A Poison Pill To Avoid $2k Stimulus Checks

from the everything-is-stupid dept

As you likely know by now, President Trump is trying to use his last few weeks in office to use various levers of power remaining to him to make sure he fucks up the open internet. However, he also threw a wrench in the works of the long-overdue and way too small COVID relief package by saying that the checks to individuals should be $2,000 rather than $600. He's not wrong, but it was bizarre that his own White House was part of the negotiations that made sure the checks were smaller. It's almost as if the President and his own administration don't communicate very much.

House Democrats took up the cause, and pushed for the $2,000, and many House Republicans went along with it, recognizing how popular an idea this was. The problem, of course, is that Mitch McConnell has absolutely no interest in this at all. Earlier today, Mitch McConnell blocked the motion to vote on increasing the checks to $2,000. Afterwards, he announced, in the most awkward language possible, that he wants to link the raised stimulus to... Section 230 repeal and the made-up issue of "election fraud."

McConnell on CHECKS, SECT. 230, ELECTION FRAUD: "Those are the three important subjects the President has linked together. This week the Senate will begin a process to bring these three priorities into focus."

It's not difficult to figure out what's actually happening here. McConnell does not want the larger checks going out. He's spent months trying to limit the size of any stimulus plan. So, his plan now is to "link" the issue to things that he knows will not pass in an actual vote. Basically, Section 230 (and the made up issue of election fraud) are poison pills to kill the stimulus plan.

This is horrific on both sides of the equation: using Section 230 and the open internet as a pawn in this game, and his resistance to actually putting together a stimulus plan that helps Americans who have suffered from their own government's total mismanagement of the pandemic. It's difficult not to be cynical about politics when you have people like Mitch McConnell pulling the strings.

Filed Under: covid, donald trump, election fraud, mitch mcconnell, poison pill, section 230, stimulus

Apparently Trump Refuses To Allow The Government To Do Anything At All Until The Open Internet Is Destroyed

from the we're-doing-what-now? dept

Well, the government is closing out the year with quite a mess. As threatened, President Trump today vetoed the massive National Defense Authorization Act, living up to his promise to veto it if it didn't include the complete revocation of Section 230 of the Communications Act, which has nothing to do with funding our military. Trump, for no reason at all, says that repealing Section 230 is important for "national security", which makes no sense at all (nor does he provide any rationale for this statement). Senate Armed Service chair and Trump buddy Senator Jim Inhofe had already threatened to override the veto should Trump go this route -- and has (correctly!) said that 230 has nothing at all to do with the NDAA. Inhofe has already responded to Trump's veto by asking Congress to "join me in making sure our troops have the resources and equipment they need to defend this nation." In other words, he's asking Congress to override the veto.

As for 230, Inhofe (ridiculously) claims that he does support a repeal of the law, but it should be in a separate legislative vehicle, and not the NDAA:

Meanwhile, the other big bills -- the omnibus government funding bill and the COVID relief bill, which are now tied together at the hip -- have also somehow been dragged into the Section 230 mess. Pretty much everyone assumed that after Congress voted overwhelmingly for both bills on Monday (as stupid as they were), Trump would sign them. After all, the White House was a part of the negotiations with Congressional leadership to come to the "compromise" that made it through.

But, last night, Trump threw a wrench in the works by claiming he wouldn't sign either unless the amount going to qualified individuals was $2,000 rather than $600. This seriously messed with his Republican colleagues who had pushed repeatedly to keep that number as low as possible. But the Democrats rightly seized on Trump's demands for $2,000 to agree with him and say they'll offer a revised bill with that more generous number.

Somehow, Section 230 had remained outside of the discussion over the funding bill and the stimulus bill, but Senator (who else?) Lindsey Graham has brought the two together by saying that he'll support the $2,000 part of the stimulus bill... if it also revokes 230. He's been tweeting more and more about this all day, and is now claiming that a refusal to revoke Section 230 means that Congress "cares more about big tech than working Americans."

That is, of course, utterly ridiculous. Section 230 protects working Americans more than it protects "big tech." It protects us posting on social media. It protects us forwarding emails. It protects us when we retweet nonsense. It makes the open internet possible, and enables the next generation of competitors to "big tech" to exist. Lindsey Graham's weird grandstanding about this is nonsense. Taking away 230 wouldn't rein in big tech, it would lock in big tech. They have large legal teams and can handle the disruption. This is why Facebook already supports major 230 reform. Zuckerberg knows that it would harm upstart competitors way more than Facebook.

There can be legitimate debates about Section 230 and how the open internet should work. The fact that it's suddenly being held hostage as part of the negotiations on three massive -- and totally unrelated to the internet -- bills is simply a case study in how broken Congress is, and how cynical politicians like Lindsey Graham have become.

Filed Under: congress, covid, donald trump, government funding, jim inhofe, lindsey graham, ndaa, omnibus, section 230, stimulus

You'll Need Fifty Stimulus Checks To Pay The Damages You Might Get Hit With Under The CASE Act

from the so-stupid dept

It was only mid-day yesterday that it was confirmed that Congress has slipped in two controversial copyright provisions into the must-pass government funding bill. Last night, as everyone expected, that must-pass bill did indeed pass, and it will soon be law.

There are many, many reasons to be frustrated about this. First, just the way this was done is incredibly stupid. The government waited until the very last minute (with a couple of "extensions") to work out this agreement on a combination of the COVID relief bill (which is way too small and way too late for many, many people) and a bill to actually fund the government and avoid a shutdown. It's already ridiculous that we have to do this government funding bill each year, especially considering that Congress already approves a budget earlier in the year, and the appropriations bill is really just a fight over how to apportion what Congress has already agreed to spend. And then, because the appropriations bill is considered a "must pass" to keep large parts of the government funded, Congress lights it up like a Christmas tree with totally unrelated bills they couldn't get passed through normal process.

Incredibly, some politicians, like Senator Chris Murphy of Connecticut, seem proud of this practice:

I get why he's proud of getting some things into the bill, and many of the things he may be proud of are good. But many of them do not belong in this bill and should not be in a 5,000 page bill that was revealed mid-day and voted on hours later.

Incredibly, while the bill does have 2,000 pages of actual appropriations details, the other 3,000 pages are totally unrelated bills that Congress couldn't pass through the rest of the year. Even if you like the bills, even if you are mad that Congress is gridlocked at other times, that's no excuse to support this awful undemocratic process. Everything about it is bad.

Now, lots of people are still combing through the bill to find all the awful landmines that it's too late to do anything about, but the two that we've been talking about here are the copyright provisions. I've already explained multiple times why the felony streaming bill and the CASE Act are extremely problematic, so I won't go over either again. I will note that neither final provision is as bad as they were in earlier versions. Both were somewhat limited from truly terrible provisions to what is today merely awful. But that's nothing to celebrate.

As I said yesterday with regards to both bills, copyright law is controversial for a wide variety of reasons, but the biggest one is this: small tweaks to copyright law can have a massive impact on expression. Few people are even willing to grapple with the fact that significant parts of copyright law raise 1st Amendment issues. And when you rush through both of these bills (the felony streaming bill received literally no discussion or debate), you impact speech in a massive way. The felony streaming bill, even with its restrictions to platforms, may scare off many platforms from being willing to host streaming content, despite it being a key way in which many people -- especially younger generations -- express themselves these days.

The CASE Act, similarly, threatens to unleash a new generation of copyright trolling, at a time when we already have too much copyright trolling, threatening and shaking down people for money over incidental and accidental infringement. On top of that, especially in the midst of a pandemic when so many people are stuck at home and communicating, living, and working virtually, doing perfectly normal things can and will be seen as infringing. Nearly 15 years ago, law professor John Tehranian wrote about how on a random day that he tracked, he realized he (a copyright law professor!) probably committed 83 acts of infringement.

As we wrote a few years back, the only reason that copyright doesn't destroy speech is that he world has recognized a concept of copyright toleration -- which is that, more or less, copyright holders have mostly looked the other way at incidental and accidental infringements that happen all the time. The entire point of the CASE Act is to slam the door shut on the entire idea of copyright toleration, and open the floodgates for copyright holders to shake down basically anyone for such incidental uses -- telling them they could owe up to $30,000 as assigned by a non-judicial tribunal housed in the Copyright Office itself.

Supporters of the CASE Act say it's no big deal because you can opt-out of the process if you don't like it. But the opt-out process is unclear and potentially confusing. And, of course, in doing so, you are poking the copyright holder, and potentially egging them on to file an even more disastrous federal copyright lawsuit against you. But, honestly, just the mere threat of facing $30,000 fines from this new tribunal will cause many to shut up. It will cause many to pull down speech or never make it at all, because who wants to deal with that threat?

And, as law professor Eric Goldman notes, we did all this to get a stimulus package that will give a mere $600 to individuals... but that $600 likely won't cover your CASE Act bill, and you'll need many more stimulus checks to deal with the fact that you promoted a song you liked. It's a complete travesty.

Filed Under: 1st amendment, case act, chilling effects, copyright, covid, expression, felony streaming, speech, stimulus, tribunal

Frontier Communications Caught (Again) Ripping Off West Virginia Taxpayers

from the your-estimates-seem-a-little-high dept

So (for good reason), we keep noting that if you want to see how the American broadband market really works, you should take a close look at West Virginia. As in most states, a lack of competition keeps broadband prices high and speeds slow, with far too many consumers forced to pay a tidy sum for DSL speeds circa 2002. But the state has also been embroiled in scandal after scandal involving Frontier Communication's mismanagement of taxpayer subsidies that were intended to try and resolve this problem.

Local Charleston Gazette reporter Eric Eyre has quietly done an amazing job the last few years chronicling West Virginia's immense broadband dysfunction, from the State's use of broadband stimulus subsidies on unused, overpowered routers and overpaid, redundant consultants, to state leaders' attempts to bury reports supporting allegations that Frontier engaged in systemic, statewide fraud on the taxpayer dime.

Eyre is back again directing readers to a new report by the US Commerce Department's Office of Inspector General (pdf) which found that Frontier pretty consistently tried to game the subsidy system, imposing various "loading" and "invoice processing" fees -- outlawed by federal grant rules governing stimulus funding -- on to invoices submitted to the state. Frontier consistently used these fees to pad their bills to the tune of $4.7 million, and internal memos feature employees clearly demonstrating that Frontier saw this bill padding as a way to glean some additional profit on the taxpayer's dime:

The scathing, 31-page report declared the payments "unreasonable" and "unallowable." Meanwhile, Frontier saw the tacked-on charges as a “revenue opportunity,” according to an internal company email cited in the report. Frontier employees referred to the extra fees as “markups” and “profit."

Keep in mind Frontier had already been fighting a lawsuit alleging that it used a wide variety of tricks to both jack up its original estimates for broadband deployment -- and ensure any subsidies would only be used to shore up Frontier's internal networks, and not to improve overall broadband penetration and competition in the state. This new report notes that one of the tricks used by Frontier was to order and store a massive amount of unused fiber for future "repairs," allowing it to bill more than projects actually cost:

"What’s more, Frontier misled the public about the amount of unused fiber cable — called “maintenance coil” — the company installed across the state, according to the report. The extra fiber, which is stored at public facilities and used for repairs, drove up the broadband expansion project’s cost. Frontier wound up placing 49 miles of spooled-up, unused fiber across West Virginia — four times the amount the company had disclosed to state officials, according to the report.

Unsurprisingly, Frontier insists it has done nothing wrong, despite years of similar allegations across the state. This is the same Frontier that just got done firing a seven year employee because, at his part-time job as West Virginia senate leader, he voted for a new law that would actually help improve broadband penetration and competition in the state. Oddly, state officials (many of the same ones that tried to bury reports alleging the same sort of thing earlier) aren't commenting on the report's findings.

It should be noted that this is how state politics has worked for years for the likes of AT&T and Verizon, who long found it easy to gobble up subsidies and tax breaks, then pay state lawmakers and regulators to look the other way when it came time for accountability over how subsidies are spent. More often than not, these companies are simultaneously being allowed to quite literally write state telecommunications law ensuring that competition in the broadband sector remains muted. All while everybody in the chain professes their unwavering dedication to free markets and consumer welfare.

But Frontier has neither the competency nor the legal and accounting firepower of its larger counterparts, and as it has stumbled closer to bankruptcy courtesy of some questionable business decisions over the last few years, keeping formerly loyal state politicians and regulators consistently looking the other direction has proven increasingly difficult. Still, believing that this ends with anything even remotely resembling accountability and justice remains a very risky wager.

Filed Under: broadband, stimulus, subsidies, west virginia
Companies: frontier communications

Shocker: Billions In Broadband Subsidies Wasted As Government Turns Blind Eye To Fraud

from the dysfunction-junction dept

As we've covered at length, the United States' 2010 National Broadband Plan was a bit of a dud. It paid a lot of lip service to improving broadband competition but was hollow to its core, using politically-safe rhetoric and easily-obtainable goals to help pretend the government had a plan to fix the nation's uncompetitive broadband duopoly. But while the NBP was a show pony, the companion plan to use $7.5 billion of the Recovery Act stimulus fund to shore up last and middle mile networks was supposed to have been notably more productive.

Or not.

Of that $7.5 billion (out of the Act's $840 billion total), $3.5 billion was set aside to help improve broadband connectivity in the nation's harder to reach areas. The funds were managed by the USDA's Rural Utilities Service (RUS), who then doled out the funds as needed to those who applied with sensible business models. But a recent report by Politico suggests that the program has what you might call a spotty success record:

"A POLITICO investigation has found that roughly half of the nearly 300 projects RUS approved as part of the 2009 Recovery Act have not yet drawn down the full amounts they were awarded. All RUS-funded infrastructure projects were supposed to have completed construction by the end of June, but the agency has declined to say whether these rural networks have been completed. More than 40 of the projects RUS initially approved never got started at all, raising questions about how RUS screened its applicants and made its decisions in the first place."

If these programs don't pull their full awarded amount by September, the awards are forfeited, and can't be used by areas that would have otherwise benefited. Of course if you've followed the broadband industry at all over the years, you might recall that these broadband gaps aren't supposed to exist in the first place. We've thrown billions upon billions in tax cuts and subsidies at incumbent companies like AT&T and Verizon over a generation, and the result has fairly consistently been broken promises, zero accountability, and a government that repeatedly makes it clear they're ok with that.

And just like these programs of old, the RUS broadband effort threw money around without actually knowing where it was going:

"We are left with a program that spent $3 billion,” Mark Goldstein, an investigator at the Government Accountability Office, told POLITICO, “and we really don’t know what became of it."

And here's the kicker: the Politico report doesn't even highlight some of the worst fraud seen in the program. Earlier this year we noted how West Virginia was the poster child for this program's dysfunction, with Verizon, Cisco and Frontier convincing the state to spend millions in broadband subsidies on over-powered, unused routers, redundant, useless consultants, and "upgrades" that appear to have benefited nobody. The state then buried a consultant's report highlighting how companies and state leaders engaged in systemic, statewide fraud on the taxpayer dime. Nothing much has happened since.

While the continued failures of broadband subsidies will be used as an example that broadband subsidies don't work, they're more an example of how we're utterly unwilling to fix campaign finance reform. Spending and tracking this money shouldn't have been all that hard; we just aren't willing to clean up a political system beholden to unaccountable giants before throwing billions of dollars into its angry maw. Meanwhile, when you have armies of politicians consistently and proudly running on the platform that government can never work, the fruit of this labor can't be all that much of a surprise.

Filed Under: boondoggle, broadband, oversight, recovery act, rural broadband, rural utilities service, rus, stimulus, usda

Throwing Tax Breaks At AT&T And Verizon Shockingly Not Creating Promised Jobs, Investment

from the we-don't-appear-to-be-learning-anything dept

Time and time again we're told by incumbent ISPs that if lawmakers give them "X," we'll soon be awash in all manner of miraculous network investment and job creation. Sometimes "X" is an acquisition, as when AT&T promised to magically increase competition if it was allowed to remove T-Mobile from the marketplace. Often "X" is broad deregulation. Other times it's significant regulation of they other guy. Sometimes it's just subsidies. Lately we've been told that if we only don't apply net neutrality rules, we'll be awash in amazing network investment and next-generation broadband in no time.

Of course, if you stop and actually pay attention, time and time again you'll shockingly find that these repeated telecom Utopias never arrive, and by giving your favorite lumbering telecom duopolist everything it wants, things generally only get worse. Deregulate AT&T broadly in California under promise that you'll see lower rates and greater competition, for example, and watch miraculously how things actually get worse (and nobody wants to talk about it). AT&T's currently telling state lawmakers that if they gut all regulations requiring it maintain DSL and POTS networks (so AT&T can hang up on users it doesn't want to upgrade) we'll soon be awash in the technology miracles of tomorrow. Downgrades are upgrades, you see.

"X" is also all-too-frequently tax breaks and incentives. You might recall that Verizon promised the States of New Jersey and Pennsylvania it would deliver fiber broadband to every home in exchange for billions in tax cuts. After getting the incentives Verizon simply threw money at the States, and a decade later both States were willing to forget Verizon's obligations entirely.

Similarly, the Wall Street Journal recently dug through the history books, and found that bonus depreciation -- imposed as part of the 2008 Stimulus Act and pushed for by the telcos to spur job creation and investment -- also never delivered the goods. Essentially an interest-free loan that lets companies defer tax obligations, the Journal notes that, once again, the promised job growth and investment spikes never actually happened:

"But that isn’t how it has worked, at least at AT&T and Verizon, whose vast networks of towers and cables make them two of the country’s biggest investors in infrastructure. AT&T estimated its federal tax bill last year at $3 billion, down from about $5.9 billion in 2007, before the tax relief was enacted. Verizon estimated that it would get $197 million back last year, compared with a 2007 bill of $2.6 billion. Meanwhile, the companies have kept their capital spending relatively flat since the stimulus was adopted, and their employee count has dropped by more than 100,000 people, a fifth of their combined work forces."

This was, the Journal notes, despite studies years earlier clearly illustrating that bonus depreciation didn't really work, though AT&T (as it does with everything) is threatening reduced investment if the policies aren't extended. While wireless spending remains strong, the Journal fails to note that AT&T's fixed-line investment has actually been dropping significantly -- even while the company pretends to be expanding gigabit fiber to get its DirecTV acquisition approved by regulators. It's a never-ending cycle of bluffing and bullshit, and at some point you'd think we'd stop and realize that maybe just giving lumbering, pampered duopolists absolutely everything they want may not be the quickest path to telecom nirvana.

Filed Under: broadband, investment, jobs, shovel ready, stimulus, telcos
Companies: at&t, verizon

Telcos Resisting Broadband Stimulus Because They're Worried It Might Force Them To Compete

from the if-they're-all-upset,-that's-a-sign dept

We've had a lot of concerns about the broadband stimulus package, since it was shaping up to look like little more than a handout to incumbent operators who have a long history of grabbing public money, then not living up to the promises they made to get it. The real problem underlying most issues having to do with broadband in the US is a lack of competition, so any stimulus needs to address that, instead of just throwing money blindly at broadband providers. Mobile operators have already complained about anything that might force them to compete interfering with the government broadband giveaway; now BusinessWeek reports that several incumbent telcos are holding back from the stimulus, because they're afraid the government will attach strings to it to try and increase competition. Most of all, they're worried they may have to allow line-sharing, which, of course, they worked very hard to get tossed out in 2005. The rules are still under discussion, but we're optimistic that the opportunity to effect some positive change on the broadband market won't get left behind in the rush to throw money at it.

Filed Under: broadband, broadband policy, competition, stimulus

Why The Stimulus Package Isn't For Startups: The Gov't Doesn't Want Creative Destruction

from the startups-are-about-short-term-job-destruction dept

Earlier this week, I was on a fun panel put together by the Telecom Council of Silicon Valley, which was mainly focused on what the Obama Stimulus plan (and the broadband allocation specifically) would most likely mean for the industry. At one point, an attendee in the audience said that he was from a startup, and questioned how he might partake of the stimulus funds -- and I responded, perhaps flippantly, that he was out of luck: the stimulus isn't for startups. That's not entirely true, of course. There will be some token amounts of money handed out to startups, but pretty much everyone on the panel agreed, the administration has made clear that the stimulus package is about creating jobs as quickly as possible, and the administration has made it clear in so many words that this means handing it to incumbents. They've been pretty frank that the stimulus plan has a lot less to do with increasing broadband capabilities than with job creations -- and plans to get funds that show more job creation will get preference over those that actually increase broadband.

And that's why the stimulus package is not for startups -- and is potentially dangerous in the long run. Truly revolutionary startups don't immediately create jobs -- they destroy them. The process of creative destruction takes on those incumbent providers and wipes them out. We're seeing it with plenty of industries today that are challenged by new upstarts that have upset their old business models. And, while most economists should recognize that this process is good for the overall economy, in that it leads to economic growth and more efficiency, it does upset the status quo, and causes many big companies to contract or disappear altogether.

So, think about it from a government bureaucrat's perspective right now. Go back a few decades, and assume someone came to you with a plan to create the internet -- and even accurately described how it would allow a great free exchange of information. The reaction, if you were trying to deal with an economic crisis, would be to focus on all of the jobs it upset. People can share music online? Think of all the job losses in the music industry! People can read news for free? Think of all those newspapers shutting down! But they wouldn't consider all of the economic activity created by the internet -- the billions of dollars and millions of new jobs created thanks to it.

If, today, you had a concept for a totally new technology that would greatly increase broadband access across the globe, in a revolutionary way. It would allow anyone to have super high speed access anywhere. It wouldn't be that costly to create or build or even maintain... and it wouldn't even require making use of existing infrastructure. From any normal calculation this would be fantastic. It would spur enormous new economic growth opportunities and speed along our economy in massively useful ways. Yet, it's exactly the type of project the government would be against right now -- because it would make AT&T, Verizon and others obsolete... and think of how many people that would put out of work, at the same time that the gov't wants to claim how many jobs it's created.

That's an extreme hypothetical, but it's useful in illustrating the point. So, this focus on using the stimulus for short-term job creation is dangerous in that it will likely be used to prop up existing incumbent businesses, because they can create the most jobs most quickly -- by doing very inefficient things. The startups that do things more efficiently end up doing short term job destruction, even if the long-term results would be a much larger, more stable economy with larger job creation.

Filed Under: creative destruction, job creation, startups, stimulus

The Stimulus Package Appears To Be Stimulating Scammers...

from the they-wanted-job-creation... dept

This probably isn't much of a surprise for most folks, but scammers have wasted no time at all in using news about the massive government stimulus plan to try to trick suckers into various scams. Many of these are scams trying to get people to sign up to pay a "fee" to find out how they can get their "stimulus check" even though the stimulus program isn't sending out checks to individuals. Expect to see plenty more similar scams as well.

Filed Under: scams, stimulus

Throwing Money At Problems Usually Is Not The Solution

from the time-to-work-smarter dept

Thomas Friedman has stirred up some controversy with his suggestion that the government (instead of giving it to dying automakers) should give $20 billion to top venture capital firms and have them invest in new innovation. The initial thought makes sense, and, in fact, we discussed something quite similar a few months ago -- though, concerning a new venture fund in the UK, rather than giving money to existing funds. Indeed, if we must throw money at the economy, it should be to invest in new innovation, rather than throwing good money after bad. However, Fred Wilson points out that the top VC firms don't want or need the cash, and in fact, adding more money to the venture investing pool at this point might cause a lot more harm than good.

And, that brings up an important point, worth discussing, that the government seems to be missing: throwing money at problems is very rarely the best solution. Often the problems are caused by too much money sloshing around (see: Wall Street). Dumping more money into the system just encourages the same inefficiencies and bad decision making. The real fix to problems is to wipe out the broken parts of the system, not fund them further. Yes, letting some of these businesses fail will have rippling effects into other parts of the economy -- but shouldn't the focus be on helping out those aspects, rather than rewarding companies like GM and Chrysler that have screwed up dreadfully?

While there's something to be said for taking money when it's available, plenty of experienced entrepreneurs know that having too much money on hand is almost as bad as not having enough. Having too little money makes you focus and makes you creative out of necessity. Having too much money makes you lazy and puts you in a position to hide or ignore the real issues for way too long. What we should be working on right now is fixing the systemic problems throughout our economy -- not papering them over with cash.

Filed Under: bailout, congress, stimulus, venture capital