Powell Offers Timetable for FCC's Fourth Attempt to Write Unbundling Rules

3/10. Federal Communications Commission (FCC) Chairman Michael Powell gave a speech [PDF] in which he offered a timetable for bringing the FCC unbundling rules into compliance with the March 2 order of the Court of Appeals. He also used this speech to address FCC regulation of internet services.

He spoke in Washington DC at a meeting of the National Association of Regulatory Utility Commissioners (NARUC). Commissioner Kevin Martin gave a speech [9 pages in PDF] to the NARUC on March 8. Martin attacked the Court or Appeals for its "failure to recognize the traditional federal-state relationship".

On March 2, 2004 the U.S. Court of Appeals (DCCir) issued its opinion [62 pages in PDF] in USTA v. FCC overturning key parts of the FCC's triennial review order (TRO). The opinion leaves largely untouched those portions of the TRO in which the FCC refrained from unbundling next generation broadband facilities. The opinion vacates those portions of the TRO in which the FCC delegated decision making authority to the state to make impairment findings. See, story titled "Appeals Court Overturns Key Provisions of FCC Triennial Review Order", also published in TLJ Daily E-Mail Alert No. 848, March 3, 2004.

The Court wrote "As to the portions of the Order that we vacate, we temporarily stay the vacatur (i.e., delay issue of the mandate) until no later than the later of (1) the denial of any petition for rehearing or rehearing en banc or (2) 60 days from today's date. This deadline is appropriate in light of the Commission's failure, after eight years, to develop lawful unbundling rules, and its apparent unwillingness to adhere to prior judicial rulings."

Powell (at right) stated that "there remains substantial room for meaningful cooperation, and I strongly endorse our continued partnership", but the FCC cannot recruit states to "do the job Congress specifically directed us to do."

He said that "having suffered our third court defeat in a row -- once at the hands of the Supreme Court and twice by the D.C. Circuit -- we find ourselves yet again in a regrettable place. And the question we are asked repeatedly is where do we go from here?"

"Beginning today, competitors and incumbents should enter into a 30 day negotiation period", said Powell. "If those negotiations fail, however, I will propose to my colleagues that the FCC adopt an interim set of rules to protect against precipitous disruptions that might result after day 60 because of the court's ruling."

Next, he stated that "I will work with my colleagues to craft an 18 month moratorium and transition to protect existing UNE-P customers from sudden changes in their service."

And "I will also instruct our staff to begin developing a framework and proposals for new rules that are judicially sustainable and faithful to our mandate to advance local competition."

BellSouth issued a release praising Powell's proposal. It stated that "Given competition from the alternate technologies like cable telephony, wireless service and voice over the Internet, BellSouth has every incentive to ensure the continued viability of its wholesale business with CLECs (competitive .local exchange carriers) by negotiating wholesale prices that keep CLEC traffic on BellSouth's network. BellSouth is ready to negotiate agreements with CLECs who are serious about offering consumers a sustainable competitive alternative." (Parentheses in original.)

BellSouth added that "BellSouth is seizing this opportunity by inviting its competitors (CLECs) to enter into serious negotiations of market-based commercial agreements aimed at benefiting the customer, establishing stability in the industry and allowing real competition to continue throughout its region."

In contrast, Russell Frisby of the CompTel/Ascent wrote in a release that "It is shocking that Chairman Powell will not defend Commission rules ..." He added that "The competitive industry has been trying to negotiate with the Bells for eight years, without success. Chairman Powell now proposes that we negotiate for 30 days."

Chairman Powell also used this speech to the NARUC to address his vision of FCC regulation of new technologies and services.

He said that "As regulators, we need to embrace the reality that the torrent of change from IP technologies has arrived, is unstoppable and will accelerate over the next year. And American citizens will be the richer for it."

"A global Internet necessarily means entrepreneurs can set up shop literally in any corner of the globe", said Powell. "If we do not create a regulatory climate that attracts and encourages investment in our states and in our Nation, we will face the rude reality that opportunity can and will go elsewhere. If the regulatory climate is hostile, the information age jobs go to India not Appalachia. If regulatory costs are excessive, email, voice and video servers will be set up in China not California. Unlike the earth-bound networks and businesses of the past, there is nothing I, or you, can do to keep economic activity in your state."

He argued that "we have to make economic regulation of the Internet a last resort, lest we chill the hot bed of IP-enabled services that are springing to life in a fast-changing environment. Therefore, the Commission should start from the premise that traditional monopoly economic regulation should not be spilled over to the Internet. The emerging universe of VOIP providers -- whether Pulver.Com, Vonage, 8x8, or one of the established, facilities-based providers rolling out new technology, such as Cox Communications -- differ fundamentally from the voice monopolists of the public switched telephone network."

But, Powell still left open the possibility of "economic regulation". He stated that "vertical integration of internet applications and distribution could tempt a provider to discriminate against the font of innovative choices made available by others."

Powell argued that "Consumers should have access to their choice of legal content; .. Consumers should be able to run applications of their choice; ... Consumers should be permitted to attach any devices they choose to the connection in their homes; and ... Consumers should receive meaningful information regarding their service plans."

Powell challenged industry to voluntarily adopt these principles. Hence, he labeled these as consumer "freedoms", rather than proposed government regulation.

Moreover, Powell argued that regulation is appropriate in other areas. He listed these as "Local Competition; Consumer Protection; Universal Service; Disabilities Access; and Homeland Security."

House Passes CREATE Act

3/10. The House passed HR 2391, the "Cooperative Research and Technology Enhancement (CREATE) Act", by a voice vote. This is a non-controversial bill to promote collaborative research.

The bill would amend Section 103(c) of the Patent Act, which is codified at 35 U.S.C. § 103, to address the August 8, 1997 opinion of the U.S. Court of Appeals for the Federal Circuit in OddzOn Products, Inc. v. Just Toys, Inc., which ruled that derived prior art may serve as evidence of obviousness.

Section 103(c) currently provides a safe harbor for inventions that are the product of collaboration involving co-inventors within a single company. However, scientific research is increasingly being conducted jointly by multiple companies, universities, government labs, and/or other entities. See, full story.

EPIC Comments on Incorporating Privacy Protections in IPv6

3/10. The National Telecommunications and Information Administration (NTIA) and the National Institute of Standards and Technology (NIST) continue to receive comments in response to their request for comments regarding Internet Protocol version 6 (IPv6). The Electronic Privacy Information Center (EPIC) submitted a comment [PDF] that addresses privacy related issues.

The EPIC wrote that "The predecessor to IPv6, IPv4, formed the foundation for the Internet as we know it today. However, weaknesses in security have allowed identity theft, third party surveillance, online fraud, and hacking, to become significant threats to Internet users. As the reach of the Internet extends with the capabilities of IPv6, further growth of the online community requires strong safeguards for the privacy and safety of persons online."

The EPIC argued that "it is absolutely vital that IPv6 incorporate strong privacy protections for end users".

First, wrote the EPIC, the Department of Commerce (DOC) "should join the EC IPv6 Task Force in strongly encouraging that the technical privacy protections in the IPv6 standard are implemented by default by all vendors, and used regularly to protect end users. Specifically, the DOC should strongly encourage that all IPv6 implementations meet the requirements of RFC 3041, allowing users to generate a random IPv6 address to prevent tracking the network activity of a user across multiple networks. Further, RFC 3041 and other privacy enhancing technologies should be made readily available and accessible to consumers. Further, the DOC should recommend that vendors implement technologies that automatically change IPv6 addresses, as specified by RFC 3041, on a regular basis to prevent third party surveillance or monitoring."

"Secondly, the DOC should encourage commercial developers writing software for IPv6 to take advantage of the IPsec services, such as end-to-end encryption."

Third, the EPIC argued that "the DOC should ensure that IPv6’s built-in security and other technical privacy safeguards are not compromised by an expansion of CALEA requirements to create security holes for law enforcement surveillance in the IPv6 data network. Extending CALEA surveillance capabilities from dedicated voice communications networks to information services such as IPv6 goes far beyond the intent of Congress and would pose significant threats to Internet security and stability."

See, NTIA/NIST notice in the Federal Register, January 21, 2004, Vol. 69, No. 13, at Pages 2890 - 2899. See also, story titled "NTIA and NIST Request Comments on IPv6" in TLJ Daily E-Mail Alert No. 819, January 20, 2004; and story titled "NTIA/NIST Publish Public Comments on IPv6" in TLJ Daily E-Mail Alert No. 853, March 10, 2004.

People and Appointments

3/10. President Bush announced his intent to nominate Stuart Levey to be Under Secretary of the Treasury for Enforcement in charge of overseeing the new Office of Terrorism and Financial Intelligence. He is currently the Principal Associate Deputy Attorney General at the Department of Justice. See, White House release.

3/10. President Bush announced his intent to nominate Juan Carlos Zarate to be an Assistant Secretary of the Treasury (Terrorist Finance). See, White House release.

3/10. Ira Keltz was named Chief of the Federal Communications Commission's (FCC) Office of Engineering and Technology's (OET) Electromagnetic Compatibility Division (ECD). He was previously Deputy Chief of the OET's Policy and Rules Division (PRD). He has worked at the FCC since 1994. Previously, he worked at Loral Advanced Projects and LSA, Inc. He has bachelors and masters degrees in electrical engineering. Jamison Prime was named Chief of the FCC's OET's PRD's Spectrum Policy Branch. He has worked at the FCC since 1997. Ronald Chase was named Chief of the FCC's OET's ECD's Technical Analysis Branch. He has worked at the FCC since 2000. Before that, he was a long time employee of the Army Research Laboratory. He has a bachelors degree in electrical engineering and a masters degree in physics. See, FCC release [PDF].

More News

3/10. Sen. Orrin Hatch (R-UT), Sen. Patrick Leahy (D-VT), Sen. Herb Kohl (D-WI), and Sen. Russ Feingold (D-WI) introduced S 2192, the "Cooperative Research and Technology Enhancement (CREATE) Act of 2004". The House passed its version of this bill, HR 2391, on March 10, 2004. This is a non-controversial bill to promote collaborative research. It would amend 35 U.S.C. § 103 to address the August 8, 1997 opinion of the U.S. Court of Appeals for the Federal Circuit in OddzOn Products, Inc. v. Just Toys, Inc., which ruled that derived prior art may serve as evidence of obviousness. See, story titled "House Passes CREATE Act" in TLJ Daily E-Mail Alert No. 854, March 11, 2004.

3/10. The House Commerce Committee's Subcommittee on Telecommunications and the Internet held a hearing titled "Oversight of the Satellite Home Viewer Improvement Act". See, prepared testimony of witnesses: David Moskowitz (Echostar Communications), Robert Lee (on behalf of the National Association of Broadcasters), Matthew Polka (American Cable Association), Gene Kimmelman (Consumers Union), Martin Franks (CBS Television), and Eddy Hartenstein (Hughes Electronics Corporation).

3/10. The House Ways and Means Committee's Subcommittee on Oversight and Subcommittee on Social Security held a joint hearing titled "Social Security Number and Individual Taxpayer Identification Number Mismatches and Misuse". See, prepared testimony of witnesses: Mark Everson (Internal Revenue Service), James Lockhart (Social Security Administration), Michael Brostek (General Accounting Office), Pamela Gardiner (Department of the Treasury), Nina Olson (Internal Revenue Service), and Patrick O'Carroll (Social Security Administration).

3/10. America Online, EarthLink, Microsoft, and Yahoo announced that they have filed complaints in various U.S. District Courts against spammers, alleging violation of the recently enacted Controlling the Assault of Non-Solicited Pornography and Marketing (CAN SPAM) Act. See, AOL release, Yahoo release, and Earthlink release. See, for example, complaint [PDF] filed by Earthlink in U.S. District Court (NDGa). This case is Earthlink v. Joe Does 1-25, et al., U.S. District Court for the Northern District of Georgia, D.C. No. 1 04 CV-0667.

3/10. Microsoft announced in a release that it has entered into a Memorandum of Understanding (MOU) with the People's Republic of China's (PRC) Ministry of Information Industry (MII) under which the PRC government will guide Microsoft's development of software. Microsoft stated that it, "under the guidance of MII and in cooperation with its partners, will establish the Windows.NET-based technology labs, as part of the National Software and Integrated Circuits Public Service Platform. Microsoft will work with both the Chinese and international IT companies to build the labs and serve a large number of small and medium-sized Chinese software companies and the computer users in China." Microsoft added that "The Public Service Platform is an institution through which the government guides the development of the software and IC industries ..."

3/10. The Internal Revenue Service (IRS) announced in a release that "electronic filing continues to show a strong increase, with e-filed tax returns running more than 10 percent ahead of last year. The biggest increase is being seen in home computer use, which is up 23 percent." The IRS added that "Through March 5, 37.1 million returns were e-filed, more than 3.4 million ahead of last year's pace."

3/10. The House Rules Committee adopted a rule for the consideration of HR 3717, the "Broadcast Decency Enforcement Act of 2004". This rule makes in order a managers amendment [PDF] offered by Rep. Fred Upton (R-MI), the sponsor of the bill. This rule also make in order an amendment [PDF] offered by Rep. Pete Sessions (R-TX), and an amendment [PDF] offered by Rep. Janice Schakowsky (D-IL).

3/10. Microsoft, Nokia, Vodafone, 3, GSM Association, HP, Orange, Samsung Electronics, and Sun Microsystems signed a memorandum of understanding to apply to the Internet Corporation for Assigned Names and Numbers (ICANN) for a mobile Top Level Domain. See, ICANN request for proposals. Vodaphone wrote in a release that the parties "have agreed to form a new joint venture to manage the mobile TLD. A mobile TLD would be a key step in bridging the world of mobility and the Internet to the benefit of customers and the entire mobile industry."

3/10. Federal Communications Commission (FCC) Commissioner Kathleen Abernathy gave a speech [7 pages in PDF] in Washington DC titled "Ensuring That ETC Designations Serve the Public Interest".

USTR Zoellick Testifies to Senate Finance Committee

3/9. U.S. Trade Representative (USTR) Robert Zoellick testified at a Senate Finance Committee hearing titled "The Administration's International Trade Agenda".

Zoellick (at right) wrote about recently negotiated bilateral free trade agreements (FTAs) in his prepared testimony [PDF]. He stated that the Singapore and Chile FTAs are "comprehensive, state-of-the-art FTAs set modern rules for 21st Century commerce and broke new ground in areas such as services, e-commerce, intellectual property protection, transparency ..."

He said that under the Australia FTA "intellectual property will be better protected".

He also addressed violation of intellectual property rights in the People's Republic of China. He wrote that "In 2004, the Administration will concentrate on ensuring that: American intellectual property rights are protected; U.S. firms are not subject to discriminatory taxation; market access commitments in areas such as agriculture and financial services are fully met; standards are not used -- whether for technology or farm products -- to unfairly impede U.S. exports; China’s trading regime operates transparently; and promises to grant trading and distribution rights are implemented fully and on time."

He elaborated that "China's lax enforcement of intellectual property rights, including counterfeiting, is a fundamental issue. Piracy of movies, music and software is so rampant in China that the practices could subvert the development of knowledge industries and stifle innovation around the world. The scope and magnitude of the problem does not just threaten outsiders, but China’s own citizens as well. Counterfeit automobile brakes, electrical switches, medicines and processed foods with pilfered brand names and poor quality control present health and safety risks throughout China. Premier Wen Jiabao has spoken of the importance of IPR and has assigned Vice Premier Wu Yi, a former trade minister who helped defuse the SARS crisis, to chair a working group on IPR enforcement. She will meet with Secretary Evans and me next month as part of our Joint Commission on Commerce and Trade."

In addition, he stated that "China has adopted discriminatory tax policies -- most blatantly on semiconductors -- and new wireless encryption standards intended to block U.S. market access. We are pressing China to resolve these disputes promptly."

He also addressed legislation that would replace the Foreign Sales Corporation (FSC) and Extraterritorial Income (ETI) tax regimes that the World Trade Organization (WTO) has ruled to be illegal export subsidies.

He wrote that "We very much appreciate Chairman Grassley's and Senator Baucus' effort to repeal the FSC law to end retaliation against U.S. exporters, and we urge others to support their work. We also look to work with Congress to remedy other U.S. violations, including the Continued Dumping and Subsidy Offset Act of 2000, the 1916 Act (reflecting early antitrust practice), Section 211 of the Omnibus Appropriations Act of 1998 concerning conditions that permit the banning of trademark enforcement, and the ruling on hot-rolled steel. America should not be a scofflaw of international trade rules." (Parentheses in original.)

Senate Commerce Committee Marks Up Broadcast Decency Bill

3/9. The Senate Commerce Committee amended and approved S 2056, the "Broadcast Decency Enforcement Act of 2004".

The bill, as introduced by Sen. Sam Brownback (R-KS) and Sen. Lindsey Graham (R-SC), would increase the maximum fines that the Federal Communications Commission (FCC) may assess on television and radio broadcasters for obscene, indecent, and profane broadcasts.

The Committee approved an amendment offered by Sen. Ted Stevens (R-AK) and Sen. George Allen (R-VA) that would expand the regulatory authority of the FCC with respect to indecency beyond broadcasters.

Currently, the FCC has indecency authority over the holders of FCC broadcast licenses. This amendment would give the FCC authority to fine any "person" who "uttered obscene, indecent, or profane material that was broadcast by a broadcast station license or permittee, if the person is determined to have willfully or intentionally made the utterance and knew or should have known that the material would be broadcast."

While the intent may be to bring TV and radio performers, such as Howard Stern, within the reach of the FCC, the actual language would give the FCC regulatory authority over a broader class of persons.

The Committee approved an amendment [8 pages in PDF] offered by Sen. John McCain (R-AZ) and Sen. Brownback to apply the obscenity penalties to broadcast images as well as language, impose a per-utterance penalty, require the FCC to consider several factors when assessing a fine, and cap the total for all fines assessed on any broadcast licensee in a given 24-hour period at $3 Million.

The Committee also approved three second degree amendments offered by Sen. Ted Stevens (R-AK) and others to the McCain Brownback amendment. See, amendment to provide for escalating penalties, amendment to provide for increased penalties under aggravating circumstances, and amendment regarding mandatory license revocation proceedings.

The Committee approved an amendment [10 pages in PDF] offered by Sen. Ernest Hollings (D-SC) and Sen. Stevens regarding violent programming. This is the "Children's Protection from Violent Programming Act", which Sen. Hollings has also introduced as S 161. See also, Hollings release.

The Committee approved an amendment offered by Sen. Stevens to authorize the National Association of Broadcasters (NAB) and other broadcasting industry groups to enter into self enforcement agreements with regard to family programming.

The Committee approved an amendment [PDF] offered by Sen. John Ensign (R-NV) and Sen. Conrad Burns (R-MT) that requires the FCC to consider the violator's ability to pay.

Finally, the Committee approved an amendment [PDF] that provides that "The General Accounting Office shall conduct a study examining the relationship between the horizontal and vertical consolidation of media companies and the number of complaints and violations of the indecency prohibitions contained in the statutes, regulations, and policies enforced by the Federal Communications Commission."

This amendment further provides that "The broadcast media ownership rules adopted by the Federal Communications Commission on June 2, 2003, pursuant to its proceeding on broadcast media ownership rules, Report and Order FCC–03–127, published at 68 FR 46286, August 5, 2003, shall be invalid and without legal effect until the completion and submission of the report ..." And until then, "the broadcast media ownership rules of the Federal Communications Commission that were in effect on June 1, 2003, are reinstated ..."

See, Commerce Committee release.

NTIA/NIST Publish Public Comments on IPv6

3/9. The National Telecommunications and Information Administration (NTIA) published in its website the 19 comments that it has received in response to its Notice of Inquiry (NOI) regarding Internet Protocol version 6 (IPv6). The NOI is also referred to as a Request for Comments (FRC).

The NTIA and the National Institute of Standards and Technology (NIST) published a notice in the Federal Register requesting comments. See, Federal Register, January 21, 2004, Vol. 69, No. 13, at Pages 2890 - 2899. See also, story titled "NTIA and NIST Request Comments on IPv6", TLJ Daily E-Mail Alert No. 819, January 20, 2004.

Commenters stressed the problem of address exhaustion under IPv4. Commenters also generally stated that government regulation, and government mandates, should not be imposed.

Cisco wrote in its lengthy comment [75 pages in PDF] that responds to the NOI question by question. Cisco also provided a attachment titled "IPv6 and IPv4 Threat Comparison and Best-Practice Evaluation".

Cisco wrote in its cover letter that "Weighing the costs and benefits of transitioning to a new protocol, the most important consideration is to promote US economic competitiveness in the global market." Cisco continued that "Japan, China, and to a limited extent, Europe, already see the lethargy in the U.S. as an opportunity to seize economic leadership. The applications being developed there will not only be cheaper than the IPv4/NAT-based ones in the U.S., they will have more creative freedom as developers are free to focus core products and services, or those for which people will pay, instead of being forced to spend time on context, designing workarounds in the limited IPv4/NAT environment. Concentrating on core vs. context is key to improving productivity. Once leadership in Internet services and applications is lost, it will be difficult for US application developers to compete globally."

Microsoft wrote in its comment [13 pages in PDF] that "A gradual, market-based conversion to IPv6 is the most technologically feasible and least disruptive way of addressing these concerns and realizing the full promise of the Internet. As part of that effort, the government should consider acquiring IPv6-enabled software and hardware in order to meet government needs. However, governmental regulation of IPv6 is unwarranted and could be counterproductive."

BellSouth wrote in its comment [9 pages in PDF] that "While we encourage government support for IPv6 transition planning initiatives, market forces, and not government intervention, should be the primary driving force for actual deployment of IPv6 infrastructure. Government intervention could result in unwarranted costs and inefficiencies that would outweigh potential benefits."

Motorola wrote in its comment [13 pages in PDF] that "Motorola believes that the potential benefits of IPv6 are such that the U.S. government should encourage research and experience with this technology. At this time, any mandate for IPv6 implementation is premature. It is also inconsistent with the government’s traditional reliance on marketplace forces for Internet development and evolution – an approach that has proven so successful to the growth and development of this space."

Sprint wrote in its comment [14 pages in PDF] that it "does not believe that government needs to mandate IPv6 deployment, although the government may wish to consider funding additional research and development if necessary."

See also, comment of NTT/Verio, comment by VeriSign.

People and Appointments

3/9. The Department of Justice (DOJ) announced on March 9 that Attorney General John Ashcroft had a cholecystectomy to remove his gallbladder. See, release.

More News

3/9 RealNetworks announced that it filed a complaint in U.S. District Court (WDWash) against Major League Baseball Advanced Media L.P. (MLBAM). RealNetworks stated in a release that it seeks "to enforce a new contract entered into between the parties in February 2004 that requires MLBAM to make its Internet broadcasts of live baseball games on MLB.com available in RealNetworks media format."

3/9. Rep. Joe Baca (D-CA), Rep. Tom Osborne (R-NE), and Rep. David Price (D-NC) introduced HR 3914, the "Children's Protection from Violent Programming Act". This bill would amend the Communications Act to require that violent video programming be limited to broadcast after the hours when children are reasonably likely to comprise a substantial portion of the audience, unless it is specifically rated on the basis of its violent content so that it is blockable by electronic means specifically on the basis of that content. This bill was referred to the House Commerce Committee.

3/9. Sen. Patrick Leahy (D-VT) spoke in the Senate regarding legislation to address online copyright infringement. He stated that "The very ease of duplication and distribution that is the hallmark of digital content has meant that piracy of that content is just as easy. The very real--and often realized--threat that creative works will simply be duplicated and distributed freely online has restricted, rather than enhanced, the amount and variety of creative works one can receive over the Internet." He continued that "Senator Hatch and I are investigating another needed response to this problem that would give the Attorney General the authority to bring a civil action against copyright infringers. This authority would not supplant either the criminal provisions of the Copyright Act, or the remedies available to the copyright owner in a private suit. Rather, it would allow the Government to bring its resources to bear on this immense problem, and to ensure that more creative works are made available online, that those works are more affordable, and that the people who work to bring them to us are paid for their efforts. We hope to introduce a bill on this matter soon". See, Congressional Record, March 9, 2004, at Pages S2295-6.

Martin Criticizes DC Circuit Opinion in USTA v. FCC

3/8. Federal Communications Commission (FCC) Commissioner Kevin Martin gave a speech [9 pages in PDF] in Washington DC at a meeting of the National Association of Regulatory Utility Commissioners (NARUC).

He criticized the March 2 opinion [62 pages in PDF] of the U.S. Court of Appeals (DCCir) in USTA v. FCC regarding the FCC's triennial review order (TRO). He also addressed federal state partnerships, universal service, the framework of the 1996 act for creating competition, the state of competition, and other topics.

The Appeals Court opinion leaves largely untouched those portions of the TRO in which the FCC refrained from unbundling next generation broadband facilities. However, the opinion vacates those portions of the TRO in which the FCC delegated decision making authority to the state to make impairment findings.

Martin (at right) stated that "In 1996, Congress set forth a framework to promote local competition in the telecom market. At the heart of this framework, Congress envisioned the FCC and state commissions working together in a federal-state partnership to bring more choice, better services, and lower prices to American consumers."

"Last week, the DC Circuit attacked this framework and failed to recognize the historical relationship that exists between state commissions and the FCC in developing local competition policy", said Martin. "I am troubled by their failure to recognize the traditional federal-state relationship."

See also, story titled "Appeals Court Overturns Key Provisions of FCC Triennial Review Order" also published in TLJ Daily E-Mail Alert No. 848, March 3, 2004; and joint statement [PDF] of Commissioners Kevin Martin, Michael Copps, and Jonathan Adelstein stating that they plan to appeal to the Supreme Court.

He discussed the federal state relationship, and the status of local wireline competition. He also discussed broadband competition. He stated that "the growth of cable broadband and DSL lines has resulted in fierce competition between these services, with cable still significantly ahead of its telco competitor."

He added that "This vibrant competition is what enabled the Commission to deregulate the provision of DSL without risking an increase in DSL prices. Last year, when we deregulated Broadband and eliminated Line-Sharing many here and some at the Commission argued that DSL prices would rise. But, since February of 2002, prices of DSL have dropped about 40%."

Supreme Court to Allow EU to Participate In Oral Argument in Intel v. AMD

3/8. The Supreme Court issued an order in Intel v. AMD. The Court ordered that "The motion of Commission of the European Communities for leave to participate in oral argument as amicus curiae and for divided argument is granted. The motion of the Solicitor General for leave to participate in oral argument as amicus curiae and for divided argument is granted." See, Order List [8 pages in PDF] at page 1.

This is a case regarding the availability of a discovery order from a U.S. District Court, pursuant to 28 U.S.C. § 1782, for a complainant in an antitrust matter before the European Commission.

The Supreme Court granted certiorari on November 10, 2003, Oral argument is scheduled for April 20, 2004.

See also, story titled "Supreme Court Grants Certiorari in Intel v. AMD", also published in TLJ Daily E-Mail Alert No. 776, November 11, 2003; and story titled "9th Circuit Rules on Discovery in U.S. for EC Antitrust Proceeding" in TLJ Daily E-Mail Alert No. 446, June 7, 2002.

This case is Intel Corporation v. Advanced Micro Devices, Inc., S.C. No. 02-572.

Small Wineries File Petition for Writ of Certiorari Re NY Direct Sales Ban

3/8. Two small wineries, and several wine consumers, filed a petition for writ of certiorari with the Supreme Court in Swedenburg v. Kelley.

On November 12, 2002, the District Court issued its opinion [32 page PDF scan] holding that the NY statute prohibiting out of state wineries from selling directly to NY residents, such as via the internet, violates the Commerce Clause of the Constitution. See, story titled "Court Holds New York's Ban on Internet Wine Sales Is Unconstitutional" in TLJ Daily E-Mail Alert No. 551, November 18, 2002.

On February 12, 2004 the U.S. Court of Appeals (2ndCir) issued its opinion [28 pages in PDF] reversing the District Court, and holding that NY's statute is a permissible exercise of authority granted to states under the 21st Amendment. See, story titled "2nd Circuit Rules in Internet Wines Sales Case" in TLJ Daily E-Mail Alert No. 840, February 19, 2004.

The winery petitioners are the Swedenburg Winery in the state of Virginia, which is owned by Juanita Swedenburg, and the Lucas Winery, located in Lodi, California. They are represented by the Institute for Justice (IJ).

IJ VP Clint Bolick stated in a release that "This case presents a clash between economic protectionism and consumer freedom ... It pits the State and a quartet of multi-billion dollar oligopolists against family-owned wineries and the consumers who want to buy their wines."

There are now several inconsistent opinions from various circuits of the U.S. Court of Appeals regarding the constitutionality of bans of direct sales of wines.

The present case is Juanita Swedenburg, et al. v. Edward Kelly, et al., U.S. Court of Appeals for the 2nd Circuit, Nos. 02-9511 and 03-7089, appeals from the U.S. District Court for the Southern District of New York.

FEC Wraps Up Bush Cheney 2000 Air Charter Matter

3/8. The Federal Election Commission (FEC) announced its final disposition of Matter Under Review (MUR) 5373, an FEC initiated review of the Bush Cheney 2000 committee, Kleiner Perkins Caufield & Byers (KPCB), and several charter aircraft service corporations. The gist of the matter is that Bush Cheney 2000 did not pay enough for charter air service, and thus, the charter services made, and Bush Cheney received, illegal in kind contributions.

The charter services were used for campaign related travel, but in some instances, were paid the lower first class air rate, rather than the charter rate. After the FEC investigation, the Bush Cheney 2000 committee paid the difference -- $95,509 -- to the U.S. Treasury, and the FEC took no further action against any of the respondents. See, FEC release of March 8, 2004 titled "Compliance Case Made Public".

The FEC counsel's report [PDF] of May 14, 2003 stated that "The Office of General Counsel recommends that the Commission find reason to believe that Bush-Cheney 2000, Inc. and David Herndon, as Treasurer, violated 2 U.S.C. § 441b(a) by accepting in-kind contributions from air charter vendors. The Office of General Counsel also recommends that the Commission find reason to believe that ... Kleiner, Perkins, Caufield & Byers ... violated 2 U.S.C. § 441b(a). Since the Committee paid the $95,509 to the United States Treasury, the carriers forfeited this amount to the United States Treasury. As a result, this Office does not believe that any further corrective action by the respondents or a civil penalty is necessary."

KPCB's COO wrote a letter [PDF] to the FEC in response to the report in which he stated that "I continue to believe Kleiner Perkins Caufield & Byers had no involvement - financial or otherwise - in the charter flights in question." He also wrote in another letter [PDF] that Kleiner Perkins does not now and has never owned any airplanes, and Kleiner Perkins did not provide or subsidize charter airplanes for Bush-Cheney 2000 ..."

KPCB is a venture capital firm based in Menlo Park, California that focuses on information technology and biotechnology. The KPCB website lists Floyd Kvamme as a "partner emeritus". The website of the President's Council of Advisors on Science & Technology (PCAST) lists Floyd Kvamme as a "partner" at KPCB, and Co-Chair of the PCAST. Another KPCB partner, John Doerr, has a history of association with the Clinton Gore administration.

DOJ and Oracle Agree on Trial Date in Action to Stop Acquisition of PeopleSoft

3/8. Oracle, the Department of Justice, and state plaintiffs submitted a Joint Case Management Statement and Proposed Order to the District Court in the governments' action to block Oracle's proposed acquisition of PeopleSoft.

On February 26, 2004, the U.S. and seven states filed a complaint in U.S. District Court (NDCal) against the Oracle Corporation alleging that Oracle's proposed acquisition of PeopleSoft, Inc. would lessen competition substantially in interstate trade and commerce in violation of Section 7 of the Clayton Act, which is codified at 15 U.S.C. § 18. The plaintiffs seek an injunction of the proposed acquisition.

See, story titled "Antitrust Division Sues Oracle to Enjoin Its Proposed Acquisition of PeopleSoft" in TLJ Daily E-Mail Alert No. 846, March 1, 2004.

The joint filing states that "The parties request a trial date of June 21, 2004, or as soon thereafter as the Court calendar permits. The parties anticipate that each side shall need approximately 10 days to submit its respective case."

See also, Plaintiffs' Statement Regarding Disputed Issues, Defendant Oracle Corporation’s Statement re Disputed Issues, proposed Protective Order, and proposed Stipulated Protective Order.

This case is U.S., et al. v. Oracle, U.S. District Court for the Northern District of California, D.C. No: C 04-00807 VRW.

People and Appointments

3/8. David Heineman was appointed to the Homeland Security Advisory Council (HSAC). He is the Lieutenant Governor of Nebraska, and Chairman of the Nebraska Information Technology Commission. See, DHS release.

3/8. Matt Oppenheim has joined the Washington DC office of the law firm of Jenner & Block as a partner in its Entertainment and New Media Practice. He will also work with the firm's Intellectual Property and Technology Practice. He was previously SVP for Business and Legal Affairs for the Recording Industry Association of America (RIAA).

3/8. Jennifer McKee was named Assistant Chief of the Federal Communications Commission's (FCC) Wireline Competition Bureau's (WCB) Pricing Policy Division (PPD). She was previously an Attorney Advisor in the PPD. She has worked on voice over internet protocol (VOIP), access charge reform rulemaking proceedings, tariff investigations, and pricing issues in Section 271 applications. See, FCC release [PDF].

3/8. The Senate Finance Committee held a hearing on several pending nominations, including that of Donald Korb to be Chief Counsel for the Internal Revenue Service (IRS). Korb wrote in his prepared testimony that "In the late 1990's, this Committee identified serious concerns regarding the operations of the Internal Revenue Service.  The reforms instituted at that time are having a positive impact both on the way the Service conducts its operations and on compliance by the taxpaying public with our tax laws.  In line with those reforms, Commissioner Everson has set three goals for the Service: to continue to enhance the service that the IRS provides to taxpayers, to continue to modernize the information technology systems of the Service, and to strengthen the integrity of the nation's tax system through enhanced enforcement activities.  If confirmed, my top priority as Chief Counsel will be to help Commissioner Everson achieve these goals." (Emphasis added.)

More News

3/8. President Bush sent a message to the Congress that formally notifies it of his intent to negotiate a free trade agreement (FTA) with Morocco.

3/8. The National Archives and Records Administration's Electronic Records Policy Working Group published a notice in the Federal Register requesting public comments on implementation of Section 207(e)(1)(A) of the E-Government Act of 2002, regarding "Public Access to Electronic Information". This section provides for "the adoption by agencies of policies and procedures to ensure that chapters 21, 25, 27, 29, and 31 of title 44, United States Code, are applied effectively and comprehensively to Government information on the Internet and to other electronic records.''  Comments must be received by April 5, 2004. See, Federal Register, March 8, 2004, Vol. 69, No. 45, at Page 10764.

3/8. The U.S. Court of Appeals (1stCir) issued its opinion in Quaak v. KPMG-B, a case regarding requests for documents in investigation and litigation in the United States. KPMG-B has been sued in connection with its role as auditor for the failed speech recognition software company, Lernout & Hauspie Speech Products. This case is Hans Quaak et al. v. Klynveld Peat Marwick Goerdeler Bedrijfsrevisoren, U.S. Court of Appeals for the 1st Circuit, No. 03-2704, an appeal from the U.S. District Court for the District of Massachusetts.

3/8. The Office of Management and Budget (OMB) submitted its report [74 pages in PDF] titled "FY 2003 Report to Congress on Implementation of The E-Government Act". Sen. Joe Lieberman (D-CT), the ranking Democrat on the Senate Government Affairs Committee, issued a release commenting on the report.

3/8. Sen. Jeff Bingaman (D-NM) and Sen. Lamar Alexander (R-TN) introduced S 2176, the "High-End Computing Revitalization Act of 2004". This bill would authorized the appropriation of $800 Million over five years to the Department of Energy to carry out a program of research and development, including hardware and software, to advance high end computing. Sen. Bingaman stated in the Senate that "Without government support, market forces are unlikely to drive sufficient innovation in high-end computing, because the private sector would not capture the full value of its innovations on a short enough time scale." See, Congressional Record, March 9, 2004, at Page S2308. This bill was referred to the Senate Committee on Energy and Natural Resources.

Go to News from March 1-5, 2004.