10/26. Roger Ferguson, Vice Chairman of the Federal Reserve Board, gave a speech at The Citadel, in Charleston, South Carolina titled "Factors Influencing Business Investment". Business investment includes spending on computers, software and information technology. He discussed trends in spending on information technology, the rate of technological advancement in information technology, a possible high tech capital overhang, and the possible effect of the tax code on investment in information technology.

He predicted that "the prospects for business investment over the next few quarters are, on balance, relatively positive." But, he said, "the news is also troubling".

Ferguson (at right) said that one "factor that complicates the outlook for investment is the state of the computer sector. About 12 percent of business spending on equipment and software is for computer gear. Some of that spending is to equip new plants and new employees, but a large share of it is to replace old machines and outdated technology."

He continued that "Over the past few decades, we have seen technology advance rapidly, and businesses have purchased a large amount of high-tech equipment. More recently, the growth rate of business spending on computers has slowed -- from about 40 percent last year to less than half that pace, on average, in the first two quarters of this year."

"One possible explanation is that we are seeing a deceleration in the pace of technical advancement. Technological progress affects business investment in primarily two ways. First, it changes how businesses organize their operations. Second, even innovations that do not spur an entirely new way of doing business can encourage equipment spending because some firms will choose to retire obsolete equipment more rapidly than they otherwise would. Accordingly, if the pace of progress slows, increases in business investment, particularly of high-tech goods, may also slow", said Ferguson.

He said that "we cannot directly measure the pace of technological progress, but we can look at some indicators to help us judge", such as "quality-adjusted prices". He explained that "Over time, these quality-adjusted prices tend to fall, as computers and related equipment become more and more powerful. Between 1992 and 2002, the quality-adjusted price of new computers fell at an annual rate of 18 percent. The speed at which these prices fall reflects mainly the pace of technological progress. Unfortunately, over the past several quarters, the rate of price decline slowed from that experienced during the preceding decade: Computer equipment prices fell just 9 percent at an annual rate in 2003 and the first half of 2004."

He concluded that "some of this deceleration may represent some slowing in the rapid pace of technological improvement." He also noted that "the number of new PC models introduced this year has fallen markedly from the pace posted in the preceding few years, suggesting that the pace of innovation, at least in this one market, has slowed."

Ferguson also discussed the concept of an information technology "capital overhang". That is, "As the high-tech boom of the nineties was ending, many observers claimed that companies had been overly optimistic and had purchased too many PCs and peripherals and laid too much fiber optic cable, resulting in an actual capital stock that exceeded the desired level for business." This, then, can curtail investment spending.

He offered no firm conclusions. Rather, he said that "Determining whether a capital overhang exists is difficult, and estimates of the size of overhangs are subject to considerable error. First, capital stocks are hard to measure; although we know the amount of new capital goods purchased, we can only roughly estimate the rate of economic depreciation and obsolescence. Consequently, we cannot know with certainty the level of the existing capital that is still available to be used. Second, we do not know how much capital firms would ideally like to employ because their expectations and production processes are always changing."

Finally, he discussed the possible effects of changes in tax law on business investment. He said that "Currently, the partial-expensing provision in the tax law allows a firm to subtract a large fraction of the cost of new capital equipment from profits right away, rather than depreciating the cost over time, and thereby to lower its taxes. The partial-expensing provision, which provides an incentive to invest in new capital goods, will expire at the end of this year. The impending expiration is probably boosting investment spending in the second half of this year as firms rush to take the tax advantage before it disappears; however, at this point the evidence is not conclusive."

See also, The Citadel's transcript.

10/22. The Federal Communications Commission (FCC) announced, but did not release, a Report and Order regarding the unbundling obligations of regional Bell operating companies (RBOCs) under 47 U.S.C. § 271. This item particularly affects fiber optic networks.

The FCC issued a release [2 pages in PDF] that describes this item, and all five Commissioners wrote separate statements. This item is FCC-04-254 in WC Docket No. 01-338, WC Docket No. 03-235, WC Docket No. 03-260, and WC Docket No. 04-48.

The FCC release states that "The FCC voted to grant petitions by the regional Bell operating companies, or RBOCs, asking the FCC to forbear from enforcing rules that would impose obligations to share, or unbundle, certain parts of their new fiber networks with rivals on regulated terms and conditions."

It elaborates that this Report and Order "forbears from applying the unbundling obligations listed in Section 271 of the Telecommunications Act of 1996 for fiber-to-the-home loops, fiber-to-the-curb loops, the packetized functionality of hybrid copper-fiber loops, and packet switching."

That is, the triennial review order, and subsequent orders, have dealt with unbundling obligations under Section 251. This item pertains to Section 271 obligations.

FCC Chairman Michael Powell wrote in a separate statement [PDF] that "By removing unbundling obligations for fiber-based technologies, today’s decision holds great promise for consumers, the telecommunications sector and the American economy. The item eliminates barriers to companies that provide customers with an assortment of new services and applications including interactive educational content, improved telecommuting, life saving telemedicine applications, real-time two-way sign language conversations with people with disabilities, and enhanced video-on-demand services in competition with cable operators."

Powell (at right) added that "My mission is to continue to stimulate investment in next generation architectures, apply a light hand and let entrepreneurs bring the future to the people."

FCC Commissioner Kathleen Abernathy wrote in a separate statement [PDF] that in this Report and Order the FCC "retains regulatory authority to ensure that consumers will be protected if robust broadband competition fails to live up to its potential ... the Commission stands ready to act if a market failure occurs." Also, she stated that "this grant of forbearance is without prejudice to our ongoing proceeding regarding the Computer Inquiry nondiscrimination provisions, so the Commission will have a full opportunity to determine the extent to which those separate requirements remain necessary."

FCC Commissioner Kevin Martin wrote in a separate statement [PDF] that this Report and Order pertains to "fiber-to-the home loops, fiber-to-the-curb loops, the packetized functionality of hybrid loops, packet switching, and line-sharing."

He noted that while "While the Commission did not specifically address line sharing in today’s decision, the Bell Operating Companies had included a request in their petitions that we forbear from enforcing the requirements of section 271 with respect to line sharing. Since line-sharing was included in their request for broadband relief and we affirmatively grant their request, I believe today’s order also forbears from any Section 271 obligation with respect to line-sharing. Regardless of whether it was affirmatively granted, because the Commission’s decision fails to deny the requested forbearance relief with respect to line sharing, it is therefore deemed granted by default under the statute."

FCC Commissioner Michael Copps (at left) dissented. He also dissented from previous orders pertaining to unbundling obligations under Section 251. He wrote in a separate statement [PDF] that "The majority attempts to assure us that today's action is part of an effort to promote local competition. They contend that in the broadband market preconditions for dominance are not present because promising technologies are flooding the marketplace."

He added that "the majority gets so carried away with its vision of the country's telecom future that they act like it is already here, that competition is everywhere flourishing, and that intermodal competition is already ubiquitous reality. But their cheerful blindness to stubborn market reality actually pushes farther into the future the kind of competitive telecom world they say they want."

FCC Commissioner Jonathan Adelstein also dissented in part. See, separate statement [PDF].

10/26. The Federal Communications Commission (FCC) released the text [56 pages in PDF] of its Notice of Inquiry (NOI) regarding foreign mobile termination rates.

This NOI states that it "seeks to inquire whether U.S. customers have adequate information and alternatives with regard to foreign mobile termination rates and surcharges, and whether such charges raise consumer concerns."

"To that end, we solicit data, information, comments, and analyses on mobile termination arrangements and foreign mobile termination rates and on actions taken by foreign national regulatory authorities with respect to these rates. We also seek comment on the impact of these rates and actions on competition in the U.S.-international telecommunications market and, in particular, on U.S. telecommunications services customers."

The FCC seeks comment on "foreign mobile termination rate payment flows and the relevant regulatory regimes." The NOI further states that "We then seek input, analyses, and comments on the concerns raised by parties in the ISP Reform proceeding and on actions taken by foreign national regulatory authorities to address mobile termination rates within their respective jurisdictions. We ask for factual information and data on foreign mobile termination rates. Finally, we seek comment on the appropriate framework by which we can analyze whether foreign mobile termination rates are unreasonably high."

The FCC adopted, but did not release, this item at its October 14, 2004 meeting. This NOI states that this is FCC 04-247 in IB Docket No. 04-398. In contrast, the FCC issued a release on October 14 that identified this item as FCC 04-248.

Comments will be due 60 days after publication of a notice in the Federal Register, and reply comments will be due 90 after such publication. This notice in the Federal Register has not yet been published.

See also, story titled "FCC Issues NOI on Foreign Mobile Termination Rates" in TLJ Daily E-Mail Alert No. 998, October 18, 2004.

10/26. The Federal Communications Commission (FCC) released an announcement regarding the fifth international meeting of the International Telecommunication Union -- Radiocommunication Sector (ITU-R) Task Group (TG) 1/8 on compatibility between ultrawideband (UWB) and radiocommunication services, to be held in San Diego, California on May 18-27, 2005. The FCC stated that "Parties who wish to participate in the meeting as a member of the United States delegation to the meeting should contact Mr. Ron Chase, the chairman of United States TG 1/8, by telephone at (202) 418-1378 or by email at Ron.Chase@fcc.gov." See, FCC release.

10/26. The Cellular Telecommunications and Internet Association (CTIA) announced that the Inter-Carrier Multi-Media Messaging Services (MMS) Working Group has "established a set of guidelines that will allow wireless carriers to phase-in photo and video messaging services over time". See, CTIA release.

The House is in recess until November 16, 2004. See, Republican Whip Notice.

The Senate is in recess until November 16, 2004.

8:30 - 11:00 AM. The New Millenium Research Council will host an event titled "The End of Regulation? Reforming Telecom Policy and Regulators' Roles to Meet New Market Realities". The speakers will include Rob Atkinson (Progressive Policy Institute), Matt Brill (Advisor to FCC Commissioner Abernathy), Jeff Carlisle (Chief of FCC's Wireline Competition Bureau), Braden Cox (Competitive Enterprise Institute), Charles Davidson (Commissioner of the Florida Public Service Commission), Susan Kennedy (Commissioner of the California Public Utilities Commission), Christopher Libertelli (Advisor to FCC Chairman Powell), Randy May (Progress and Freedom Foundation), Connie Murray (Missouri Public Service Commission), Harold Furtchgott-Roth (former FCC Commissioner), Bob Rowe (Chairman of the Montana Public Service Commission), Adam Thierer (Cato Institute), and Paul Vasington (Analysis Group). See, notice. RSVP to Ed Rovetto at 202 263-2922. Registration and breakfast begin at 8:00 AM. Location: Holeman Lounge, National Press Club, 529 14th St. NW, 13th Floor.

10:00 AM - 3:00 PM. The Federal Communications Commission's (FCC) Technology Advisory Council will meet. The topic will be ultrawideband (UWB) technology. See, FCC notice [PDF], and notice in the Federal Register, September 28, 2004, Vol. 69, No. 187, at Page 57915. Location: FCC, 445 12th St. SW., Room TW-C305.

12:15 - 1:45 PM. The New America Foundation (NAF) will host a brown bag lunch titled "Debating the Offshoring Debate: A Joust Between Contending Views About What A Healthy Economy Looks Like". The speakers will be Catherine Mann (Institute for International Economics) and Charles McMillion (MBG Information Services). See, notice. RSVP to Jennifer Buntman at 202 986-4901 or buntman@newamerica.net. Location: NAF, 1630 Connecticut Ave, 7th Floor.

2:00 - 4:00 PM. The Department of State's Telecommunication Advisory Committee (ITAC) will meet. See, notice in the Federal Register, October 14, 2004, Vol. 69, No. 198, at Page 61066. Location: ___?

Day three of a five day conference hosted by the Office of the Secretary of Defense (OSD) Networks and Information Integration (NII) and the Joint Chiefs of Staff titled "7th Annual DoD Spectrum Management Conference". See, notice. Location: Radisson Hotel, Annapolis, MD.

Deadline to submit comments to the Department of Commerce's Technology Administration in response to its request for comments regarding the recycling of electronics equipment, such as flat panel monitors. See, TA notice.

Day four of a five day conference hosted by the Office of the Secretary of Defense (OSD) Networks and Information Integration (NII) and the Joint Chiefs of Staff titled "7th Annual DoD Spectrum Management Conference". See, notice. Location: Radisson Hotel, Annapolis, Maryland.

8:30 - 11:30 AM. The Software and Information Industry Association (SIIA) will host a seminar titled "Software Licensing Best Practices Seminar Series: Licensing (and Other) Issues in Software Distribution". See, notice. Prices vary. Location: Mintz Levin, 12010 Sunset Hills Road, Suite 900 Reston, Virginia.

2:00 - 4:00 PM. The Federal Communications Commission's (FCC) WRC 07 Advisory Committee's Informal Working Group 3: IMT-2000 and 2.5 GHz Sharing Issues, will meet. See, FCC notice [PDF]. Location: FCC, 445 12th Street, SW, South Conference Room (8th Floor, Room 8-B516).

6:00 - 8:00 PM. The Federal Communications Bar Association (FCBA) will host the second part of a two part continuing legal education (CLE) seminar on Homeland Security. Prices vary. See, notice. Location: FCC, Commission Meeting Room, 445 12th St., SW.

Day five of a five day conference hosted by the Office of the Secretary of Defense (OSD) Networks and Information Integration (NII) and the Joint Chiefs of Staff titled "7th Annual DoD Spectrum Management Conference". See, notice. Location: Radisson Hotel, Annapolis, Maryland.

Deadline to submit comments to the Federal Communications Commission (FCC) in response to its notice of proposed rulemaking (NPRM) regarding the Emergency Alert System (EAS). The FCC adopted this NPRM at its August 4, 2004 meeting, and released it on August 12, 2004. This NPRM is FCC 04-189 in EB Docket No. 04-296. See, notice in the Federal Register, August 30, 2004, Vol. 69, No. 167, at Pages 52843 - 52847.

Daylight Savings Time ends.

10:00 AM. The U.S. Court of Appeals (FedCir), Panel A, will hear oral argument in Nellcor Puritan v. Masimo Corporation (04-1247). (The Court will decide Hoffer v. Microsoft, No. 04-1103, on the briefs.) See, FedCir calendar. Location: Courtroom 402, 717 Madison Place, NW.

10:00 AM. The U.S. Court of Appeals (FedCir), Panel B, will hear oral argument in Harris Corp. v. Ericsson (No. 03-1625) and Syntex USA v. Apotex (No. 04-1252). See, FedCir calendar. Location: Courtroom 203, 717 Madison Place, NW.

2:00 PM. The U.S. Court of Appeals (FedCir), Panel C, will hear oral argument in Evident Corp. v. Church & Dwight Co. (No. 03-1541) and Lewis v. Agriculture Facilities (No. 04-1255). See, FedCir calendar. Location: Courtroom 402, 717 Madison Place, NW.

Deadline to submit comments to the National Institute of Standards and Technology (NIST) regarding the first draft of NIST Special Publication 800-52 [33 pages in PDF], titled "Guidelines on the Selection and Use of Transport Layer Security". Submit comments and questions to Matthew Fanto at matthew.fanto@nist.gov.

Deadline to submit comments to the National Institute of Standards and Technology (NIST) regarding the second public draft of NIST Special Publication 800-53 [94 pages in PDF], titled "Recommended Security Controls for Federal Information Systems". Submit comments and sec-cert@nist.gov.

General Election Day.

10:00 AM. The U.S. Court of Appeals (FedCir), Panel D, will hear oral argument in IEX Corp. v. Blue Pumpkin Software (No. 04-1068) and Postx Corp. v. Secure Data (No. 04-1257). See, FedCir calendar. Location: Courtroom 402, 717 Madison Place, NW.

10:00 AM. The U.S. Court of Appeals (FedCir), Panel E, will hear oral argument in Ishida Co. v. Taylor (No. 04-1102) and Lawman Armor v. Master Lock (No. 04-1276). See, FedCir calendar. Location: Courtroom 203, 717 Madison Place, NW.

2:00 PM. The U.S. Court of Appeals (FedCir), Panel F, will hear oral argument in Commissariat v. Chi Mei Optoelecton (No. 04-1139) and Howmedica v. Tranquil Prospect (No. 04-1302). See, FedCir calendar. Location: Courtroom 402, 717 Madison Place, NW.

Rescheduled date for the Federal Communications Commission's (FCC) Auction No. 37, pertaining to FM broadcast construction permits. See, notice in the Federal Register, July 16, 2004, Vol. 69, No. 136, at Pages 42729 - 42742.

10:00 AM. The U.S. Court of Appeals (FedCir), Panel G, will hear oral argument in Purdue Pharmaceutical v. Endo Pharmaceutical (No. 04-1189) and Transonic Systems v. Fresenius USA (No. 04-1439). See, FedCir calendar. Location: Courtroom 402, 717 Madison Place, NW.

10:00 AM. The U.S. Court of Appeals (FedCir), Panel H, will hear oral argument in Anheuser Busch v. Crown Cork & Seal (No. 04-1185). See, FedCir calendar. Location: Courtroom 203, 717 Madison Place, NW.

12:15 PM. The Federal Communications Bar Association's (FCBA) Common Carrier Practice Committee will host a brown bag lunch. The topic will be "Intercarrier Compensation Reform -- Where Is It Headed?". The speakers will be Steve Morris (Deputy Division Chief of the FCC's Wireline Competition Bureau's Pricing Policy Division), Ken Pfister (Great Plains Communications), and Rich Rindler (Swidler Berlin), and others. RSVP to Cecilia Burnet at cmburnett@hhlaw.com or 202 637-8312 by October 29. Location: Hogan & Hartson, 555 13th Street, NW, Litigation Center Conference Room.

2:00 PM. The U.S. Court of Appeals (FedCir), Panel I, will hear oral argument in Bayer AG v. Housey Pharmaceuticals (No. 04-1194). See, FedCir calendar. Location: Courtroom 402, 717 Madison Place, NW.

6:00 - 8:15 PM. The DC Bar Association will host a continuing legal education (CLE) program titled "Ten Ways to Protect Intellectual Property When Drafting E-Commerce Agreements". The speaker will be Walter Effross (American University law school). See, notice. Prices vary from $70 to $115. For more information, call 202 626-3488. Location: D.C. Bar Conference Center, B-1 Level, 1250 H Street, NW.

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