Legislative Year in Review: All Talk, Little Action

Congress tried. It really did. And it came so close on several issues--spyware and digital copyright most prominently. But though a number of bills were proposed, and some were even passed by the House or the Senate, very few actually became law. The Federal Communications Commission, the Supreme Court, and the Department of Justice, however, were all busy bees.

Below, I run through six of the year's major topics, what's been decided, the considerable amount still left on the to-do list for 2005--and my guess as to how much of that list Congress will actually get to this year.

Internet taxes and VoIP: President Bush signed in December a bill that extends the moratorium on Internet-specific taxes for another three years. That means you shouldn't be taxed for your broadband or dial-up service specifically (certain locations are exempt for up to four years because they had laws on the books taxing these things prior to the moratorium).

Taxation and regulation of voice over IP services continue to be controversial. The FCC consistently maintains that the nascent industry should be protected from regulation and it has taken regulation out of states' hands. But others argue that these exemptions give VoIP service providers too much advantage over more traditional telephone service providers.

The moratorium has no affect on whether you pay sales taxes on your online purchases, however. That's still dependent on whether the store you buy from has a physical presence in your state, or whether that store has volunteered to collect sales taxes at the urging of various state governments. State governments have been pushing for years to get most or all online retailers to collect sales taxes, claiming losses in the hundreds of millions to billions of dollars in revenue. Many states have banded together to simplify the sales tax code to make it easier for retailers to collect the tax, but thus far stores have no federal obligation to do so. With online sales showing double-digit growth over last year, expect more pressure from states on both businesses and individuals to pay up.

(See "A Tangled Web of Taxes" for more details on Internet taxes and VoIP.)

Digital copyright: In earlier columns, I discussed a number of proposed bills dealing with digital copyright. One would increase penalties for copyright violations and make it easier to prosecute them, among many other things (HR 4077). Another bill would give the DOJ the ability to sue for civil damages (S 2237), while a third supposedly targeted peer-to-peer software vendors and clearly made it a crime to intentionally induce copyright violations (S 2560). On the other hand, only one bill, HR 107, sought to clarify and protect fair use rights to digital media. None became law, although several were passed by either the House of Representatives or the Senate.

Count on most of these bills or others with similar language to be reintroduced in 2005. Expect more curbs on what you can do with your digital media--remember, new DVD recorders, TVs, personal video recorders, and the like must recognize the broadcast flag as of July 2005. These flags will be sent along with digital broadcasts and will tell compliant devices whether, and how often, you can record or copy the programs they mark.

While Congress debated, the DOJ, via 2004's Operation Fastlink, worked with law enforcement agencies overseas to go after dozens of suspected large-scale pirates of software, movies, music, and games. They've gotten one conviction so far. Congress also created a new position when it passed a spending bill in late 2004: a sort of Copyright Czar, who will likely coordinate and oversee efforts to catch and prosecute pirates.

The Supreme Court is also weighing in and has agreed to review the Ninth Circuit Court of Appeals decision that upheld that P-to-P companies Grokster, StreamCast Networks, and were not liable for any copyright infringement by people using their software or networks.

The Motion Picture Association of America and the Recording Industry Association of America continue to file lawsuits against users and P-to-P software vendors, with BitTorrent the latest defendant.

Spyware: Several bills were proposed, all either prohibiting or regulating the distribution of spyware, or increasing penalties for spyware distributors. Though none were perfect, they were good attempts. Three were passed by either the House (HR 2929 and HR 4661) or the Senate (S 2145), but none got by both. It's back to the drawing board for 2005.

In the meantime, to protect yourself against spyware, check out some of our recent roundups ("Bigger Threats, Better Defense," a Home Office column, and a look at not-so-good removers). Look for a new roundup of spyware removers in our March issue.

E-voting: Problems were predicted and found during the elections in November as about 30 percent of voters cast their ballots electronically. There is some moderately good news--the National Software Library held copies of the code to try to safeguard results, several states will require voter-verified paper trails for future elections, and Nevada banned machines without a paper trail in this recent election.

But despite the fact that a lot of the attention has been focused on how the machines work and what's been done to prevent malicious agents from tampering with results, issues such as too-close ties between election officials, members of Congress, and voting machine vendors, and insufficient numbers of machines at key polling places remain unaddressed. Perhaps we'll have better luck in 2006.

Wireless 411: Several cellular service providers have gotten together with a company called Qsent to create a national 411 directory of cell phone numbers to help people reach those they need to call; the directory should go live in 2005. Verizon and some consumer advocates oppose such a list (Verizon has said it will not allow its users to participate) because of privacy concerns. Congress tried to weigh in, and a Senate committee did pass a bill that would require such a list to be opt-in only and would allow people to opt out free of charge, among other things. The bill didn't go beyond committee, however.

The companies putting the directory together say they will provide many of the bill's proposed protections, and unless Congress revives it, we'll just have to trust them.

Protection for kids online: The right balance between protecting children as they surf the Net and allowing adults to have their fun continues to elude lawmakers. The Supreme Court upheld an injunction against the enforcement of 1998's Child Online Protection Act, saying that the law's potential harm to free speech and its chilling effect on legal adult speech outweighed the potential harm to children that the law was meant to address. The court said there were likely other, less harmful means (some of which Congress had enacted since the original law) that might achieve the law's intended result--for example, filtering software and technologies. The court sent the case back to trial to allow the warring parties to present evidence of the effectiveness (or lack thereof) of filtering technologies, among other things.

Even if this particular case gets dropped, Congress will likely try again to craft a law that will help keep kids safe when they go on the Web. Perhaps, as some readers suggested, we'll get a .adult or .sex domain to make it easier to block sites with potentially harmful content from children.

My bet, though: Only spyware (with a side of phishing), digital copyright, and VoIP will see any real action in 2005.

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