6/21. The Federal Communications Commission (FCC) adopted, but did not release, a Report and Order and Notice of Proposed Rulemaking. It provides, among other things, that the FCC will tax interconnected voice over internet protocol (VOIP) providers. This expands the entities taxed to pay for the FCC's universal service subsidy program. This item also raises taxes on wireless service provides. However, it does not address the subsidy side of the program.

Also on June 21, but later in the day, the House Commerce Committee's (HCC) Subcommittee on Telecommunications and the Internet held a hearing titled "Universal Service: What Are We Subsidizing and Why? Part 1: The High-Cost Fund".

Rep. Joe Barton (R-TX), the Chairman of the HCC, wrote in his opening statement that "the current system is gameable, it's not fair, it's out-of-date". He cited the example of a posh suburb or Houston, Texas, where homes sell for $250,000 to $1,000,000 that created its own phone cooperative that is "getting huge federal and state subsidies".

Rep. Barton (at right) also wrote that "The growth that has occurred in the high-cost fund is unacceptable, unsustainable and unnecessary."

There is, however, considerably more enthusiasm for universal service taxes and subsidies at the Senate Commerce Committee (SCC) and the FCC.

The FCC issued a short release [PDF] that describes this item, and each of the Commissioners wrote a statement.

This release states that the order portion of this item "expands the base of USF contributions by extending universal service contribution obligations to providers of interconnected voice over Internet Protocol, or VoIP, service. For interconnected VoIP providers, the Commission establishes a safe harbor percentage of interstate revenue at 64.9 percent of total VoIP service revenue. Interconnected VoIP providers also may calculate their interstate revenues based on their actual revenues or by using traffic studies."

This release also states that the order portion of this item "raises the existing wireless ``safe harbor´´ percentage used to estimate interstate revenue from 28.5 percent to 37.1 percent of total end-user telecommunications revenue to better reflect growing demand for wireless services. This interim wireless safe harbor was last updated in 2002. Wireless carriers continue to retain the option to base contributions on their actual revenues or on traffic studies that estimate their actual interstate revenues."

The FCC's release reveals little about the NPRM portion of this item. It merely states that it requests comments "on interim contribution obligations imposed in this Order".

The FCC's release does not contain any analysis of the statutory basis for the order. However, see 47 U.S.C. § 254.

This item is FCC 06-94 in Docket Nos. 06-122, 04-36, 96-45, 98-171, 90-571, 92-237, 99-200, 95-116, 98-170.

FCC Chairman Kevin Martin (at left) wrote in a statement [PDF] that "consumers are increasingly using interconnected VoIP services as a substitute for traditional wireline service. And, many of these VoIP providers claim that their services are “inherently interstate.” Thus, we could require these providers to pay based on 100% percent of their revenues. Instead, we only require them to contribute based on a safe harbor of 64.9% - the percentage of interstate revenues reported by wireline toll providers. Similar to the options available to wireless providers, interconnected VoIP providers may choose instead to contribute based on their actual interstate revenues or use a traffic study as proxy for these revenues."

FCC Commissioner Robert McDowell wrote in his statement [PDF] that "this system is in dire need of comprehensive reform. Today's action is simply an interim measure that will help bridge the gap between the deteriorating status quo and a fairer and more sustainable system for the future."

FCC Commissioner Deborah Tate joined in this item, as she has other recent items regulating VOIP services. She asserted in her statement [PDF] that she still advocates "a light regulatory touch".

FCC Commissioners Michael Copps and Jonathan Adelstein both addressed the FCC's August 5, 2005, order, and exclusive of broadband service providers from universal service taxation. See, stories titled "FCC Classifies DSL as Information Service" and "Reaction to the FCC's Classification of DSL" in TLJ Daily E-Mail Alert No. 1,190, Monday, August 8, 2005.

Copps wrote in his statement [PDF] that "Today's actions need to be understood in a broader context, because universal service needs to be seen whole. Last August the Commission put in motion a process to exempt DSL from contributing to the support of universal service. There were other options available to us that would have been more in keeping, I believe, with Section 254 of the Communications Act which charges the Commission with implementing policies that promote the ``preservation and advancement of universal service.´´ And more in keeping, I would add, with Section 706 of the Telecommunications Act which charges the FCC to encourage the deployment of advanced telecommunications capability to all Americans."

Copps continued that "DSL and cable broadband -- which are surely going to be the backbone of our nation’s telecom infrastructure for years to come -- can build where they choose and profit as they can without contributing towards making these services available to harder-to-reach people. It’s like taking the broadband out of a broadband strategy -- except that the country lacks such a strategy."

Adelstein wrote in his statement [PDF] that "Last August, the Commission embarked on an uncharted path by reclassifying broadband Internet access services as information services, outside the framework of our traditional Title II authority. Nowhere is this path more murky than in the case of universal service, where reclassifying these services removes their revenues from the mandatory contribution requirements of section 254.

He continued that "exempting broadband Internet access revenues would remove a sizable and rapidly-growing segment of the telecommunications sector from the contribution base. That Congress contemplated that our universal service mechanisms would evolve as technology evolves is certainly evidenced in the broad permissive authority it gave the Commission to expand the contribution base. As I said at the time of the reclassification, I would have preferred to exercise our permissive contribution authority to address this potential decline in the contribution base permanently."

Reaction to FCC Order. Rep. John Dingell (D-MI) commented upon this item in his opening statement at the HCC hearing on June 21. He said that "All companies who offer telephone services, whether over the Internet or through a traditional network, should carry the same obligation to support universal service. The FCC took an interim step this morning to broaden the base by requiring VOIP providers to pay and raising the safe harbor for wireless carriers. But, let me be clear, even with debate over the proper percentages, the FCC only did the easy part. The true test will be whether the FCC can muster the will to resolve difficult questions among industry participants who have benefitted handsomely -- and do so without finding consumers' pockets easy prey."

BellSouth's Herschel Abbott praised this item. He wrote in a release that "This order ensures that all telecom providers pay their fair share of universal service support, stabilizing the fund while the Commission considers comprehensive reform of the way contributions are calculated. It is certainly fair for consumers that VoIP providers to contribute to this vital fund. We urge the Commission to adopt a technologically neutral numbers-based approach as an equitable permanent solution".

Walter McCormick, head of the USTA, stated in a release that "Today's action is a good interim step by the Commission as it begins to reform comprehensively the nation's intercarrier compensation regime. This decision acknowledges the tremendous changes in how American consumers communicate while also honoring the nation’s commitment to universal service. We applaud today's ruling for ensuring that all voice service providers are treated alike and will continue to work closely with the Commission as it moves forward to revise the entire intercarrier compensation system, including stabilizing and strengthening the universal service system."

6/21. The Federal Communications Commission (FCC) adopted, but did not release, a Further Notice of Proposed Rulemaking (FNPRM), related to its various media ownership rules. The FCC did not amend its rules. Rather, it once again asked for public comments on how to amend its rules that regulate ownership of broadcast and newspaper media, including the local television ownership limit, local radio ownership limit, newspaper broadcast cross-ownership ban, radio television cross-ownership limit, dual network ban, and UHF discount on the national television ownership limit.

The FCC issued a short release [3 pages in PDF] that summarizes this item. However, it is short on details. Also, each Commissioner wrote a statement.

The FCC's release states that this FNPRM requests comments on whether the FCC should "revise the limits adopted in the 2002 Biennial Review Order on the number of stations that can be commonly owned in one market, or is there additional evidence or analysis available now upon which the Commission can rely to further justify the limits adopted then".

The FCC's release also states that the FNPRM asks whether the FCC should "revise these numerical limits or is additional evidence available to further justify them".

The FCC's release also states that the FNPRM asks how the FCC should "address radio/television and newspaper/broadcast cross-ownership issues".

The FCC's release also states that the FNPRM "seeks comment on the court’s remand of certain proposals relating to minority ownership. In addition, responsive to the quadrennial review required by statute, the Further Notice seeks comment on whether these rules sent back to the Commission by the court, as well as the dual network rule which was not at issue in Prometheus, are necessary in the public interest as a result of competition."

The FCC must write new rules, because the Court of Appeals in 2004 instructed it to do so in Prometheus Radio Project v. FCC. The Court overturned parts of the FCC's 2003 rules . Hence, this FNPRM belatedly responds to the Court's directions in Prometheus Radio.

On June 2, 2003, the FCC announced its Report and Order and Notice of Proposed Rulemaking [257 pages in PDF] amending its media ownership rules. See, story titled "FCC Announces Revisions to Media Ownership Rules" in TLJ Daily E-Mail Alert No. 672, June 3, 2003.

These 2003 rule changes, in turn, responded to the directions of the U.S. Court of Appeals (DCCir). For example, on April 2, 2002, the DC Circuit issued its opinion in Sinclair Broadcast Group v. FCC, remanding the FCC's local television ownership rule for further consideration. See, story titled "DC Circuit Remands Local TV Ownership Rule to FCC" in TLJ Daily E-Mail Alert No. 402, April 3, 2002. Also, on February 19, 2002, the DC Circuit issued its opinion in Fox v. FCC. The Court overturned the FCC's national TV station ownership rule (NTSO) and its cable broadcast cross ownership rule (CBCO). See, stories titled "DC Circuit Vacates Cable Broadcast Cross Ownership Rule", TLJ Daily E-Mail Alert No. 372, February 20, 2002, and "FCC Files Petition for Review of Appeals Court Opinion in Fox v. FCC" in TLJ Daily E-Mail Alert No. 415, April 22, 2002.

However, as a result of successful forum shopping efforts by opponents of the FCC's 2003 rule changes, the legal challenge was heard by a different circuit. On June 24, 2004, the U.S. Court of Appeals (3rdCir) issued its opinion [213 pages in PDF] in Prometheus Radio, 373 F.3d 372, overturning some of the FCC's media ownership rules. See, story titled "3rd Circuit Rules in Media Ownership Case" in TLJ Daily E-Mail Alert No. 930, July 1, 2004. The Supreme Court denied certiorari. See, story titled "Supreme Court Denies Certiorari in Media Ownership Rules Case" in TLJ Daily E-Mail Alert No. 1,153, June 14, 2005.

FCC Chairman Kevin Martin wrote in his statement [PDF] that the FCC "should take into account the competitive realities of the media marketplace while also ensuring the promotion of the important goals of localism and diversity."

FCC Commissioner Deborah Tate wrote in her separate statement [PDF] that "As we move forward, we must realize that the world is indeed interconnected and that American companies must be able to compete in order to continue to be global leaders in the media marketplace."

FCC Commissioner Robert McDowell wrote in his statement [PDF] that "Our rules must take into account the dramatic changes that have occurred in the media landscape".

FCC Commissioner Michael Copps, who has for years railed against the evils of media consolidation and "giant media moguls", wrote in his statement [PDF] that FCC's 2003 rules changes were "misguided handiwork" that "tried to eliminate important safeguards that protected media diversity, localism and competition". He added that "Three years ago the FCC tried to inflict this massive wave of further consolidation onto an already highly concentrated media industry."

Copps (at right) also discussed transparency at length. He wrote that "Some companies want the government to make the decision to rush into more media concentration behind closed doors in sequestered Washington bureaucracies." He argued that "we need a transparent process", and that "Such a process makes inevitably for better policy".

While Commission Copps argues for more transparency in these proceedings, he has also argued for less transparency in other proceedings. He has argued that that open meeting law should be amended to allow the Commission conduct business in secret. His desire for transparency is selective.

FCC Commissioner Jonathan Adelstein wrote in his statement [PDF] that this FNPRM "is totally inadequate".

He elaborated that "The large media companies wanted, and today they get, a blank check to permit further media consolidation. The Notice is so open-ended that it will permit the majority of the Commission to allow giant media companies to get even bigger at the time, place and manner of their choosing."

The FCC's release provides a document number for this item, FCC 06-93. However, it does not identify any docket numbers. That it, it does not reference the docket numbers for the FCC's various long running media ownership proceedings, such as MB Docket No. 02-277, MM Docket No. 01-235, MM Docket No. 01-317, and MM Docket No. 00-244. The statements of the Commissioners list these four docket numbers, and a new one, MB Docket Nos. 06-121.

The House will meet at 10:00 AM legislative business. It will consider several non-technology related items under suspension of the rules. The House may also consider HR 9, a voting rights bill, and HR 4890, the "Legislative Line Item Veto Act of 2006", subject to rules. See, Republican Whip Notice.

The Senate will meet at 9:30 AM. It will resume consideration of S 2766, the defense authorization bill.

9:30 AM. The Senate Judiciary Committee (SJC) may hold an executive business meeting. The agenda includes consideration of the nominations of Brett Tolman to be the U.S. Attorney for the District of Utah. The agenda also includes consideration of S 2453, the "National Security Surveillance Act of 2006", S 2455, the "Terrorist Surveillance Act of 2006", S 2468, a bill to provide standing for civil actions for declaratory and injunctive relief to persons who refrain from electronic communications through fear of being subject to warrantless electronic surveillance for foreign intelligence purposes, S 3001, the "Foreign Intelligence Surveillance Improvement and Enhancement Act of 2006", S 2831, the "Free Flow of Information Act of 2006", HR 1036, the "Copyright Royalty Judges Program Technical Corrections Act", and S 1845, the "Circuit Court of Appeals Restructuring and Modernization Act of 2005". See, notice. The SJC frequently cancels or postpones meetings without notice. The SJC rarely follows its published agenda. Press contact: Courtney Boone at 202-224-5225. Location: Room 226, Dirksen Building.

9:30 - 11:30 AM. The Department of Justice's (DOJ) Antitrust Division and the Federal Trade Commission (FTC) will hold the second of three hearings on single firm conduct. This hearing will address selling. The speakers will be Patrick Bolton (Columbia University Business School), Kenneth Elzinga (University of Virginia), Douglas Melamed (Wilmer Hale), and Janusz Ordover (New York University). See, notice. Location: FTC, Room 432, 600 Pennsylvania Ave., NW.

TIME AND LOCATION CHANGE. 10:00 AM. The House Ways and Means Committee's Subcommittee on Select Revenue Measures will hold a hearing titled "Hearing on the Impact of International Tax Reform on U.S. Competitiveness". See, notice. Location: Room B-318, Rayburn Building.

1:00 - 4:00 PM. The Department of Justice's (DOJ) Antitrust Division and the Federal Trade Commission (FTC) will hold the third of three hearings on single firm conduct. This hearing will address buying. The speakers will be Tim Brennan (University of Maryland), John Kirkwood (Seattle University School of Law), Janet McDavid (Hogan & Hartson), Steven Salop (Georgetown University Law Center), and Frederick Warren-Boulton (Microeconomic Consulting & Research Associates, Inc.). See, notice. Location: FTC, Room 432, 600 Pennsylvania Ave., NW.

2:00 PM. The Senate Commerce Committee (SCC) will meet to mark up S 2686, the "Communications, Consumer's Choice, and Broadband Deployment Act of 2006". See, notice. Press contact: Aaron Saunders (Stevens) at 202-224-3991 or Andy Davis (Inouye) at 202-224-4546. The meeting will be webcast by the SCC. Location: __.

2:00 PM. The House Commerce Committee's (HCC) Subcommittee on Oversight and Investigations will hold the second of two hearings titled "Internet Data Brokers and Pretexting: Who has Access to Your Private Records?". The scheduled witnesses are Peter Lyskowski (Missouri Assistant Attorney General), Julia Harris (Florida AAG), Paul Kilcoyne (U.S. Immigration and Customs Enforcement), Elaine Lammert (FBI), James Bankston (U.S. Marshals Service), Ava Cooper Davis (DEA), Larry Ford (Bureau of Alcohol, Tobacco, Firearms, and Explosives), Raul Ubieta (Miami-Dade Police Department), and David Carter (Austin Police Department). See, notice. The witnesses will include Paul Kilcoyne (DHS/ICE). The hearing will be webcast by the HCC. Press contact: Larry Neal (Barton) at 202-225-5735 or Terry Lane (Barton) at 202-225-5735. Location: Room 2322, Rayburn Building.

2:00 PM. The House International Relations Committee's (HIRC) Subcommittee on Africa, Global Human Rights and International Operations will meet to mark up several bills, including HR 4780, the "Global Online Freedom Act of 2006". See, notice. Location: Room 2172, Rayburn Building.

2:30 PM. The Senate Homeland Security and Governmental Affairs Committee's Subcommittee on Federal Financial Management, Government Information, and International Security will hold a hearing titled "Assuring Healthy Initiatives in Health Information Technology". See, notice. Location: Room 342, Dirksen Building.

3:00 PM. The Senate Judiciary Committee's (SJC) Subcommittee on Antitrust, Competition Policy and Consumer Rights will hold a hearing titled "AT&T and BellSouth Merger: What Does it Mean for Consumers?". The witnesses will be Edward Whitacre (Ch/CEO of AT&T), Duane Ackerman (Ch/CEO of BellSouth), James Geiger (P/CEO Cbeyond Communications), and Jonathan Rubin (American Antitrust Institute). See, notice. The SJC frequently cancels or postpones hearings without notice. Press contact: Courtney Boone at 202-224-5225. Location: Room 226, Dirksen Building.

5:00 PM. Deadline to submit comments to the National Institute of Standards and Technology (NIST) regarding its Draft Special Publication 800-85B [149 pages in PDF] titled "PIV Data Model Test Guidelines". PIV is an acronym for Personal Identity Verification.

The Republican Whip Notice states that "there are no votes expected in the House".

8:30 AM - 4:00 PM. The Homeland Security Advisory Council (HSAC) will hold a mostly closed meeting. The open portion will be from 11:00 AM to 1:00 PM. See, notice in the Federal Register, June 9, 2006, Vol. 71, No. 111, at Pages 33477-33478. Location: U.S. Secret Service HQ (closed portions), and St. Regis Hotel, 923 16th & K Streets, NW (open portion).

10:00 AM. The House Commerce Committee's (HCC) Subcommittee on Oversight and Investigations will hold the first of two hearings titled "Making the Internet Safe for Kids: The Role of ISP’s and Social Networking Sites". See, notice. The hearing will be webcast by the HCC. Press contact: Larry Neal (Barton) at 202-225-5735 or Terry Lane (Barton) at 202-225-5735. Location: Room 2123, Rayburn Building.

10:00 AM. The Senate Finance Committee will hold a hearing on the nomination of Eric Solomon, to be Assistant Secretary of the Treasury for Tax Policy. See, notice. Location: Room 215, Dirksen Building.

12:00 NOON - 2:00 PM. The DC Bar Association's Intellectual Property Law Section will host a panel discussion titled "Nuts and Bolts of Section 337 Practice Before the International Trade Commission". The speakers will include Maureen Browne (Adduci Mastriani & Schaumberg) and Karin Norton (US International Trade Commission). The price to attend ranges from $15-$40. For more information, call 202-626-3463. See, notice. Location: D.C. Bar Conference Center, 1250 H Street NW, B-1 Level.

12:00 NOON - 2:00 PM. The DC Bar Association's Taxation Section will host a panel discussion titled "Taxing the Digital World: How do States Tax Downloads and other Electronic Stuff?". The speakers will include Mark Nebergall (Software Finance and Tax Executives Council), Matthew Tomalis (Federation of Tax Administrators), and Stephen Kranz (Council On State Taxation). The price to attend ranges from $15-$27. For more information, call 202-626-3463. See, notice. Location: D.C. Bar Conference Center, 1250 H Street NW, B-1 Level.

CANCELLED. 6:00 - 8:15 PM. The Federal Communications Bar Association's (FCBA) Transactional Practice Committee will host a continuing legal education (CLE) seminar titled "Private Equity Fund and Lender Issues in FCC-Regulated Businesses". See, registration form [PDF]. Prices vary. The deadline to register is 5:00 PM on June 23. Location: Akin Gump, 1333 New Hampshire Ave., NW.

12:00 NOON. The Center for Democracy and Technology (CDT) will host a panel discussion titled "Policymakers' Guide to Radio Frequency Identification". The participants will include Robert Cresanti (Under Secretary of Commerce for Technology) and Dan Caprio (Progress & Freedom Foundation). See, notice. Location: Room B339, Rayburn Building, Capitol Hill.

2:00 PM. The House Commerce Committee's (HCC) Subcommittee on Telecommunications and the Internet will hold a hearing titled "The Audio and Video Flags: Can Content Protection and Technological Innovation Coexist?". See, notice. The hearing will be webcast by the HCC. Press contact: Larry Neal (Barton) at 202-225-5735 or Terry Lane (Barton) at 202-225-5735. Location: Room 2322, Rayburn Building.

Day one of a four day conference hosted by the Wireless Communications Association International (WCAI). At 8:30 AM, FCC Commissioner Jonathan Adelstein will speak. At 8:50 AM, there will be a panel discussion titled "The Great Debate: BWA Spectrum For Consumer Broadband And/Or Public Safety?". At 4:45 PM there will be an panel discussion titled "Wireless Stakes In The 'Net Neutrality' Debate". See, conference web site. Location: Omni Shoreham Hotel, Washington DC.

10:00 AM - 12:00 NOON. The Department of State's (DOS) International Telecommunication Advisory Committee (ITAC) will meet to prepare for the ITU Plenipotentiary Conference 2006 on November 6-24, 2006, in Ankara, Turkey. See, notice in the Federal Register, March 29, 2006, Vol. 71, No. 60, at Page 15798. Location: __.

12:00 NOON. The Federal Communications Bar Association (FCBA) will host a lunch. The speaker will be FCC Commissioner Deborah Tate. See, registration form [PDF]. Prices vary. The deadline to register is 12:00 NOON on June 23. Location: Capital Hilton Hotel, 16th and K Streets, NW.

10:00 AM. The House Commerce Committee's (HCC) Subcommittee on Oversight and Investigations will hold the fecond of two hearings titled "Making the Internet Safe for Kids: The Role of ISP’s and Social Networking Sites". See, notice. The hearing will be webcast by the HCC. Press contact: Larry Neal (Barton) at 202-225-5735 or Terry Lane (Barton) at 202-225-5735. Location: Room 2322, Rayburn Building.

10:00 AM. The House Financial Services Committee's (HFSC) Subcommittee on Capital Markets will hold a hearing titled "Protecting Investors: A Review of the Milberg Weiss Indictment and Ways to Prevent Securities Litigation Abuse". See also, story titled "Milberg Weiss Indicted for Paying Illegal Kickbacks to Class Action Plaintiffs" in TLJ Daily E-Mail Alert No. 1,375, May 22, 2006. Location: Room 2128, Rayburn Building.

6:00 - 8:00 PM. The Federal Communications Bar Association's (FCBA) Young Lawyers and Diversity Committees will host an event titled "Happy Hour". For more information, contact Jeff Tignor at jhtig at aol dot com or Natalie Roisman at natalie dot roisman at fcc dot gov. Location: Poste -- Modern Brasserie, 555 8th Street, NW.

Day two of a four day conference hosted by the Wireless Communications Association International (WCAI). See, conference web site. At 10:45 AM there will be a panel discussion titled "Regulation, Public Policy & Spectrum Rights Acquisition: Surveying Options For New North American Spectrum Acquisition & Valuation". At 1:30 PM, there will be a panel discussion titled "Regulation, Public Policy & Spectrum Rights Acquisition: Looming Issues For U.S. BWA Carriers". At 2:45 PM, there will be a panel discussion titled "Regulation, Public Policy & Spectrum Rights Acquisition: Meet The FCC Legal Advisors". Location: Omni Shoreham Hotel.

DELAYED TO AUGUST 9. The Federal Communications Commission (FCC) will commence Auction 66. This is the auction of Advance Wireless Services (AWS) licenses in the 1710-1755 MHz and 2110-2155 MHz (AWS-1) bands.

Day three of a four day conference hosted by the Wireless Communications Association International (WCAI). See, conference web site. At 9:45 AM, there will be a panel discussion titled "Regulation, Public Policy & Spectrum Rights Acquisition: Is Your Spectrum At Risk? Preparing For The World Radio Conference 2007". At 1:30 PM, there will be a panel discussion titled "U.S. Telecom Act Reform: Prospects & Wireless Implications?". At 2:45 PM, there will be a panel discussion titled "Regulation, Public Policy & Spectrum Rights Acquisition: Small Carrier Tutorial On Meeting FCC 911 & CALEA Obligations". Location: Omni Shoreham Hotel.

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