| FCC Declines to Approve
EchoStar DirectTV Merger |
10/10. The Federal
Communications Commission (FCC) announced that it has
"declined to approve the transfer of licenses from
EchoStar Communications Corporation and Hughes Electronics
Corporation, a subsidiary of General Motors Corporation, to a
new entity". EchoStar and Hughes both provide direct
broadcast satellite (DBS) service via their Dish
Network and DirecTV.
See, FCC
release [MS Word].
The FCC also announced that it has issued an order
"designating the application for a full evidentiary
hearing before an Administrative Law Judge". However, the
order allows the parties 30 days to amend their application to
include major revisions designed to address the anti-
competitive impact of their proposed merger.
The FCC's decision departs from its recent pattern in license
transfer proceedings associated with major mergers. First, in
this case, the FCC reached its decision before the Department
of Justice's Antitrust
Division reached its decision in its antitrust merger
review proceeding. Second, the FCC declined to approve the
transaction, and all but rejected the idea that the
transaction could be revised or restructured. The FCC has more
often approved transactions, after extracting changes in the
terms, and imposing continuing obligations on the merged
entity.
One winner in today's decision may be News Corp., which now
has another shot at acquiring DirecTV.
All four FCC Commissioners supported the decision. All four
released separate statements. Chairman Michael Powell
wrote in his statement
[MS Word] that "The combination of EchoStar and DirecTV
would have us replace a vibrant competitive market with a
regulated monopoly. This flies in the face of three decades of
communications policy that has sought ways to eliminate the
need for regulation by fostering greater competition."
 Powell (at right) added that "The record
before us irrefutably demonstrates that the proposed merger
would eliminate an existing viable competitor in every market
in the country. The case against approving the transfer
application is particularly compelling with respect to
residents of rural America who are not served by any cable
operator. Those Americans would be left with only one choice
for their subscription video service, now and in the
foreseeable future. But that alone is not the cornerstone of
our decision. At best, this merger would create a duopoly in
areas served by cable; at worst it would create a merger to
monopoly in unserved areas."
Commissioner Kathleen
Abernathy wrote in her statement
[MS Word] that "this proposed merger will likely harm
consumers by eliminating a viable competitor in every market,
driving up prices, and decreasing innovation and quality of
service."
Commissioner Michael
Copps wrote in his statement
[MS Word] that "it would be an enormous risk to approve a
transaction that results, at best, in the merger of a duopoly
into a monopoly in a critical sector of multi channel video
programming."
Commissioner Kevin Martin
wrote in his statement
[MS Word] that "I believe EchoStar currently is violating
the must carry provisions of the Satellite Home Viewer
Improvement Act (``SHVIA´´) and FCC rules by placing some
broadcasters' signals on a second dish. I continue to be
concerned about the burden this practice places on consumers
and the impact this discrimination may have on some
broadcasters -- particularly public broadcasters. I therefore
dissent in part, on the majority's decision not to include
EchoStar’s compliance with its must carry obligations among
those issues designated for hearing."
Consumer Groups' Reactions. Two consumer groups offered
criticism of the decision. Gene Kimmelman of the Consumers Union
stated in a release
that "this merger could have been structured in a way
that actually helped consumers by making satellite TV a
legitimate competitor to cable TV. Cable companies have a
monopolistic grip on the vast majority of communities in
America. Satellite companies haven't been able to compete head
to head with cable because they cannot offer local TV channels
in many places."
He continued that "The combination of EchoStar and
DirecTV would have freed up enough spectrum for the merged
company to offer local channels across the country. The FCC
could have required the company to meet this goal. Satellite
could have posed a serious threat to cable monopolies under
the proper conditions. But the FCC today opted for the more
narrow minded route and voted to block the merger. It's hard
to understand how the FCC thinks that it's helping consumers
by blocking, rather than restructuring, this deal. It was bad
enough for consumers when Congress deregulated cable
monopolies and allowed rates to skyrocket. But for regulators
and antitrust officials to hinder efforts to make satellite
more competitive with cable simply adds insult to
injury."
Similarly, Mark Cooper of the Consumer Federation of
America stated that "Yet again the Bush
Administration votes in favor of monopolies. Today, the FCC
rejected the merger of satellite competitors EchoStar and
DirectTV while the Justice Department has failed to block the
AT&T Comcast cable merger. The Administration lets cable
monopolies flourish while it crushes potential competition
from satellite. Even the Wall Street Journal today recognized
that in order for satellite to compete with cable it needed
more capacity and a bigger marketplace. What these decisions
do is tip the scales in favor of the cable monopolies that
will continue to raise basic cable rates and high speed
Internet charges all to the detriment of consumers."
Satellite Broadband. The parties to the merger had
argued that the merger was necessary to upgrade facilities to
provide high speed Internet access service via satellite. They
further argued that this broadband service could compete with
wireline broadband providers, and in some rural areas, be the
only provider of broadband services. One argument was that
they needed to pool their spectrum to be able to provide
broadband service.
However, the FCC rejected this argument. It wrote in its press
release that "Competition to cable modem and DSL products
from satellite providers would be a significant advance, but
the claimed efficiency benefit here is weaker than in the MVPD
market. There is no spectral efficiency gain because each
broadband customer uses additional spectrum, regardless of the
number of providers. The companies have failed to substantiate
that their claimed broadband benefit was likely to occur or
that the merger was necessary to achieve it."
Another argument advanced by the parties to the merger was
that neither alone could attract the capital necessary to
launch this new broadband service. |
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| FCC Adopts Technology for
Digital AM/FM Broadcasting |
10/10. The Federal
Communications Commission (FCC) announced, but did not
release, a First Report and Order regarding digital AM/FM
broadcasting. The FCC issued a press
release [MS Word] in which it stated that it
"selected in-band, on-channel (IBOC) as the
technology" to be used by AM and FM broadcasters for
digital broadcastings. This is MM Docket No. 99-325.
FCC Commissioners Kathleen
Abernathy and Kevin Martin
said in a joint statement
[MS Word] that "We
commend the work of the industry for developing a model that
will not require allocation of additional spectrum and will
allow for an efficient transition to digital radio, during
which time consumers will be able to receive their current
services without disruption."
FCC Commissioner Michael Copps
wrote in his separate statement
[MS Word] that "Digital radio presents a tremendous
opportunity for terrestrial radio broadcasters to compete with
new technologies. It holds forth the promise of better quality
sound -- CD quality for FM, and FM quality for AM -- which
will enhance audio service generally and may well reanimate AM
radio. But that's just for starters. Going beyond sound
quality there will be multiple broadcaster opportunities in
the provision of new auxiliary services, such as multiple
audio programming channels, audio on demand services, and
interactive features, too." |
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| Commerce Secretary Evans
Writes Powell Re Auction 35 |
10/10. Secretary of Commerce Donald Evans
wrote a letter
to Federal Communications
Commission (FCC) Chairman Michael Powell
requesting that the FCC grant relief to the winning bidders in
Auction 35. This is the FCC's re-auction of spectrum
previously auctioned to NextWave, and now tied up by
litigation.
He wrote that "On behalf of the Administration, I would
like to commend the Commission for reexamining its position on
providing relief to the winning bidders of Auction No. 35. The
Commission's decision is a step in the right direction toward
revitalizing the Nation's telecommunications industry. In
light of the current condition of the industry and the
extraordinary circumstances presented by Auction No. 35, I
would urge the Commission to take the next important step by
granting relief to the winning bidders as swiftly as
possible."
He continued that "Over the last decade, the
telecommunications industry, and particularly the explosive
growth of the wireless sector, brought new services to
consumers, increased productivity, and helped drive our
economic prosperity. More recently, mounting debt loads and
constricted capital markets have slowed the industry's
progress."
Evans concluded that "Quick Commission action to grant
relief from Auction No. 35, however, would bring much needed
stability to the wireless sector and would allow the sector to
focus its resources on meeting the needs of consumers. By
restoring certainty, the Commission can lay the foundation for
renewed investment, innovation, and job producing growth, both
in the telecommunications industry and in the economy as a
whole."
On October 8 the Cellular
Telecommunications and Internet Association (CTIA)
submitted a comment
[10 pages in PDF] to the FCC in which it argued that "the
wireless telecommunications industry, along with the rest of
the telecommunications industry, is currently facing a capital
crisis that threatens thousands of jobs and the ability of
telecommunications carriers to continue investment in new
infrastructure. By allowing Auction 35 winning bidders maximum
flexibility to decide whether to request voluntary dismissal
of pending applications, allowing a full refund of applicable
deposits and granting a full release from contingent
liabilities that encumber billions of dollars of wireless
assets, the Commission can inject new liquidity into the
wireless telecommunications industry that will foster capital
development, job creation and better service for
consumers." |
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|
| Movie and Music Industry
Write to Universities About P2P Piracy |
10/10. Leaders of several entertainment content groups wrote
letters
[4 pages in PDF] on October 3 to 2,300 colleges and
universities complaining about peer to peer based copyright
infringement.
The letters state that "We are concerned that an
increasing and significant number of students are using
university networks to engage in online piracy of copyrighted
creative works. The educational purpose for which these
networks were built is demeaned by such illegal behavior and
is inconsistent with the ethical principles underlying the
university community."
The letters continue that "The students and other users
of your school's network who upload and download infringing
copyrighted works without permission of the owners are
violating Federal copyright law. ``Theft´´ is a harsh word,
but that it is, pure and simple. As Deputy Assistant Attorney
General John Malcolm recently stated, ``Stealing is stealing
is stealing, whether it's done with sleight of hand by
sticking something in a pocket or it’s done with the click
of a mouse.´´ It is no different from walking into the
campus bookstore and in a clandestine manner walking out with
a textbook without paying for it." See, Malcolm speech
of August 20, 2002.
The letters were signed by Hillary Rosen of the Recording Industry Association of
America (RIAA), Jack Valenti of the Motion Picture Association of
America (MPAA), Edward Murphy of the National Music
Publishers' Association (NMPA), and Rick Carnes of the The
Songwriters Guild of America.
See also, letters
[3 pages in PDF] of October 8 to colleges and universities
from David Ward of the American Council on Education, Nils
Hasselmo of the Association of American Universities, David
Warren of the National Association Independent Colleges and
Universities, George Boggs of the American Association of
Community Colleges, Constantine Curris of the American
Association of State Colleges and Universities, and Peter
Magrath of the National Association of State Universities and
Land Grant Colleges. See also, RIAA release. |
|
|
| USTR Seeks Comments Re
Special 301 Identifications |
10/10. The Office of the U.S.
Trade Representative (USTR) published a notice
in the Federal Register that requests written comments from
the public concerning two matters. First, the USTR requests
comments regarding the acts, policies, and practices of
trading partners of the U.S. that are relevant to the decision
as to whether they should be identified under Section 182 of
the Trade Act of 1974 (19 U.S.C. § 2242).
Section 182, which is commonly referred to as the
"Special 301" provisions in the Trade Act, requires
the USTR to identify countries that deny adequate and
effective protection of intellectual property rights or deny
fair and equitable market access to U.S. persons who rely on
intellectual property protection.
Second, the USTR requests comments on the U.S. Government's
1998 Memorandum of Understanding with Paraguay on intellectual
property matters, including enforcement.
The deadline to submit comments is 12:00 NOON on Wednesday,
October 30, 2002. See, Federal Register, October 10, 2002,
Vol. 67, No. 197, at Pages 63186 - 63187. |
|
|
| SEC Files Complaint Against
Lernout & Hauspie |
10/10. The Securities and
Exchange Commission (SEC) filed a civil complaint
in U.S. District Court
(DC) against Lernout & Hauspie Speech Products N.V.
alleging that it "engaged in a variety of undisclosed and
deceptive transactions to inflate L&H's reported income
and, consequently, the price of its stock", in violation
of federal securities laws.
The complaint alleges violation of § 17(a) of the
Securities Act, § 10(b) of the Exchange Act,
§ 13(a) of the Exchange Act, and §§ 13(b)(2)(A)
and 13(b)(2)(B) of the Exchange Act. |
|
|
| SEC Files Another WorldCom
Complaint |
10/10. The Securities and
Exchange Commission (SEC) filed a civil complaint in U.S. District Court
(SDNY) against Betty Vinson and Troy Normand, both former
accountants for WorldCom,
alleging that they participated in a fraud that inflated the
company's earnings at the direction and with the knowledge of
WorldCom's senior management, in violation of federal
securities laws.
The complaint alleges violation of the antifraud, books and
records, and internal controls provisions, § 17(a) of
the Securities Act of 1933, §§ 10(b) and 13(b)(5) of
the Securities Exchange Act of 1934, and Rules 10b-5 and
13b2-1 thereunder. The complaint also alleges aiding and
abetting WorldCom's violations of the periodic reporting,
books and records, and internal controls provisions, pursuant
to §§ 13(a) and 13(b)(2)(A) & (B) of the Exchange
Act, and Rules 12b-20, 13a-1 and 13a-13 thereunder.
The U.S. Attorneys Office (SDNY) had previously brought
criminal charges against the two. On October 10, they plead
guilty to criminal charges. See, SEC
release. |
|
|
| People and Appointments |
10/10. President Bush announced his nomination of four
persons to be judges of U.S. District Courts: Thomas Varlan
(EDTenn), Cormac Carney (CDCal), Daniel Breen
(WDTenn), and John Adams (NDOhio). See, White
House release.
10/10. Christopher Padilla was named Assistant U.S.
Trade Representative (USTR) for Intergovernmental Affairs and
Public Liaison. He has previously worked for Eastman Kodak
Company, Lucent Technologies, and AT&T. See, USTR
release.
10/10. Margaret
Greene, President of Regulatory & External Affairs
at BellSouth, is the
new Chair of the U.S. Telecom
Association's (USTA) Board of Directors. See, BellSouth
release. |
|
|
| More News |
10/10. The House
Judiciary Committee's Subcommittee on Commercial and
Administrative Law postponed its meeting to mark up HR 5429,
the Satellite Services Act of 2002.
10/10. The Federal Communication
Commission (FCC) published a notice
in the Federal Register stating that it has postponed Auction
No. 46, currently scheduled for October 30, 2002, to April 30,
2003. This is for one nationwide 5 megahertz license in the
1670 - 1675 MHz band. The FCC stated that "This
postponement is necessary to provide additional time for
bidder preparation and planning." See, Federal Register,
October 10, 2002, Vol. 67, No. 197, at Pages 63095 - 63096. ArrayComm requested the
postponement. The FCC previously announced this postponement
by a public
notice [PDF] on September 25, 2002.
10/10. The U.S.
District Court (EDTex) held that Intel's Itanium chip
infringe's patents held by Intergraph.
10/10. The House approved HJRes 114,
which authorizes the use of force against Iraq, on a roll call
vote of 296-133. See, Roll
Call No. 455. The Senate has yet to pass the resolution.
The House also passed the conference report on HR
5010, the defense appropriations bill, by a vote of
409-14. See, Roll
Call No. 457. It also passed HR
5011, the military construction bill, by a vote of 419-0.
See, Roll
Call No. 458. However, the House and Senate have yet to
pass most appropriation bills. The House passed HJRes
122, another continuing resolution to keep the government
running, by a vote of 272-144. See, Roll
Call No. 461. The Senate also passed it by unanimous
consent. |
|
|
|
| Friday, October 11 |
The House will meet at 10:00 AM for legislative business.
Day two of a two day Annual Update Conference on Export
Controls and Policy hosted by the Department of Commerce's
Bureau of Industry and
Security (BIS). See, agenda.
Location: to be announced.
Deadline to submit comments to the FCC in response
to it Public
Notice [7 pages in PDF] regarding relief for the Auction
No. 35 winners. The FCC asks for public comments regarding two
possible scenarios for providing relief to the winning bidders
in the January 2001 re-auction of spectrum previously
auctioned to NextWave: full refund and option to dismiss all
pending applications, and selective opt out for pending
applications. See also, notice
in Federal Register. |
|
|
| Monday, October 14 |
| Columbus Day. The FCC will be closed. The National Press
Club will be closed. |
|
|
| Tuesday, October 15 |
9:00 AM - 12:00 NOON. The U.S.
Patent and Trademark Office's (USPTO) Technology
Center 2800 will hold a Semiconductor Customer Partnership
Meeting to discuss the quality and timeliness of the
examination process. (2800 pertains to semiconductors,
electrical and optical systems and components.) RSVP to Tom
Thomas at tom.thomas
@uspto.gov or 703 308-2772. See, USPTO
notice. Location: Crystal Park 1, Suite 819, 2011 Crystal
Drive, Arlington, Virginia.
12:00 NOON. James
Rogan (Under Secretary of Commerce for Intellectual
Property and Director of the USPTO) will
give an address titled "Reaffirming Intellectual
Property Rights in an Information Age". See, notice.
Press contact: Brigid Quinn at brigid.quinn @uspto.gov
or 703 305-8341. Location: Heritage
Foundation, 214 Massachusetts Ave., NE.
Day one of a two day conference of the Association Internationale pour
la Protection de la Propriété Intellectuelle (AIPPI)
titled "How to be Successful with Patent and Trademark
Litigation: Europe and the Far East". The agenda includes
a business meeting (1:00 - 1:30 PM), a CLE seminar (1:30 -
5:00 PM), and a reception (5:00 - 6:30 PM). Location: Faculty
Conference Room, Burns Building, 5th Floor, GWU Law
School, 716 20th Street, NW.
Deadline to submit comments to the FCC in response
to Qwest Communications' Section
271 application to provide in region interLATA service in
the states of Colorado, Idaho, Iowa, Montana, Nebraska, North
Dakota, Utah, Washington and Wyoming. This is WC Docket No.
02-314. See, FCC
release [PDF]. |
|
|
| Wednesday, October 16 |
9:00 AM - 4:00 PM. The FCC will host a
day long conference on rights of way management issues.
See, FCC
notice [PDF]. For more information contact Kris Monteith
or Gene Fullano at 202 418-1400, kmonteit @fcc.gov or gfullano @fcc.gov. Audio
web cast. Location: FCC, Commission Meeting Room, 445 12th
Street, SW.
10:00 AM. The Senate
Appropriations Committee's Treasury and General Government
Subcommittee will hold a hearings on U.S. companies' moving
their headquarters offshore. Location: Room 192, Dirksen
Building.
11:00 AM - 12:00 NOON. James Rogan
(Director of the USPTO) and
Richard Russell (Associate Director for Technology of the
White House Office of Science
and Technology Policy) will lead a roundtable discussion
on the future of innovation with 37 leading inventors,
including Steve Wozniak (computers), Donald Keck and Peter
Schulz (fiber optics), and Doug Englebart (mouse). See, list
of participants. Press contact: Brigid Quinn at brigid.quinn @uspto.gov
or 703 305-8341. Location: Room 4830, Department of Commerce,
14th and Constitution, NW.
1:30 - 3:00 PM. Sam Bodman (Deputy Secretary of Commerce), James Rogan
(Director of the USPTO), and 37
leading inventors will hold an awards ceremony commemorating
the bicentennial of the USPTO. Press contact: Brigid Quinn at brigid.quinn @uspto.gov
or 703 305-8341. Location: Auditorium, Department of Commerce,
14th and Constitution, NW.
6:00 - 8:00 PM. The FCBA's
Transactional Practice Committee will host a CLE seminar
titled "Bankruptcy Issues in FCC Practice".
For more information contact Brian Weimer at 202 371-7604 or
Laura Phillips at 202 842-8891. Registrations and
cancellations due by 5:00 PM on October 14. Location: Skadden Arps, Conf. Rm. 11
A, 1440 New York Ave., NW.
Day two of a two day conference of the Association Internationale pour
la Protection de la Propriété Intellectuelle (AIPPI)
titled "How to be Successful with Patent and Trademark
Litigation: Europe and the Far East". The agenda includes
a CLE seminar (9:30 AM - 1:00 PM). Location: Faculty
Conference Room, Burns Building, 5th Floor, GWU Law
School, 716 20th Street, NW. |
|
|
| Thursday, October 17 |
3:00 PM. David
Post (Temple University School of Law), will present a
draft of a paper titled "Against Against
Cyberanarchy". The lecture is sponsored by the George Washington University
(GWU) Law School's Dean Dinwooodey Center for Intellectual
Property Studies. For more information, contact Prof. Robert
Brauneis at 202 994-6138 or by email. Location: GWU
Law School, Burns Building, 5th Floor, Faculty Conference
Center, 720 20th St., NW.
Day one of a two day conference titled "Open Source: A
Case for e-Government". The event is hosted by
infoDev, the Cyberspace Policy Institute of The George
Washington University, and the UNDP. See, notice. Location: The World
Bank, IFC Auditorium, 2121 Pennsylvania Ave. |
|
|
| Friday, October 18 |
9:30 AM. The U.S.
Court of Appeals (DCCir) will hear oral argument in Office
of Communications of the United Church of Christ v. FCC,
No. 01-1374. This is a petition for review of a final
order [30 pages in PDF] of the FCC approving the assignment of
certain licenses from Chris Craft Industries to Fox Television
Stations. The Church of Christ and others had opposed the
transfer before the FCC, and now appeal the FCC's approval of
the transfer. Location: Courtroom 20, 333 Constitution Ave.,
NW.
12:15 PM. The FCBA's
Mass Media Practice Committee will host a brown bag lunch to
conduct an organizational meeting. RSVP to Barry Umansky at
202 263-4128. Location: NAB, 1771 N St., NW.
Day one of a two day conference titled "Open Source: A
Case for e-Government". The event is hosted by
infoDev, the Cyberspace Policy Institute of The George
Washington University, and the UNDP. See, notice. Location: The World
Bank, IFC Auditorium, 2121 Pennsylvania Ave.
Deadline to submit comments to the FCC regarding the petition for
declaratory ruling in CC Docket No. 01-92 requesting that the
FCC determine that wireless termination tariffs are not a
proper mechanism for establishing reciprocal compensation
arrangements between local exchange carriers (LECs) and
commercial mobile radio service (CMRS) providers. See, FCC
notice [PDF]. |
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