BUSH SUPPORTS INTERNET TAX BAN, SPECTRUM TRUST FUND

Bush repeated calls for a permanent ban on taxes on Internet services and spoke of several communications technologies he was shown by Commerce Dept. officials before his speech. He also called on Congress to pass legislation creating a spectrum transition fund, which has stalled in the Senate.

In remarks that came as a surprise to CLECs in their directness, Bush indicated he stands behind FCC Chmn. Powell on regulatory certainty sought by the Bells. Bush had been briefed prior to the announcement last week that the Administration wouldn’t appeal the Triennial Review Order decision by the U.S. Appeals Court, D.C., but hadn’t addressed the decision in public before Thurs. “In this case, the FCC provided regulatory certainty, and by doing so created incentives for communication companies to build out their fiber optic broadband lines to more homes,” Bush said: “It’s a good decision. I think the decision will benefit American consumers, as well.”

But much of the speech continued the Administration’s theme of spurring broadband. “Broadband saves costs throughout the economy,” Bush said: “In other words, it makes the economy more efficient. Imagine how efficient businesses will be when they're that far away from their customer. That’s what broadband technology will enable us to do.”

Bush said that while more Americans have access to broadband, the totals are not high enough: “Access has gone from 7 million subscriber lines in 2000, to 28 million last year. That’s rapid growth. Yet, on a per capita basis, America ranks 10th amongst the industrialized world. That’s not good enough. We don’t like to be ranked 10th in anything.”

The speech dealt with several themes stitched together under the broad theme of “innovation.” Bush also touched on hydrogen as a vehicle fuel, tort reform and protecting doctors against the rising costs of malpractice insurance. But the last 10 min. of his remarks were a firm statement on the importance of broadband rollout across all of the U.S., including the most rural communities. To that end, Bush highlighted the RUS’s rural broadband program.

NTIA acting Dir. Michael Gallagher told us that before the speech Bush was shown 2 rooms full of technology demonstrations. “His passion for broadband was clear to me when I spoke to him a few months back about it and it was demonstrated in that room in a significant way,” Gallagher said.

In one of the most dramatic demonstrations, which he referred to in his speech, Bush was able to speak with a 5- year-old boy who had just had heart surgery, in a demonstration of telemedicine. Gallagher said: “He was very engaged with that demonstration.” Gallagher said he also showed Bush Motorola’s home monitoring system, BPL presented by Current Technologies, and the video Ojo phone by WorldGate Communications.

Bush was particularly intrigued by the home monitoring system. “I was shown a Wi-Fi hookup today that enables somebody to load a system in their home that when their child comes home, if it’s set up properly… it'll trigger a noise, the person will look on their phone and see a picture of their kid coming in the home,” he said: “It’s pretty imaginative, isn’t it? It’s just an illustration of what is possible… with this new broadband technology.”

TIA Pres. Matthew Flanigan said equipment manufacturers “continue to be very pleased with the President’s leadership and focus on the importance of a national plan for bringing broadband technologies to every corner of America. The steps the administration is now taking will contribute to the U.S. remaining more competitive with nations that are ahead of us in broadband deployment.”

Kerry Unveils His Broadband, Spectrum Plans

Meanwhile, presumptive Democratic presidential nominee Sen. Kerry (Mass.) used a speech in San Jose to unveil his own high-tech strategy. He said the U.S. has slipped to 10th from 4th in broadband adoption during the Bush administration and has cut R&D spending. According to a 9-page high-tech plan released Thurs., Kerry would: (1) Use tax incentives and “marketplace solutions” to speed broadband deployment, which he said could add $500 billion to the U.S. economy and generate more than 1.2 million jobs. Specifically, he would push for a 10% tax credit on broadband investment in rural and inner-city areas, with a 20% tax credit for next- generation deployment. This echoes legislation by Sen. Rockefeller (D-W.Va.) and Rep. English (R-Pa.). (2) Eliminate capital gains taxes for long-term investments in small business, and “reform or eliminate regulations that impede America’s high-tech competitiveness.” (3) Boost govt.-funded R&D. (4) Invest in K-12 math and science education and reward colleges for creating “state-of-the-art online learning technologies.”

Kerry would fund his plan, he said, by accelerating the transition to digital TV “while ensuring that Americans continue to enjoy free, over-the-air television.” He said that would raise $30 billion from the auction of some of the returned spectrum, while freeing some spectrum for unlicensed devices as well as for all first responders by 2006. “The explosive growth of Wi-Fi shows the benefits of making some spectrum available on an unlicensed basis,” the plan said. In addition to increasing spectrum for wireless broadband, the plan said, “Kerry would make the regulatory changes that are needed to unleash new broadband networking technologies such as cognitive radio, mesh networks, ultra-wide band, and software-defined radio.”

House Science Research Subcommittee Chmn. Smith (R- Mich.) took issue with Kerry’s criticism of R&D spending under the Bush Administration. “I suggest in the strongest possible way that this issue must remain bipartisan,” he said, suggesting Kerry “has chosen to politicize science.” Smith said federal R&D support has increased 37% after adjusting for inflation since 2001, and the U.S. spends 3 times as much on R&D as the 2nd-place country, Japan. “The truth is,” he said, “by every measure, the United States is far and away the 800-pound gorilla when it comes to science and technology.” -- Howard Buskirk, Patrick Ross

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The Dept. of Commerce recommended establishing a spectrum testbed to encourage sharing of spectrum between the federal govt. and private companies. NTIA acting Dir. Michael Gallagher told us the FCC and NTIA hadn’t decided where the testbed would fall on the radio spectrum. “The testbed is going to be a tremendous step forward for spectrum policy,” Gallagher said Thurs.: “It’s going to put us on the cutting edge of the world, which, as the President just indicated, is where we belong.” Gallagher said the testbed would be a place on the band that is “set aside to development the technologies and prove the technologies.” He said FCC and NTIA would recommend where the testbed will fall on the radio spectrum within 2 years. An FCC official said the main consideration is providing “usable” spectrum, though no band had been selected. The recommendation is getting the most initial attention of a number contained in 2 reports released Thurs. by the Administration on a spectrum policy for the 21st Century.