Management for Advanced Wireless Communication
and Macromedia Bundle 3D Authoring and Web
Systems, NTT-ME, Rikei, Toyo and Enreach Team to
VOD Services to Japanese MTUs
Story of the Issue
3D Cyber Host
Systems Announces $4.5 Million Visualization
Integrated Systems Licenses Arm Core for PC Logic
Semiconductors Introduces Glue Chip 4 for PC
to Reduce DRAM Fab Capacity at Its Yokkaichi
Wireless and Powerwave to Accelerate the
of MIMO-OFDM Broadband Fixed Wireless
Suhler Releases Communications Industry Forecast
Tax Moratorium - Testimony on the Hill
Management for Advanced Wireless Communication Services
mobile radio services have greatly increased in usage during
the last few years. According to the FCC’s (Federal Communication
Commission) Office of Engineering and Technology, in the 12 months
ending December 2000, the mobile telephony sector had estimated
revenues of $52.5 billion due to an increase in subscribership
from 86 million to 110 million users. The WAVE Report has followed
this industry’s development from analog to digital, and most
recently through 3G standards debates (Issue 9094), high priced
auctions (Issue 2033 and Issue 0116) and spectrum management
last issue was the subject of discussion at recent FCC and Congressional
hearings, both of which were an effort to hear industry comments
on new allocations for 3G advanced communication services.
as a result of a Study Plan issued by Department of Commerce,
the FCC and the NTIA (National Telecommunications and Information
Administration) began to study the use of the 1710-1885Mhz band
(used by the Department of Defense) and the 2500-2690Mhz band
(used by ITFS (Instructional Television Fixed Services) and MMDS
(Multichannel Multipoint Distribution Services)) for possible
reallocation for 3G advanced wireless services. Both spectrum
bands had previously been identified by the ITU (International
Telecommunication Union) as candidates for worldwide 3G systems.
reports, released by the FCC and NTIA in March of this year,
summarized cost estimates, precautionary measures that would
need to be taken, and the time frame needed for the transition
of existing services to other spectrum bands.
Senate’s Committee on Commerce, Science and Transportation recently
heard testimony from industry representatives on spectrum management
issues outlined in the reports. According to Robert Rini, from
Rini, Coran & Lancellotta, the Senate’s hearing resulted
in an, “Amazing agreement among all parties that government needs
to move quickly then get out of the way.” Other testimonials
worthy of mentioning, in Rini’s opinion were:
representative from Leap Wireless claimed that they in fact did
not need any more spectrum for 3G services, but could instead
institute technology that would allow them to use their existing
spectrum more efficiently.
Tom Wheeler testified that although more spectrum was needed,
the timeframe was not a critical aspect, as previously thought.
According to Wheeler, instead of developing plans to allocate
the whole 200Mhz in one movement, the government should work
with industry representatives to develop a comprehensive national
spectrum policy that would allocate the spectrum in small pieces,
as it became available.
of the MMDS industry, including Arraycom and Nucentrix, testified
at the hearing to ask Congress to remove the uncertainy about
their spectrum bands, 2500-2690Mhz, which have just been given
approval by the FCC for 2-way services. According to the companies,
financial investment and technology development have been hindered
as a result of the potential reallocation of the spectrum for
the subsequent FCC open meeting, the Commission spoke with industry
representatives and various members of FCC offices to gather
information in preparation for its Third Report on the Deployment
of Advanced Telecommunications Capability to all Americans.
the meeting, the FCC adopted a Memorandum Opinion and Order and
Further Notice of Proposed Rulemaking (MO&O and FNPRM), FCC
01-224, that would explore additional frequency bands for 3G
services, in addition to the ones already studied by the Commission
and NTIA. The additional bands would include spectrum being used
for Mobile Satellite Service (MSS), Unlicensed Personal Communications
Service, and Amateur Radio Service.
rulemakings specifically sought comments on the potential of
the bands for commercial use, the advantages and disadvantages
of using the bands, the effect of the allocation proposals on
existing and prospective users of the bands, and the effect of
allocations for global compatibility.
the meeting, the FCC did not address the issue of the MMDS/ITFS
spectrum as Nucentrix and Arraycom had requested. Commissioner
Gloria Tristani expressed regret on this
issue claiming that the FCC missed the chance “to lay to rest
the uncertainty surrounding the ITFS and mulitpoint MDS operations.”
According to Tristani, the Commission’s final report identified
“significant hurdles” in allocating this band for 3G services.
Chairman Powell indicated that this issue would be resolved in
the next few weeks.
and Macromedia Bundle 3D Authoring and Web Design Tools
Macromedia have announced a strategic partnership to accelerate
the deployment of interactive 3D content to the web by combining
3D authoring and web design tools. Under the agreement, the companies
will bundle a version of Macromedia Director 8.5 with
the standard priced version of the 3ds max 4 animation solution.
Director 8.5 features 3D functionality jointly developed with
Intel due to a 3D Web collaboration that launched more
than a year ago. Director provides developers with an extensible
3D content creation and publishing solution. Director 8.5 can
create simulated natural effects such as smoke, fire, water,
dust, sparks, vapor, and explosions. In addition to 3D authoring
capabilities, Macromedia Director 8.5 has support for Macromedia
Flash 5 and streaming Real Media content.
3ds max 4 is a 3D modeling, animation and rendering software.
The 3ds max Shockwave exporter allows artists to preview their
3D-enhanced Shockwave content within 3ds max and supports Discreet’s
character studio and reactor products for character animation
and interactive physics. Macromedia’s Shockwave movie player
more than 200 million desktops, according to the company.
commercial versions of Discreet 3ds max 4 bundled with Macromedia
Director 8.5 will be available in mid-August 2001 for a suggested
retail price of US $3,495 in North America.
Systems, NTT-ME, Rikei, Toyo and Enreach Team to Offer VOD
Services to Japanese MTUs
Systems, a provider of full-service systems optimized for provisioning
broadband services within multi-tenant unit properties (MTUs),
has announced its partnership with NTT-ME, Rikei, Toyo Communications
and EnReach Technology to offer an end-to-end video-on-demand
(VOD) and high-speed Internet solution over an IP infrastructure
in hotels and apartments throughout Japan.
Corporation, a Japanese service provider, will offer network
connectivity and set-top box devices; Rikei, Tut's longtime partner
in Japan, will offer system integration and distribution; Toyo
Communications, an in-hotel pay TV operator, will offer VOD content;
and Enreach Technology, a broadband infrastructure software provider,
will offer its iTV middleware and software.
VOD service will run on Tut's VDSL platform, IntelliPOP MTU,
which will reside in a building's basement and enable IP video
and Internet services at up to 26 Mbps over the existing copper
wiring, compatible with Japan ISDN.
targeted at the hospitality market with plans to expand to the
apartment market, the VOD solution will utilize NTT's WakWak
Station broadband set-top-box connected to the television and
installed with minimal distribution to each guest room. The system
will offer web browsing, e-mail, online shopping and e-commerce,
VOD, and concierge portals for advertising and account services.
MTU, powered by Tut's Signature Switch technology, is a solution
that integrates multiple components of a network into one service
gateway, simplifying and lowering the cost of the management,
provisioning and installation process.
announcement is interesting for several reasons: VoD using IP,
and the presence of an end-to-end solution
for VoD. Targeting MTU and other high concentration locations
offers the prospect of a viable business model, which has been
hard in VoD. Not discussed in the announcement is the content,
which is another factor which will determine the success of the
Story of the Issue
is in the news quite a bit lately: how much do we use, how much
do we need, where will it come from, and how much will it cost,
are all front page questions as Congress debates the president's
energy proposal. An often-unaddressed question is how problems
with the national energy network will affect the telecommunications
industry, and vice versa. To address this question Shorecliff
Communications has scheduled the First Annual Telecom Energy
Consumption Conference for November 8 and 9. The WAVE Report
recently spoke with Tim Downs, Executive Vice President of Shorecliff,
for more information.
with the national power supply are well covered in almost every
news outlet -why are we writing about this now? Why is Shorecliff,
a company heavily involved in the broadband industry, holding
this conference? When posed this question, Downs gave a multipart
The power transmission network is as poorly suited to the developing
needs of telecom as the public switched telephone network was
to the Internet. The problem has more to do with transmission
than with supply, he said. He stated that the problem is not
one of 2001, but rather one that companies must plan for now. "With
what we now know about the national power grid, we know it will
continue to have problems," said Downs.
Competitive local exchange carriers (CLECs) and other "competitive" portions
of the industry, must share resources with the "incumbent" portions
of the industry (established networks such as the Bells). As
we will discuss later in the article, power utilities are now
passing the cost of installing new large-scale systems on to
the customer. If that customer is an incumbent such as a Bell,
the costs are passed on to the CLECs, adding yet another competitive
pressure against them.
Shorecliff's conferences and shows revolve around the idea of
outsourcing. As power cost reduction climbs its way up the priority
list at telecom companies, as Downs believes it will, an obvious
strategy would be outsourcing the development and management
of assets such as central switching offices, with an eye on minimizing
Supply, Reduce Demand
stated that the goal of the conference is to explore ways to
reduce power costs in the telecommunications industry, both ongoing
and related to expansion. He emphasized this goal, and stated
there were three ways to accomplish it: better planning, better
operations, and/or better systems. Additionally, there are two
sides of power costs to consider: the supply side, and the demand
supply-side improvement he mentioned is distributed power generation.
The traditional electric network in the US is centralized, in
that power is produced in a few select locations, then distributed
widely. Distributed power generation, in contrast, consists of
on-site power production at the point of demand. In the telecommunications
industry, this could take the form of natural gas generators,
rechargeable batteries, fuel cells, or other means of producing
electric power, housed at the central office or even on the tower
installation. Note that these sources of energy would provide
the primary power for the equipment, not just back-up. Since
the supply is housed on site, it would not be subject to the
vagaries of long-distance power transmission. Whether or not
it is truly uninterruptible is a matter of debate however, and
for now, prudent companies will still have backup power systems.
power costs from the demand side is most often a matter of reducing
power consumption, either by the telecom equipment itself, or
the heating and cooling (HVAC) systems that maintain an operating
environment. According to Downs, improved architectural planning
can have a positive effect, primarily by spacing equipment appropriately.
The free air space that exists in an installation, and the distance
between components, has a direct effect on the amount of heat
that can build up. Larger, more spaciously designed building
layouts can sometimes more than offset the increased square footage
cost with savings in HVAC power requirements.
way to reduce power consumption is by using equipment that uses
less power. Downs agreed that superconductor-based RF filters
for wireless base stations are a good example of equipment that
can decrease power requirements without degrading performance.
(See WAVE #133, Story of the Issue) Recent breakthroughs in low-power
chipsets have been driven by demand in the laptop and handheld
market, but the technology could find applications in the telecom
industry as well, especially as power costs continue to grow.
overall demand for data hosting and co-location is falling, specific
or ongoing projects are still driving some development. Naturally
as more equipment comes on line, power costs will rise in a one
to one relationship. Recently, though, across the industry, the
unit price of expansion has risen dramatically.
stated that he found this to be the most interesting wrinkle
in the current power market. As data hosting, collocation centers,
and dot coms were being built, power companies were forced to
make tremendous capital investments to keep up with demand, particularly
since it often specified high-priority power (known as 0.999999
or "six nines") - power that comes with guarantees
of uninterrupted service. As many of these businesses have folded,
however, utilities have seen their ROI go up in smoke.
a result, many utilities are now passing the cost of the power
infrastructure installation on to new customers demanding 0.999999
power. Such customers can include everyone from a dot com start-up
to one of the Bells. The result is massively increased power
costs for new projects, and therefore fewer and smaller installations.
Downs stated that unless this dilemma is solved, any bounce back
in the data or telecom industries will come slowly if at all.
possible solution he mentioned was third-party involvement. Contracting
with third parties for network development and management is
already proving popular with PCS providers, and he stated that
outsourcing to a third party is a good
way to lower costs. As cost-of-power management becomes more
important, Downs believes a market of managed service providers
will blossom for installations such as central switching offices,
and the focus will be on power savings.
3D Cyber Host
Ascension Technology’s streaming 3D cyber host, is currently
debuting on Ascension’s Web site. Angel is an online virtual
character made possible through the combination of motion capture
and streaming technologies. She was modeled and animated by 3Dclic
using Ascension’s MotionStar tracking device. QEDSoft developed
the streaming technology that overlays Angel’s movements.
or a virtual host like her, can interact with viewers on a website
to help order goods, navigate the site, provide information or
have fun. Animated web hosts can serve as mascots, corporate
representatives or user avatars, serving purposes from advertising
and built by Herve Tardif and the 3Dclic team, Angel’s modeling
was done under Maya 3.0. Ascension’s MotionStar magnetic tracker
captured the movements of a live human performer and transmitted
the motion data to a host computer. The motions were then mapped
onto Angel using FILMBOX 2.7. Lip synchronization was accomplished
using LiPSEE, an automatic lip detection system developed by
Tardif and the sound company Tapages.
made Angel’s display possible using QEDStream technology and
QEDStudio. QEDStream works with multiple bandwidths and hardware
devices, enabling real-time, full screen 3D web animation. QEDStudio
converted Angel’s 3D animation files, so she could appear on
the Internet over a 56KB connection using QEDPlayer, a 250KB
Technology designs and manufactures tracking devices for animation,
virtual reality, simulation, biomechanics and medicine. Ascension
currently has four product lines and eleven tracking products
using DC magnetic, inertial, infrared optical
and laser technologies
learn more about Motion Tracking go to:
has announced the release of the Virtue3D Developer Toolkit.
The toolkit streamlines stages of the 3D content deployment cycle,
allowing Web developers, 3D modelers and CAD designers to create
and integrate 3D Web content that can be delivered over the Internet.
date, sharing 3D content online has been difficult due to the
large file size of 3D models and the complexities associated
with integrating 3D content into Web pages. Virtue3D compression
technology creates small 3D files for online viewing without
losing image quality. For example, 3D CAD files can often be
compressed to less than 1% of the original file size.
Virtue3D Developer Toolkit includes four tools that speed online
delivery of 3D content:
Optimizer uses compression technology to transform 3D models
into compact files (VTUs) that can be downloaded, sent by e-mail,
or integrated into Web pages.
Player is a browser plug-in that lets users manipulate VTU files.
The Virtue3D Player, at less than 500Kb, results in high-quality
3D content with any user regardless of connection speed.
Max Plug-in lets modelers export a 3D Studio Max file into the
Virtue3D Optimizer as a VRML file for compression. The result
is a compact VTU file that preserves all of the original 3D Studio
Max content and animated features.
Dreamweaver Extension allows Web developers to embed the Virtue3D
Player into Web pages to support interactive viewing of 3D VTU
free download of the Virtue3D Developer Toolkit is available
at Virtue3D’s Web site. After downloading the toolkit, users
can create compressed Virtue3D-watermarked VTU files. Customers
can remove this watermark by either submitting files to be validated
by Virtue3D at a cost of $99 per file or by purchasing
an annual publishing license for $1,495, which allows customers
to publish any number of valid VTU files.
Systems Announces $4.5 Million Visualization System Contract
Systems, a business unit of Electrohome Limited, has been awarded
a $4.5 million contract by the U.S. Department of Energy (DOE).
The contract calls for Fakespace Systems to design, build and
install several custom visualization systems at Los Alamos National
large-scale visualization systems will include high-brightness,
stereoscopic digital projection technology. Multiple Mirage 2000
graphics projection systems, from Christie Digital Systems, will
be tiled into a large format WorkWall display system for viewing
large computer data sets in high-resolution detail. Capable of
displaying 31 million pixels, the full system is expected to
be the largest display of its type ever built.
previously installed large-scale visualization systems for the
DOE at LANL in 1999 and 2000, with the goal of providing better
ways for scientists to understand nuclear weapons phenomena through
immersive visualization. The future WorkWall systems will be
used to display some of the world’s largest and most complex
simulations, which were developed for the DOE's Accelerated Strategic
Computing Initiative (ASCI). As a part of the DOE's stockpile
stewardship program, ASCI uses experimental programs and computer
simulation to maintain the safety and reliability of the U.S.
nuclear stockpile without underground testing.
visualization systems will be installed in the Strategic Computing
Complex (SCC), a simulation and computing facility. The SCC will
house more than 200 nuclear weapons scientists, engineers, and
designers, and will provide large-scale visualization laboratories
as well as a visualization theater. The SCC also features an
uninterrupted computer floor the size of a football field, and
will house the largest supercomputer in the world. Called “Q,”
this system, built by Compaq, will be capable of performing calculations
at 30 trillion operations per second (teraOPS).
against the $4.5 million order are scheduled to occur during
fiscal 2001 (ending September 30, 2001) and fiscal 2002.
Integrated Systems Licenses Arm Core for PC Logic Applications
and ARM announced that SiS has licensed the ARM7TDMI microprocessor
core for use in its product range of integrated chipsets for
PCs. SiS currently offers core logic products integrating network
and 3D graphics for both Intel and AMD processors and will soon
offer a system-on-chip (SoC) solution. This agreement will allow
SiS to integrate ARM intellectual property (IP) into future core
logic products for PCs. SiS also plans to use the ARM7TDMI core
to develop networking and communication products.
plans to make products based on the ARM7TDMI core available in
Semiconductors Introduces Glue Chip 4 for PC Motherboard Market
Semiconductors has announced the availability of the Glue Chip
4, PCA9504A, an integrated ASIC that reduces logic part count,
overall component cost and board space requirements for PC designers
and manufacturers. The Glue Chip 4 supports the latest generation
of high-volume platforms based on Intel processors and chipsets
that require additional external circuitry in order to function
properly. Some of these functionalities include meeting timing
specifications, buffering signals and switching between power
PCA9504A Glue Chip 4 integrates miscellaneous motherboard logic
and analog functions into a single, small footprint 56-pin TSSOP
(plastic thin shrink small outline package) device. The Glue
Chip 4 typically resides on the motherboard close to the I/O
controller Hub. This single chip solution has been designed to
integrate various logic features including: dual strapping, selectable
feature sets; audio-disable/mute circuit; power supply turn-on
circuitry; extra general-purpose logic gates; and tri-state buffers
PCA9504A Glue Chip 4 is in high volume production with buffer
inventory and is priced at $0.90 each in quantities of 100,000.
to Reduce DRAM Fab Capacity at Its Yokkaichi Manufacturing
America Electronic Components (TAEC) and its parent company Toshiba
have announced the realignment of its memory production strategy.
In response to continued excess supply, weak market demand and
related pressures on pricing, Toshiba will close production at
its Yokkaichi Operations fabrication line number 1 (Fab 1). Yokkaichi
Operations Fab 2 will remain open. The majority of Toshiba's
300 employees working on the Fab 1 line will be transferred to
a different line.
currently produces approximately 70,000 8-inch wafers a month.
Fab 1 contributes to about half of this output. Current production
details for Fab 1 are approximately seven million pieces per
month of DRAM (measured in 64 megabit equivalents) at 0.20 micron
and one million pieces per month of SRAM (measured in 4Mb equivalents)
at 0.40 micron. Fab 2 will continue to produce memories at 0.175
micron and lower process technologies. Toshiba is concentrating
its DRAM efforts on bringing to production 0.13-micron 512Mb
devices in Q4, 2001.
is an independent operating company owned by Toshiba America,
a subsidiary of the $54 billion Toshiba Corp., the second largest
semiconductor company worldwide in terms of global sales for
the year 2000.
Wireless and Powerwave to Accelerate the Deployment of MIMO-OFDM
Broadband Fixed Wireless Access Technology
Wireless, a provider of fixed wireless broadband multiple antenna
technology, and Powerwave Technologies, a supplier of radio-frequency
power amplifiers for use in wireless telecommunications networks,
announced they have entered into a memorandum of agreement for
the joint development of AirBurst-compatible broadband power
amplifiers that will optimize the performance of Iospan’s MIMO-OFDM-enabled
AirBurst technology is designed to allow service providers to
deploy broadband wireless services for both residential and business
applications. As part of the agreement, Powerwave will supply
Iospan with broadband power amplifiers for use in trials with
a U.S. carrier using Iospan’s AirBurst technology. Tighter coupling
of AirBurst and Powerwave’s technologies is aimed at improving
system efficiencies and reducing the costs and footprint of the
find additional information on MIMO-OFDM go to:
Suhler Releases Communications Industry Forecast
Suhler has released their 15th annual Communications
Industry Forecast. The report predicts overall industry growth
at an annual rate of 5.6% from 2001-2005, outpacing the 5% growth
rate of the Gross Domestic Product and reaching $738 billion
in total spending by 2005.
and satellite TV – spending on cable and satellite advertising
jumped 18.5% to $13.8 billion in 2000. Spending is expected to
increase at a compound annual rate of 11.6% between 2001-2005,
reaching $23.8 billion in 2005.
user spending in this category (subscriptions) is forecast to
rise 7.4% to $207 billion in 2001, up from $192.8 billion in
2000. Spending will grow at a rate of 7.5% in 2002 to $222.7
billion, then slow to 6.6% in 2003 and 5.9% in both 2004 and
television – advertising spending in this category rose 11.1%
in 2000, compared to a 4.4% rise in 1999, reaching $44.4 billion
(compared to $40 billion in 1999). Both television networks and
individual stations benefited from the presidential election
coverage, however the absence of political and Olympic-related
advertising, along with the evaporation of promotions related
to the new millennium, total spending is forecast to drop 2.5%
to $43.3 billion in 2001.
Internet – Veronis projects that by 2005, 68.4 million households
will be online, or 88% of all computer households (63% of all
American homes). The compound annual growth rate of Internet
households will slow to 6.9% during this time though, down from
39.1% during the 1995-2000 period.
spent $11.6 billion on Internet access in 2000 compared with
$9.4 billion in 1999, an increase of 23.6%. Projections of the
average annual spending per household for dial-up by 2005 are
$243. Access via cable modem and DSL will total $300 and $420
per year, per household, respectively.
spending is expected to increase to $9.9 billion by 2005, increasing
at a 3.8% compound annual rate. By 2005, total Internet spending
is expected to reach $28.3 billion.
more information about Veronis Suhler’s Communications Industry
Forecast go to:
Tax Moratorium - Testimony on the Hill
Congress passed the Internet Tax Freedom Act in 1998, it authorized
a National Advisory Commission to study the issues involving
Internet taxation and e-commerce. The committee met in April
2000, but was unable to come to a conclusive agreement on the
future of taxation. Therefore Congress faces the Act’s October
21st deadline with no clear solution. At a recent
hearing of the Senate Finance Committee, chaired by Senator Max
Baucus (D-Mont.), Congress reviewed the testimony of members
of the retail industry, local and state governments, and tax
experts to plan a course of action.
Internet Freedom Act of 1998 imposed a moratorium on multiple
and discriminatory taxes on the Internet, and on Internet access
taxes. It did not however, address the problem of how states
should collect sales taxes on interstate e-commerce, or how international
taxation issues would be handled. These issues were brought to
the forefront during this hearing due to state concerns over
the effect of taxes on their constituents/businesses, and an
announcement by several European countries that a value-added
tax may be levied on digital products, sold by US companies on
those who testified was G. Thomas Woodward, Assistant Director
for Tax Analysis from the CBO (Congressional Budget Office).
According to Woodward, forty-five states and the District of
Columbia impose a sale tax on purchases made within their borders,
a fee which amounts to 33% of their total tax revenue. Most states
also impose a “use” tax on out-of-state purchases. These include
purchases made on the Internet, telephone or by mail. Unlike
traditional sales tax though, the use tax is collected directly
from consumers, not paid to retailers. This makes collection
a difficult and expensive task for state and local governments.
states would like to change the structure for the use tax, and
develop a structure similar to the one that exists for sales
tax. Under this structure, consumers would be subject to a sales
tax, which would be transferred from the retailer to the consumers’
local or state government. The Supreme Court however, has ruled
that this puts “undue burden on interstate commerce,” and therefore
it has not been instituted. It did however, give Congress permission
to impose this type of system if and when it saw fit. Congress
has not yet taken action on this issue, and asked for comments
from the day’s speakers.
is an important issue to states because according to the General
Accounting Office, remote retail sales were $92 billion in 1999,
with 17% of the total coming from e-commerce. This number is
somewhat misleading, due to the fact that it includes business-to-business
transactions, which are exempt from sales tax. Yet the premise
remains, that this is a large amount of lost revenue. In fact,
the GAO estimates that in 2003 revenue loss from remote sales
tax will be between $2.5 billion and $20.4 billion.
claimed that funds are also lost in the process of collecting
and remitting these use taxes. He suggested that the system could
be simplified by using computer technology to streamline tax
collection through the appropriate jurisdictions. Another option
is the harmonization of state sales tax regimes among states
that impose Internet taxes.
speakers agreed with Woodward that something had to be done,
but like Congress’ National Advisory Commission, there was not
a consensus on the strategy going forward. For instance, Frank
Shafroth, Director of the Office of State Federal Relations,
National Governors Association, expressed reservations about
Federal involvement at all, stating that Congress had already
over-stepped its boundaries by preempting states’ rights and
enacting the Internet Tax Freedom Act. He expressed regret at
the fact that the Act had established a tax-free precedent for
remote retailers over the Internet, which would be hard to correct.
Shafroth’s opinion, states are responsible for their own policies,
and he said they were working to develop responsible Internet
taxation guidelines on their own. At the 2001 NGA Winter Meeting,
state and local governments worked on Policy EC-12, Streamlining
Sales Tax Systems, which outlines a simplified sales tax system
including streamlined audit requirements, administration, and
common definitions of the by giving incentives to states that
simplified their tax structure. Shafroth did admit that this
would first require Congress’s vote to allow remote sellers to
charge sales tax. North Carolina, Wisconsin, Michigan and Kansas
have begun pilot testing of tax collection software that would
follow these guidelines.
David Bullington, Vice President of Taxation for Wal-Mart, and
The Honorable Steven Rauschenberger from the National Conference
of State Legislatures, differed in their view of Federal involvement,
they also testified in agreement that a simplified plan to collect
sales and use taxes would be beneficial for states and local
Julian, Vice President and Tax Counsel, of the Federated Department
Stores, testified on behalf of the Direct Marketing Association.
The DMA takes the position that the tax moratorium on new and
discriminatory taxes on the Internet should be extended and the
moratorium on taxation on Internet access should be permanent.
As clarification though, the DMA said it believes in the “neutral
tax treatment” of the Internet, not a tax-free zone. Therefore,
they believe that if sales and use tax guidelines are simplified,
there is no need to change Federal regulations.
Michael Grieve and John Searle Scholar, from the American Enterprise
Institute, proposed another solution. They suggested that taxation
could be simplified by developing an interstate tax structure
that taxes products at the point of origin, as opposed to the
current system that taxes products by their destination (the
location of the buyer). The speakers claimed that Federal regulation
would be needed in this regard, but would result in a more efficient
and equitable system.
meeting concluded with a consensus on only one thing; the current
taxation structure must be changed in order to find an equitable
balance between in-state and remote purchases. The details remained
uncertain, which is not surprising - and will provide an interesting
fall season within Congress. Bills corresponding to this issue
and HR.1410 Internet Tax Moratorium and Equity Act
and HR.1675 Internet Tax Nondiscrimination Act
Internet Tax Nondiscrimination Act
Internet Tax Nondiscrimination Act
Internet Tax Fairness Act of 2001