'04 is almost over. How will it be remembered, for the purposes of this space? We're gonna need a montage...

We're #11 in broadband deployment! "Going Phishing" now has a far more sinister connotation than following a certain band from Vermont. Rural ILECs do pretty well with your universal service dollars, thank you. The NextWave saga ends. We're #13 in broadband deployment! Goodbye UNE-P, hello VoIP. Broadband trumps dial-up. The Intercarrier Compensation forum. Cable a la carte. The pulver.com Order. The Vonage Order. The FCC Kidzone. BPL trials. WiMax trials. Stratellite trials. USTA II. Brand X. Muni Broadband. Triple play. 'Net Freedom. 'Net Neutrality. Nipple brooches. NARUC. FTTP. FTTC. Fios. VOD. DVRs. IPods. Skype. Google. Duke loses to UConn. Fade to black.

Of course, what's a proper end-of-year retrospective without some sort of award. After consideration of several worthy nominees, the Rentseeker of the Year recipient is...

The Parents' Television Council. Even if they are anywhere close to reportedly backing 99.8% of the indecency complaints filed at the FCC this year, this is an impressive display of rentseeking behavior. A few weeks ago, I wondered what broadcast programming would consistently look like should the PTVC run the table, and then I saw an ad for a holiday music spectacular starring Clay Aiken and Barry Manilow. That seemed about right.

Now, on to 2005. In its Top Ten Trends for 2005, Red Herring anticipates "The Death of Distance." (David Isenberg properly blasts this header by stating that "distance is so dead its corpse stinks.") If Red Herring can pass off forward-looking statements like this to paid subscribers, I can pass off ridiculous forward-looking statements to web surfers. Bust out the crystal ball.

1. "Stevens & Inouye" will rival Hall & Oates. Get your "Telecom reform listening tour" shirts before they're sold out! Public hearings like these always draw the most interesting (and self-interested) people. And speaking of Hall & Oates...

2. Air Supply to headline the Aspen Summit. Maybe not, but I was quite envious to learn that Heart will be participating at an upcoming VON conference, which continues to add verve to the conference template. So, perhaps we can have our own 80's revival. Ice cream break featuring Journey? Happy hour featuring Tears for Fears? I am very serious about this.

3. President Bush will not utter the word "broadband" in public. It was worth a few points for both presidential candidates to throw out some general ideas on broadband deployment, but the Administration hasn't shown that it is really serious about it. Had Kerry won, his name probably would have been inserted here instead. Just playing the odds.

4. Cell phone use on airplanes will be one of the most important communications issues...for public consumption. It has already begun. The FCC has posted instructions on its home page for the public to comment on the issue - which is unconventional. Leaving no stone unturned, Commissioner Copps seeks "to determine precisely what jurisdiction the FCC has over the annoying-seatmate issue." First off, the no brainer here would be the value added for users of data applications. And while I, too, worry about the annoying-seatmate, to the extent this adds yet one more option for a seatmate to be annoying, I would think that the issue can be worked out in the market.

Happy New Year to you, PFF blog readers, and to all of the folks at PFF.

In a move that would hardly defy the oddsmakers in Vegas, were they to set lines on such things, California has challenged the FCC's Vonage Order in the Ninth Circuit.

The Texas Public Policy Foundation has released a report by Robert Crandall and Jerry Ellig entitled Texas Telecommunications: Everything's Dynamic but the Pricing. The authors conclude that the maintenance of cross-subsidies in Texas to keep retail rates "affordable" results in an annual consumer welfare loss of at least $200 million dollars and has hampered the development of local competition in the state. The report is as timely as it is compelling, as the state's public utilities act undergoes sunset review.

The New York Times has honed in on Michael Powell and indecency regulation with a (hit) piece today. (Free registration required.) The article notes that Powell declined four invitations to speak about the issue. However, his reluctance to speak does not give license to the reporter. For example, all of the quotes from the Commission are anonymous. The story liberally uses quotes from folks with a clear vested interest in the issue and select quotes from Powell's public statements. The source(s) and motives for the other quotes are hidden from the reader. The story explains Powell's views with unflattering quotes from sources like unidentified "commission officials and friends of the Chairman" and "other lawyers and commission officials."

No doubt Powell's statements and actions should be analyzed. Likewise the views of people with an interest in broadcast regulation should be heard. But an article headlined "Evolution Atop the FCC" and given prominent space ought to include something attributable in the Chairman's defense. On the key criticism of the Powell and the FCC - the perceived arbitrariness of this form of regulation - no one is on the record to push back. The criticism may be warranted, but without more information it simply looks like a personal attack.

This space has highlighted a few bits here and there on the subject of indecency but none are as humorous as this classic piece of PFF Weblog satire. It too paints a picture of the Chairman's views on indecency, but no one tried to pass it off as a straight news article.

A new report by AMR Research claims that this year major consumer goods producers have invested more than $250 million in radio frequency identification devices and related equipment. Wal Mart is spurring the investment with a set of goals and deadlines for up to 140 of its suppliers. However, the omnipresent retailer is not alone. The author of the report notes,

that several other major retailers, including Albertsons, Best Buy, Target and Britain's Tesco, are also launching RFID projects with their merchandise suppliers.

Funny thing, just this morning I took the opportunity to read an October 2004 study by Rob Atkinson and Julie Hutto on RFID. Their description of the issues and the false alarm created by self-anointed privacy advocates is similar to work done by PFF adjunct Jim Harper.

Why does this matter? Many analysts see 2004 as the proverbial tip of the iceberg in RFID deployment. It is a digital technology that promises tremendous consumer savings across a wide segment of the economy. In addition, the Defense Department, the FDA and the Homeland Security Department are at the forefront of public sector RFID deployment with an eye toward improved safety. These players - through regulatory edict or buying power - could significantly shape the market. Second, several states - notably California and Utah - toyed with prohibitions, limitations or moratoriums in 2004 and it is an issue sure to spark the interest of state legislators in the coming year.

A Wall Street Journal editorial pulls together the threads of three distinct digital tax issues under the heading "A National Telephone Tax?" (Subscription required) As one might expect, the editorial board at the WSJ does not favor a new national telephone tax. In addition to the market distortions it would present, the WSJ presents persuasive data on a rising tide of state revenues. Economic growth tends to increase tax receipts even when the taxman cannot reach new technologies.

However, the distinct issues are serious enough to warrant their own treatment. First there is the issue of state and local taxes on Internet-based calling. According to the WSJ, states are on the offensive on this point and rightly see the traditional tax base in decline insofar as taxes were levied on traditional telephone service. VoIP bedevils state officials on the jurisdictional issues that dominate regulatory policy as well as the pending decline of tax revenues built into the old system. How many firehouses will be shuttered because cities have not figured out how to tax VoIP? (Not many...unless you live exclusively in the land of outlandish rhetoric.)

Second, there are the manifold problems associated with "streamlined use tax" proposals. In effect, it is a cartel for state revenue officers. Finally, there is the recently enacted Internet Tax Non-Discrimination Act. This "Internet tax freedom" act only temporarily extended the prohibition on Internet access taxes and the like. Watch for the intersection of technology and taxation in the New Year; in one way or another we are bound for a collision as these issues gain traction.

The President touted the importance of ownership during this week's Conference on the Economy. The importance of ownership in small businesses and in money were keys to securing the future of the economy. He, and the panelists, failed to mention anything about the ownership of intellectual property, however. Perhaps this subject area did not fit into the agenda, but it seems to me that ownership of intellectual property needs to be an integral part of innovation and productivity. It will be interesting to see if the President's love of people owning something will extend past savings accounts and into intellectual property.

Today wrapped up the White House Conference on the Economy. In the morning session President Bush led a panel entitled "Financial Challenges for Today and Tomorrow." The main focus of this panel was long term deficits due to unfunded mandates, particularly social security and Medicare. The President began by outlining his own 3 key points to social security reform:

1. No change for those in or near retirement.
2. Do not raise payroll taxes
3. Allow younger generations to use own payroll taxes for personal savings accounts.

The panelists all seemed to agree that the old methods used to fix social security, namely increase payroll taxes or decrease benefits, simply will not do. The system itself is broken. Instead of tweaking the old, a new social security infrastructure must be established. The key to this new architecture should be private accounts, according to the panelists. These private accounts would allow people to invest their own money into savings accounts for their retirement, but give them flexibility to invest what they want and also to do what they see fit with the money, such as pass it on to family.

One of the main themes of the morning session was ownership, as illustrated by the personal account concept. Free markets and entrepreneurial spirit were heralded as the driving forces of a strong economy. Personal accounts demonstrate the concept of using ownership as a means to strengthening the economy and avoiding the pitfalls of long term debt. The President affirmed his belief in the American people and a system of ownership through two statements:

"Citizens can affect policy"

"I love the idea of people being able to own something"

Private ownership and believing in the people of America to spur on change. Ah, the beauty of a capitalist democracy in action.

At the risk of underscoring our fearless leader's purported disinterest in today's Triennial Review Order (TRO) from the FCC, I have to concede that the agency's most important task is to maximize its chances of being upheld on appeal, so that it can go back to focusing on more innovative services, such as Internet voice, wireless and broadband. The safest approach would have been for the agency to craft a concrete standard based on evidence of both actual and potential competition from multiple technologies, and from existing services such as "special access." Based on what we've heard, the Court will probably agree that the FCC has moved the ball forward, but the Devil's in the (forthcoming) details -- the full text of the order may not be out for days or weeks.

The FCC moved the ball forward in several ways. First, it signaled that competitors could no longer provide service, in essence, by leasing established phone companies' entire networks at steeply-discounted rates set by the government. Second, the agency stated it would consider the future prospects of competition in deciding whether companies entering the market are "impaired" and thereby entitled to lease those parts of the network the agency's rules still cover. Third, the agency established numeric thresholds so that incumbent phone companies will not be required to lease parts of their networks to competitors throughout geographic areas, rather than in specific locations.

Yet there are some potential risks in the agency's approach that cannot be fully evaluated until the order is released. Although the agency will be able to assure the Court that companies will need to invest in their own equipment to get the full economic benefit of owning a network, those assurances won't become effective until the end of long transitions lasting over a year or more. So the Court will need to decide whether those transitions are reasonable steps to prevent disruption of service to customers, or whether the agency has unduly prolonged obligations it had no authority to adopt in the first place. Similarly, although the FCC apparently has heeded the Court's warning not to disregard the prospects for future competition based on a variety of technologies and services, the Court may be skeptical that the agency afforded reasonable weight to such evidence. The numeric thresholds set by the agency, after all, do not appear to rely expressly on such evidence. And it's hard to shake the feeling that a Court that has criticized the FCC harshly for failing to comply with the law in this area three times previously may not be satisfied by a fourth attempt under which the FCC still would require incumbents to lease certain equipment in the vast majority of cases.

Only time (and the Court itself) will tell whether the pluses of today's decision outweigh its minuses. Thus, restraint is in order even with respect to my cautious optimism. Again, the consumer benefits of the competition covered in this decision already have been eclipsed by the benefits of wireless, Internet telephony and broadband. With any luck, the FCC may be able to put this proceeding to bed soon so it can devote more of its energies to finishing the framework to promote investment in these more innovative services.

After spending the morning at the White House Conference on the Economy, several things have been brought to my attention. According to the economic and business experts present, the economy is in good shape, taxes and regulation are bad, and consumer saving and investment in technology are good. Also, small business is an important cog in the mechanism of the national economy.

Aside from the gratuitous flattery of the Administration and its economic and tax policies, the two panels expounded on the virtues of entrepreneurial growth and investment, the importance of small business and the need for the federal government to clean up the regulatory framework effecting all businesses.

Stay tuned for more breaking news following tomorrow's sessions.