Access to Broadband Networks: The Net Neutrality Debate

Angele A. Gilroy
Specialist in Telecommunications Policy

As congressional policymakers continue to debate telecommunications reform, a major point of contention is the question of whether action is needed to ensure unfettered access to the Internet. The move to place restrictions on the owners of the networks that compose and provide access to the Internet, to ensure equal access and non-discriminatory treatment, is referred to as “net neutrality.” While there is no single accepted definition of “net neutrality,” most agree that any such definition should include the general principles that owners of the networks that compose and provide access to the Internet should not control how consumers lawfully use that network, and they should not be able to discriminate against content provider access to that network.

A major focus in the debate is concern over whether it is necessary for policymakers to take steps to ensure access to the Internet for content, services, and applications providers, as well as consumers, and if so, what these steps should be. Some policymakers contend that more specific regulatory guidelines may be necessary to protect the marketplace from potential abuses which could threaten the net neutrality concept. Others contend that existing laws and policies are sufficient to deal with potential anti-competitive behavior and that additional regulations would have negative effects on the expansion and future development of the Internet. The December 21, 2010, adoption, and upcoming November 20, 2011, implementation, by the Federal Communications Commission (FCC) of its Open Internet Order has focused attention on the issue. Although most concede that networks have always needed and will continue to need some management, the use of prioritization tools, such as deep packet inspection, as well as the initiation of metered/usage-based billing practices have further fueled the debate.

A consensus on the net neutrality issue has remained elusive and support for the FCC’s Open Internet Order has been mixed. While some Members of Congress support the action, and in some cases would have supported an even stronger approach, others feel that the FCC has overstepped its authority and that the regulation of the Internet is not only unnecessary, but harmful. Internet regulation and the FCC’s authority to implement such regulations has been a topic of legislation (H.R. 96, H.R. 166, S. 74, H.R. 2434, H.R. 1, H.J.Res. 37, and S.J.Res. 6 ) and hearings in the 112th Congress. The House, on April 8, 2011, passed (240-179) H.J.Res. 37, to state disapproval of and remove the force and effect of the FCC’s Open Internet Order. However, an identical resolution of disapproval (S.J.Res. 6) failed to pass the Senate on November 10, 2011, by a 52-46 vote. The House FY2012 Financial Services and General appropriations bill (H.R. 2434), which includes FCC funding, contains a provision barring the FCC from using funds to implement the Open Internet Order. It is anticipated that the issue of Internet access will be of continued interest to policymakers.

The net neutrality issue has also been narrowly addressed within the context of the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5). Provisions required the National Telecommunications and Information Administration (NTIA), in consultation with the FCC, to establish “nondiscrimination and network interconnection obligations” as a requirement for grant participants in the Broadband Technology Opportunities Program (BTOP). These obligations were released, July 1, 2009, in conjunction with the issuance of a notice of funds availability soliciting applications. Recipients of these awards have been selected and continued congressional oversight is expected.

The ARRA also required the FCC to submit a report, containing a national broadband plan, to both the House and Senate Commerce Committees; it was released on March 16, 2010.


Date of Report: November 16, 2011
Number of Pages: 21
Order Number: R40616
Price: $29.95

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The Technology Innovation Program

Wendy H. Schacht
Specialist in Science and Technology Policy

The Technology Innovation Program (TIP) at the National Institute of Standards and Technology (NIST) was established in 2007 to replace the Advanced Technology Program (ATP). This effort is designed “to support, promote, and accelerate innovation in the United States through highrisk, high-reward research in areas of critical national need,” according to the authorizing legislation. Grants are provided to small and medium-sized firms for individual projects or joint ventures with other research organizations.

While similar to the Advanced Technology Program in the promotion of R&D that is expected to be of broad-based economic benefit to the nation, TIP appears to have been structured to avoid what was seen as government funding of large firms that opponents argued did not necessarily need federal support for research. The committee report to accompany H.R. 1868, part of which was incorporated into the final legislation, stated that TIP replaces ATP in consideration of a changing global innovation environment focusing on small and medium-sized companies. The design of the program also “acknowledges the important role universities play in the innovation cycle by allowing universities to fully participate in the program.”

The elimination of ATP and the creation of TIP have renewed the debate over the role of the federal government in promoting commercial technology development. In arguing for less direct federal involvement, advocates of this approach believe that the market is superior to government in deciding technologies worthy of investment. Mechanisms that enhance the market’s opportunities and abilities to make such choices are preferred. It is suggested that agency discretion in selecting one technology over another can lead to political intrusion and industry dependency. On the other hand, supporters of direct methods argue that it is important to focus on those technologies that have the greatest promise as determined by industry and supported by matching funds from the private sector. They assert that the government can serve as a catalyst for cooperation. As the Congress makes appropriation decisions, the discussion may serve to redefine thinking about governmental efforts in facilitating technological advancement in the private sector.


Date of Report: November 14, 2011
Number of Pages: 9
Order Number: RS22815
Price: $19.95

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Manufacturing Extension Partnership Program: An Overview

Wendy H. Schacht
Specialist in Science and Technology Policy

The Hollings Manufacturing Partnership (MEP) is a program of regional centers that assist smaller, U.S.-based manufacturing companies in identifying and adopting new technologies. Operating under the auspices of the National Institute of Standards and Technology (NIST), centers in all 50 states and Puerto Rico provide technical and managerial assistance to firms. Federal funding is matched by non-federal sources. Existing resources in government, business, and academia are leveraged while the program endeavors to build on current state and local activities and industrial extension efforts.

The MEP program has, at times, been included in the discussion surrounding termination of government programs that provide direct federal support for industry. Questions have been raised in congressional debate as to the appropriateness of government funding for this program when the technologies are available in the marketplace. Instead of the government picking “winners and losers,” opponents argue, the marketplace should make decisions regarding firms worthy of investment. However, proponents of the program stress that, to date, no direct funding is available to companies through MEP and that assistance is technical, scientific, and/or managerial. The centers facilitate the adoption of new technologies that foster competition and promote innovation. As Congress continues to make appropriation decisions, support for manufacturing extension may be discussed in the context of the role of the federal government in facilitating research and technological advancement.


Date of Report: November 14, 2011
Number of Pages: 11
Order Number: 97-104
Price: $29.95

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The National Institute of Standards and Technology: An Appropriations Overview

Wendy H. Schacht
Specialist in Science and Technology Policy

The National Institute of Standards and Technology (NIST), a laboratory of the Department of Commerce, is mandated to provide technical services to facilitate the competitiveness of U.S. industry. NIST is directed to offer support to the private sector for the development of precompetitive generic technologies and the diffusion of government-developed innovation to users in all segments of the American economy. Laboratory research is to provide measurement, calibration, and quality assurance techniques that underpin U.S. commerce, technological progress, improved product reliability, manufacturing processes, and public safety.

Continued funding for NIST extramural programs directed toward increased private sector commercialization has been a major issue. Some Members of Congress have expressed skepticism over a “technology policy” based on providing federal funds to industry for development of pre-competitive generic technologies. This approach, coupled with pressures to balance the federal budget, led to significant reductions in funding for NIST. The Advanced Technology Program (ATP) and the Manufacturing Extension Partnership (MEP), which accounted for over 50% of the FY1995 NIST budget, were proposed for elimination. In 2007, ATP was terminated and replaced by the Technology Innovation Program (TIP).

While much of the legislative debate has focused on ATP and MEP, increases in spending for the NIST laboratories that perform the research essential to the mission responsibilities of the agency have tended to remain small. As part of the American Competitiveness Initiative, announced by former President Bush in the 2006 State of the Union, the Administration stated its intention to double over 10 years funding for “innovation-enabling research” done at NIST through its “core” programs (defined as internal research in the STRS account and the construction budget). In April 2009, the current President stated his decision to double the budget of key science agencies, including NIST, over the next 10 years. While additional funding has been forthcoming, it remains to be seen how support for internal R&D at NIST will evolve and how this might affect financing of extramural efforts such as TIP and MEP. The dispensation of funding for NIST programs may influence the way by which the federal government supports technology development for commercial application.


Date of Report: November 14, 2011
Number of Pages: 11
Order Number: 95-30
Price: $29.95

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State Taxation of Internet Transactions

Steven Maguire
Specialist in Public Finance

The United States Bureau of the Census estimated that $3.4 trillion worth of retail and wholesale transactions were conducted over the Internet in 2009. That amount was 16.8% of all U.S. shipments and sales in that year. Other estimates projected the 2011 so-called e-commerce volume at approximately $3.9 trillion. The volume of e-commerce is expected to increase and state and local governments are concerned because collection of sales taxes on these transactions is difficult to enforce.

Under current law, states cannot reach beyond their borders and compel out-of-state Internet vendors (those without nexus in the buyer’s state) to collect the use tax owed by state residents and businesses. The Supreme Court ruled in 1967 that requiring remote vendors to collect the use tax would pose an undue burden on interstate commerce. Estimates put this lost tax revenue at approximately $11.4 billion in 2012.

Congress is involved because interstate commerce typically falls under the Commerce Clause of the Constitution. Opponents of remote vendor sales and use tax collection cite the complexity of the myriad state and local sales tax systems and the difficulty vendors would have in collecting and remitting use taxes. Proponents would like Congress to change the law and allow states to require out-of-state vendors without nexus to collect state use taxes. These proponents acknowledge that simplification and harmonization of state tax systems are likely prerequisites for Congress to consider approval of increased collection authority for states.

A number of states have been working together to harmonize sales tax collection and have created the Streamlined Sales and Use Tax Agreement (SSUTA). The SSUTA member states hope that Congress can be persuaded to allow them to require out-of-state vendors to collect taxes from customers in SSUTA member states.

In the 112th Congress, S. 1452 and H.R. 2701 (Senator Durbin and Representative Conyers) would grant SSUTA member states the authority to compel out-of-state vendors in other member states to collect sales and use taxes. In addition, H.R. 3179 (Representative Womack) would also grant states the authority to compel out-of-state vendors to collect use taxes provided selected simplification efforts are implemented.

A related issue is the “Internet Tax Moratorium.” The relatively narrow moratorium prohibits (1) new taxes on Internet access services and (2) multiple or discriminatory taxes on Internet commerce. Congress has extended the “Internet Tax Moratorium” twice. The most recent extension expires November 1, 2014. The moratorium is distinct from the remote use tax collection issue, but has been linked in past debates. An analysis of the Internet tax moratorium is beyond the scope of this report.


Date of Report: November 1, 2011
Number of Pages: 20
Order Number: R41853
Price: $29.95

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