FCC Announces NPRM To Review TELRIC Rules

9/10. The Federal Communications Commission (FCC) announced, but did not release, a notice of proposed rulemaking (NPRM) regarding the pricing of unbundled network elements (UNEs) and the resale of services by incumbent local exchange carriers (ILECs). The current rules were written in 1996.

The FCC issued a short press release [PDF] describing the NPRM. It states that the "current UNE pricing rules, based on the Total Element Long Run Incremental Cost (TELRIC), consider what it would cost the new entrant -- today -- to build and operate a hypothetical, efficient telephone network that can provide the same services as the incumbent local exchange carrier’s (LEC) existing network."

It states that the NPRM "tentatively concludes that our TELRIC rules should more closely account for the real-world attributes of the routing and topography of the incumbent's network in developing forward-looking costs".

The FCC's release also states that the FCC "seeks comment on numerous network assumptions, such as network routing and construction, technology, structure sharing, and fill factors, in light of the tentative conclusion."

The FCC also seeks comment "on the impact of changes in unbundling obligations resulting from the Triennial Review Order on UNE pricing" and "on what resale pricing rules the FCC should adopt in light of the U.S. Court of Appeals for the Eight Circuit decision to vacate the FCC's previous resale pricing rules."

FCC Chairman Michael Powell wrote in a separate statement [PDF] that "our commitment to retaining a forward-looking approach is unwavering -- what we are debating is the extent to which realistic assumptions about the incumbent's network should be included in our pricing rules." He added that "an approach grounded in the real-world attributes of the incumbent's network would address claims that our TELRIC rules currently distort a competitor’s decision whether to invest in new facilities or to lease an incumbent’s existing facilities."

FCC Commissioner Kathleen Abernathy wrote in a separate statement [PDF] that this NPRM "recognizes two key problems with the TELRIC pricing standard. First, it is a black box that permits inconsistent results among the states for reasons unrelated to actual cost differentials, and it also permits internal inconsistencies within individual rate proceedings. Second, the excessively hypothetical nature of the Commission’s existing standard sends inappropriate investment signals and produces irrational pricing in some instances."

FCC Commissioner Kevin Martin wrote in a separate statement [PDF] that "Today's item, in conjunction with our decision in the recent Triennial Review Order, begins the process to provide the necessary adjustments to the TELRIC formula that will more accurately reflect incumbent costs and help spur deployment in new facilities and services."

FCC Commissioner Jonathan Adelstein wrote in a separate statement [PDF] that he supports this item, but would have preferred that it not include any tentative conclusions.

FCC Commissioner Michael Copps (at right) dissented in part. He wrote in a separate statement [PDF] that "I just don’t believe the record at hand justifies the making of important, even if tentative, conclusions. Such tentative conclusions often have a curious way of becoming final. On the basis of little or no prior record, the majority today adopts a tentative conclusion concerning so-called real-world network attributes that I believe is confusing and inconsistent with basic premises of TELRIC that were upheld as a reasonable interpretation of Section 252(d)(1) by the Supreme Court. For a Commission striving to provide clarity to an industry, this is a strange way to do it."

ILEC Reaction. Walter McCormick, P/CEO of the U.S. Telecom Association (USTA), a group that represents ILECs, stated in a release that "the FCC's notice is a step in the right direction. On the positive side, it might move telecom policy in the direction of the real world and economic rationality. But on the negative side, it perpetuates this mindset that it’s okay to place local phone companies and their customers in a different category than all other communications platforms. It continues to insist that in today’s crowded communications marketplace, government can better manage competition than consumers."

Susanne Guyer, SVP for Federal Regulatory Affairs at Verizon, an ILEC, stated in a release that "Making sure that wholesale rates reflect real-world costs is long overdue. Making sure that carriers that lease parts of our network pay fair wholesale prices will help restore health to a sick sector of the economy. Making sure that everyone who uses our network pays their fair share will ensure all customers continue to get high-quality service at a great price. Appropriate pricing also will help restore incentives for all providers to invest in telecom networks, which will lead to more jobs in our communities."

This is FCC Docket No. WC 03-173. The proceeding is titled "Review of the Commission Rules Regarding the Pricing of Unbundled Network Elements and the Resale of Services by Incumbent Local Exchange Carriers".

FCC Adopts Digital Plug and Play Cable Compatibility Rules

9/10. The Federal Communications Commission (FCC) announced, but did not release, a Second Report and Order and Second Further Notice of Proposed Rulemaking pertaining to digital plug and play cable compatibility. The order is based upon the December 19, 2002 Memorandum of Understanding negotiated by consumer electronics and cable companies.

FCC Chairman Michael Powell (at right) wrote in a separate statement [PDF] that "Consumers who want digital television sets will have an easier time connecting them to their cable service and having them work with high definition and other digital programming. I am more convinced than ever that high definition programming is becoming a competitive differentiator among television programmers."

The FCC issued a press release [4 pages PDF] and summary [2 pages PDF] describing this item. This is CS Docket 97-80, and PP Docket 00-67.

Background. On December 19, 2002, fourteen consumer electronics companies and seven cable operators announced that they entered into a Memorandum of Understanding (MOU) regarding a national plug and play standard between digital television (DTV) products and digital cable systems. See, document [78 pages in PDF] consisting of the MOU, proposed rules to be promulgated by the FCC, and a letter to FCC Chairman Powell. See also, story titled "Cable and Consumer Electronics Companies Announce DTV Agreement" in TLJ Daily E-Mail Alert No. 572, December 20, 2002.

This proposal required implementation by the FCC. On January 7, 2003, the FCC announced a Further Notice of Proposed Rulemaking (FNPRM) seeking comment on the rules proposed by the MOU. See, story titled "FCC Seeks Comments on Cable TV Plug and Play MOU" in TLJ Daily E-Mail Alert No. 581, January 13, 2003. See also, notice in the Federal Register, January 16, 2003, Vol. 68, No. 11, at Pages 2278 - 2283.

See also, story titled "Comment Period Closes in FCC's Plug and Play Cable Compatibility Rulemaking Proceeding" in TLJ Daily E-Mail Alert No. 655, May 5, 2003.

On July 23, 2003, Rep. Lee Terry (R-NE), Rep. Rick Boucher (D-VA) and others introduced HR 2825, the "Consumer Access to Digital Television Enhancement Act". The bill states that "Within 30 days after the date of enactment of this Act, the Federal Communications Commission shall, by regulation, adopt and implement the regulations proposed in the memorandum of understanding between the cable and consumer electronics industries filed with the Commission on December 19, 2002, as contained in the Commission's notice of proposed rulemaking concerning compatibility between cable systems and consumer electronics equipment (FCC 03-3; adopted January 7, 2003)."

Report and Order. The FCC's release describing the yet to be released report and order states that "The new rules will permit TV sets to be built with ``plug and play´´ functionality for one-way digital cable services, which include typical cable programming services and premium channels like HBO and Showtime. Consumers will have to obtain a security card (often called a ``POD´´ or ``cable card´´), from their local cable operator, to be inserted into the TV set."

It also states that "Consumers will still need a set-top box to receive two-way services such as video on demand, impulse pay-per-view and cable operator-enhanced electronic programming guides."

The FCC release also describes "limits on copy control mechanisms". It asserts that the FCC has "ancillary jurisdiction" authority to issue such rules.

Reaction. Rep. Boucher stated that "Consumers will now be able to buy DTVs which connect directly to digital cable without a set-top box, and enjoy convenient access to HDTV offered by cable providers." He added that "The FCC's expeditious action moves us a step closer in the transition to digital television".

Rep. Billy Tauzin (R-LA), the Chairman of the House Commerce Committee, released a statement in which he praised the adoption of plug and play rules. He also wrote that "The new rules will prevent piracy of digital content from being carried over cable and satellite systems, while preserving consumers’ ability to make use of that content legally. Without these very necessary protections, content providers would be hesitant to make high-value digital content available and many consumers would not be inclined to make the switch to digital television."

The Consumer Electronics Association praised the FCC's action. It stated in a release that "The plug-and-play agreement not only ensures consumers will be able to buy DTVs that connect to digital cable without a set-top box, but also establishes a long sought after balance between consumer home recording rights and copyright protection through reasonable encoding rules or "rules of the road" for digital content. These rules, which are based on existing law and agreements with content studios, are applicable to all multichannel video programming distributors (MPVDs), including cable."

Edward Fritts, President of the National Association of Broadcasters (NAB), stated in a release that "The FCC deserves enormous credit for adopting today's 'plug and play' decision, and particularly for insisting that digital TV tuners with over-the-air reception capability be included in digital 'cable ready' television receivers. Step by step, the Commission is resolving roadblocks that have delayed the transition from analog to digital television. The time is ripe for the FCC to complete the loop by adopting cable carriage rules ensuring consumer access to the 1,000 digital broadcast stations on the air and serving their communities."

See also, National Cable Telecommunications Association (NCTA) release.

FCC States That It Will Act On Broadcast Flag

9/10. The Federal Communications Commission (FCC) announced new rules pertaining to digital plug and play cable compatibility, without also addressing another issued related to DTV conversion, the broadcast flag. The FCC's release announcing its plug and play rules also states, without elaboration, that the FCC "will address Digital Broadcast Copy Protection issues in the near future."

Background. Programming that is in digital format is more susceptible to copying and copyright infringement than analog programming, because it is easier to make and distribute exact copies of digital content. Thus, content providers have a disincentive to make their works available in digital format. To the extent that less content is made available in digital format, consumers have less incentive to purchase DTV receivers and equipment. The FCC, which seeks a conversion to DTV, has therefore involved itself in copy protection issues.

Title 17 of the U.S. Code, which codifies the Copyright Act, gives rule making authority for implementing the Copyright Act to the Library of Congress, not the FCC. Moreover, there is no specific grant of authority to the FCC in Title 47 of the U.S. Code, the Communications Act, to promulgate copyright protection regulations.

Nevertheless, on August 8, 2002, the FCC adopted a Notice of Proposed Rulemaking (NPRM) [15 pages in PDF] in its proceeding titled "In the Matter of Digital Broadcast Copy Protection". This NPRM proposed that the FCC promulgate a broadcast flag rule, and seeks comment on this, and related questions. This is MB Docket No. 02-230. The public comment period ended last year. See, stories titled "FCC Issues NPRM on Broadcast Flag" and "FCC Debates Its Authority to Promulgate Broadcast Flag Rule" in TLJ Daily E-Mail Alert No. 489, August 12, 2003. See also, FCC release [PDF].

The FCC has yet to issue an order containing rules in this proceeding.

September 10 Statements. FCC Chairman Michael Powell wrote in a separate statement [PDF] in the plug and play proceeding that "I plan to deliver to my colleagues a draft decision on the Broadcast Flag proceeding in the very near future. All affected parties should be aware that this proceeding is in the on-deck circle."

Powell also stated that "Now that we have taken this step in the cable world, we must immediately turn our attention to broadcasting. Over 35 million Americans continue to receive television programming exclusively from over-the-air broadcasters. And over 30% of all television sets in this country are not connected to cable or satellite service. The viability of our free broadcasting system is a high priority for me, and the government needs to ensure that broadcast television is not disadvantaged as a delivery platform for high value content."

FCC Commissioner Kevin Martin (at right) wrote in a separate statement [PDF] in the plug and play proceeding that "I am disappointed that we were not able to resolve the Broadcast Flag proceeding at the same time. Acting on the content protection rules in both the Plug & Play proceeding and the Broadcast Flag proceeding at the same time would have clarified the rules of the road for all participants in the DTV transition. Still, I am pleased that the Commission has committed in this item to resolving the Broadcast Flag proceeding in the near future, and I look forward to working with my colleagues on this difficult and important issue."

FCC Commissioner Michael Copps wrote in a separate statement [PDF] in the plug and play proceeding that "I vote for today's Order with the understanding that it will not affect any of the rights or remedies available under our nation's copyright laws and cognizant that it is Congress that ultimately sets national policy in this critical and sensitive area. As we implement this decision, I for one, and I trust my colleagues, will remain sensitive to this and not venture into content matters beyond our authority."

FCC Commissioner Jonathan Adelstein wrote in a separate statement [PDF] in the plug and play proceeding that "We are mindful today of the needs of copyright owners to protect high value content. Our action does not affect any rights or limitations of copyright holders under the copyright law. We preserve flexibility for the later use of certain methods of protecting premium content if it is shown that such uses are necessary and consumer-friendly."

Rep. Billy Tauzin (R-LA), the Chairman of the House Commerce Committee, commented that "The FCC also announced its commitment to move a broadcast flag item in the near future. This is a very important issue to the many consumers who still rely on free, over-the-air broadcasting. Without similar protections for broadcast networks, these consumers would be left out of the new digital era."

In the House of Representatives, the House Judiciary Committee has jurisdiction over intellectual property matters, including copyright. Nevertheless, the House Commerce Committee has been increasingly active on intellectual property issues in recent years.

FCC Announces NPRM Regarding Regulations Affecting the Use of Spectrum in Rural Areas

9/10. The Federal Communications Commission (FCC) announced, but did not release, a notice of proposed rulemaking (NPRM) regarding its regulations and policies affecting the use of spectrum in rural areas. The FCC issued a short press release [2 pages in PDF] describing its NPRM, and individual Commissioners issued short statements.

FCC Chairman Michael Powell wrote a separate statement [PDF] that this NPRM "includes initiatives and policies aimed directly at facilitating access to capital and lowering regulatory and market barriers to spectrum and infrastructure in rural areas. This Notice also seeks comment on how we can clarify rules, minimize regulatory costs, and provide other incentives to promote service to rural markets. While a number of past Commission measures have been intended to foster the deployment of wireless services throughout the country, the Notice we adopt today for the first time expands upon these measures and will help ensure that rural Americans can experience the breadth of wireless service offerings currently available and further fulfill the Commission’s statutory mandate to make available, in a rapid and efficient manner, communications services to all Americans."

The FCC's release is short and vague, but references several topics. It states that the FCC seeks comment regarding "Which areas of the country should be considered rural?"

It references "measures to increase power level flexibility for licensed services in rural areas".

It also "seeks comment on a tentative conclusion to retain the cellular cross-interest rule in RSAs with three or fewer CMRS competitors, removing the rule as it applies to other RSAs, and eliminating its application to non-controlling investments in all RSA licensees".

The FCC has not yet released the NPRM, or set deadlines for public comments. This is WT Docket No. 03-202.

FCC Announces NPRM Regarding Unlicensed Devices

9/10. The Federal Communications Commission (FCC) announced, but did not release, a notice of proposed rulemaking (NPRM) regarding its regulations regarding unlicensed devices. The FCC issued a short press release, and several Commissioners released statements.

The FCC release states that the proposed rules would "permit operators, including wireless internet service providers (WISPs), and device manufacturers to more readily modify or substitute technically equivalent parts".

The FCC release also states that the FCC "proposes to amend its rules to specifically provide for the use of sectorized and phased array antenna systems. Often called ``smart antennas,´´ these antenna systems focus their radio transmissions according to the geographic locations of their users. Use of these advanced antenna technologies will increase spectrum efficiency because they allow for greater re-use of the same radio frequencies and may permit increased spectrum sharing among multiple wireless networks."

The release also states that the FCC proposes "rule modifications that would facilitate deployment of next-generation Bluetooth devices, which operate at data rates up to three times faster than current devices. The rule changes would enable new devices to be backward compatible."

At 9:00 AM on Thursday, September 18, the FCC will host an event titled "Rural Wireless Internet Service Provider (WISP) Showcase and Workshop". See, agenda [PDF]. The workshop will be in the FCC's Commission Meeting Room.

The FCC has not yet released the NPRM, or set deadlines for public comments. This is WT Docket No. 03-202.

Bush Proposes Expanded Administrative Subpoena Power

9/10. President Bush gave a speech at the FBI Academy at Quantico, Virginia, on September 10, in which he stated that the Congress should pass legislation giving law enforcement new tools, including administrative subpoena power, to fight terrorism. On September 9, Rep. Tom Feeney (R-FL) introduced HR 3037, the "Antiterrorism Tools Enhancement Act of 2003", for this purpose. See, full story.

People and Appointments

9/10. Len Lauer was named President and Chief Operating Officer of Sprint. Lauer has been with Sprint since 1998. See, release.

9/10. John Jeffrey was named General Counsel, and Kurt Pritz was named Vice President of Business Operations, of the Internet Corporation for Assigned Names and Numbers (ICANN). See, ICANN release.

More News

9/10. The House passed HR 2622, the "Fair and Accurate Credit Transactions Act of 2003", by a vote of 393-30. See, Roll Call No. 499. See also, House Financial Services Committee release, with summary of the bill.

9/10. The House Government Reform Committee's Subcommittee on Technology, Information Policy, Intergovernmental Relations and the Census held a hearing titled "Worm and Virus Defense: How Can We Protect the Nation's Computers from These Serious Threats?"

House Subcommittee Holds Hearing on Contact Lens Bill

9/9. The House Commerce Committee's Subcommittee on Trade and Consumer Protection held a hearing on HR 2221, the "Fairness to Contact Lens Consumers Act", sponsored by Rep. Richard Burr (R-NC), Rep. Billy Tauzin (R-LA), Rep. James Sensenbrenner (R-WI), and Rep. Jim Matheson (D-UT).

The bill does not reference the internet or electronic commerce. However, if passed, it would remove some barriers to the sale of replacement contact lenses over the internet. For example, it would require that ophthalmologists and optometrists release contact lens prescriptions to their patients and verify contact lens prescriptions for internet sellers and other third parties. See also, story titled "Bill Would Facilitate Internet Sale of Replacement Contact Lenses" in TLJ Daily E-Mail Alert No. 669, May 29, 2003.

Howard Beales, Director of the Federal Trade Commission's (FTC) Bureau of Consumer Protection, stated in his prepared testimony that the FTC "supports the proposed legislation's goal of promoting greater competition among contact lens sellers and thereby enhancing consumer choice."

Jonathan Coon, the CEO of 1-800 Contacts stated in his prepared testimony that "contact lenses are mass produced and disposable. It is an industry that has changed dramatically over the last 25 years. The fastest growing segment of the market are lenses that are thrown away every day -- after a single use. Toll free numbers, overnight delivery, and the Internet have made it possible for consumers to order replacement lenses quickly and have the exact same lenses delivered to their door that they used to have to drive to purchase and pick up from their eye doctor." He said that HR 2221 is "an important first step".

See also, prepared testimony of other witnesses: Pat Cummings (American Optometric Association), Peggy Venable (Citizens for a Sound Economy), Robert Hubbard (Antitrust Bureau, Office of the New York Attorney General), Ami Gadhia (Consumers Union), and Maria Martinez.

Senate Judiciary Committee Hears Testimony on Copyright Infringement on P2P Networks

9/9. The Senate Judiciary Committee held a hearing titled "Porography, Technology, and Process: Problems and Solutions on Peer-to-Peer Networks". The Committee heard testimony on peer to peer (P2P) infringement of copyrighted works, recent court opinions regarding vicarious and contributory liability for P2P related infringement, and the dispute over the use of Digital Millennium Copyright Act (DMCA) subpoenas to obtain from internet service providers (ISPs), including Verizon, the identities of their subscribers who may be copyright infringers.

Marybeth Peters, the Register of Copyrights, wrote in her prepared testimony that "The law is unambiguous. Using peer-to-peer networks to copy or distribute copyrighted works without permission is infringement and copyright owners have every right to invoke the power of the courts to combat such activity. Every court that has addressed the issue has agreed that this activity is infringement."

However, she stated that the law is in flux on the issue of vicarious and contributory infringement. She said that "Earlier this year, the Central District of California surprised many when it held that Grokster and Kazaa are not liable as secondary copyright infringers. This decision departed from long-established precedent."

See, order and opinion granting Grokster's and Streamcast's motions for summary judgment in MGM v. Grokster, (C.D. Cal, April 25, 2003), and story titled "District Court Holds No Contributory or Vicarious Infringement by Grokster or Streamcast P2P Networks" in TLJ Daily E-Mail Alert No. 650, April 28, 2003.

Peters continued that "Not only was the Kazaa decision wrong on the law, it has serious policy consequences as well. The historical doctrines of secondary liability have served copyright owners, courts, and the public well -- they provide copyright owners with the ability to obtain relief against the root cause of a series of infringements without costly, inefficient, and burdensome suits against numerous individuals. Without a viable doctrine of contributory liability, this option is severely curtailed and may present the copyright owner with the unenviable choice of either accepting unremedied infringements or filing numerous suits against the individual direct infringers."

"If today's hearing leaves the Committee with the impression that the law is in flux with regard to the liability of proprietors of peer-to-peer technology, that is because it is. On one side is the Napster decision of the Ninth Circuit and the Aimster decision of the Seventh Circuit, both finding liability, albeit through different paths of analysis. On the other side is the Kazaa decision of the Central District of California, finding no liability for Kazaa and Grokster. Hanging over all of these cases is the Supreme Court’s decision in Sony", said Peters. See, Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984).

Peters elaborated that "Unless and until the Kazaa decision is overruled, copyright owners are faced with the unenviable choice to which I referred earlier. They can either resign themselves to unremedied infringements on a previously unimaginable scale, or they can file infringement actions against individual peer-to-peer users. The recording industry has chosen the latter route."

In August, both the National Music Publishers Association (NMPA), representing Jerry Liebler and other music publishers and songwriters, and the Recording Industry Association of America (RIAA) and Motion Picture Association of America (MPAA), representing MGM and other movie and record companies, filed appeal briefs with the U.S. Court of Appeals (9thCir) in Liebler v. Grokster and MGM v. Grokster. See, TLJ story titled "Music Publishers File Appeal Brief in P2P Infringement Case", August 18, 2003.

She also addressed the DMCA subpoena issue. "The ability of copyright owners to utilize subsection 512(h) is a critical part of that partnership as is copyright owners' ability to impose liability against those who infringe copyright. It is regrettable that at least one major ISP now rejects the compromise and the balance of the DMCA." She also said that "As the United States District Court for the District of Columbia recently held, the plain language of subsection 512(h) demonstrates that this interpretation is not correct. I agree with the court’s analysis. Subsection 512(h) instructs service providers to expeditiously respond to a subpoena."

The RIAA represents music companies whose copyrights are being infringed by people using P2P file sharing systems. The RIAA possesses only Internet Protocol (IP) number information on infringers. This does not reveal the identity of the infringers. However, ISPs, which provide internet access for the P2P infringers, possess information that would associate subscriber information with IP number information. That is, by obtaining the ISP's information, the RIAA, or its members, can file complaints alleging infringement against the individual infringers. The RIAA cannot sue these ISPs for infringement, because of the safe harbor provisions of the DMCA.

The RIAA has obtained numerous subpoenas from the Clerk of the Court of the U.S. District Court for the District of Columbia, pursuant to § 512(h), and served them upon many ISPs. In August of 2002, Verizon filed a complaint in the District Court challenging some of the first of these subpoenas. This matter has been thoroughly litigated in the District of Columbia, the RIAA has prevailed in the District Court, and the Appeals Court has declined to issue a stay. ISPs have been providing information in response to the subpoenas. Earlier this week, the RIAA filed its first round complaints against individuals.

Verizon and other ISPs are not pleased. In contrast to the testimony of Marybeth Peters, Bob Barr, General Counsel of Verizon, condemned the music industry's use of DMCA subpoenas to obtain the identities of Verizon subscribers. He wrote in his prepared testimony that "the answer to the copyright community's present business problems is not a radical new subpoena process, previously unknown in law, that un-tethers binding judicial process from constitutional and statutory protections that normally apply to the discovery of private data regarding electronic communications. Verizon believes that the district court was wrong in concluding that Congress authorized such a broad and promiscuous subpoena procedure in the DMCA -- but whatever the courts ultimately conclude on this issue -- the subpoena power endorsed by the district court is not an effective remedy for copyright holders and has great costs in terms of personal privacy, constitutional rights of free expression and association, and the continued growth of the Internet."

Barr continued that "As interpreted by the district court, this subpoena provision grants copyright holders or their agents the right to discover the name, address, and telephone number of any Internet user in this country without filing a lawsuit or making any substantive showing at all to a federal judge. This reading of the DMCA accords truly breathtaking powers to anyone who can claim to be or represent a copyright owner; powers that Congress has not even bestowed on law enforcement and national security personnel. It stands in marked contrast to the statutory protections that Congress has enacted in the context of video rentals, cable television viewing habits, and even the requirements for law enforcement officers to gain access confidential data associated with electronic communications."

Barr also complained that "All one need do is fill out a one-page form asserting a ``good faith´´ belief that a copyright has been infringed and one can obtain identifying information about anyone using the Internet. There is no review by a judge or a magistrate; the clerk’s office simply issues the subpoena in ministerial fashion. This identifying information can then be linked to particular material sent or received over the Internet, including e-mails, web browsing activity, chat room postings, and file-sharing activity."

Cary Sherman, President of the Recording Industry Association of America (RIAA), responded in his prepared testimony that "Verizon is reaping enormous financial benefits from the explosion in the use of P2P. It is particularly troubling to our industry that Verizon actively encourages its new subscribers to visit unauthorized P2P services -- instead of legitimate, licensed sites -- as their preferred source for music online."

"And people wonder why the copyright community is skeptical of Verizon’s claim that the real issue is privacy and not their tacit acceptance and promotion of piracy by their subscribers", said Sherman.

He added that "no one has a privacy right to engage in copyright infringement on the Internet. Despite many novel arguments to the contrary, illegally sharing or downloading copyrighted music online is not a form of free speech or civil disobedience protected by the First Amendment."

See also, stories titled "RIAA Seeks to Enforce Subpoena to Identify Anonymous Infringer" in TLJ Daily E-Mail Alert No. 499, August 27, 2002; "Verizon and Privacy Groups Oppose RIAA Subpoena" in TLJ Daily E-Mail Alert No. 501, September 4, 2002; "District Court Rules DMCA Subpoenas Available for P2P Infringers" in TLJ Daily E-Mail Alert No. 588, January 22, 2003; "Law Professor Submits Apocalyptic Declaration in RIAA v. Verizon" in TLJ Daily E-Mail Alert No. 596, February 3, 2003; "DOJ Files Brief in Support of RIAA in Verizon Subpoena Matter" in TLJ Daily E-Mail Alert No. 646, April 22, 2002; "District Court Rules That A DMCA § 512(h) Subpoena for the Identity of an P2P Infringer Does not Violate the Constitution" in TLJ Daily E-Mail Alert No. 649, April 25, 2003; "Court of Appeals Denies Stay in RIAA v. Verizon" in TLJ Daily E-Mail Alert No. 674, June 5, 2003; and "Pacific Bell Internet Services Sues RIAA Over Infringer Subpoenas" in TLJ Daily E-Mail Alert No. 709, August 1, 2003.

Senate Judiciary Committee Hears Testimony on Porn on P2P Networks

9/9. The Senate Judiciary Committee held a hearing titled "Pornography, Technology, and Process: Problems and Solutions on Peer-to-Peer Networks". In addition to copyright related issues, the Committee heard testimony on pormography on P2P networks.

Sen. Patrick Leahy (D-VT), the ranking Democrat on the Committee, wrote in his opening statement that "I believe that peer-to-peer has the potential to revolutionize the way people share all sorts of information. But as with any technology, it can be abused. Peer-to-peer networks can be used to delve into people’s private records, or illegally to share copyrighted material. Most disturbingly, peer-to-peer networks can be used to distribute child pornography, and to make all sorts of pornography available to unsuspecting children. If peer-to-peer networks are going to find a useful place in our culture, they must respond to these problems. And we certainly cannot allow those who purposefully exploit network file-sharing to the detriment of children to go unpunished."

See also, opening statement of Sen. Orrin Hatch (R-UT), the Chairman of the Committee.

Linda Koontz of the General Accounting Office (GAO) wrote in her prepared testimony that "Child pornography is easily found and downloaded from peer-to-peer networks." She added that "Juvenile users of peer-to-peer networks are at significant risk of inadvertent exposure to pornography, including child pornography. Searches on innocuous keywords likely to be used by juveniles (such as names of cartoon characters or celebrities) produced a high proportion of pornographic images ..."

John Malcolm, the head of the Department of Justice's (DOJ) Computer Crimes and Intellectual Property Section (CCIPS) wrote in his prepared testimony that "child pornographers continue to find ways to employ the ever-evolving technology of the Internet and computers to commit their deviant crimes. In turn, law enforcement must respond to technological advances, as well, eradicating child pornographers from every forum in which they lurk, be that in cyberspace or otherwise."

He addressed how law enforcement entities can identify criminal activity on P2P networks. He wrote that "using P2P software, a law enforcement agent can identify a file containing child pornography, and while downloading that file, identify the IP address of the computer sending it. The agent can then determine which Internet service provider owns that IP address, and serve legal process on that Internet service provider to obtain the name and address of the P2P user associated with that IP address on the date and time that the file was shared. Moreover, seizure of that user’s computer will often reveal the IP addresses of other computers with which contraband files were shared."

However, he also cautioned that new technologies may evade this process. "Notably, however, new generations of P2P file-sharing protocols and tools are promising their users even more anonymity, such as by hiding IP addresses behind proxy servers or even refusing to recognize preliminary inquiries from computers known to be associated with law enforcement. Some peer-to-peer tools are even touting their ability to shield users from the view of victims or law enforcement. Should this technology come to fruition, it will present significant challenges to law enforcement and will undoubtedly make P2P an even more popular vehicle for trading child pornography."

CDT Sues Pennsylvania Alleging Censorship of ISPs

9/9. On September 9, 2003, the Center for Democracy and Technology (CDT) and others filed a complaint [38 pages in PDF] in the U.S. District Court (EDPenn) against Michael Fisher, in his capacity of Attorney General of the state of Pennsylvania, seeking declaratory and injunctive relief.

The CDT alleges that Pennsylvania's "system of secret prior restraint orders" against internet service providers regarding the blocking of access to child pornography on the web is unconstitutional under the Commerce Clause, the First Amendment, and the Fourteenth Amendment. The CDT also filed a motion for temporary restraining order (TRO). See, memorandum in support [18 pages in PDF] of motion for TRO.

On September 9, the Court issued an order [2 page PDF scan] in which it ordered that, "Pending final resolution of this action, the Attorney General of Pennsylvania shall discontinue issuance of informal notices to internet service providers requiring that they deny their subscribers access to any website".

This case is Center for Democracy and Technology, ACLU of Pennsylvania, and Plantagenet, Inc. v. Michael Fisher, D.C. No. 03-3051. Judge Jan Dubois issued the order.

FCC Rules that Howard Stern Has a Bona Fide News Interview Program

9/9. The Federal Communications Commission's (FCC) Media Bureau issued a Declaratory Ruling [PDF] that Infinity Broadcasting Operations' Howard Stern Show, famous for its on air garbage, constitutes a "bona fide news interview program", and is therefore exempt from the equal time requirements of 47 U.S.C. § 315. While pundits and critics may condemn a finding that Howard Stern's program is "bona fide news", the FCC has a long history of granting "bona fide news" exemptions to the speakers of the vast wasteland of broadcast media. See, full story.

Senate Commerce Committee Holds Hearing on Transportation Security

9/9. The Senate Commerce Committee held an oversight hearing on transportation security. Admiral James Loy, Administrator of the Transportation Security Administration (TSA) at the Department of Homeland Security (DHS) discussed the Computer Assisted Passenger Prescreening System in his prepared prepared testimony.

Prior to September 11, 2001, the airlines conducted passenger screening, and administered the CAPPS I, subject to federal guidelines. In late 2001, the Congress passed the Aviation and Transportation Security Act, which created the TSA as a unit of the Department of Transportation (DOT). This Act gave the TSA responsibility for airport passenger screening. In late 2002, the Congress passed the Homeland Security Act, which created the DHS, and transferred the TSA from the DOT to the new DHS. The new CAPPS II -- the next generation passenger screening system -- will be a government (TSA) run system that replaces CAPPS I.

Loy (at right) stated that "our most visible mission since September 11th has been to keep terrorists off commercial airliners. Our plan to move forward with development, testing, and implementation of the second-generation Computer Assisted Passenger Prescreening System (CAPPS II) is critical to a robust aviation security system. As part of its ongoing dialogue with the public on CAPPS II and related issues, DHS has issued a revised Interim Final Privacy Notice, which provides information regarding CAPPS II, including the type of data that the system will review, and how the data will be used. As always, public comment on the Notice is requested. The closing date for submission of comments is September 30th."

See, second Privacy Act notice, Federal Register, August 1, 2003, Vol. 68, No. 148, at Pages 45265 - 45269.

Privacy advocates on both the left and right have voiced concerns about the CAPPS II.

Loy responded that "CAPPS II will be a threat-based system under the direct control of the government and will represent a major improvement over the decentralized, airline-controlled system currently in place. Mr. Chairman, I pledge to continue to work with this Committee to assure you and the Members of this Committee that our development of CAPPS II will enhance security without compromising important privacy rights."

See also, statement by Sen. John McCain (R-AZ), the Chairman of the Committee.

SCO CEO Criticizes Open Source Development Model

9/9. Darl McBride, CEO of SCO Group (SCO), which is also known as Caldera, wrote an open letter to the Open Source community regarding UNIX System V, SCO Group's lawsuit against IBM, intellectual property rights, the open source software movement, and denial of service attacks directed at the SCO Group website.

On March 6, 2003, Caldera (SCO) filed a complaint in state court in Utah against IBM alleging misappropriation of trade secrets, tortious interference, unfair competition and breach of contract in connection with IBM's alleged use of Caldera's proprietary UNIX code.

IBM filed its answer [17 page PDF scan] on April 30, 2003. It asserted that "contrary to Caldera's allegations, by its lawsuit, Caldera seeks to hold up the open source community (and development of Linux in particular) by improperly seeking to assert proprietary rights over important, widely used technology and impeding the use of that technology by the open source community." (Parentheses in original.)

In his September 9 letter, McBride referenced "an admission by Open Source leader Bruce Perens that UNIX System V code (owned by SCO) is, in fact, in Linux, and it shouldn't be there." (Parentheses in original.) McBride then asserted that "This improper contribution of UNIX code by SGI into Linux is one small example that reveals fundamental structural flaws in the Linux development process."

He continued that "this issue goes to the very heart of whether Open Source can be trusted as a development model for enterprise computing software. The intellectual property roots of Linux are obviously flawed at a systemic level under the current model. To date, we claim that more than one million lines of UNIX System V protected code have been contributed to Linux through this model."

He also commented that "Some enterprise customers have accepted Open Source because IBM has put its name behind it. However, IBM and other Linux vendors are reportedly unwilling to provide intellectual property warranties to their customers. This means that Linux end users must take a hard look at the intellectual property underpinnings of Open Source products and at the GPL (GNU General Public License) licensing model itself."

See also, stories titled "SCO Group Delivers Notice to IBM of Termination of UNIX License Agreement", "CAI Settles Suit Brought By The Canopy Group", and "Commentary: Canopy Group, SCO and Caldera" in TLJ Daily E-Mail Alert No. 718, August 14, 2003; "SCO And Novell Continue Argument Over Rights in UNIX Operating System" in TLJ Daily E-Mail Alert No. 676, June 9, 2003; "Novell Asserts Intellectual Property Rights in UNIX Technology" and "German Software Group Threatens to Sue SCO Over Linux Claims", in TLJ Daily E-Mail Alert No. 670, May 30, 2003; "Microsoft Licenses Technology at Issue in Caldera v. IBM", in TLJ Daily E-Mail Alert No. 669, May 29, 2003.

CTIA Announces Voluntary Consumer Code for Wireless Carriers

9/9. The Cellular Telecommunications & Internet Association (CTIA) released a voluntary code for wireless service providers titled "Consumer Code". See, CTIA release. This announcement follows a July 24, 2003 proposal by the California Public Utilities Commission (CPUC) to enact a "Telecommunications Consumer Bill of Rights" that the CTIA considers onerous. See, CPUC summary [MS Word].

For example, the CTIA code provides that service providers should voluntarily "Provide every new consumer a minimum 14-day trial period for new service." In contrast, the CPUC proposal would mandate that "Subscribers may cancel any contracted service without fees, charges or penalties (except for usage fees), within 45 days if the carrier did not provide the contract at the time of sale. If the carrier provided the contract at the time of sale, the customer has 30 days within which they can cancel without fees, charges or penalties." (Parentheses in original.)

Similarly, the CTIA code provides that carriers should "Abide by policies for the protection of customer privacy". The CPUC proposal would require that "Carriers may not deny service for failure to provide a social security number" and that "Carriers must tell customers and obtain their written consent before using confidential customer information for any purpose other than the provision and/or billing of the service, or if they give such information to a third party."

Federal Communications Commission (FCC) Chairman Michael Powell released a statement [PDF] commending the CTIA. He stated that "The proper functioning of a highly competitive market -- which the wireless market has proven to be -- depends on consumers having accurate and meaningful information at all stages of the customer relationship with the provider." He added that "Ultimately, voluntary efforts, like the code, are not only good for consumers; they are good for business too by improving the customer experience and encouraging subscription. I look forward to continuing to work with the wireless industry and consumers to ensure spectrum-based services deliver value for the American people."

FCC Commissioner Kathleen Abernathy also issued a statement [PDF] supporting the CTIA. She wrote that "I would like to applaud CTIA and the wireless industry for creating a Consumer Code for Wireless Service. The competitive nature of the wireless industry has prompted this action as a means of responding to consumer demands for increased information regarding rates and terms of service."

Abernathy also stated that "the industry's willingness to adopt a voluntary code of conduct avoids the need for costly regulatory oversight while delivering greater value to wireless customers."

Michael Gallagher, acting Assistant Secretary of Commerce for Communications and Information, also issued a statement: "Customer service is good for competition and great for the 148 million wireless customers in the United States. We will be very interested in monitoring the wireless industry's efforts to meet this new standard of performance. I commend CTIA and the companies who have adopted the Consumer Code for the step forward they take today."

The Consumers Union (CU) and other groups support the proposal before the CPUC. Janee Briesemeister, Senior Policy Analyst for CU, stated in a release that “The cell phone companies have locked in profits with iron clad contracts for services that don't work and complicated and inaccurate billing that no one understands ... Customers who try to complain are subjected to endless automated messages that never lead to anything but irritation. This proposal offers essential consumer safeguards that are long overdue.”

The CTIA's proposed Consumer Code is as follows:
"1. Provide every new consumer a minimum 14-day trial period for new service.
2. Provide coverage maps, illustrating where service is generally available.
3. In every advertisement that mentions pricing, specifically disclose the rates and terms of service.
4. For every rate plan or contract, provide consumers specific disclosures regarding rates and terms of service.
5. On billing statements, carriers will not label cost recovery fees or charges as taxes, and will separately identify carrier charges from taxes.
6. When initiating or changing service, carriers will clearly state contract terms to customers and confirm changes in service.
7. Provide customers the right to terminate service for significant changes to contract terms.
8. Provide ready access to customer service.
9. Promptly respond to consumer inquiries and complaints received from government agencies.
10. Abide by policies for the protection of customer privacy."

Also, on September 9, the CPUC fined Cingular Wireless $12.14 Million. The CPUC stated in a release the Cingular's "corporate policy and practice in California did not allow any ``grace period´´ or trial of its wireless service. Furthermore, Cingular's corporate policy prohibited early termination of wireless service contracts unless the customer paid an early termination fee of $150. Some Cingular agents imposed an additional early termination fee of as much as $400, for a total of as much as $550. Given Cingular's own testimony to the PUC that testing wireless service by using the phone is the best way for a customer to ascertain whether the service meets his or her needs, binding that customer in advance to a one or two year contract constituted an unjust and unreasonable rule and resulted in inadequate, unjust, and unreasonable service in violation Public Utilities Code and a previous Commission decision (D.95-04-028)."

9th Circuit Rules on Customer Antitrust Injury

9/9. The U.S. Court of Appeals (9thCir) issued its opinion [28 pages in PDF] Glen Holly Entertainment v. Tektronix, a case regarding customer antitrust injury.

Glen Holly, also known as Digital Images, was in the business of leasing to film companies for their own use non-linear editing equipment which it purchased from the manufacturer, Tektronix, and using these systems to perform professional editing services for customers in the film industry. Non-linear editing is a digital technology based method of  accessing and rearranging film images and audio tracks.

Glen Holly filed a private antitrust action in U.S. District Court (CDCal) against Tektronix and Avid Technologies, alleging that until 1998 they were there were only two competing manufacturers of non linear editing equipment, that Glen Holly purchased its equipment from Tektronix, and that in 1998 Avid and Tektronix entered into an agreement whereby Tektronix ceased production and marketed Avid's product, in violation of antitrust laws.

The District Court dismissed for lack of antitrust standing. The Appeals Court reversed the dismissal for lack of antitrust standing (but affirmed the dismissal of several state law claims). Judge Stephen Trott wrote the opinion for a unanimous three judge panel.

He wrote that "Given that customers are the intended beneficiaries of competition, and that customers are presumptively those injured by its unlawful elimination, for pleading purposes we conclude that Digital Images has satisfied the requirement that it adequately allege antitrust injury to its business."

He added that "If the antitrust laws are designed to protect customers from the harm of unlawfully elevated prices, and from ``agreements between competitors at the same level of the market structure to allocate territories in order to minimize competition,´´ ... it is no stretch to conclude that these same laws protect customers from harm directly related to the unlawful removal of a competitive product from the market. If ... ``competitors may be able to prove antitrust injury before they actually are driven from the market and competition is thereby lessened,´´ ... one would think that a customer in business directly driven from the market by an agreement in restraint of trade would be able to do the same. It is one thing for a business to have cast its fate with a product that disappears because of the normal forces of the market; it is another to have the rug pulled out from under a business by a conspiratorial agreement to eliminate a competing product from the process upon which our economic model depends in order to promote social welfare." (Citations omitted.)

Glen Holly also argued that the case should be reassigned to another judge on remand. It argued that Judge Stephen Wilson should be replaced because he stated that he would not hire any more law clerks from Yale. Judge Trott, who went to Harvard, rejected this argument.

This case is Glen Holly Entertainment v. Tektronix, Inc. and Avid Technologies, Inc., No. 01-56447, an appeal from the U.S. District Court for the Central District of California, Judge Stephen Wilson presiding, D.C. No. CV-99-02476-SVW.

More News

9/9. The Federal Communications Commission (FCC) announced that it has removed one item from its previously announced agenda for its September 10 meeting. The FCC had previously stated that it would consider a NPRM regarding the conditions under which 47 U.S.C. § 251(c) and § 271 should be deemed to be "fully implemented" under Section 10(d) of the Communications Act. See, FCC release [PDF].

9/9. The Federal Communications Commission's (FCC) Office of Engineering and Technology (OET) announced that it will sponsor a tutorial titled "Technical Challenges Associated with the Evolution to VoIP" on Monday, September 22, 2003 from 1:00 - 3:00 PM. The speakers will be Susan Spradley (President of Wireline Networks) and Alan Stoddard (General Manager, Carrier Next Generation Networks of Nortel Networks). The event will be in the FCC's Commission Meeting Room (TW-C305), at 445th 12th Street SW. It will be open to the public, and webcast. See, FCC release [PDF].

9/9. The House Government Reform Committee's Subcommittee on Technology, Information Policy, Intergovernmental Relations and the Census held a hearing titled "Advancements in Smart Card and Biometric Technology".  Benjamin Wu, Deputy Under Secretary for Technology at the Department of Commerce, wrote in his prepared testimony that "Smart cards provide opportunities for improving security of our critical infrastructure, both from a physical and logical perspective. Because they are capable of performing cryptographic functions, they can perform important security services such as securely storing digital signatures, holding public key credentials, and authenticating a claimed identity based on biometric data. As such, smart cards are a crucial element in a range of current and expected critical applications and programs such as Public Key Infrastructure, Transportation Worker Identity Card, Building Entry, DoD’s Common Access Card (CAC), Electronic Travel Documents, and many others." See also, prepared testimony [22 pages in PDF] of Joel Willemssen, Managing Director for IT Management at the General Accounting Office (GAO), who testified regarding smart cards, and prepared testimony [27 pages in PDF] of Keith Rhodes, Chief Technologist at the GAO, who testified regarding biometrics.

People and Appointments

9/9. President Bush announced his intent to nominate Roger Ferguson (at right) to be Vice Chairman of the Board of Governors of the Federal Reserve System for a four year term, and to nominate Ben Bernanke to be a Member of the Board of Governors of the Federal Reserve System for a fourteen year term. Both are currently members. See, White House release.

9/9. Tom Feddo was named an oversight and investigations counsel for the House Commerce Committee. Feddo was previously an associate with the law firm of Pillsbury Winthrop, focusing on intellectual property litigation. Before attending law school, Feddo was an officer in the U.S. Navy, with experience as a submarine officer, and in terrorism and counterintelligence matters.

9/9. Barbara Comstock, the Director of Public Affairs at the Department of Justice (DOJ), will step down later this month. See, DOJ release.

9/9. Scott Doyle joined the Northern Virginia office of the law firm of Morrison & Foerster as a partner in the firm's Patent Group. He was previously SVP and Chief Intellectual Property Officer of Liberty Broadband Interactive Television and OpenTV, affiliates of Liberty Media. Prior to attending law school, Doyle obtained a B.S. and M.S. in electrical engineering. See, MoFo release.

9/9. The Federal Trade Commission (FTC) released a report [40 pages in PDF] titled "Report to Congress Pursuant to the Do Not Call Implementation Act on Regulatory Coordination in Federal Telemarketing Laws".

9/9. Rep. John Dingell (D-MI) and Rep. Richard Burr (R-NC) wrote a "dear colleague" letter to other members of the House urging support for, and cosponsorship of, HR 2052, the "Preservation of Localism, Program Diversity, and Competition in Television Broadcast Service Act of 2003". The bill was introduced in response to the national TV ownership provisions of the FCC's June 2, 2003 Report and Order and Notice of Proposed Rulemaking [257 pages in PDF] amending its media ownership rules. See also, story titled "FCC Announces Revisions to Media Ownership Rules" in TLJ Daily E-Mail Alert No. 672, June 3, 2003. HR 2052 provides that "The Commission shall not permit any license for a commercial television broadcast station to be granted, transferred, or assigned to any party (including all parties under common control) if the grant, transfer, or assignment of such license would result in such party or any of its stockholders, partners, or members, officers, or directors, directly or indirectly, owning, operating or controlling, or having a cognizable interest in television stations which have an aggregate national audience reach exceeding 35 percent."

Music Companies File Lawsuits Against Individual P2P Infringers

9/8. The Recording Industry Association of America (RIAA) announced that its member companies have filed complaints in U.S. District Courts against more than 250 individuals asserting copyright infringement in connection with their distribution of copyrighted sound recording on peer-to-peer (P2P) networks. The RIAA further announced that this is "the first wave of what could ultimately be thousands of civil lawsuits against major offenders".

The RIAA also announced that "the industry is prepared to grant what amounts to amnesty to P2P users who voluntarily identify themselves and pledge to stop illegally sharing music on the Internet. The RIAA will guarantee not to sue file sharers who have not yet been identified in any RIAA investigations and who provide a signed and notarized affidavit in which they promise to respect recording-company copyrights."

RIAA President Cary Sherman stated that "when your product is being regularly stolen, there comes a time when you have to take appropriate action. We simply cannot allow online piracy to continue destroying the livelihoods of artists, musicians, songwriters, retailers, and everyone in the music industry."

The RIAA also stated that "Federal law and the federal courts have been quite clear on what constitutes illegal behavior when it comes to ``sharing´´ music files on the Internet. It is illegal to make available for download copyrighted works without permission of the copyright owner. Court decisions have affirmed this repeatedly. In the recent Grokster decision, for example, the court confirmed that Grokster users were guilty of copyright infringement. And in last year's Aimster decision, the judge wrote that the idea that ``ongoing, massive, and unauthorized distribution and copying of copyrighted works somehow constitutes `personal use´ is specious and unsupported.´´"

See, order and opinion granting Grokster's and Streamcast's motions for summary judgment in MGM v. Grokster, (C.D. Cal, April 25, 2003), and story titled "District Court Holds No Contributory or Vicarious Infringement by Grokster or Streamcast P2P Networks" in TLJ Daily E-Mail Alert No. 650, April 28, 2003.

FCC Fines Verizon for Section 272 Violation

9/8. The Federal Communications Commission (FCC) released a Notice of Apparent Liability for Forfeiture (NAL) finding that Verizon Telephone Companies apparently violated section 32.27(c) of the FCC's rules, which regulates accounting practices for transactions between Verizon's New York Bell Operating Company and its affiliates established pursuant to 47 U.S.C. § 272(c). The NAL further proposes a total forfeiture of  $283,800.

The FCC adopted this NAL on August 6, 2003, but did not announce or release it until September 8. See, FCC release. In addition, in April of 2003 the FCC found that Verizon Maryland violated its interconnection requirements under 47 U.S.C. § 251. See, FCC release [PDF].

FCC Commissioners Jonathan Adelstein and Michael Copps wrote in a separate statement [PDF] that "This is yet another illustration of how the Commission has fallen short of its statutory duties under Section 272. We need to do more to ensure that our oversight is of the kind and character that Congress intended."

They elaborated that "Through Section 272, Congress required Bell companies to provide long distance and manufacturing services through a separate affiliate. In implementing these requirements, the Commission concluded that Congress adopted these safeguards because it recognized that Bell companies might still exercise market power at the time they enter long-distance markets. As part of these safeguards, Congress specifically required that Bell companies retain an independent auditor to review separate affiliate operations and produce a public report evaluating how they comply with the statute and the Commission's rules. Congress also provided that the long distance separate affiliate requirements would continue for three years, but could be extended by the Commission by rule or order."

The FCC allowed Verizon's Section 272 requirement to sunset three years after it was permitted to offer in region interLATA services in New York. The present NAL is subsequent to that sunsetting. Adelstein and Copps wrote that "This review takes place more than seven months after the Commission allowed the sunset of the New York Section 272 separate affiliate. This is backwards."

7th Circuit Rules in Cell Tower Case

9/8. The U.S. Court of Appeals (7thCir) issued its opinion [33 pages in PDF] in VoiceStream v. St. Croix County, a cell tower case in which the Court of Appeals affirmed the District Court's summary judgment in favor of the county denying VoiceStream's request to construct a cell tower.

VoiceStream Minneapolis (now T-Mobile) provides personal communications services (PCS) in several states, including Wisconsin. It applied to the Board of Adjustment of the County of St. Croix, in Wisconsin, for a special exception permit to construct and operate a telecommunications tower. The county refused.

VoiceStream filed a complaint in U.S. District Court (WDWisc) against the County of St. Croix and its Board of Adjustment alleging violation of 47 U.S.C. § 332(c)(7).

Subsection 332(c)(7)(B)(i) provides, in part, that "The regulation of the placement, construction, and modification of personal wireless service facilities by any State or local government or instrumentality thereof ... shall not prohibit or have the effect of prohibiting the provision of personal wireless services."

Subsection 332(c)(7)(B)(iii) provides that "Any decision by a State or local government or instrumentality thereof to deny a request to place, construct, or modify personal wireless service facilities shall be in writing and supported by substantial evidence contained in a written record."

The District Court granted summary judgment to St. Croix, finding that its denial was supported by substantial evidence and that VoiceStream had failed to demonstrate that St. Croix's decision had the effect of prohibiting personal wireless services. The Appeals Court affirmed on both issues.

This case is VoiceStream Minneapolis, Inc. v. St. Croix County, No. 02-2889, an appeal from the U.S. District Court for the Western District of Wisconsin, D.C. No. 01 C 504, Judge Barbara Crabb presiding.

Kids.us Directory Activated

9/8. NeuStar, the contractual manager of the .us top level domain, has activated the directory for the kids.us second level domain. See, NeuStar's www.kids.us.

This second level domain was created by the "Dot Kids Implementation and Efficiency Act of 2002", HR 3833 (107th), which was enacted into law as Public Law 107-317. The bill was sponsored by Rep. John Shimkus (R-IL), Rep. Ed Markey (D-MA), and others.

The bill requires that the National Telecommunications and Information Administration (NTIA) "shall require the registry selected to operate and maintain the United States country code Internet domain to establish, operate, and maintain a second-level domain within the United States country code domain that provides access only to material that is suitable for minors and not harmful to minors ..."

That is, this new second level domain is available for voluntary use. Nothing requires any content provider to place content in web sites that use this second level domain. The goal of the bill is to create a child friendly, on-line safe zone on the web. However, if this goal is to be achieved, content providers must voluntarily place content in it.

On September 5, Rep. Shimkus spoke in the House about this new second level domain. He stated that "last year we passed on this floor the ``kids.us´´ site. President Bush signed this bill into law. It is a safe Internet site for kids. Now I call upon corporate America, nonprofits and governmental entities to put information on the kids.us site. I also call upon all parents to demand that these entities do so. The World Wide Web is an amazing, but dangerous, place for kids. With the arrival of kids.us, it has now become safer." See, Congressional Record, September 5, 2003, at page H7953.

Shimkus and Markey first introduced a bill, HR 2417, that would have required a "top-level, International domain", but later settled for a second level domain within the .us country code domain. See, stories titled "Reps. Shimkus and Markey Seek a .kids Domain" in TLJ Daily E-Mail Alert No. 234, July 25, 2001; "House Subcommittee Holds Hearing on Kids Domain" in TLJ Daily E-Mail Alert No. 300, November 2, 2001; "House Passes Dot Kids Domain Bill" in TLJ Daily E-Mail Alert No. 436, May 22, 2002; and "Bush Signs Dot Kids Bill" in TLJ Daily E-Mail Alert No. 561, December 5, 2003.

State Department Official Addresses International Cyber Security

9/8. Lincoln Bloomfield, Assistant Secretary of State for Political Military Affairs, gave a speech at the Southeastern European Cybersecurity Conference in Sofia, Bulgaria. He stated that "We need all states to take tangible steps to reduce the risks to critical information infrastructures around the world."

Bloomfield (at right) said that "At the same time as we are increasing our reliance on information technology for critical services, we are seriously concerned that the reliability and availability of these systems is threatened on a daily basis. Every day brings another story of a system vulnerability being criminally exploited, resulting in downtime and economic losses. If these vulnerabilities were to be exploited systematically by hostile individuals or terrorist groups, our national security could be threatened."

He added that "The United States has concluded that, no matter what steps individual states might take to safeguard their own critical information infrastructures, none of us will be secure until the least secure among us has addressed the issue. This technology gives us a shared opportunity, but also a shared vulnerability and a shared responsibility."

He offered several observations about cyber threats. He stated that "the tools to conduct cyber attacks are widely available to any person or group, regardless of their motivation". He said that "cyber attacks pay no attention to national boundaries. In fact, perpetrators are likely to route attacks through several countries to decrease the probability of being caught. That is why our cybersecurity depends on the security practices of every country, every business, and every citizen ..." He also stated that "most of the information infrastructures that we rely upon, even for many government functions, are in the private sector", so, there must be "a broad partnership between government and industry in all of our countries."

He also offers several recommendations for countries. For example, he stated that "each country should review its legal code to assure that it effectively criminalizes misuse of information technology and that it has in place the domestic tools to investigate and prosecute cyber crime, and rules to facilitate trans-border law enforcement."

Bush Designates McCallum Deputy Attorney General

9/8. The White House press office issued a release that states that President Bush "designated Robert D. McCallum, Jr., of Georgia, to be Acting Deputy Attorney General, Department of Justice. McCallum currently serves as Associate Attorney General." Deputy Attorney General is an executive branch office that requires Senate confirmation.

The President does not "designate" the Deputy Attorney General. The Constitution, at Article II, Section 2, provides that "he shall nominate, and by and with the Advice and Consent of the Senate, shall appoint ... and all other officers of the United States ..."

On June 27, 2003, the Senate confirmed McCallum to be the Associate Attorney General, the third highest position at the DOJ. He was previously Acting Associate Attorney General, and before that, Assistant Attorney General in charge of the DOJ's Civil Division. And before that, he was a partner in the law firm of Alston & Bird, which is based in Atlanta, Georgia.

The Attorney General is in charge of the Department of Justice (DOJ). The Deputy Attorney General is the second position. McCallum, if confirmed as Deputy Attorney General, would replace Larry Thompson, who, like McCallum, is from Atlanta, Georgia. See, story titled "Atlanta Lawyers at DOJ" in TLJ Daily E-Mail Alert No. 711, August 5, 2003.

Sen. Charles Grassley (R-IA), a senior member of the Senate Judiciary Committee, has a dispute with the DOJ regarding oversight procedures, and access to records. He has been placing holds in the Senate on top DOJ nominations. For example, on July 30, 2003, he placed a hold on the nomination of Christopher Wray to be an Assistant Attorney General in charge of the DOJ's Criminal Division.

Sen. Grassley stated that "I have several outstanding written requests before the Department of Justice. Some of these requests are more than 6 months overdue. In addition, I am presently working with the Department of Justice to overcome a number of procedural issues directly affecting my ability, as a member of the Judiciary Committee to, among other things, conduct oversight of the Department of Justice, and the Federal Bureau of Investigations." See, Congressional Record, July 30, 2003, at S10258.

Also, on August 1, 2003, Sen. Grassley placed a hold on the nomination of Daniel Bryant to be an Assistant Attorney General in charge of the Office of Legal Policy (OLP). See, Congressional Record, August 1, 2003, at S10898.

More People and Appointments

9/8. The Department of Homeland Security (DHS) announced that David Bolka "has assumed the position of Director of the Homeland Security Advanced Research Projects Agency (HSARPA) for the Department's Office of Science and Technology". HSARPA is the external research funding arm for the DHS. Bolka previously worked for Lucent Technologies. Before that, he worked for AT&T's Bell Laboratories. Before that, he worked at the Naval Sea Systems Command as a Major Project Manager for Submarine Combat Systems. And before that, he was a career officer in the U.S. Navy.

9/5. Merit Janow and Robert Lighthizer were nominated by the United States for a position on the Appellate Body of the World Trade Organization (WTO). Janow is a professor at Columbia University, and a former Deputy Assistant U.S. Trade Representative. Before that, she worked for the law firm of Skadden Arps Slate Meagher & Flom. Lighthizer works for the law firm of Skadden Arps, where he is in charge of the firm's International Trade Department. He was previously a Deputy U.S. Trade Representative. See, USTR release [PDF].

9/8. Federal Communications Commission (FCC) Chairman Michael Powell named Christopher Libertelli to be his Senior Legal Advisor. He replaces Bryan Tramont. Powell recently named Tramont FCC Chief of Staff. Libertelli is currently one of Powell's Legal Advisors. He handles wireline competition issues, unbundled network element rules, and broadband services issues. Before that, he was Special Counsel for Competition Policy in the Office of the Bureau Chief of the Wireline Competition Bureau (WCB), and an attorney-advisor in the Policy Division. Before that, he was an attorney at the law firm of Dow Lohnes & Albertson. See, FCC release [PDF]

9/8. Michael Powell also named Sheryl Wilkerson to be his Legal Advisor for wireless and international issues. Bryan Tramont had previously handled wireless, international, consumer and technology issues. She previously worked in legislative affairs at ArrayComm. Before that, she worked at the FCC lobbying the Congress. She has also worked for the House Commerce Committee, the Senate Commerce Committee, National Strategies, Inc., the Washington DC law firm of Leventhal Senter & Lerman, and the lobbying firm of Wexler Reynolds Fuller Harrison & Schule (now Wexlar and Walker).

9/8. Tony Fratto was named Deputy Assistant Secretary of Public Affairs at the Treasury Department. He has worked in the Department's Office of Public Affairs since March of 2001. Before that, he worked for the Bush Cheney 2000 campaign. See, release.

More News

9/8. The Federal Communications Commission (FCC) published a notice in the Federal Register that describes and recites its proposed rule regarding human exposure to radiofrequency (RF) energy. This notice also sets deadlines for public comments. Comments are due by December 8, 2003. Reply comments are due by January 6, 2004. The FCC adopted this notice of proposed rulemaking on June 12, 2003, and released it on June 26, 2003. This is ET Docket No. 03-137. For more information, contact Robert Cleveland in the FCC's Office of Engineering and Technology at 202 418-2422 or robert.cleveland@fcc.gov. See, Federal Register, September 8, 2003, Vol. 68, No. 173, at Pages 52879 - 52889.

Go to News from September 1-5, 2003.