News from June 1-5, 2004

Rep. Cox Addresses Technology and Homeland Security

6/4. Rep. Christopher Cox (R-CA) gave a speech at the McGraw-Hill Homeland Security Summit. He discussed several topics, including the role of technology in homeland security.

He said that "The federal-wide research and development program to support homeland security in fiscal year 2005 is nothing short of astounding. R&D investment across key federal partners has seen a 44% increase since September 11, to $132 billion. Department of Homeland Security R&D will see the greatest increase of any Federal Department -- 15.5% in the coming year. This increase in investment recognizes the key role that the private sector plays in protecting our critical infrastructure. It's also a recognition of the importance of technological innovation to the mission of the Department of Homeland Security."

"I'm a firm strong believer in the power of technology -- perhaps because after long experience, I've found that artificial intelligence beats real stupidity. But in all seriousness, technology will be an important key to success in the war on terrorism. At the same time, however, there is a dark side to the astounding progress of science and technology. The rapid pace of technological development is the greatest single reason that terrorists must be taken more seriously than ever before", said Rep. Cox.

Rep. Chris CoxRep. Cox (at left) elaborated that "Technology, as has been so often noted by commentators, is a great equalizer. The same technology that empowers multinational corporations and the most sophisticated national security forces in the world, inevitably becomes available to entrepreneurial organizations and groups of all sizes and types -- including terrorists. And the time that it takes for technology to move from invention, to deployment, to widespread global availability -- is shrinking every year."

He also discussed investments in technology that both increase security, and economic performance. He said that "We know that these significant increases in private sector security spending represent a quantifiable drag on GDP. But the good news is that this has hardly brought the economy to its knees. Our economy is still growing. In fact, we’re experiencing the fastest economic growth in 20 years."

He offered a few examples. First, "let's say that in the future, a power company wishes to improve its security system to prevent it from being accessed by terrorists. Let's say that one means of accomplishing this objective was to wall off the computer system against a breach by terrorists. Why couldn’t this same investment help prevent a rolling blackout? In that case, better security measures would also mean more reliable power -- preventing the kinds of enormous economic costs that ensued after the blackout in Ohio."

Secondly, he asked "Why can't technology that tracks and inspects containers for security purposes also improve throughput at the ports and satisfy commercial demand for better real-time tracking of shipments?"

Rep. Cox is the Chairman of the House Homeland Security Committee, and a member of the House Commerce Committee, and its Subcommittee on Telecommunications and the Internet.

McCain and Leahy Introduce Low Power FM Bill

6/4. Sen. John McCain (R-AZ) and Sen. Patrick Leahy (D-VT) introduced S 2505, an untitled bill pertaining to low power FM radio licensing.

The Federal Communications Commission's (FCC) adopted a LPFM Report and Order [77 pages in PDF] on January 20, 2000. (This item is FCC 00-19 in MM Docket No. 99-25.) Commercial broadcasters and National Public Radio opposed the order, as did many members of Congress.

The Congress responded by passing the Radio Broadcasting Preservation Act of 2000, over the objections of the FCC, which was then led by former Chairman William Kennard. This Act was first passed as a stand alone bill by the House, and then passed by both the House and Senate as part of the Commerce State Justice (CJS) appropriations bill for FY 2001.

This Act limited the FCC's ability to issue LPFM licenses. It provided, in part, that the FCC "shall modify the rules authorizing the operation of low-power FM radio stations, as proposed in MM Docket No. 99-25, to -- (A) prescribe minimum distance separations for third-adjacent channels (as well as for co-channels and first- and second-adjacent channels) ..." (Parentheses in original.)

S 2505 revisits this issue. The bill contains three substantive provisions.

First, it would repeal the Radio Broadcasting Preservation Act of 2000. S 2505 provides that "Section 632 of the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 2001, (Pub. Law 106-553; 114 Stat. 2762A-111) is repealed."

Second, S 2505 would provide that the FCC "shall modify its rules to eliminate third-adjacent minimum distance separation requirements between (1) low-power FM stations; and (2) full-service FM stations, FM translator stations, and FM booster stations."

Third, it would provide that the FCC "shall retain its rules that provide third-adjacent channel protection for full-power non-commercial FM stations that broadcast radio reading services via a subcarrier frequency from potential low-power FM station interference."

Section 632 of the Commerce State Justice (CJS) appropriations bill for FY 2001 is also known as the "Radio Broadcasting Preservation Act of 2000". The House passed an earlier version as a stand alone bill, HR 3439, by a vote of 274-110 on April 13, 2000. See, story titled "House Passes Bill to Restrain FCC on Low Power FM", April 13, 2000.

Another version of this bill was then passed by both the House and Senate as a part of the CJS appropriations bill for FY 2001.

There was an intense conflict between members of the House and the FCC in early 2000 on this issue. For example, Rep. Billy Tauzin (R-LA), the former Chairman of the House Commerce Committee, was the floor manager of the Radio Broadcasting Preservation Act of 2000, and one of the most adamant opponents of the FCC's LPFM program in the 106th Congress. He stated during the floor debate that he would ask the Department of Justice to conduct a criminal investigation of the FCC's use of public funds to lobby Members of Congress in violation of 18 U.S.C. § 1913.

Rep. Tauzin resigned as Chairman of the Committee, effective February 16, 2004. See, story titled "Rep. Tauzin to Retire from Congress" in TLJ Daily E-Mail Alert No. 830, February 5, 2004.

Section 632 required the FCC to complete a report "not later than February 1, 2001". The FCC released its report [6 pages in PDF] on February 19, 2004.

The report concluded that "Existing third-adjacent minimum distance separation requirements between LPFM stations and existing full-service FM stations and FM translator and booster stations should be eliminated." It added that "Congress should re-address this issue and modify the statute to eliminate the third-adjacent channel distant separation requirements for LPFM stations."

Both Sen. McCain and Sen. Leahy referenced this report in their floor speeches in support of S 2505.

Sen. John McCainSen. McCain (at right) stated that "Due to the broadcasters' subterfuge, Congress added language to a 2000 appropriations bill requiring the FCC to hire an independent engineering firm to further study broadcasters' claims of interference. Well, the results are in! I am not happy to report that after spending almost two years and over two million dollars, the independent study revealed what the FCC and community groups had said all along: LPFM will do no harm to other broadcasters. The study has stripped the broadcasters of their veiled claims by concluding that Low Power FM stations on third adjacent channels would cause virtually no interference to other broadcast stations."

"This bill simply follows the FCC's recommendation: begin licensing Low Power FM stations on third adjacent channels to full power stations without limitations", said Sen. McCain. "The enactment of this bill will immediately make available a number of Low Power FM frequencies."

He also elaborated that "Localism is increasingly important in today's changing media landscape. Rampant ownership consolidation has taken place in the radio industry since passage of the Telecommunications Act of 1996. Since that time, many Americans have complained that the large media conglomerates fail to serve local communities' interests and seem to use their local station license as a conduit to air national programming. Low Power FM was introduced, in part, to respond to such complaints."

Sen. Leahy stated that "Unfortunately, for many years now, the number of low power FM stations the FCC could license has been limited by unrealistic and unnecessary rules requiring these small stations to find available frequencies far from any full power broadcaster. Interference must be avoided if we are to make use of the airwaves. The current rules, however, go beyond what is necessary to protect full power stations from interference, and instead protect them from competition. The focus of today's legislation is the so-called ``third-adjacent rule,´´ which requires that a low power station not broadcast within three frequency intervals of a full power station."

The bill was referred to the Senate Commerce Committee. Sen. McCain is the Chairman. Sen. Leahy is the rankiing Democrat on the Senate Judiciary Committee.

GAO Reports on P2P Piracy at Universities

6/4. The General Accounting Office (GAO) released a report [44 pages in PDF] titled "File Sharing: Selected Universities Report Taking Action to Reduce Copyright Infringement".

The report finds that university officials are taking steps to reduce the use of peer-to-peer technologies, because they are concerned about the bandwidth being consumed by these technologies, and about security risks.

The report states that "most of the officials interviewed stated that their institutions had experienced either network performance problems or security incidents as a result of the use of the file-sharing applications on their networks, and almost all indicated that they had spent additional funds to deal with the problems associated with the use of these applications ..."

The report also states that "Federal law enforcement officials are taking actions to investigate and prosecute organized software-piracy groups that use a wide range of Internet technologies -- including file sharing over peer-to-peer networks -- to illegally distribute copyrighted materials over the Internet."

The GAO is an arm of the Congress.

3rd Circuit Rules in CWA Union Dues Case

6/4. The U.S. Court of Appeals (3rdCir) issued its opinion [PDF] in White v. CWA, a case regarding the agency shop and union dues provisions in a Communications Workers of America (CWA) collective bargaining agreement (CBA).

Corey White is a Verizon subsidiary employee who does not like CWA. Unfortunately for White, Verizon negotiated a CBA with the CWA that provides that the CWA is the exclusive representative of the employees in White's workplace in negotiations with Verizon, and that all employees, regardless of whether or not they are members of the CWA, must pay union dues to the CWA, or loose their jobs.

Under the National Labor Relations Act (NLRA), a worker in such a workplace can only be compelled to to pay those fees that are necessary to perform the duties of an exclusive representative of the employees in dealing with the employer on labor management issues. See, 29 U.S.C. § 158(a)(3) and CWA v. Beck, 487 U.S. 735 (1988).

The CWA adopted an opt out procedure under which employees could exercise their right to limit the amount of union dues that they pay. The CWA gave notice to workers of this opt out procedure in its publication titled CWA News. White stated that this publication is "union propoganda" and that did not read it. Moreover, for most of the years in question, the CWA did not send White a copy. Verizon gave the CWA an incorrect address for White.

White filed a pro se complaint in U.S. District Court (EDPenn) against the CWA alleging a NLRA breach of duty of fair representation claim, and a First Amendment. He sought a refund of the non-bargaining related portion of the fees that he had paid. The District Court granted summary judgment to the CWA.

The Court of Appeals affirmed. First, the National Labor Relations Board has sole jurisdiction over the breach of duty of fair representation claim. Second, there is no state action that would give rise to a First Amendment claim.

People and Appointments

6/4. Computer Associates announced in a release that "Chief Software Architect Sanjay Kumar has decided to leave the Company. Kumar will cease all involvement with the Company's business effective immediately." It added that "the United States Attorney's Office and SEC investigations are continuing and the Company cannot predict the scope, outcome or timing of those investigations, which may include the institution of administrative, civil injunctive or criminal proceedings against the Company and/or other Company officers or employees, the imposition of fines and penalties, suspensions or debarments from government contracting, and/or other remedies and sanctions. The Company also cannot predict what impact, if any, the investigation may have on its results of operations or financial condition, its ability to retain and attract key employees, its credit ratings and ability to finance operations, and its ability to market its products and services."

More News

6/4. Federal Trade Commission (FTC) Chairman Timothy Muris issued a statement regarding the National Do Not Call Registry: "As in the earlier Harris Interactive® survey, the recent survey by Customer Care Alliance demonstrates the overwhelming success of the National Do Not Call Registry. Among those surveyed, 92 percent are aware of the list, and 87 percent of those who signed up have received fewer calls. On average, the survey shows, they no longer receive 80 percent of the calls they received before they signed up – exactly what the FTC predicted when it defended the rule in court. Those on the registry average 6 calls a month; those who are not on the registry receive 22 calls per month. There are, of course, violations, and the FTC is committed to aggressive enforcement, as are our partners at the FCC and in the states."

6/4. Rep. Judy Biggert (R-IL) and Rep. Lincoln Davis (D-TN) introduced HR 4516, the "Department of Energy High-End Computing Revitalization Act of 2004". The bill would authorize the appropriation of $165 Million over three years for "a program of research and development (involving software and hardware) to advance high-end computing systems" at the Department of Energy. The bill states 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 frame". The bill was referred to the House Science Committee.

FCC Announces Agenda for June 10 Meeting

6/3. The Federal Communications Commission (FCC) released the agenda [4 pages in PDF] for its meeting of Thursday, June 10, 2004. The agenda includes a RO and NPRM regarding the eligibility, licensing and service rules for the 2500-2690 MHz band, currently used by ITFS and MDS/MMDS. FCC Chairman Powell stated on June 3 that "These new rules will unleash the power of wireless broadband over fixed and mobile platforms in this band".

This item is third on the agenda. First, the FCC will consider a notice of proposed rulemaking (NPRM) regarding mandatory electronic filing for international telecommunications services and other international filings.

Spectrum Sharing in the 1.6 and 2.4 GHz Bands. Second, the FCC will consider a report and order (RO) concerning spectrum sharing in the 1.6 and 2.4 GHz bands. This item is titled "Review of the Spectrum Sharing Plan Among Non-Geostationary Satellite Orbit Mobile Satellite Service Systems in the 1.6/2.4 GHz Bands (IB Docket No. 02-364); and Amendment of Part 2 of the Commission's Rules to Allocate Spectrum Below 3 GHz for Mobile and Fixed Services to Support the Introduction of New Advanced Wireless Services, including Third Generation Wireless Systems (ET Docket No. 00-258)."

2500-2690 MHz Band and ITFS/MDS. Third, the FCC will consider a RO and further NPRM regarding the eligibility, licensing and service rules for the 2500-2690 MHz band. This band is currently used by Instructional Television Fixed Service (ITFS), Multipoint Distribution Service (MDS), and Multichannel Multipoint Distribution Service (MMDS). See also, FCC web page titled "ITFS & MDS Radio Services".

FCC Chairman Michael Powell discussed this proceeding in a speech [PDF] at the Wireless Communications Association International (WCA) conference in Washington DC on June 3. He said that "We are working hard to develop new rules allowing more efficient and productive use of the spectrum in the 2.5 GHz band, much of which is currently underutilized."

Powell reviewed the history of ITFS/MDS. He said that "Initially designed as a broadcast-style wireless cable service in the 1980s, this band has evolved along with the telecom industry itself, and the Commission has added flexibility to the band’s rules incrementally over the past several years. In 1995, the FCC established geographic licenses for the service and auctioned the unused spectrum. In 1998, we authorized the use of two-way services, and in 2001, added a mobile allocation to the band. Now it is time for new rules that will allow MDS and ITFS licensees to enjoy the complete flexibility available to licensees of other wireless services."

Michael PowellPowell (at right) said that "These new rules will unleash the power of wireless broadband over fixed and mobile platforms in this band, and provide tremendous benefits for Americans in the form of personalized and ubiquitous services, economic growth, and greater security."

"The key to success in the MDS-ITFS proceeding is for the Commission to provide for flexible use of the spectrum disciplined with vibrant competition and a realization of the true opportunity cost of the spectrum resource allows for innovation to flourish" said Powell. "By allowing the creation of secondary markets, we are providing the industry with more commercial flexibility in obtaining and allocating spectrum. Further, our spectrum leasing initiative will make spectrum more easily accessible to wireless operators interested in serving niche markets."

The full title of this item is "Amendment of Parts 1, 21, 73, 74 and 101 of the Commission’s Rules to Facilitate the Provision of Fixed and Mobile Broadband Access, Educational and Other Advanced Services in the 2150-2162 and 2500-2690 MHz Bands (WT Docket No. 03-66, RM-10586); Part 1 of the Commission’s Rules – Further Competitive Bidding Procedures (WT Docket No. 03-67); Amendment of Parts 21 and 74 to Enable Multipoint Distribution Service and the Instructional Television Fixed Service Amendment of Parts 21 and 74 to Engage in Fixed Two-Way Transmissions (MM Docket No. 97-217); Amendment of Parts 21 and 74 of the Commission’s Rules with Regard to Licensing in the Multipoint Distribution Service and in the Instructional Television Fixed Service for the Gulf of Mexico (WT Docket No. 02-68, RM-9718); and Promoting Efficient Use of Spectrum Through Elimination of Barriers to the Development of Secondary Markets (WT Docket No. 00-230)."

See also, story titled "FCC Announces NPRM To Provide Flexibility To Users of MMDS/ITFS Spectrum" in TLJ Daily E-Mail Alert No. 624, March 17, 2004.

Competition in Video Markets. Fourth, the FCC will consider a notice of inquiry (NOI) seeking information and comments for its 11th annual report to the Congress on the status of competition in the market for the delivery of video programming. The Communications Act, as amended by the 1992 Cable Act, requires these annual reports. See, 47 U.S.C. § 548 (g). The FCC released its 10th annual report [146 pages in PDF] on competition in video markets on January 28, 2004.

TRS. Fifth, the FCC will consider a RO, order on reconsideration, and further NPRM regarding the provisions, regulations, and compensation of telecommunications relay service (TRS) for persons with hearing and speech disabilities. This is CC Docket Nos. 90-571, 98-67, and 03-123.

§ 251 Unbundling and Multiple Dwelling Units. The sixth and final item on the agenda is consideration of an order on reconsideration regarding requests from BellSouth and Sure West to reconsider and/or clarify the unbundling obligations, under 47 U.S.C. § 251, of incumbent local exchange carriers (ILECs) relating to multiple dwelling units and the network modification rules. This is CC Docket No. 01-338, CC Docket No. 96-98, and CC Docket No. 98-147.

The meeting will be held at 9:30 AM at the FCC, 445 12th Street, SW, in Room TW-C05, the Commission Meeting Room. The meeting is open to the public, and will be webcast by the FCC.

Powell Addresses Wireless Broadband Issues

6/3. Federal Communications Commission (FCC) Chairman Michael Powell gave a speech [PDF] at the Wireless Communications Association International (WCA) conference in Washington DC.

Powell stated, as he has in the past, that "The FCC's role -- and my mission -- is to facilitate competition that will spur broadband deployment and make this goal a reality. Wireless broadband can bring much needed competition to existing DSL and cable-modem service."

Powell also addressed unlicensed use of spectrum. He said that "In the unlicensed bands, we have found that innovation multiplies when the participants are able to cooperatively introduce a number of new broadband services only lightly touched by regulation. That's why we continue to promote innovative uses of unlicensed spectrum such as our allocation of additional spectrum in the 5 GHz band and our recent inquiry smart radio devices that could make use of unused broadcast television spectrum without creating interference. We also will continue to support ultrawideband technologies and look to new and emerging platforms such as broadband over power lines for solutions."

Powell also discussed the FCC's report and order and notice of proposed rulemaking, to be considered at the June 10 meeting of the FCC, regarding eligibility, licensing and service rules for the 2500-2690 MHz band, currently used by ITFS and MDS/MMDS. See, story in this issue titled "FCC Announces Agenda for June 10 Meeting".

Finally, Powell addressed economic growth. He said that "Our economy's explosive growth at the end of last year is directly attributable to our investments in the Internet and information technologies in the 90's. If the United States hopes to see its economy grow in the future, I think the continued proliferation of broadband technologies -- with wireless playing a critical part -- is the key to that solution."

House Commerce Committee Approves Satellite Home Viewer Extension and Reauthorization Act

6/3. The House Commerce Committee amended and approved a committee print of HR __, the "Satellite Home Viewer Extension and Reauthorization Act".

The Committee approved, by voice vote, an amendment [48 pages in PDF] offered by Rep. Fred Upton (R-MI), the Chairman of the Subcommittee on Telecommunications and the Internet. The Committee also approved, by voice vote, an amendment [1 page in PDF] offered by Rep. Barbara Cubin (R-WY).

See, committee print [23 pages in PDF] as reported by the Subcommittee on Telecommunications and the Internet on April 29, 2004. The Upton amendment substantially replaces the subcommittee version.

See also, brief prepared statement of Rep. John Dingell (D-MI), the ranking Democrat on the full Committee.

More Capitol Hill News

6/3. The House Financial Services Committee met to mark up several bills. It began its consideration of HR 3574, the "Stock Option Accounting Reform Act", but then postponed further consideration. See, story titled "Capital Markets Subcommittee Approves Stock Options Bill" in TLJ Daily E-Mail Alert No. 897, May 13, 2004.

6/3. The Senate Judiciary Committee held an executive business meeting. The agenda included consideration of S 1635, the "L-1 Visa (Intracompany Transferee) Reform Act of 2003", and S 2013, the "Satellite Home Viewer Extension Act of 2004". The Committee held over items both of these items.

6/3. The House Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property held an oversight hearing titled "Oversight of the Operations of the U.S. Copyright Office". See, prepared testimony [PDF] of Marybeth Peters, the Register of Copyrights.

Tenet Resigns

6/3. George Tenet, Director of Central Intelligence, announced his resignation. He has been head of the Central Intelligence Agency (CIA) since 1997. See, speech to CIA employees.

President Bush delivered a statement in which he said that "He's done a superb job on behalf of the American people." Bush added that "He will serve at the CIA as the director until mid July, at which time the deputy director of the Central Intelligence Agency, John McLaughlin, will serve as the acting director."

See also, joint statement of Sen. Pat Roberts (R-KS) and Sen. Jay Rockefeller (D-WV) the Chairman and Vice Chairman of the Senate Select Committee on Intelligence; statement of Rep. Chris Cox (R-CA), the Chairman of the House Homeland Security Committee; statement of Rep. Jane Harman (D-CA), the ranking Democrat on the House Intelligence Committee; and statement of Attorney General John Ashcroft.

People and Appointments

6/3. The Senate confirmed Judith Herrera to be a Judge of the U.S. District Court for the District of New Mexico by a vote of 93-0. See, Roll Call No. 110.

6/3. The Senate confirmed Kenneth Karas to be a Judge of the U.S. District Court for the Southern District of New York, by a vote of 95-0. See, Roll Call No. 109.

6/3. The Senate confirmed Sandra Townes to be a Judge of the U.S. District Court for Eastern District of New York by a vote of 95-0. See, Roll Call No. 108.

More News

6/3. The U.S. Court of Appeals (9thCir) issued its opinion [PDF] in Ballaris v. Wacker Siltronic, a case involving claims of unpaid overtime wages against a company that manufactures silicon wafers for the computer industry. The Appeals Court affirmed in part and revered in part. This case is Michael Ballaris v. Wacker Siltronic Corporation, U.S. Court of Appeals for the 9th Circuit, App. Ct. No. 02-35956, an appeal from the U.S. District Court for the District of Oregon, Judge Garr King presiding, D.C. No. CV-00-01627-KI.

6/3. The Department of Justice's (DOJ) Antitrust Division announced that it closed its investigation of Movielink, a joint venture of Sony Pictures Entertainment, Inc., Paramount Pictures Corp., Metro Goldwyn Mayer Studios Inc., Warner Bros., and Universal Studios to provide video on demand (VOD) services. The DOJ stated in a release that "The Division’s substantial investigation of Movielink does not indicate that the formation of this joint venture by five of the major movie studios harmed competition or consumers of movies. The investigation focused on whether formation of the joint venture facilitated collusion among the studios or decreased their incentives to license movie content to competing video-on-demand (VOD) providers. The Division considered several theories of competitive harm but ultimately determined that the evidence does not support a conclusion that the structure of the joint venture increased prices or otherwise reduced competition in the retail markets in which Movielink competes. The Division will continue to monitor activity in these emerging markets as part of its ongoing enforcement of the antitrust laws."

Senate Commerce Committee Holds Hearing on FTC Nominees

6/2. The Senate Commerce Committee held a hearing on five pending nominations, including the nominations of Deborah Majoras and Jonathan Liebowitz to be Commissioners of the Federal Trade Commission (FTC). President Bush has nominated Majoras, a Republican, to replace Tim Muris as Chairman, and Liebowitz, a Democrat, to replace Mozelle Thompson.

The hearing did little to establish these nominees' positions on technology related maters within the jurisdiction of the FTC, or their qualifications to be Commissioners. Rather, most of the hearing was taken up by partisan election year posturing on issues largely unrelated to matters that will be decided by the FTC.

Most of the two hour long contentious hearing was devoted to gas prices on the West Coast. Sen. Ron Wyden (D-OR) and Sen. Barbara Boxer (D-CA), who are both Democratic members of the Committee, and who are both up for re-election in November, railed at length about gasoline prices and oil companies. Moreover, they directed their questions and statements solely at the Republican nominee, Majoras.

Sen. John McCain (R-AZ), the Chairman of the Committee, was alone in raising some technology related matters.

See, full story.

Senate Commerce Committee Holds Hearing on Ben Wu Nomination

6/2. The Senate Commerce Committee held a hearing on pending nominations that included the nomination of Benjamin Wu to be Assistant Secretary for Technology Policy at the Department of Commerce. Wu's confirmation hearing was combined with that of several other nominees, including those of Deborah Majoras and Jonathan Liebowitz to be Commissioners of the Federal Trade Commission (FTC). Most of the hearing focused on gasoline prices and the Majoras nomination. Consequently, Committee members spent very little time questioning Wu. No one uttered any criticism of Wu.

Rep. Sherwood Boehlert (R-NY), the Chairman of the House Science Committee, introduced Wu, a former staff member of that Committee. Rep. Boehlert praised Wu, and urged the Senate to confirm him.

Sen. John McCain (R-AZ), the Chairman of the Senate Commerce Committee, raised the subject of funding for the National Institute of Science and Technology (NIST) and staff reductions at the NIST. Otherwise, Wu spent most of the hearing sitting quietly while Democratic Senators railed at Deborah Majoras about gasoline prices.

Ben WuWu (at right) said in his opening statement that he intends to focus the Office of Technology Policy (OTP) "on the process of technological innovation and entrepreneurship; in other words, how the genius of American technology gets developed, how the results of R&D make their way to the marketplace, and how technology can be harnessed to grow companies, jobs, and industries."

He stated that his goals are to "provide the President and the Secretary with quality analyses of important, cutting edge science and technology issues of national concern in order to ensure that American technological preeminence is maintained; establish greater dialogue with the high technology industry sectors; develop rapid response mechanisms to advise on appropriate actions; strengthen interagency collaborations with other federal agencies on issues that cross-cut departmental boundaries; and form greater partnership opportunities with the three entities that perform our nation's research and development -- industry, universities, and the federal government -- in order to enhance our science and technology

Wu has been Deputy Under Secretary for Technology since November of 2001. Before that, he worked for the House Science Committee's Technology Subcommittee. The previous Assistant Secretary for Technology Policy was Bruce Mehlman.

Ken Starr Says the Big Issue in the FCC's TRO and USTA II is Separation of Powers

6/2. Kenneth Starr, an attorney at the law firm of Kirkland & Ellis, gave a speech at a luncheon hosted by the Progress and Freedom Foundation (PFF) titled "The Supreme Court and the Future of the Telecom Act of 1996". Starr argued that the fundamental legal issues raised by the Federal Communications Commission's (FCC) triennial review order's (TRO) unbundling provisions are not about telecommunications. The fundamental issues are executive power, and the separation of powers. See, full story.

House Subcommittee Holds Hearing on DTV Transition

6/2. The House Commerce Committee's Subcommittee on Telecommunications and the Internet held a hearing titled "Advancing the DTV Transition: An Examination of the FCC Media Bureau Proposal".

Ken Ferree, Chief of the Federal Communications Commission's (FCC) Media Bureau (MB) outlined the MB's tentative proposal to expedite the transition to digital television (DTV) in his prepared testimony.

See also, prepared statement of Rep. Joe Barton (R-TX), the Chairman of the full Committee, and prepared statement of Rep. John Dingell (D-MI), the ranking Democrat on the full Committee.

See also, prepared testimony of Edward Fritts (P/CEO of the National Association of Broadcasters), prepared testimony of Robert Sachs (P/CEOfficer of the National Cable & Telecom Association), prepared testimony of Richard DalBello (Satellite Broadcasting & Communications Association), prepared testimony of Gary Shapiro (P/CEO of the Consumer Electronics Association), prepared testimony of Gloria Tristani (United Church of Christ), and prepared testimony of Thomas Lenard (Progress & Freedom Foundation).

The Senate Commerce Committee is scheduled to hold a hearing on the transition to DTV on Wednesday, June 9, 2004.

People and Appointments

6/2. Cathy Carpino was named Deputy Chief of the Federal Communications Commission's (FCC) Wireline Competition Bureau's (WTB) Telecommunications Access Policy Division (TAPD). She was previously Assistant Chief in the FCC's Enforcement Bureau's (EB) Investigations and Hearings Division. Before that, she worked in the WCB's Competition Policy Division. Before joining the FCC in 2001, she worked for Massachusetts Department of Telecommunications and Energy. See, FCC release [PDF].

6/2. Katie King was named Special Counsel in the Federal Communications Commission's (FCC) Wireline Competition Bureau's (WTB) Telecommunications Access Policy Division (TAPD). She has been an Attorney Advisor in the TAPD since September 1997. Before joining the FCC she was Majority Communications Counsel for the Senate Commerce Committee. She was also previously a Legislative Assistant for former Sen. Larry Pressler (R-SD). She is also a former associate at the law firm of Wiley Rein & Fielding. See, FCC release [PDF].

6/2. The Senate Commerce Committee held a hearing on pending nominations, including that of Brett Palmer to be Assistant Secretary for Legislative and Intergovernmental Affairs at the Department of Commerce. No members of the Committee expressed opposition. He is currently Deputy Assistant Secretary for Trade Legislation and acting Assistant Secretary for Legislative and Intergovernmental Affairs.

U.S. and Mexico Settle Telecom Dispute

6/1. The Office of the U.S. Trade Representative (USTR) announced that "The United States and Mexico reached an agreement today to resolve their ongoing WTO dispute over international telecommunications services." See, USTR release [PDF].

In February of 2002 the U.S. submitted its complaint to the World Trade Organization's (WTO). On April 2, 2004, the WTO's Dispute Settlement Body released its panel ruling [256 pages in PDF]. The panel ruled that Mexico's current regime for international telecommunications violates Mexico's WTO obligations. For example, the panel found that Mexico breached its commitment to ensure that U.S. carriers can connect their international calls to Mexico's major supplier, Telmex, at cost-based rates.

The USTR stated that the agreement announced on June 1 provides that "Mexico will remove the provisions of Mexican Law relating to the proportional return system, uniform tariff system, and the requirement that the carrier with the greatest proportion of outgoing traffic to a country negotiate the settlement rate on behalf of all Mexican carriers for that country. Both countries believe that the elimination of these provisions will allow the competitive commercial negotiations of international settlement rates."

The USTR added that the agreement provides that "Mexico will allow the introduction of resale-based international telecommunications services in Mexico by 2005, in a manner consistent with Mexican law."

GAO Reports on Economic Arrangements Among Small Webcasters

6/1. The General Accounting Office (GAO) released a report [47 pages in PDF] titled "Intellectual Property: Economic Arrangements among Small Webcasters and Third Parties and Their Effect on Royalties".

This report was required by the Small Webcaster Settlement Act of 2002, which was enacted late in the 107th Congress. This was HR 5469. The House passed the bill on October 8, 2002. The Senate passed it on November 15, 2002. President Bush signed it on December 4, 2002. It is now Public Law 107-321.

In 1995, the Congress enacted the Digital Performance Right in Sound Recordings Act. This Act created an intellectual property right in digital sound recordings. That is, it provided that royalties are due when copyrighted sound recordings are digitally transmitted. In 1998, the Congress enacted the Digital Millennium Copyright Act (DMCA). This Act clarified that webcasters are covered, and provided webcasters with a compulsory license, with royalty rates to be determined by a Copyright Arbitration Royalty Panel (CARP) at the Library of Congress.

On June 20, 2002, the Librarian of Congress issued his final rule regarding webcasting rates. It provides the terms for the statutory license for eligible nonsubscription services to perform sound recordings publicly by means of digital audio transmissions, also known as webcasting, pursuant to 17 U.S.C. § 114, and to make ephemeral recordings of sound recordings for use of sound recordings under the statutory license set forth in 17 U.S.C. § 112.

The Librarian also released a summary stating that he "accepted the recommendation of the Register of Copyrights and rejected the rates and terms recommended by a Copyright Arbitration Royalty Panel (CARP) ... The most significant difference between the CARP's determination and the Librarian's decision is that the Librarian has abandoned the CARP's two tiered rate structure of 0.14¢ per performance for ``Internet  only´´ transmissions and 0.07¢ for each retransmission of a performance in an AM/FM radio broadcast, and has decided that the rate of 0.07¢ will apply to both types of transmission."

The Small Webcaster Settlement Act of 2002 provided relief for small webcasters. For example, rather than paying on a per performance formula, the Act provide a percentage of revenue option.

The GAO report states that "During the debate on the Small Webcaster Settlement Act, copyright owners also raised concerns about the economic arrangements that small webcasters have with third parties, arguing that these arrangements could produce revenues or expenses that might not be included in the calculation of royalties that the small webcasters owed to them. To provide more information on such arrangements, the Congress mandated that GAO, in consultation with the Register of Copyrights, prepare a report on (1) the economic arrangements between small webcasters and third parties and (2) the effect of those arrangements on royalties that are based on a percentage of the webcaster’s revenues or expenses."

Consequently, Section 6 of the Act required the GAO to prepare a report "concerning the economic arrangements among small commercial webcasters covered by agreements entered into pursuant to section 114(f)(5)(A) of title 17, United States Code, as added by section 4 of this Act , and third parties, and the effect of those arrangements on royalty fees payable on a percentage of revenue or expense basis."

The GAO report finds that "Small webcasters have a variety of economic arrangements with third parties, such as bandwidth providers, businesses seeking or selling advertising space, and merchandise providers. Virtually all of the webcasters that we interviewed -- the 30 that had agreed to the royalty terms in the small webcaster agreement and the 28 that had not -- reported having arrangements with bandwidth providers from 1998 through 2003."

The report also finds that "Forty webcasters reported arrangements for selling advertising space either directly or through advertising firms. However, advertising sales have remained low, according to industry analysts, in part because of the collapse of the high technology business sector since 2000 and the relative novelty of the Internet as an advertising medium."

Also, "Twenty-five, or 44 percent, of the small webcasters that we contacted also reported arrangements with businesses to sell merchandise, such as T-shirts and coffee mugs, through their Web sites. Less commonly reported arrangements included those with companies that help small webcasters manage or obtain advertising for their Web sites such as by inserting ads on the Web site or into the webcast itself or selling advertising based on the aggregate audiences of multiple webcasters."

Finally, the GAO report concludes that the data "suggest that the overall effect of economic arrangements between small webcasters and third parties on royalties owed to copyright owners has been minimal to date."

It elaborates that "Of the 30 small webcasters we interviewed that had agreed to the terms of the small webcaster agreement, 27 provided us with financial data. Nineteen of the 27 reported revenue and expense estimates that were below the levels that would result in royalty payments at an amount greater than the minimum fee for either or both of the time periods for which payments were to be made. The remaining 8 owed royalties that exceeded the minimum fee. In addition, 2 of the 13 small webcasters that reported receiving free or reduced-price goods or services did not report the free service they received as revenue in their calculations of royalties."

However, GAO report adds that "these data may not be reflective of conditions that may develop as the industry matures. Specifically, revenues and expenses of small webcasters might increase as they attract more listeners, and advertising opportunities and rates may also increase as the webcasting industry matures and advertisers rely more on the Internet as part of their advertising efforts, according to industry analysts."

The report was prepared for Sen. Orrin Hatch (R-UT) and Sen. Patrick Leahy (D-VT), the Chairman and ranking Democrat on the Senate Judiciary Committee, and Rep. James Sensenbrenner (R-WI) and Rep. John Conyers (D-MI), the Chairman and ranking Democrat on the House Judiciary Committee.

GAO Reports on Spectrum Management

6/1. The General Accounting Office (GAO) released a report [42 pages in PDF] titled "Spectrum Management: Better Knowledge Needed to Take Advantage of Technologies That May Improve Spectrum Efficiency".

The report was prepared for Rep. Tom Davis (R-VA), the Chairman of the House Government Reform Committee, and Rep. Adam Putnam (R-FL), the Chairman of the Subcommittee on Technology, Information Policy, Intergovernmental Relations, and the Census. Hence, it is primarily about spectrum management as it affects government agency users.

The report finds that federal agencies have little incentive to use spectrum efficiently. The report also finds that current management of spectrum impedes efficient use, such as by compartmentalized allocation of spectrum. The report dismisses market based solutions for government users as "difficult". Rather, it contains six recommendations for action. Basically, it recommends further study by the Federal Communications Commission (FCC) and the National Telecommunications and Information Administration (NTIA).

The GAO report finds that "The agencies that we reviewed have made some investments in technologies that provide improved spectrum efficiency. However, these investments have been primarily driven by the imperatives of their individual missions -- not by an underlying, systematic consideration of spectrum efficiency."

The report also finds that current management of spectrum impedes efficient use. It states that "The current structure and management of spectrum use in the United States may limit the development and use of some spectrum efficient technologies. Because the spectrum allocation structure largely compartmentalizes spectrum by types of services (such as aeronautical radio navigation) and users (federal, nonfederal, and shared), the capability of emerging technologies that are designed to use spectrum in different ways is often diminished." (Parentheses in original.)

The report elaborates that, for example, "technologies like software-defined cognitive radios can be adapted to operate in virtually any segment of spectrum and, in the future, may be able to adapt to realtime conditions and make use of underutilized spectrum in a given location and time. Currently the spectrum allocation system, however, may not provide the freedom needed for these technologies to operate across existing spectrum designations."

The report adds that "defining new rules to accommodate these emerging technologies requires knowledge about spectrum use that is not currently available."

The report also finds that "there are few federal regulatory requirements and incentives for agencies to use spectrum more efficiently. While NTIA is responsible for managing the federal government’s use of spectrum and ensuring spectrum efficiency, NTIA primarily relies on individual agencies to ensure that the systems they develop make as efficient use of the spectrum as possible. Agencies' guidance and policies, however, do not require systematic consideration of spectrum efficiency in their acquisitions. The lack of economic consequence associated with the manner in which spectrum is used has also provided little incentive to agencies to pursue opportunities proactively to develop and use technologies that would improve spectrum efficiency governmentwide."

It also states that "agencies have little or no economic incentive to use the radio-frequency spectrum more efficiently because they pay only small administrative fees for its use. Once it is allocated and users gain access to the spectrum, there are generally no financial incentives for them to consider accommodating other users, or in many cases, even to move to more efficient technologies."

The report then addresses market based approaches to spectrum management. It finds that "creating viable economic incentives to achieve spectrum efficiency in the U.S. federal government may be difficult. ... NTIA could face several challenges if it decides to use such incentives. First, implementing a market-based approach may be difficult for some agency functions that are critical and unique, such as public safety and national defense. Second, incentives that would require greater flexibility among license holders of spectrum may ultimately result in problems of interference. ... Third, it is unclear whether licensees would have the right to buy and sell spectrum, and what rights would be conferred and under what circumstances rights would be granted. Finally, while it may be possible to impose fees on federal agencies' use of assigned spectrum, it is far from obvious how such fees or other economic incentives could be applied to agencies’ opportunistic use of white and gray spaces in the spectrum -- as would be the case with software-defined cognitive radios, which adapt their use of the spectrum in real time."

Finally, the report offers three recommendations for the NTIA and FCC, and three for the NTIA. It recommends NTIA and FCC jointly "assess and determine the feasibility of redefining the spectrum allocation system to build in greater flexibility where appropriate to facilitate emerging technologies; develop and implement plans to gain a more thorough and on-going understanding of the current spectrum environment; and strengthen efforts to develop jointly accepted models and methodologies to assess the impact of new technologies on overall spectrum use and increase opportunities to permit testing of those technologies."

It also recommends that the NTIA "establish guidance for agencies to determine and report their future spectrum requirements; strengthen NTIA’s spectrum certification process to more directly address spectrum efficiency; and determine approaches, where appropriate, for providing incentives to agencies to use spectrum more efficiently and then pilot and measure the effectiveness of those approaches."

DC Circuit Dismisses AT&T's Petition for Review of Public Notice of § 272 Sunset

6/1. The U.S. Court of Appeals (DCCir) issued its opinion [16 pages in PDF] in AT&T v. FCC, a case regarding Bell Operating Companies' applications to provide in region interLATA services pursuant to 47 U.S.C. § 271, and regulatory safeguards under 47 U.S.C. § 272. The Court held the § 272 safeguards automatically sunset under § 272(f)(1) by operation of law, and therefore, the FCC need not engage in any reasoned decision making before issuing a public notice of a sunset date.

The Federal Communications Commission (FCC) granted Verizon's § 271 application to provide long distance service in the state of New York on December 22, 1999. It issued a public notice on December 23, 2002, stating that Verizon reached the automatic sunset date under § 272(f)(1) with respect to its long distance operations in New York.

AT&T filed a petition for review challenging the issuance of this public notice. It argued that Verizon retains significant market power, that this justifies the need for continued application of the § 272 safeguards, and that the FCC failed to engage in reasoned decision making by issuing this public notice.

The Court dismissed the petition for review. The Court wrote that "As the Commission indicated in its public notice, the § 272 safeguards sunset ``by operation of law,´´ not by Commission action. The FCC's public notice did not purport to be an order or rule addressing the continued need for § 272 safeguards, and the Act does not require any decision from the Commission in order for the sunset provision under § 272(f)(1) to take effect. Therefore, the Commission was not obligated to engage in ``reasoned decisionmaking´´ when it issued the public notice. Finally, AT&T’s claims regarding the need for alternative safeguards, covering BOC provision of interLATA services after sunset of the § 272 structural and related requirements, remain under consideration by the FCC. Therefore, those claims are not ripe for review."

However, the Court also noted that the FCC has issued a related notice of proposed rulemaking, and "it remains an open question as to whether the Commission will adopt alternative safeguards covering BOCs authorized to provide in-region, interLATA service."

This case is AT&T, petitioner v. FCC and USA, respondents, Verizon, intervenor, U.S. Court of Appeals for the District of Columbia, App. Ct. No. 03-1035, a petition for review of a final order of the FCC.

Senators Nelson and Feinstein Introduce Bill to Regulate Foreign Outsourcing

6/1. Sen. Bill Nelson (D-FL) and Sen. Dianne Feinstein (D-CA) introduced S 2481, the "Increasing Notice of Foreign Outsourcing Act", a bill to regulate the transfer of medical or financial information to a business outside of the U.S., and to regulate the use of foreign call centers. The bill would mandate various notices to consumers, and require notices and periodic certifications to regulators. The bill was referred to the Senate Judiciary Committee, of which Sen. Feinstein is a member.

Sen. Nelson stated in the Senate that "When U.S. companies outsource sensitive customer information for processing overseas, they may be outsourcing our privacy rights along with it." See, Congressional Record, June 1, 2004 at Pages S6275-6.

He continued that "When a U.S. company allows a foreign company to process customer data, the foreign company may be given access to the most sensitive types of customer information. Our health records, bank account numbers, social security numbers, tax forms, and credit card numbers are now being shipped abroad -- without the knowledge of the customer and beyond the reach of U.S. privacy laws."

See also, S 2472, introduced by Sen. Nelson on May 20, 2004, and also titled the "Increasing Notice of Foreign Outsourcing Act".

This bill joins several other bills that would impose protectionist regulatory regimes on the foreign outsourcing of services. See, for example:

 • HR 3820, the "United States Workers Protection Act of 2004", and story titled "Rep. DeLauro and Rep. Dingell Introduce Outsourcing Protectionism Bill" in TLJ Daily E-Mail Alert No. 845, February 27, 2004.

 • HR 4366, the "Personal Data Offshoring Protection Act of 2004", and story titled "Rep. Markey Introduces Data Protectionism Bill" in TLJ Daily E-Mail Alert No. 899, May 17, 2004.

 • S 2312, the "SAFE-ID Act". See, story titled "Sen. Clinton Introduces Bill That Mixes Trade Protectionism and Data Privacy" in TLJ Daily E-Mail Alert No. 876, April 14, 2003.

Supreme Court News

6/1. The Supreme Court returned from a one week recess. It issued one opinion in a criminal case (Yarborough v. Alvarez), and released an order list in which it granted no petitions for writ of certiorari.

6/1. The Supreme Court denied certiorari in Santa Barbara News-Press v. Leonard Ross, No. 03-1338, a case regarding libel and public figures. See, Order List [8 pages in PDF] at page 7.

6/1. The Supreme Court announced that "The Court will take a recess from today until, Monday, June 7, 2004."

People and Appointments

6/1. The Senate confirmed Dennis Saylor to be a Judge of the U.S. District Court for the District of Massachusetts by a vote a 89-0. See, Roll Call No. 104.

More News

6/1. The Department of Homeland Security (DHS) announced that Accenture has been selected to be the prime contractor for the US-VISIT program. See, DHS release.

6/1. The Department of Justice's (DOJ) Antitrust Division released a redacted version [43 pages in PDF] of the trial brief that it filed with the U.S. District Court (NDCal) in US v. Oracle. The parties also filed their Joint Stipulations of Fact [5 pages in PDF]. 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. 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.

Go to News from May 26-31, 2004.