Nebraska and Arkansas this week follow "taxation by regulation" to its logical ends by affirming the respective states' rights to tax Voice over Internet Protocol (VoIP). The Nebraska PSC, with a display of not inconsiderable regulatory will, concludes that is possesses the authority to tax VoIP for purposes of its state universal service fund. Meanwhile, the March 29 Communications Daily (subscription required) reports that the Arkansas legislature moved to "to ensure that VoIP and other types of non-traditional telecom services are subject to Ark.'s telecom gross receipts tax."

The Nebraska PSC action is the more interesting of the two, but both are of a piece. Both actions demonstrate the internal logic of the current universal service system that cannot abide any exit from the taxble "telecommunications" category. Thus, the Nebraska PSC endeavors -- in the face of the FCC's Vonage Order -- to conclude that VoIP services can be taxed for state universal service purposes. Surprise, surprise, the PSC concludes it gets to tax VoIP as telecommunications, based in part on the FCC's ducking of the matter in the Vonage Order. Universal service policy abhors a regulatory definitional vacuum -- and the states will fill in where the FCC gives room.

It seems like each week brings another report of a major media breakup or divestiture. As I mentioned here and here in previous essays, various media firms have recently been considering, or are engaged in, major divorces or divestitures. In recent weeks or months, Viacom, Liberty Media, Sony, Time Warner, and Cablevision have all been pondering or carrying out major spin-offs or restructuring plans.

This week it's Disney's turn. After years of feuding with the Weinstein brothers over in their popular and critically acclaimed Miramax Films studio, the two are calling it quits and filing for divorce. (Can you blame the Weinstein brothers after Disney apparently told them to turn down the production rights for the "Lord of the Rings" movies?!?) Disney will be losing one of the most respected movie studios in the world once the divorce is finalized.

I know I'm starting to sound like a broken record on this issue, but I just have to ask once more: Where are all the media critics now? Whenever two media outlets propose a marriage, the critics lament the supposed coming death of diversity and democracy and all that jazz. But when we find ourselves in the midst of another wave of media DE-consolidation, these Chicken Littles are nowhere to be found.

More on Brand X -- along with the insightful posts of Randy and Kyle below, I'd like to direct you to an op-ed Kyle has on CNet News.com. There he champions the position of his old FCC boss and suggests that some voluntary steps by cable to both define and implement "openness" on the Internet might forestall mandates by policymakers that could be far worse.

Today's Supreme Court argument in the Brand X case raises an important question: why did the Justices downplay the idea that courts should defer to the FCC when it comes to interpreting the Communications Act? By all accounts, the Court said almost nothing about this issue. The answer may say less about the Court or the parties' arguments than about the conflicting policy goals surrounding the FCC's efforts to promote investment in broadband networks.

After listening to the Brand X argument this morning at the Supreme Court, this is my quick reaction:

"For the sake of sound communications policy in the digital broadband era, I hope the FCC and the cable industry prevail. Surprisingly, however, except for Justice Stephen Breyer's persistent questions, there was little discussion at the argument concerning the deference due the agency's interpretation regarding what, in my opinion, are inherently ambiguous statutory provisions - the definitions of "information" and "telecommunications" services. A key issue briefed in the case is whether the 9th Circuit erred in holding that the FCC's interpretation was entitled to no deference under the Supreme Court's Chevron decision that holds that agency's reasonable interpretations of ambiguous statutory provisions should normally be upheld. In light of the ambiguity in the statute, this is a pretty good case for the Court to show some deference to the agency."

Well, at week's end, it's back to the important stuff. Last weekend Coach K (you try to spell Kryzewski!) became the winningness coach in NCAA tournament history, passing Dean Smith, coach of that other school down Tobacco Road.

So, in their eighth straight Sweet 16 appearance, let's hope that the Devils can put together a couple more wins, maybe setting up another matchup with that other school down the road a piece.

Gets to the Schumpeterian nature of competition, the error costs and futility of antitrust enforcers predicting the future, the benefits of tight-integration and non-modularity, and markets driving firms toward interoperability. A tour de force.

Robert Samuelson has a typically insightful column on the language of social security. Samuelson notes that by not calling social security and medicare what they are, welfare programs that are transfers from the employed to the retired, we cannot proceed to discuss reforming them honestly. In part, this is because the recipients believe they have a moral right to the transfer payments premised on earlier payment of taxes, notwithstanding that those taxes do not even begin to cover the net benefits being received.
His conclusions are backed by experimental economists

It was with some regret that I read last week's FCC decision postponing (until 2007) the date when cable operators will be required to use "CableCards" in the set-tops they lease to subscribers. The cards -- which protect against theft of digital cable service -- currently are required only for digital TVs and other devices purchased from consumer electronics companies that enable viewers to surf their favorite channels. Although the FCC moved in the right direction, its decision includes bad news along with the good.

While D.C. basked in the first convincing evidence that Spring will soon take hold, a group of Congressional staffers crunched through repeated dustings of snow on their way to classes in Aspen, Colorado. The staffers were few in number but decidedly well-placed and bipartisan, representing key committees and offices in both the House and Senate. They had agreed to devote part of their Easter recess to participate in the Federal Institute for Regulatory Law & Economics, hosted at the famed Aspen Institute. The Federal Institute was modeled after a similar program for state regulators that PFF launched successfully last year, in conjunction with our academic partners at the University of Colorado's Silicon Flatirons Telecommunications Program and George Mason University's Interdisciplinary Center for Economic Science.