10 things the US government can do to help digital news entrepreneurs

The US Federal Communications Commission last week released its long-awaited report on the future of local news in the Internet era, “The Information Needs of Communities,” to a collective “meh” from the digital news commentariat. At best, the report seems to have met or at least exceeded the low expectations that many critics had for it. There’s no ill-advised proposal for getting government into the news business, thank goodness, and the report shows a commission that tried to do its homework in analyzing what’s been happening in the local news marketplace over the past decade.

But let’s not dismiss too quickly the federal government’s potential role in promoting good news coverage. Here are 10 steps that the US government *could* take that would significantly help entrepreneurs trying expand the news coverage of their local communities. And none of them involve direct subsidies or payments to the news industry.

1. Protect Net Neutrality

The Internet has nearly eliminated the barriers to entry for start-up publishers, enabling the explosion of new information sources across the Internet. If we need better sources of local information, the solution is not to allow telecom companies to extract tolls and demand payments from publishers to allow access from readers. That will merely reduce the number of voices available to consumers while further enriching telcos. Corporate media was cutting local news coverage before the Internet. Silencing websites won’t bring back that coverage. It will only reduce the possibility of finding replacements.

2. Expand broadband coverage

The smaller the market, the harder it becomes for a local publication to earn the income it needs to operate as a viable business. The digital divide makes small communities even smaller. Universal access to broadband would make every household part of its local digital marketplace, expanding opportunities for publishers and helping increase the possibility that a professional, responsible news publication in that community could be a financial success. The government can help expand broadband coverage not by caving to the demands of telecos (who are holding broadband expansion hostage to kill net neutrality, for example), but by laying its own fiber lines, establishing public WiFi networks, and by demanding more from companies bidding for broadcast spectrum.

3. Digitize public records and put them online in open formats

You might have noticed that we have millions of un- and underemployed workers in America today, many with digital skills. We also have decades of public records that remain available only in printed form, or in archaic electronic formats. Why not create a WPA-style computer workforce to digitize the nation’s public records and to publish them online, in open formats? Not only would this effort put many thousands of Americans to work, it would create a repository of more easily retrievable public information, allowing citizens (and reporters) easier access to our government.

4. Pass a national shield law, with explicit protection for online publishers

The First Amendment belongs to everyone, not just to print and broadcast reporters. Unfortunately, the shield laws that provide legislative support to the First Amendment vary from state to state, and some courts are unwilling to apply their protections to anyone other than old-school print and broadcast reporters. A federal shield law, with an explicit protection for online publishers, could help create a more hospitable legal environment for start-up news publishers.

5. Regulate transaction fees

Like many retailers, I lose a chunk of every payment made by my customers who use debit and credit cards. While it’s reasonable to expect to pay a bit for the convenience of these forms of payment, given the small number of megabanks that now control the credit card industry, we need government oversight to keep fees reasonable. Congress is taking steps to help this happen, which will reduce operating costs for all small businesses, including start-up news publishers.

6. Revisit COPPA

The Children’s Online Privacy Protection Act sounds like a worthy piece of legislation – no online service can collect personal information from someone under age 13 without that the explicit consent of that child’s parent or guardian (and an email or Web form consent doesn’t count). In practice today, however this act is violated so often as to make the drinking age look like a widely respected law. And it’s not the publishers undermining the law. It’s the kids. Many online community publishers spend way too much time finding and deleting user accounts from kids who lied about their age to register on a website. Creating digital media has become a normal part of life for kids under 13. It’s time to revisit this law and create a new solution that protects kids, parents and publishers. The law should mean something. When this many people violate it, the law is reduced to charade and farce.

7. Ditch the FTC’s “blogger endorsement” rule

This attempt to force truth in advertising is a confusing mess and its inconsistent enforcement has become a joke. If payola disclosure’s important, let Congress pass a law mandating it for everyone – bloggers, newspaper reporters, celebrities and anyone else who publishes. But good online publishers shouldn’t have to worry themselves with jumping through legal hoops that less considerate people get away with ignoring.

8. Model zoning reform

Continuing on the topic of widely ignored laws, zoning laws in many communities make running a business from your home (even a remotely hosted website) illegal. With telecommunity becoming more popular, the lines dividing home from work are becoming more blurred. While zoning remains a local issue, the federal government could encourage local communities to revisit their zoning regulations to encourage the development of online businesses. The first step would be to eliminate restrictions against running from one’s home office a business that employs no one from outside the family on site.

9. Remove payroll tax cap and reduce rate

My last two recommendations would help create a more viable environment for all job creation, not just in online news. Too many digital entrepreneurs are caught by surprise their first year, when they’re hit with the bill for the “self employment tax” – the share of Medicare and Social Security taxes typically paid by employers. When you’re self-employed, you’re on the hook for that share, as well as your regular share as an “employee.”

These so-called payroll taxes are regressive, as they are charged only on the first $106,800 of income. Eliminating the cap would raise additional money to fund these programs, potentially allowing an overall reduction in the payroll tax rate. That would reduce the self-employment tax, making digital entrepreneurship more attraction to journalists thinking about starting up, just trying to make a middle-class income for themselves and their family.

10. National health care

Even more than payroll taxes, the biggest non-income expense for many start-up businesses is health care. I personally know many journalists who’ve stuck with unsatisfying newsroom jobs rather than starting out on their own because of the health benefits. Ever-increasing health insurance premiums effectively serve as a private industry “tax” on job creation in the United States. A national health care plan that divorces health insurance from employment would encourage people and businesses to create jobs by eliminating health insurance as a direct expense of creating (or maintaining) a job. At the very least, opening Medicare to all who wanted to enroll and pay the premiums would create some much needed competition for companies such as Wellpoint, which enjoy near-monopolies in many communities on health policies for the self-employed.

Should anyone have a 'kill switch' for the Internet?

The recent events in Egypt remind journalists not only of the physical peril inherent in covering conflict, but the evolving danger that journalists’ reporting can be kept from reaching the public at all.

Egypt’s crumbling regime has resorted to traditional techniques for silencing reporters, including beatings and arrests. (Reporters also have been assaulted by pro-government thugs during the ongoing anti-government protests.) But it was the Egyptian government’s action to cut access to the Internet early during the protests that also should prompt journalists around the world to take a closer look at their government’s attitude toward controlling the Internet.

Even here in the United States, there’s far from political unanimity on how the government should address the Internet. Consumer advocates want to the Federal Communications Commission to expand to wireless services its rules blocking Internet providers from slowing access to content providers who don’t pay telecommunication companies an extra fee, beyond hosting and bandwidth charges. The telcos want the government to butt out and quit preventing them from finding new ways to make money to maintain and expand their networks. The Department of Homeland Security is shutting down websites (including ones outside the US) that link to live streams of copyrighted televise broadcasts.

And some members of Congress have proposed legislation that would allow the government to shut down parts of the Internet in a “national emergency.”

Sen. Susan Collins (R-Maine) told Wired.com last week that she might reintroduce the Protecting Cyberspace as a National Asset Act of 2010 in this Congressional session. The bill is designed to legally enable the federal government to shut down parts of the Internet under cyber attack – creating an effective firewall between comprised networks and the rest of the Internet.

I can’t imagine not wanting to preserve the integrity of the Internet in a time of crisis, when efficient communication can become even more important. But giving anyone in the federal government a “kill switch” for the Internet ought to concern any advocate for free speech, especially in light of what Egypt has done.

The bill contains a provision against censorship, but, as Wired.com pointed out, similar language in the Patriot Act didn’t stop the feds from using that legislation to spy on interest groups.

The definition of an attack changes with your point of view, as well. I’m certain that the Mubarak regime in Egypt considered the outpouring of support for change in that nation an “attack” on its national security.

Throughout history, people have made money and achieved power by controlling access points in commerce, including ports, portages, mountain passes, and roads. In recent times, others have earned money and power by owning access points for the passage of information, such as the town’s printing press, a broadcast license or, later, cable TV franchise.

While restricting the flow of people, goods and information through access points can enrich those who control those points, opening access helps spread that wealth among a larger population, often creating additional wealth in the process.

It’s ridiculous to insist that the U.S. government stay out of the Internet. Heck, it created the thing. Like interstate highways or global air and sea traffic routes, the Internet’s too important to allow it to fall under the control of a handful of corporations.

Or a few government officials.

That’s why I believe that government’s role in the Internet ought to be:

  • Protecting open access to this information marketplace, preventing service providers from denying access to publishers.
  • Promoting the expansion of Internet access to more people.
  • Promoting the expansion of bandwidth across the Internet.
  • Promoting the establishment of more redundancy within the Internet, to improve reliability and minimize the effectiveness of both cyber attack and censorship.

Regardless of your opinion on those points, I hope that the revolution under way in Egypt will inspire more online publishers to speak up when politicians debate regulation of the Internet. This issue means too much to us as business people, and too much to us as leaders in the communities we serve, for we to keep quiet and leave these decisions to others.

What’s happening in Egypt also reminds us that brave reporters risk their lives to bring the rest of us the news. We owe it to them, as well as to their audience, to do everything we can to ensure that the news they report can and will get out to the rest of the world.

Get ready for the Battle over Bandwidth

The next great battle in the journalism industry will be the Battle of Bandwidth.

AT&T’s announcement this month that it will end unlimited data plans for its smartphone and iPad subscribers is expected to lead to similar announcements from other wireless providers. And Comcast’s continuing efforts to throttle certain traffic from its home Internet customers shows that bandwidth battles are not limited to the wireless Web.

Internet Service Providers clearly don’t want to continue offering a one-price-buys-everything option. ISPs have shown that they favor a pricing model where certain users have to pay more to use more bandwidth.

While there’s some logical appeal to the idea of making the heaviest users of the Internet pay the most for their use, metered traffic online creates profound challenges for online content producers.

Think back (if you’ve been online for more than a decade) to when online services such as Prodigy and CompuServe charged by the minute. How much time did you spend online back then, compared with today? One might argue that the availability of more powerful devices and connection plans have enabled people to spend more time online. But one also could argue that without unmetered access, there’d have been much less, and perhaps no, demand for such online capacity.

With unmetered online access, developers and entrepreneurs are developing a wide range of bandwidth-intensive applications, from Netflix’s online streaming service for movies and television to Virtual Private Networks that allow companies to share data, video and audio among far-flung employees without having to buy their own telecom lines.

Of course, some of those new applications – especially Netflix’s – threaten well-established business models and practices at ISPs. Cable companies that make billions of dollars by selling people subscriptions to a set line-up of television channels (as well as by selling channel producers places on those line-ups), don’t want to see the likes of Netflix providing an alternative medium for watching TV shows. Telephone companies don’t want to see a dozen Skypes offering unlimited, flat-rate or free voice and video calling over the ‘net. For these corporations, bandwidth metering isn’t simply about cost containment on the ISP side; it’s a way to protect their core businesses from competition.

In an opinion piece in Salon last week, Dan Gillmor made a case for the federal government expanding broadband coverage through a comparison to U.S. postal subsidies for newspapers, which began in the 18th Century.

Allow me to add another analogy – the Rural Electrification Act. While the Post Office Act of 1792 encouraged the free flow of information around the young American nation, the REA helped lift millions of rural Americans out of poverty and into a national marketplace.

Rural electrification allowed rural households to have the power that they needed to light their homes, run machinery, refrigerate more food and work their land to a scale impossible before. It allowed them to escalate their level of economic activity, in addition to providing a higher standard of living.

Affordable comprehensive national broadband could do the same. Not only would it lead to a more informed citizenry, it would give the people of the United States an important tool with which they could become more engaged in a national (and international) marketplace.

Gillmor argued that the government’s subsidy of broadband would be a more appropriate way for the federal government to support journalism than to provide direct payment to establishment media.

I agree. Payments to establishment media fund a limited number of existing voices. Expanded broadband coverage – in both geographical reach and availability of more bandwidth to all – would create fertile ground for the growth of many more voices.

This is the battle that will be fought in the courts and in Congress over the next months, and years. Will we allow a limited number of broadband ISPs to use their market power to limit the bandwidth that consumers and producers may access? Or will we use the collective power of our government to expand bandwidth to more consumers, to create more entrepreneurial opportunity?

I’ve warned before that online publishers must not fall into the trap of acting like newsroom reports, afraid to take a stand on any issue. Access to bandwidth is the issue that will nurture, or kill, online news and information businesses in the years to come. If you’re publishing online, you need to fight for your access to bandwidth – and your potential audience’s access to it, as well.