Class 4 – April 7, 2012

IT Regulation

Net neutralityOpen and transparent internet

Equally accessible to anyone with a basic knowledge of internet protocols

Problem: gatekeepers in the transmission market could impede competition in the processing market by preferential treatment of their own data processing units

Net neutralityMeans Internet Service Providers may not

discriminate between different types of content

Creates a level playing field for:All web sitesAll technologies

Companies desire to charge for speed, permission to “plug in” devices, and smoother access

Those who do not pay, or pay less:Sites will not load as quicklyApplications will not work as wellResults in a “tiered” Internet

Net neutrality Four principles

Consumers are entitled to access the lawful Internet content of their choice

Consumers are entitled to run applications and use services of their choice, subject to the needs of law enforcement

Consumers are entitled to connect their choice of legal devices that do not harm the network

Consumers are entitled to competition among network providers, application and service providers, and content providers

Online Piracy BillsHR 3261 – Stop Online Piracy ActS 968 – Protect IP Act of 2011Backed by major media companiesTargets:

Illegal downloads of TV shows, movies, musicHow it works

Copyright holder discovers foreign site offering illegal downloads

Court order requires search engines to remove links and advertisers to withhold payment

Online Piracy BillsUnintended consequences

Web sites responsible for monitoring all material on their websites

Large website could “disappear” from the web due to a minute amount of copyrighted content

Tech industry had little input on crafting bills – language overly broad and could impact companies that are largely innocent

Under current system, if notified of copyright infringement, content is removedGoogle (and YouTube) received over 5 million requests

last year Acts in less than 6 hours if request is legitimate

Massive protest by tech companies and related interests caused laws to be reconsidered

National Broadband Plan Source: http://www.broadband.gov/plan/Design policies to ensure robust competition

To maximize consumer welfare, innovation and investment

Ensure efficient allocation and management of government-owned and influenced assetsManagement of spectrum, poles, and rights-of-way, to

encourage network upgrades and competitive entry.Create incentives for universal availability and

adoption of broadbandUniversal access to broadband; affordability to low-

income Americans; enhance national digital literacy.Update policies, set standards and align incentives to

maximize broadband use for national prioritiesEnhance private sector investment and innovation in:

healthcare; education; energy and environment; economic development; government operations; public safety and homeland security.

National Broadband Plan: Goals Source: http://www.broadband.gov/plan/executive-summary/

At least 100 million U.S. homes should have affordable access to actual download speeds of at least 100 megabits per second and actual upload speeds of at least 50 megabits per second. (1 megabit = 1,000,000 bits = roughly 125 KB; 1,024 KB = 1 MB)

The United States should lead the world in mobile innovation, with the fastest and most extensive wireless networks of any nation.

Every American should have affordable access to robust broadband service, and the means and skills to subscribe if they so choose.

National Broadband Plan: Goals Source: http://www.broadband.gov/plan/executive-summary/

Every American community should have affordable access to at least 1 gigabit per second broadband service to anchor institutions such as schools, hospitals and government buildings. (1,000,000,000 bits = 125 MB)

To ensure the safety of the American people, every first responder should have access to a nationwide, wireless, interoperable broadband public safety network.

To ensure that America leads in the clean energy economy, every American should be able to use broadband to track and manage their real-time energy consumption.

E-government enabling lawsPaperwork Reduction Act, 1980 (1995)

Governs what information to collectGovernment Paperwork Elimination Act, 1998

GPEA requires Federal agencies to allow individuals or entities the option to submit information or transact with the agencies electronically and to maintain records electronically

The Act specifically states that electronic records and related electronic signatures are not to be denied legal effect, validity, or enforceability, and encourages Federal government use of a range of electronic signature alternatives.

E-government enabling lawsClinger Cohen Act, 1996

Combines: Information Technology Management Reform Act, 1996 and Federal Acquisition Reform Act, 1996

Emulates private-sector IT management in federal agencies.

Created a Chief Information Officer (CIO) position who reports to the head of the agency.

Develop an IT capital planning and investment process.Sets performance goals and standards for IT systems.Creates an enterprise wide architecture.Provision to evaluate the skills of the agency’s IT staff

and identify skill gaps.Develops hiring and training plans for the agency’s

workforce to improve IT management.

E-government enabling lawsE-Government Act, 2002

Endorses and requires agencies to support cross agency initiatives

OMB to provide annual report to Congress on act’s compliance

Dialogue and collaboration on the use of IT to improve the delivery of Government information and services

Standards for categorizing and indexing government information

Standards for agency Web sitesCreates a public directory for agency Web sites – check

out USA.govCreation of a database and Web site to track Federally

funded R&DState and local governments may use Federal Supply

Schedules for IT purchasesCyber security and Statistical Confidentiality and Data

Sharing

Online Protection of ChildrenChildren’s online Privacy Protection Act, 1999

Applies to the online collection of personal information from children under 13

Web site operator must include in a privacy policy, when and how to seek verifiable consent from a parent and what responsibilities an operator has to protect children's privacy and safety online

Compliance: Anyone operating a commercial Web site or an online service directed to children under 13 that collects personal information from children or if it is a general audience Web site and operators have actual knowledge that they are collecting personal information from children

A privacy notice must be posted on website

Online Protection of ChildrenProtection of Children from Sexual Predators Act of

1998Penalties for

Use of interstate facilities (e.g. computer transmission) to transmit information about a minor

Transfer of obscene materials to minorsZero tolerance for possession of child pornography

Adam Walsh Child Protection and Safety Act, 2006Established the national database of sex offenders and

offenders against childrenPublic access to sex offender information through the

InternetAccess to national crime information databases by the

National Center for Missing and Exploited ChildrenCases against the law are on-going in some states

Pornography lawsPornography is perhaps the largest business on the

internetRepresents at least 8% of all emails, and 12% of all

websites. 294 billion emails sent each day (2010); 158 million

websites in 2008 (doubled in prior two years)Three major legal statuses pertaining to pornography

Obscene materials – defined as violating community standards and can be prohibited and censored

Child pornography – clearly illegal – pertains to sexual acts or images of minors

Obscene for minors – adults only have the rights to viewFiltering Software and Regulation Issues

Pornography lawsPornography and free speech

Free speech advocates claim pornography laws may violate free speech rights guaranteed by First Amendment of constitution Child pornography excluded from First Amendment

protection However, Child Pornography Prevention Act of 1996

was struck down in 2002 by the U.S. Supreme Court [Ashcroft v. Free Speech Coalition, 535 U.S. 234] as being overtly broad

E-GamblingInternet gambling is becoming a huge business with

2003 volume expected to triple by 2009E-gambling is a worldwide industry, making

regulation difficult if not impossibleFive policy options are considered worldwide:

Make online gambling illegal with jail time associated.Make online gambling illegal with seizure of assets.Curtail gambling by forbidding financial institutions

from honoring credit card transactions associated with gambling.

Legalize and tax online gambling with associated regulation.

Legalize and establish state-run gambling concessions for revenue purposes.

E-GamblingConcerns with e-gambling

Unfair or illegal business practices of unregulated sites

Unfair or illegal player practicesGambling by prohibited groupsBridge to problem gambling habitDifficult to prohibit and not good policy to have

laws that cannot be enforced

Taxation issuesInternet Tax Freedom Act, 1998

Moratorium on taxes on Internet access, not sales tax. National Bellas Hess, Inc v. Department of Revenue of

Illinois, 1967Case deals with mail orderCase established that a "seller whose only connection

with customers in the State is by common carrier or the United States mail" lacked the requisite minimum contacts with the State

Interstate taxation would violate the due process clause of the fourteenth amendment and create an unconstitutional burden on interstate commerce

Taxation issuesQuill Corporation v. North Dakota (1992)

Case ratified the Bellas Hess case principles to apply for Internet purchase

No tax on internet purchase of goods E.g If you live in New York city, and purchase wine from

New Jersey over internet, you will not pay tax; however, you will pay tax if you buy wine in person from New Jersey

Sales tax problem is compounded by economy shifting ever more toward services than tangible goods.

Use tax is designed to recover sales tax on purchases citizens make outside the state. However, extremely difficult and much too costly to enforce properly.

Taxation issuesThe “Entity Isolation” Issue

If an Internet firm has no presence in a state, it is exempt from state taxes.

“Entity isolation” refers to separation of a firm with physical stores in a state, but with separate Internet operations [e.g. Sears, Walmart]. Such firms have argued they are exempt from Internet taxation because their Internet sales operations are separate entities, not connected to physical store.

Nexus is the issue. Store must have nexus in state to be subject to state tax. States cannot regulate interstate commerce and cannot require out-of-state vendors to collect and remit sales tax.

Contrast: European Union does not exempt internet trade from taxation

Taxation issuesIs Internet a tool of sales tax avoidance?

Hotel and reservation agencies do not have to pay tax for online bookings (e.g. Expedia, etc.). They purchase bulk reservations at reduced rates and resell at higher rates. Local governments lose taxes due to this. Many local governments (Dade and Broward included) are suing online brokers for lost sales taxes.

Amazon.com filed suit against North Carolina against a demand for purchase transaction data, including names and addresses of customers, on the basis the demands violate privacy and first amendment rights of customers. 2002 decision ruled that First Amendment protects “an

individual’s fundamental right to purchase books anonymously, free from governmental interference.” 2007 federal case came to the same conclusion.

Video Privacy Protection Act – illegal for anyone selling movies to release customer information to anyone.

Amazon has suits in dozens of states and Congress has once again taken up the issue to avoid state-by-state fights

Taxation issuesStreamlined Sales Tax Project

Designed to create a methodology for collecting sales tax due states on out of state sales

Main problems: Too many jurisdictions – 7,500 or so including local

Differing tax rates, tax base and exemptions Sourcing rules – how do you allocate to different states? No standardization, even within states

Agreement requires a certain amount of standardization and simplification for participants

Most states have passed legislation, but process is still stalled Will still require Congressional action Florida passed enabling legislation but backed away from

taking the required steps to become member state

Taxation issuesStreamlined Sales Tax Project (continued)

Adoption not difficult for big companiesSmall companies would likely have to use a

“Certified Service Provider” utilizing a “Certified Automated System” Even with simplification, collecting sales tax from

so many jurisdictions could be overwhelming

Big Issue – not taxing Internet sales represents giving a competitive advantage to Internet companies over brick and mortar companies.

Intellectual propertyIntellectual property theft is one of the most

important categories of computer crime Theft through hacking, reverse software engineering, or

simply stealing code Intellectual property may be placed in the public domain

but also may have restrictive legal status, such as a patents and copyrights

Purchase of intellectual property requires precise wording and contract documentation of ownership rights “For Hire” projects – becomes property of the agency

The Federal Acquisitions Regulation, Part 27 regulates federal purchase of intellectual property

Fair Use DoctrineAllows copying for the use of criticism, comment,

reporting, teaching, scholarship, and research. Must not involve copying a substantial percentage of work and must not damage market value.

Open sourceProprietary Software

Software for which source code is owned by the developer (e.g. Microsoft products)

Open Source [Free Libre Open source software (FLOSS)]Software for which source code is in the public domain

(e.g. Linux)Follows GNU General Public Licence: Open Standards [

http://www.gnu.org/licenses/gpl.html] Software shared and distributed freely Software Licensed to allow use, modification and

reproduction Software distributed on a non-discriminatory basis Subject to peer review and public consensus

Open sourceOpen source applications

Gnome desktop; Linux; Apache serverOpen Document Format applications

OpenOffice.org, Google Docs and Spreadsheets, IBM Workplace, Lotus Symphony and Sun's StarOffice

mySQL databasesSee: Open Source Software Institute [

http://www.oss-institute.org/]Advantages of Open Source for government

Availability of source code for modificationCommon interface standard (e.g. eXtensible Markup

Language, XML)Better for long term preservation of documents (e.g. for

historical archives) since proprietary software go out of date

Open sourceDisadvantages of Open Source for government

Non availability of documentation, training, and supportSome legal issues concerning open source software

(although GNU has standardized legal basis)While thought of as an alternative to products

available from “big companies,” many large multinational organzations have backed and assisted the growth of open source software, e.g., IBM, Oracle, Sun, and Novell.

Yet, adaptation of Open Source growingMA, TX, CA, MN in USAOutside USA: Brazil, European Union, India, Malaysia