Senate renews plan to ban internet taxes forever

Do you ever look at your phone bill and wonder, “what the heck are all those fees?” While it’s a natural impulse to blame the mendacity of the phone company, most of those items are there because various governments put them there.

The good news is that federal law bans tax on internet service — meaning that most of us don’t see something like this on our broadband bill:

Screen Shot 2015-02-11 at 11.00.35 AM

Well, for now, at least. Due to a quirk in Congress, the current relief from internet taxes is based on a temporary measure that keeps expiring and getting renewed on a short-term basis.

But as The Hill reported Tuesday, a bipartisan group in the Senate, led by John Thune (R-SD) and Ron Wyden (D-Or), wants to change that by passing a law called the Internet Tax Freedom Forever Act.

Those who follow these things may say we’ve seen this movie before, and that Congress has tried and failed to make the internet tax permanent in the past – most recently last December.

This time is likely to be different, however, as the bill appears to be finally decoupled from a more contentious proposal known as the Marketplace Fairness Act, which would have required online retailers to collect state sales tax.

While both measures are broadly related to taxes and the internet, they are are in fact separate issues: one is about taxing ISP connections, and the other is about how state sales tax should apply to online retailers. But in the past, supporters of the latter have tried to tie the two issues together when it came to voting in Congress.

Now that the Internet Tax Freedom Forever Act appears to be up for debate on its own, however, its chances of success seem high given that it enjoys broad bipartisan support.

The measure could, however, get tangled up in the hot button issue of the FCC’s proposal net neutrality, which Republicans want to portray as tax grab. As I’ve explained in the past, such claims — including a “study” claiming a $17 billion tax hit — appear utterly specious but, well, that won’t stop certain grandstanders from touting them anyways.

Finally, it remains to be seen how a permanent ban on ISP taxes would affect seven states (Hawaii, New Mexico, North Dakota, Ohio, South Dakota, Texas, and Wisconsin) that imposed internet taxes prior to October 1, 1998, and have been allowed to skirt the temporary ban because of a grandfather clause.

US lawmaker pushes back against FBI backdoor calls

U.S. Senator Ron Wyden (D-OR) has introduced a bill that would stymie almost any attempt by a government agency to force device manufacturers and app developers to install backdoors for surveillance purposes.

Wyden’s Secure Data Act, introduced on Thursday, follows calls by FBI chief James Comey for companies such as [company]Apple[/company] and [company]Google[/company] to give his agents a way through their encryption mechanisms, which have been tightened in the wake of Edward Snowden’s NSA revelations and episodes such as the celebrity iCloud hack.

Apple’s most recent move, for example, makes it impossible for the company to bypass the passcode on a user’s iPhone for the benefit of law enforcement or intelligence agencies.

Wyden’s bill gives an exemption to CALEA, the U.S. law that already compels carriers and router manufacturers to install “lawful intercept” capabilities, but beyond that it states:

… no agency may mandate that a manufacturer, developer, or seller of covered products design or alter the security functions in its product or service to allow the surveillance of any user of such product or service, or to allow the physical search of such product, by any agency.

“Covered products” means any hardware or software made available to the general public, so the bill would arguably not cover, say, flawed random number generators.

Wyden’s main impetus for this move, the NSA critic said in a statement, was that backdoors inherently weaken the security of the systems they’re installed in. He also reckons that backdoor mandates are a disincentive to innovation in “strong new data security technologies”, and harmful to trust in American products and services.

“Strong encryption and sound computer security is the best way to keep Americans’ data safe from hackers and foreign threats,” he said in the statement. “It is the best way to protect our constitutional rights at a time when a person’s whole life can often be found on his or her smartphone. And strong computer security can rebuild consumer trust that has been shaken by years of misstatements by intelligence agencies about mass surveillance of Americans.”

It’s interesting, if unsurprising, that Wyden’s bill gives a get-out to CALEA. His own statement cites the 2005 case of senior Greek politicians being illicitly tapped, using an [company]Ericsson[/company] lawful intercept feature, as an example of how backdoors can compromise a system’s security for the benefit of more people than they’re supposed to.

Earlier this year, security researchers also identified critical weaknesses in some companies’ lawful intercept products.

What the Solyndra case says about the government and cleantech

A quick Google news search on Sunday of the term “Solyndra” produced 3,830 results, ahead of “Tom Cruise” (3,210) but still safely behind “Lady Gaga” (12,300).  It’s fair to say that Solyndra’s bankruptcy and the ensuing congressional investigation into how Solyndra secured its loan guarantee has become both a national story and quite possibly the worst PR the renewable energy industry has ever had. It comes at a time when the Obama administration is out with a Hail Mary push for a jobs package. The timing is awful for Obama, but it raises another question. How far should a government go in helping cleantech thrive and compete?

One of the undercurrents in this story is that China is playing dirty in how it supports its solar industry. The allegations are widespread and have been spearheaded by Oregon Sen. Ron Wyden. In October 2010, he sponsored a letter warning that China’s policies of restricting export of key raw materials needed to manufacture solar panels, along with its requirements that U.S. companies that manufacture in China must transfer their tech and only procure from local producers, were slowly strangling the U.S. solar industry. China has aggressively supported green technology with $216 billion in subsidies, more than double what the U.S. has spent, a point that a 301 petition to the U.S. Trade Representative’s office made last year.

There are a number of reasons why the solar industry is struggling: tariff rollbacks in Europe, the falling price of silicon and oversupply of panels in the global market being some of the other factors that sentenced Solyndra. China’s behavior is not the whole story.

But a snapshot of how forcefully the Chinese central government supports the renewable energy sector is a reminder that China views renewable energy as an industry that will be massive, even if today it’s only making slow but steady progress toward profitability. Put simply, China is doing everything it can to ensure that its companies own that early market so they can own the mature market.

Which brings me back to Solyndra. The loan guarantee was 1.3 percent of the DOE’s entire $38 billion loan portfolio, and the DOE goes into these deals assuming 10 percent of them will go bad. It’s safe to say that without DOE loan guarantees, many of the energy projects the DOE is tasked with supporting, including the largest loan guarantee of $8.3 billion for a nuclear energy project in Georgia, would not have gotten off the ground, because securing financing in private markets was too costly or simply not possible.

The cozy financial relationships that many East Asian governments have with their top corporations is a far tougher political sell in the U.S., where, as the conservative uproar over Solyndra shows, many in Congress simply don’t believe that the government should be financing clean energy. Companies like Solyndra, which require a lot of debt capital to build facilities, will find it almost impossible to raise venture capital right now. Estimates are that the solar market will be worth around $75 billion by 2016. So the question becomes, How can the government support solar so that U.S. companies can participate in that future market? One possibility that deserves further consideration is a way for the government to receive some of the financial benefit from the companies it finances and not just suffer the losses of the Solyndras. (And, yes, there will be more.)

Think about it. Assuming a 10 percent fail rate for a loan guarantee program totaling $38 billion, the government would need to amass equity worth $3.8 billion from the recipients of its loans to cover its presumed losses and make the program pay for itself. It doesn’t seem like that much to ask for. And when you look at all that China is doing to help its renewable energy industry, sustaining programs like the DOE loan program is the bare minimum that the U.S. will need to do if it wants to help U.S. renewable energy companies compete.

Question of the week

What role should the government have in supporting cleantech?

Today in Cleantech

We got further indication of just how much the solar power industry has evolved, as 1366 Technologies finalized a $150 million loan guarantee for its Direct Wafer (DW) project. The project is expected to reduce manufacturing costs by 50 percent. No longer is the talk about more efficient panels. Rather, solar panels are becoming commodities and the race is on to lower production costs to compete with the Chinese. There was also news that PE firm Hudson Clean Energy Partners has raised a yuan denominated fund for China, a clear indicator that investors are betting on the Chinese market. Add to that today’s call from Oregon Sentor Ron Wyden to restrict the import of Chinese solar panels among accusations that the Chinese government is violating WTO rules by offering nearly free capital and land to its solar industry, and you start to get a picture of where the cleantech market is headed and how everything revolves around China right now.

Today in Cleantech

Big plans for green energy interstate transmission systems could get a lot harder — or a lot fairer, depending on your point of view — under legislation introduced on Friday. Senators including Bob Corker (R-Tenn.), Ron Wyden (D-Ore.) and Lindsey Graham (R-S.C.) want to limit the Federal Energy Regulatory Commission’s ability to spread the costs of interstate transmission lines to the states that contain them, outside of a strict tally of just how much each state benefits from the wind and solar power generated and consumed. New transmission lines are needed to carry power from remote areas good for renewable power to population centers — earlier this week, the Department of Energy gave out its first loan guarantee to a transmission project to carry geothermal resources from the north of Nevada to the Las Vegas area in the south. But siting and permitting new transmission lines are hard enough when they stay within one state’s borders. Interstate projects like the “Green Power Express” to link Midwest wind farms to load centers like Chicago and Minneapolis are even more complicated when state-by-state costs and benefits are taken into account.

An Important Greentech Bill You Need to Know: STORAGE

energystoragegenericAll eyes have been on the clean power and energy efficiency funds rolling out of the stimulus package, as well as the climate bill, and its cap-and-trade system, currently winding through the Senate. But a lesser-known bill — the Storage Technology of Renewable and Green Energy Act of 2009, or “STORAGE” (S. 1091) — that was introduced at the end of May, could offer crucial tax credits for one of the most important and overlooked aspects of building out a smarter grid: energy storage (FAQ on energy storage).

The bill is important enough that at the Infocast Storage Week conference earlier this month, Imre Gyuk, the Department of Energy’s program manager for Energy Storage Research, reportedly asked audience members to actively support the bill. The bill’s incentives, coupled with other funds for energy storage, could have massive potential to get more energy storage deployed, Gyuk said, according to John Petersen at Alt Energy Stocks.
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