6/28. The Senate Commerce Committee (SCC) approved a broad communications reform bill at the conclusion of a day long mark up. This bill is now numbered HR 5252. However, it was introduced as as S 2686, and originally had the title "Communications, Consumer's Choice, and Broadband Deployment Act of 2006".

This bill is much different from the version of HR 5252 that the House approved on June 8, 2006. See, story titled "House Approves COPE Act, Without Network Neutrality Amendment" in TLJ Daily E-Mail Alert No. 1,388, June 9, 2006.

The vote on final approval was 15-7. The twelve Republican members, along with Sen. Daniel Inouye (D-HI), Sen. Ben Nelson (D-FL), and Sen. Mark Pryor (D-AR), voted for the bill.

On June 28, the SCC debated, and rejected by a vote of 11-11, an amendment offered by Sen. Olympia Snowe (R-ME), Sen. Byron Dorgan (D-ND), and others, that would have imposed a network neutrality mandate.

The SCC also rejected by a vote of 10-12 an amendment offered by Sen. John Kerry (D-MA) that would have amended Title III, which pertains to video services, to impose a build out requirement. It was a nearly straight party line vote. All Republicans, except Sen. Snowe, voted against the amendment, while all Democrats, except Sen. Ben Nelson, voted for the amendment.

The SCC rejected by a vote of 2-20 an amendment offered by Sen. John McCain (R-AZ) that would have provided that for video service providers to receive the benefits of Title III of the bill, they must first offer a la carte programming.

The SCC approved by a vote of 14-7 an amendment offered by Sen. McCain regarding low power FM.

The SCC approved by a vote of 21-1 an amendment offered by Sen. McCain to impose a three year moratorium on new and discriminatory taxes on wireless services.

The SCC approved by a vote of 19-3 an amendment offered by Sen. George Allen (R-VA) that would make permanent the Internet Tax Freedom Act (ITFA)

The SCC began this mark up on Thursday, June 22. See, story titled "Senate Commerce Committee Begins Mark Up of Communications Reform Bill" in TLJ Daily E-Mail Alert No. 1,398, June 23, 2006, and story titled "Senate Commerce Committee to Continue Mark Up of Communications Bill" in TLJ Daily E-Mail Alert No. 1,400, June 27, 2006. It then held a full day mark up session on Wednesday, June 27. See, story titled "Senate Commerce Committee Continues Mark Up of Communications Reform Bill" in TLJ Daily E-Mail Alert No. 1,401, June 28, 2006.

The SCC considered over 200 amendments in three mark up sessions. This article is brief and incomplete. TLJ intends to publish a full review of the markup on Wednesday, July 5.

6/28. The Senate Finance Committee (SFC) amended and approved S 1321, the "Telephone Excise Tax Repeal Act of 2005". This bill repeals the federal telephone excise tax that dates back to the Spanish American War. However, the bill, as amended, also includes numerous other tax provisions, including some that affect technology and communications.

Repeal of Telephone Excise Tax. Sen. Charles Grassley (R-IA), the Chairman of the SFC, stated in a release that "We're on the way to ending a quote-unquote temporary tax ... The temporary part means nothing, because this tax has been around since 1898. It was used to pay for the Spanish-American War by taxing the rich because in 1898, only the wealthy had telephones. Now everybody has a phone and pays this tax. It’s time to get rid of the tax."

Sen. Grassley (at right) said that this repeal will save phone customers $7 billion over 10 years.

He also stated that "The savings will apply to anyone with a land line telephone ... Because seniors tend to use land-line telephones more than other people, as a group they'll see financial help by eliminating this tax that's no longer justified."

Sen. Max Baucus (D-MT), the ranking Democrat, wrote in his opening statement [PDF] that "The war lasted just 229 days. But the tax lasted more than a century. It is time to give Americans relief from this regressive tax. It is time to repeal the tax, once and for all."

Sen. Rick Santorum (R-PA) introduced the original version of S 1321 on June 28, 2005.

Members of Congress have been trying to repeal the excise tax on phones for many years, without final success.

There were substantial efforts in the 105th,106th, 107th, and 108th Congresses to repeal this tax. (The current Congress is the 109th). See, for example, HR 3648 in the 105th Congress, HR 3916 in the 106th Congress, HR 236 in the 107th Congress, and HR 2957 in the 108th Congress. The House approved HR 3916 on a roll call vote of 420-2, on May 25, 2000. See, Roll Call No. 233. However, the full Senate did not approve the bill. HR 236 had 149 sponsors.

Licensing and Regulation of Software Developers. The bill as amended incorporates S 832, the "Taxpayer Protection and Assistance Act of 2005". Sen. Jeff Bingamon (D-NM) and others introduced the original version of S 832 on April 18, 2005. S 1321, as amended, amends the Internal Revenue Code (IRC) with respect to any "refund loan facilitator". The bill provides for the regulation by the Department of the Treasury of compensated income tax return preparers who are not already subject to another regulatory regime. This is a business and occupational licensing regime.

However, the language of the bill, as amended, goes far beyond regulation of tax return preparers. It amends the IRC to expand the definition of tax return preparer to include certain software developers and contractors of tax return preparers.

The SFC/JCT released a memorandum [151 pages in PDF], authored by staff of the Congress's Joint Committee on Taxation, that summarizes this bill. It states that "The proposal modifies the regulatory definition of tax return preparer to include any person who assists in preparing tax returns for compensation or holds himself out to tax return preparers or taxpayers as a person who assists in preparing tax returns, regardless of whether tax return preparation is the person's sole business activity and regardless of whether the person charges a fee for tax return preparation services. The proposal also specifically includes as a tax return preparer, a person who develops software that is used to prepare or file a tax return, electronic return originators/authorized IRS e-file providers, as well as contractors of the tax return preparer performing services in connection with tax return preparation." (See, paper page 81, and PDF page 85.)

The SFC/JCT's 151 page memorandum does not identity any problems that the Internal Revenue Service (IRS), which is a unit of the Department of the Treasury, has encountered with software developers. In contrast, the Department of Justice (DOJ) has taken legal actions against numerous unscrupulous tax return preparers.

Moreover, the IRS and Department of the Treasury have a history of overbroad and aggressive interpretation of their statutory authority in the context of communications and information technology.

For example, telecommunications carriers have in recent years begun offering services that have not fallen within the categories of services subject to the 3% excise tax. Nevertheless, the IRS continued to collect taxes as if these services were covered by the statute.

The IRS continued even after numerous courts uniformly held that it could not. It was not until May 25, 2006, that the IRS conceded the illegality of its actions. See, IRS Notice 2006-50 [14 pages in PDF], and story titled "IRS Announces It Will Cease Its Illegal Collection of Excise Taxes on Phone Service" in TLJ Daily E-Mail Alert No. 1,379, May 26, 2006. See also, story titled "IRS Announces That It Will Violate Court of Appeals Ruling Regarding Excise Tax on Phone Service" in TLJ Daily E-Mail Alert No. 1,241, October 27, 2005.

Five Courts of Appeals had ruled against the IRS. The U.S. Court of Appeals (11thCir) issued its opinion [22 pages in PDF] in ABIG v. IRS on May 10, 2005. See, story titled "IRS Loses Appeal Over 3% Excise Tax on Communications" in TLJ Daily E-Mail Alert No. 1,133, May 11, 2005.

The U.S. Court of Appeals (6thCir) issued its opinion [20 pages in PDF] in Office Max v. US on November 2, 2005. See, story titled "IRS Loses Another Appeal Regarding 3% Excise Tax" in TLJ Daily E-Mail Alert No. 1,246, November 3, 2005.

The U.S. Court of Appeals (DCCir) issued its opinion [11 pages in PDF] in Amtrak v. US on December 9, 2005.

The U.S. Court of Appeals (2ndCir) issued its opinion [PDF] in Fortis v. USA, on April 27, 2006. See also, story titled "2nd Circuit Rules Against IRS on Excise Tax on Phone Service" in TLJ Daily E-Mail Alert No. 1,361, May 1, 2006.

The U.S. Court of Appeals (3rdCir) issued its opinion [23 pages in PDF] in Reese Brothers v. USA,
on May 9, 2006. See, story titled "IRS Loses Another Frivolous Appeal Regarding Telephone Excise Tax" in TLJ Daily E-Mail Alert No. 1,367, May 10, 2006.

Moreover, back in 2004, the IRS announced its interest in expanding the excise tax on phones to information services, despite its lack of statutory authority. See, story titled "IRS Publishes Advance NPRM Regarding Expanding the Excise Tax on Telephones to Include New Technologies" in TLJ Daily E-Mail Alert No. 931, July 6, 2004.

Some Members of Congress and others opposed this. See, for example, story titled "Rep. Cox Urges Bush to Instruct IRS Not to Expand Excise Tax on Phones" in TLJ Daily E-Mail Alert No. 945, July 26, 2004.

Free Electronic Returns. The SFC/JCT memorandum states the "The IRS has entered into cooperative relationships with commercial return preparation services to provide free electronic filing services to eligible low-income or elderly taxpayers. This program is called ``Free File.´´ Presently, the IRS does not permit taxpayers to file their tax returns electronically without the use of an intermediary."

The memorandum adds that the bill "requires the Secretary to establish the ``Direct e-file Program.´´ The Direct e-file Program is a program that provides individual taxpayers with the ability to electronically file their Federal income tax returns through the IRS website without the use of an intermediary or with the use of an intermediary with which the IRS contracts to provide free universal access."

Sen. Baucus (at left) stated that "This bill contains many provisions that will improve tax administration. For example, it authorizes the IRS to offer direct electronic filing. Taxpayers will no longer be forced to pay a preparer or to buy software in order to file a tax return electronically. Taxpayers can file a paper return for free. And they should be able to file an electronic return for free, as well."

Internet Tax Freedom Act. The SFC approved an amendment offered by Sen. Ron Wyden (D-OR) that removes the expiration date from the Internet Tax Freedom Act (ITFA), thus making the moratorium of the ITFA permanent.

It is currently set to expire on November 1, 2007. See, story titled "Bush Signs Internet Tax Nondiscrimination Act" in TLJ Daily E-Mail Alert No. 1,031, December 6, 2004.

The Senate Commerce Committee, which completed its mark up of HR 5252, the communications reform bill, on June 28, approved by a vote of 19-3 a similar amendment offered by Sen. George Allen (R-VA).

Expensing of Broadband Internet Access Expenditures. The SFC/JCT memorandum first explains the concepts of depreciation and expensing. It states that "A taxpayer is allowed to recover, through annual depreciation deductions, the cost of certain property used in a trade or business or for the production of income. The amount of the depreciation deduction allowed with respect to tangible property for a taxable year is determined under the modified accelerated cost recovery system", or MACRS, with most recovery periods for most form of tangible property ranging from 3 to 25 years.

The memorandum states that the bill "provides an election to treat any qualified broadband expenditure paid or incurred by the taxpayer as not chargeable to capital account, but rather, as a deduction. The deduction is allowed in the first taxable year in which either current generation, or next generation, broadband services are provided through qualified equipment to qualified subscribers."

It adds that "Expenditures are eligible for this election only for qualified equipment, the original use of which commences with the taxpayer. The proposal applies for qualified broadband expenditures incurred after June 30, 2006, and before January 1, 2011."

It also states that "Current generation broadband services are defined as the transmission of signals at a rate of at least 5 million bits per second to the subscriber and at a rate of at least 1 million bits per second from the subscriber. Next generation broadband services are defined as the transmission of signals at a rate of at least 50 million bits per second to the subscriber and at a rate of at least 10 million bits per second from the subscriber."

Reaction. BellSouth's Herschel Abbott stated in a release that "On the heels of the IRS action, today's Senate committee vote is welcome news for consumers. When passed by the full Congress, this legislation will further lower the cost of phone service. Senator (Rick) Santorum (R-Pa.) and Chairman (Chuck) Grassley (R-Iowa) deserve thanks for their efforts on behalf of consumers. Senator (Max) Baucus' (D-Mont.) amendment to promote broadband deployment and the vote to make the internet tax moratorium permanent are two more bonuses for consumers. We hope this bill is quickly enacted into law."

The U.S. Telecom Association's (USTA) Walter McCormick stated in a release that "We applaud the Senate Finance Committee's action today to repeal the remaining portion of the federal excise tax that customers who subscribe to local telephone service only are still forced to pay. Basic communications should not be taxed as a luxury, and repealing this regressive tax is long overdue. We look forward to seeing the repeal of this outdated tax this year. Additionally, we applaud the Committee's action to amend the Chairman's mark to include provisions to update the rules governing wireless depreciation and broadband expensing, along with making the Internet Tax Moratorium permanent."

6/27. The U.S. Court of Appeals (DCCir) issued its opinion [17 pages in PDF] in AT&T v. FCC, remanding the FCC's order that denied, on procedural grounds, SBC's (now AT&T) petition for forbearance from Title II common carrier regulation certain of its internet protocol platform services.

See, the FCC's May 5, 2005, Memorandum Opinion and Order [12 pages in PDF] in its proceeding titled "In the Matter of Petition of SBC Communications Inc. for Forbearance from the Application of Title II Common Carrier Regulation to IP Platform Services". This MOO is FCC 05-95 in WC Docket No. 04-29.

See also, story titled "FCC Denies SBC's Petition for Forbearance of Common Carrier Regulation of IP Services" in TLJ Daily E-Mail Alert No. 1,130, May 6, 2005.

Section 10 of the Communications Act, which is codified at 47 U.S.C. § 160(a), provides, in part, that the FCC:

"shall forbear from applying any regulation or any provision of this chapter to a telecommunications carrier or telecommunications service, or class of telecommunications carriers or telecommunications services, in any or some of its or their geographic markets, if the Commission determines that--
   (1) enforcement of such regulation or provision is not necessary to ensure that the charges, practices, classifications, or regulations by, for, or in connection with that telecommunications carrier or telecommunications service are just and reasonable and are not unjustly or unreasonably discriminatory;
   (2) enforcement of such regulation or provision is not necessary for the protection of consumers; and
   (3) forbearance from applying such provision or regulation is consistent with the public interest."

SBC filed its petition on February 4, 2004. It requested that the FCC forbear from applying Title II common carrier regulation to "those services that enable any customer to send or receive communications in IP format over an IP platform, and the IP platforms on which those services are provided".

SBC also simultaneously filed with the FCC a related petition for declaratory ruling. However, the FCC shortly thereafter instituted in omnibus IP enabled services proceeding (WC Docket No. 04-36. The FCC consolidated the declaratory ruling petition into the IP enabled services proceeding.

The FCC order on SBC's forbearance petition stated that "We find that it would be inappropriate to grant SBC's petition because it asks us to forbear from requirements that may not even apply to the facilities and services in question. We also find that SBC's petition and the evidence proffered is not sufficiently specific to enable us to determine whether the requested forbearance satisfies the requirements of section 10".

The Court of Appeals held that "Because we agree that the Commission lacks section 10 authority to reject a petition as procedurally improper just because it requests forbearance from uncertain regulatory obligations, we reject the Commission's first rationale for denying SBC’s petition. And because the Commission has failed to explain how its second rationale is consistent with the specificity standard it has applied in other contexts, we remand the case for further explanation and consideration consistent with this opinion."

This case is AT&T, petitioner v. FCC and USA, respondents, and Time Warner Inc. and Time Warner Cable, intervenors, U.S. Court of Appeals for the District of Columbia, App. Ct. No. 05-1186, a petition for review of a final order of the FCC. Judge Tatel wrote the opinion of the Court of Appeals, in which Judge Williams joined. Judge Randolph wrote a brief concurring opinion.

There will be no issue of the TLJ Daily E-Mail Alert on Monday, July 3, 2006, or on Tuesday, July 4, 2006. TLJ intends to publish a more detailed summary of the Senate Commerce Committee's mark up of its communications reform bill in the Wednesday, July 5, 2006, issue.

6/29. The House amended and approved HR 5672, the "Science, State, Justice, Commerce, and Related Agencies Appropriations Act for Fiscal Year 2007". It began consideration of this bill on June 27, continued on June 28, and finished on Thursday morning, June 29. The vote on final approval was 393-23. See, Roll Call No. 349.

On June 28, the House rejected by a vote of 189-230 an amendment offered by Rep. Jerrold Nadler (D-NY) that would have prohibited the use of funds to issue a national security letter to a health insurance company under any of the provisions of law amended by Section 505 of the USA PATRIOT Act. See, Roll Call No. 344.

The House approved by voice vote an amendment offered by Rep. Sherrod Brown (D-OH) to increase funding by an additional $3 Million to monitor imports from China. See also, Rep. Brown's Senate campaign web site.

The House approved by voice vote an amendment offered by Rep. Tim Murphy (R-PA) to increase and immediately decrease funding for the Federal Communications Commission (FCC) to encourage the FCC to promulgate a rule on caller ID services.

The House ruled out of order an amendment offered by Rep. Diane Watson (D-CA) to prohibit the use of funds to negotiate the accession by the Russian Federation into the World Trade Organization (WTO).

This bill includes appropriations for many technology related entities, including the FCC, NTIA, NIST, OSTP, Antitrust Division, and numerous DOJ units involved in electronic surveillance and data collection.

See also, story titled "House Begins Consideration of CJS/Science/Tech Appropriations Bill" in TLJ Daily E-Mail Alert No. 1,401, June 28, 2006.

The House will meet at at 10:00 AM for legislative business. See, Republican Whip Notice.

The Senate will meet at 9:30 AM for morning business. It will then begin consideration of  S  3569, a bill to implement the US-Oman free trade agreement.

10:00 AM. The Senate Finance Committee will hold a hearing titled "The U.S.-Peru Trade Promotion Agreement". See, notice. Location: Room 215, Dirksen Building.

10:00 AM. The House Ways and Means Committee will meet to mark up HR 5684, the "United States-Oman Free Trade Agreement Implementation Act". Location: Room 1100, Longworth Building.

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.

The House may meet at at 9:00 AM for legislative business. See, Republican Whip Notice.

10:00 AM. The U.S. District Court (DC) will hold a status conference in Cisco Systems v. Teles AG, D.C. No. 1:2005-cv-02048-RBW, a case involving U.S. Patent No. 6,954,453, titled "Method for transmitting data in a telecommunications network and switch for implementing said method". Judge Walton will preside. Location: Courtroom 5, 333 Constitution Ave., NW.

Day four of a four day conference hosted by the Wireless Communications Association International (WCAI). See, conference web site. Location: Omni Shoreham Hotel.

Deadline to submit comments to the Antitrust Modernization Commission (AMC) regarding criminal remedies. See, notice in the Federal Register, Federal Register, May 31, 2006, Vol. 71, No. 104, at Pages 30863-30864.

EXTENDED TO JULY 31. Deadline to submit comments to the U.S. Patent and Trademark Office (USPTO) in response to its notice in the Federal Register regarding revisions to guidelines used by USPTO personnel in their review of patent applications to determine whether the claims in a patent application are directed to patent eligible subject matter. The USPTO seeks comments on, among other topics, "claims that perform data transformation" and "claims directed to a signal per se". With respect to the later, the USPTO asks "If claims directed to a signal per se are determined to be statutory subject matter, what is the potential impact on internet service providers, satellites, wireless fidelity (WiFi [reg]), and other carriers of signals?" See, Federal Register, December 20, 2005, Vol. 70, No. 243, at Pages 75451 - 75452. See also, story titled "USPTO Seeks Comments on Subject Matter Eligible for Patents" in TLJ Daily E-Mail Alert No. 1,278, December 22, 2005. See, notice in the Federal Register (June 14, 2006, Vol. 71, No. 114, at Pages 34307-34308) extending deadline, and story titled "USPTO Seeks Further Comments on Patentable Subject Matter" in TLJ Daily E-Mail Alert No. 1,391, June 14, 2006.

Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its notice of proposed rulemaking (NPRM) regarding licensing and use of frequencies in the 904-909.75 and 919.75-928 MHz portions of the 902-928 MHz band that are used for the provision of Multilateration Location and Monitoring Service (M-LMS band). This NPRM is FCC 06-24 in WT Docket No. 06-49. See, text [24 pages in PDF] of NPRM; notice in the Federal Register, March 29, 2006, Vol. 71, No. 60, at Pages 15658-15666; and story titled "FCC Releases NPRM on M-LMS Systems" in TLJ Daily E-Mail Alert No. 1,325, March 8, 2006.

Effective data of the Library of Congress's Copyright Office's fee increases. See, notice in the Federal Register, March 28, 2006, Vol. 71, No. 59, at Pages 15368-15371.

The House will not meet on Monday, July 3, through Friday, July 7. See, Majority Whip's calendar.

The Senate will not meet on Monday, July 3, through Friday, July 7. See, 2006 Senate calendar.

Deadline to submit initial comments to the Federal Communications Commission (FCC) in response to its further notice of proposed rulemaking (FNPRM) regarding telecommunications relay services (TRS) and speech to speech services for individuals with hearing and speech disabilities, and misuse of internet protocol relay service and video relay service. This item is FCC 06-58 in CG Docket No. 03-123. See, notice in the Federal Register, June 1, 2006, Vol. 71, No. 105, at Pages 31131-31137.

Independence Day.

The Federal Communications Commission (FCC) and other federal offices will be closed. See, Office of Personnel Management's (OPM) list of federal holidays.

Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its notice of proposed rulemaking (NPRM) regarding creation of broadband channels in the 700 MHz public safety band. The FCC adopted this NPRM on March 17, 2006. See, story titled "FCC Adopts NPRM Re Public Safety Communications in the 700 MHz Band" in TLJ Daily E-Mail Alert No. 1,332, March 20, 2006. The FCC released the text [30 pages in PDF] of this NPRM on March 21, 2006. This NPRM is FCC 06-34 in WT Docket No. 96-86. See, notice in the Federal Register, April 7, 2006, Vol. 71, No. 67, at Pages 17786-17790.

6/29. The Senate Judiciary Committee (SJC) had scheduled an executive business meeting for June 29, 2006, at 9:30 AM. It did not obtain a quorum. No business was conducted. The SJC also failed to obtain a quorum at its June 22 meeting. The agenda for the June 29 meeting included consideration of the nominations of Neil Gorsuch (to be Judge of the U.S. Court of Appeals for the 10th Circuit), Jerome Holmes (10th Circuit), Gustavo Antonio Gelpi (U.S.D.C., Puerto Rico), Daniel Jordan (U.S.D.C., Southern District of Mississippi), Alexander Acosta (U.S. Attorney for the Southern District of Florida), Martin Jackley (U.S. Attorney for the District of South Dakota), Brett Tolman (U.S. Attorney for the District of Utah). The agenda also included 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". All of these bill were also on last week's agenda. Some have long been included on meeting agendas, but never considered.

6/28. The Department of Justice's (DOJ) Antitrust Division announced in a notice that "Effective today, and until further notice, all premerger filings should be directed to:
   Department of Justice
   Antitrust Division
   Office of Operations
   Premerger Notification Unit
   600 E Street, N.W.
   Room 10308
   Washington, D.C. 20530
The DOJ has relocated its Hart Scott Rodino premerger unit because of the effects of the flooding of the basement of the DOJ's main building, also known as the Robert F. Kennedy building. The notice adds that "FedEx airbills should use the above address information. Delivery of premerger and notification report forms and other materials to the Premerger Unit will be similar to the procedures in place at the RFK building."

6/28. The U.S. District Court (WDNC) sentenced David Chen Pui and David Lee Pruett to prison terms of 8 and 18 months, respectively. They previously each pled guilty to a single felony count of conspiracy to commit copyright infringement, in connection with their involvement with online software piracy. The DOJ stated in a release that "These are the first federal criminal sentences for members of the so-called “warez scene” from the Charlotte component of Operation FastLink, an ongoing federal crackdown against the organized piracy groups responsible for most of the initial illegal distribution of copyrighted movies, software, games and music on the Internet. Operation FastLink has resulted, to date, in more than 120 search warrants executed in 12 countries; the confiscation of hundreds of computers and illegal online distribution hubs; and the removal of more than $50 million worth of illegally-copied copyrighted software, games, movies and music from illicit distribution channels."

6/27. AT&T and the US settled United States ex rel. JA Russo Associates, Inc. v. AT&T Corporation, a civil action pending in the U.S. District Court (CDCal) alleging violation of the False Claims Act. AT&T agreed to pay $2.9 Million. The Department of Justice (DOJ) stated in a release that the complaint alleged that AT&T defrauded the General Services Administration (GSA) "by knowingly passing through to government customers, in violation of the terms of AT&T’s contract with GSA certain, costs and fees known as Presubscribed Interexchange Carrier Charges. The charges are a fee that long distance companies pay to local telephone companies to recover part of the costs of providing facilities that link each telephone customer to the telephone network." This case is D.C. No. Civil No. 04-1142-DOC (FMOx).

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