FCC Adopts NPRM Regarding Privacy of Consumer Phone Records

2/10. The Federal Communications Commission (FCC) adopted, but did not release, a Notice of Proposed Rulemaking (NPRM), regarding the practice of pretexting to obtain consumers' confidential phone records.

47 U.S.C. § 222 limits the use and dissemination by telecommunications carriers of customer proprietary network information (CPNI).

On August 30, 2005, Chris Hoofnagle of the Electronic Privacy Information Center's (EPIC) filed a petition for a rulemaking in CC Docket No. 96-115. This petition requested that the FCC commence a rulemaking proceeding to "to establish more stringent security standards for telecommunications carriers" in releasing CPNI. The just adopted NPRM grants, or responds to, this petition.

FCC Chairman Kevin Martin wrote in a separate statement [PDF] that "This item responds directly to the petition filed with the Commission by the Electronic Privacy Information Center (EPIC). In its Petition, EPIC expresses concerns about the sufficiency of carrier practices relating to customer proprietary network information (CPNI) in light of numerous reports that online ``data brokers´´ and private investigators are engaged in the sale of customers’ personal telephone records. EPIC claims that these data brokers are obtaining unauthorized access to CPNI through various possible means, including through ``pretexting´´ -- that is, by pretending to be a customer seeking access to that customer's own telephone records."

The FCC has not yet released the NPRM. It only issued a press release with a brief description of its contents.

The FCC release states that the FCC seeks comments on five measures that might be taken to protect CPNI. They are as follows:

"Passwords set by consumers."
"Audit trails that record all instances when a customer’s records have been accessed, whether information was disclosed, and to whom."
"Encryption by carriers of stored CPNI data."
"Limits on data retention that require deletion of call records when they are no longer needed."
"Notice provided by companies to customers when the security of their CPNI may have been breached."

The FCC release also states that the FCC seeks comments "on a tentative conclusion that it should amend its rules to require carriers to file annual compliance certificates with the Commission, along with a summary of all consumer complaints received in the past year concerning the unauthorized release of CPNI and a summary of any actions taken against data brokers during the preceding year".

Finally, the FCC release states that the FCC seeks comments "on other ways to protect customer privacy, including whether carriers should be required to take the additional step of calling a subscriber's registered telephone number before releasing CPNI in order to verify that the caller requesting the information is actually the subscriber."

The FCC release references "carriers", and Section 222, which applies to "telecommunications carriers". The release does not address confidential consumer information held by providers of information services.

FCC Commissioner Michael Copps wrote in a separate statement [PDF] that "last year, we reclassified wireline broadband Internet access services, but left for another day the chilling question of whether or not privacy protections followed this regulatory remix."

Some of the bills currently pending in the Congress would address pretexting both in the context of carriers and VOIP service providers. See, story in this issue titled "Rep. Smith Introduces Bill to Criminalize Pretexting to Obtain Consumer Phone or VOIP Records".

FCC Commissioner Deborah Tate wrote in a separate statement [PDF] that "While my philosophy leans towards market-based solutions with minimal government intervention, this issue provides a perfect example of the appropriateness of government intervention, investigation, and enforcement. Indeed, national security is of utmost importance, but so is personal security. We must be as vigilant to protect our personal digital borders as we are our nation’s physical borders."

FCC Commissioner Jonathan Adelstein wrote in a separate statement [PDF] that "I also support our efforts to bring swift enforcement action against companies that are violating our rules."

This NPRM is FCC 06-10 in Docket No. 96-115 and RM-11277.

Utah Supreme Court Addresses Personal Jurisdiction Based upon Sending E-Mail

2/10. The Supreme Court of the State of Utah issued its opinion [15 pages in PDF] in Fenn v. Mleads, holding that the courts of Utah cannot exercise personal jurisdiction over an out of state defendant who sends one email message to a state resident without knowledge of the residence of the recipient or the location at which the recipient will retrieve the message.

Background. Brittney Fenn, the plaintiff in the trial court and respondent before the Supreme Court, is a resident of Utah.

Mleads Enterprises, Inc., the defendant and petitioner, is an Arizona corporation based in Arizona. It is a mortgage lead company. These companies typically develop collections of data on consumers seeking mortgages, and then sell data to mortgage lenders. One method that these companies use to obtain data is to send bulk unsolicited e-mail. Mleads contracted with a marketing agent to advertise Mleads's services to consumers. Mleads' agent sent an unsolicited e-mail message to Fenn.

Proceedings Below. Fenn filed a complaint in Utah District Court (trial court) against Mleads and ten John Doe defendants. Fenn also seeks to sue on behalf of others similarly situated. Mleads moved to dismiss for lack of personal jurisdiction. The relevant evidence before the court included the single e-mail message to Fenn. Fenn asserted specific personal jurisdiction. The District Court dismissed the case for lack of personal jurisdiction.

The Utah Court of Appeals (intermediate appellate court) issued its opinion on November 12, 2004, reversing the District Court. The Court of Appeals concluded that "Sending one email to a resident of Utah is sufficient ``contact´´ to satisfy the long-arm statute and the minimum contacts requirement of due process for a statutory claim arising from the sending of that email. Additionally, the state's and Fenn's interests in this case trump the burdens imposed upon Mleads. Thus, we hold that the district court ruled incorrectly in dismissing this case on summary judgment for lack of personal jurisdiction."

The Supreme Court of Utah granted certiorari on March 17, 2005. See also, story titled "Utah Supreme Court Grants Certiorari to Decide Whether Sending One E-Mail Can Create Personal Jurisdiction" in TLJ Daily E-Mail Alert No. 1,102, March 24, 2005.

In the proceedings below, Fenn asserted specific personal jurisdiction, but not general jurisdiction. Hence, the only issue before the Supreme Court was whether the court could exercise specific personal jurisdiction.

Supreme Court Opinion. The Supreme Court began by noting that the court has jurisdiction if "(1) the Utah long-arm statute extends to defendant’s acts or contacts, (2) plaintiff’s claim arises out of those acts or contacts, and (3) the exercise of jurisdiction satisfies the defendant's right to due process under the United States Constitution."

However, since the parties agreed that the long arm statute extends to Mleads's actions, and that Fenn's claim arises out of those acts or contacts, the only issue before the Supreme Court was the due process limitations upon the exercise of personal jurisdiction. The Supreme Court then applied International Shoe v. Washington, 326 U.S. 310 (1945), its progeny, and related opinions of the Utah Supreme Court.

The Supreme Court held that sending a single e-mail message, of a limited nature, when the sender does not know the location of the recipient, is not a sufficient contact to create specific personal jurisdiction.

The Supreme Court wrote that "The fact that the contact with Utah occurred via the Internet does not change the analysis. ``Traditionally, when an entity intentionally reaches beyond its boundaries to conduct business with foreign residences, the exercise of specific jurisdiction is proper,´´ and ``[d]ifferent results should not be reached simply because business is conducted over the Internet.´´ Nevertheless, ``[t]he ‘minimum contacts´ standard is not susceptible of mechanical application, and instead, involves an ad hoc analysis of the facts,´´ particularly when dealing with the Internet because emails and websites present unique and complicated problems for jurisdictional analysis. The main complication is that a defendant, like Mleads, is generally unaware of the geographic location to which it sends an email because that information is not necessarily provided with the email address." (Footnotes omitted.)

The Supreme Court went on to analyze and apply the purposeful availment test, the effects test, and whether "the nature and quality of the activity is generally of such a degree to support the exercise of jurisdiction".

With respect to the nature and quality, the Supreme Court noted that "sending mass emails into Utah, or even a threatening or otherwise tortious individual email, may result in a substantial connection between the defendant and Utah if the nature and quality is such as to have a meaningful impact on Utah and its citizens." However, it concluded that the single e-mail, of an advertising nature, to a person whose residence is unknown, is not of a nature and quality to give rise to personal jurisdiction.

In summary, the Supreme Court wrote that "under a minimum contacts analysis for Internet activity, ``[p]roper inquiry must not focus on the mere quantity of contacts, but rather upon the quality and nature of those contacts as they relate to the claims asserted.´´ We do not intend to permit corporations to hide behind the excuse of ignorance in not knowing where they or their agents send email advertisements. However, before asserting jurisdiction arising out of those emails, a plaintiff must demonstrate a substantial connection to Utah created by the one email contact. Specifically, the plaintiff must establish that the corporation purposefully availed itself of the benefits of conducting business in Utah, knew its email may injure persons in Utah, or the nature and quality of the sent email supports the exercise of personal jurisdiction in Utah. One way, but not necessarily the only way, a plaintiff may establish that the nature and quality of the activity supports jurisdiction is to demonstrate that the defendant´s conduct created an active or interactive relationship with Utah. However, we do not limit jurisdiction under the general ``nature and quality´´ to the active/passive test." (Footnotes omitted.)

Fenn was represented by Denver Snuffer of Sandy, Utah, and Jesse Riddle of Draper, Utah. MLead was represented by Jill Dunyon, of Snow, Christensen and Martineau in Salt Lake City, Utah, and Derek Newman, Roger Townsend, and Venkat Balasubramani of Newman & Newman in Seattle, Washington.

The present case is Brittney Fenn v. Mleads Enterprises, Inc., Supreme Court of the State of Utah, Sup. Ct. No. 20041072-SC, a petition for writ of certiorari to the Court of Appeals. The Court of Appeals case number is 20030948-CA. Its opinion is reported at 2004 UT App 412 and 103 P.3d 156. The case was filed in the District Court, Third District, Sandy Department, Judge Denise Lindberg presiding. Its case number is 030400108.

Texas Sues Seller of Consumers' Phone Records

2/10. The state of Texas filed a civil complaint [11 pages in PDF] in state court in Travis County, Texas, against John Strange dba usaskiptrace.com, AMS Research Services, Inc., and Worldwide Investigations, Inc. dba USA Skiptrace, alleging violation of Texas Deceptive Trade Practices Act (TDTPA) in connection with the defendants' acquisition and sale of consumers' confidential phone records from telecommunications carriers.

The complaint alleges that AMS Research Services, Inc. and Worldwide Investigations, Inc. are Colorado based companies that conduct business in Texas.

The complaint alleges that the defendants "operate an online data broker service" that finds and sells consumers phone records, without the consent of those consumers.

It alleges, upon information and belief, how the defendants obtain this confidential information. First, they "obtain these call detail records through a variety of deceptive pretexts including contacting telecommunications carriers’ customer service representatives and impersonating the person whose records are being sought, misrepresenting that they are providing assistance to a customer who cannot speak, or that they are associated with the carrier and need access to a certain person’s cell phone records for legitimate business reasons."

In addition, they "gain access to some customer call records, including that of Texas residents, by accessing accounts through the web sites maintained by the carriers for the use of customers. On information and belief, Defendants obtain personal information about the customers whose records they seek to access and in turn, use that personal information to gain access to the customer's telephone account records via the carriers’ web sites.

The complaint seeks injunctive relief and damages.

The Court issued a Temporary Restraining Order [4 pages in PDF] on February 9, 2006. It bars the defendants from "selling or offering to sell call detail records" either "to a Texas resident" or "of a Texas resident". It also bars the defendants from seeking to obtain telephone records by pretexting methods.

The state of Texas also issued a release that states that "The Attorney General continues to investigate other data brokers who may be violating the law and breaching the privacy of innocent consumers."

This case is State of Texas v. John Strange dba usaskiptrace.com, AMS Research Services, Inc., and Worldwide Investigations, Inc. dba USA Skiptrace, District Court of Travis County Texas, 250th Judicial District, Case No. D-1-GV-06-0001666.

Disclosure. One of the attorneys for the state of Texas associated with this case is a former classmate of the publisher of Tech Law Journal.

FCC Describes Annual Report on Video Competition

2/10. The Federal Communications Commission (FCC) adopted, but did not release, its report titled "12th Annual Report to Congress on Video Competition". This annual report is required by statute.

The FCC issued a release [4 pages in PDF] that describes the report. It states that the FCC "finds that the competitive MVPD market continues to provide consumers with increased choice, better picture quality, and greater technological innovation. The report concludes that almost all consumers may opt to receive video services from over-the-air broadcast television, a cable service, and at least two DBS providers."

The FCC release also states that "a growing number of consumers can access video programming through digital broadcast spectrum, fiber to the node or to the premises, or video over the Internet. Moreover, once consumers have selected a provider, technology such as advanced set-top boxes, digital video recorders, and mobile video services give them even more control over what, when, and how they receive information. Furthermore, many MVPDs offer nonvideo services in tandem with their traditional video services."

The FCC release states that "As of June 2005, there were 109.6 million TV households, compared to 108.4 million in June 2004. Of that number, approximately 94.2 million TV households subscribe to an MVPD service, as compared to 92.2 million as of June 2004." It adds that the cable share of MVPD subscribers declined from 71.6% in June of 2004 to 69.4% in June of 2005, while the DBS share continued to grow, to 27.7% in June of 2005.

The FCC release continues that "The amount of web-based video provided over the Internet continues to increase significantly each year. The sale and rental of home videos, including videocassettes and DVDs, offer consumers an alternative to the premium and pay-per-view offerings of MVPDs. Video-on-demand services provided by cable, DBS, and Internet providers have emerged, in turn, as competitive alternatives to home video."

The FCC release also states that U.S. incumbent local exchange carriers (ILECs) "have reported plans to provide video service". Also, "In foreign markets, a number of incumbent operators and new entrants are providing Internet protocol television (IPTV) over DSL."

Kyle McSlarrow, head of the National Cable Telecommunications Association (NCTA), stated in a release that "The FCC report confirms that the home video marketplace has never been more competitive and, `continues to provide consumers with increased choice, better picture quality, and greater technological innovation.´" He added that "As even more providers enter this competitive market, it is important that government policies continue to promote such investment and innovation, and treat all providers equally."

This report is FCC 06-11 in MB Docket No. 05-255.

NAB Seeks Changes of Broadcast/Newspaper Cross-Ownership and Television Duopoly Rules

2/10. National Association of Broadcasters (NAB) P/CEO David Rehr sent a letter [4 pages in PDF] to Federal Communications Commission (FCC) Chairman Kevin Martin regarding changing the FCC's broadcast ownership rules, and particularly the broadcast and newspaper ownership prohibition, and the television duopoly rule.

He wrote that "the complete prohibition on newspaper/broadcast combinations was no longer justified. The crossownership prohibition has inhibited the development of new innovative media services, especially digital and on-line services that have features of both the electronic and print media. The ban also precluded struggling newspaper and broadcast entities, including those in medium and small markets, from joining together to improve, or at least maintain, existing local news operations."

With respect to the duopoly rules, he argued that "local television broadcasters are bearing the expense of the DTV transition and the loss of network compensation at the same time they are facing ever-increasing competition from cable and Direct Broadcast Satellite for audiences and national and local advertising revenue. NAB stresses that these pressures on local station finances will only continue in the future with new forms of competition in the video marketplace. For example, video content is already being offered via the Internet, mobile phones and the iPod."

Hence, he argued that there is a "need to allow television stations in markets of all sizes to form more efficient and viable ownership arrangements, including duopolies."

People and Appointments

2/10. President Bush nominated Gordon England to be Deputy Secretary of Defense. See, White House release. President Bush gave England a recess appointment on January 4, 2006. See, White House release. Bush originally nominated England for this position in April of 2005.

2/10. President Bush nominated Robert Lenhard to be a member of the Federal Election Commission (FEC) for a term expiring April 30, 2011. President Bush nominated Hans von Spakovsky to be a member of the FEC for a term expiring April 30, 2011. President Bush nominated Steven Walther to be a member of the FEC for a term expiring April 30, 2009. See, White House release. President Bush gave all three recess appointments on January 4, 2006. See, White House release. See also, story titled "Bush Announces FEC Nominations" in TLJ Daily E-Mail Alert No. 1,276, December 20, 2005.

2/10. President Bush nominated Boyden Gray to be the U.S. Representative to the European Union. See, White House release. Gray currently holds a recess appointment. See also, story titled "Bush Nominates Boyden Gray to be US Representative to EU" in TLJ Daily E-Mail Alert No. 1,182, July 26, 2005.

2/10. President Bush nominated Julie Myers to be an Assistant Secretary of Homeland Security, for the Bureau of Immigration and Customs Enforcement. See, White House release. Bush gave her a recess appointment on January 4, 2006. See, White House release.

2/10. President Bush nominated Benjamin Powell to be General Counsel of the Office of the Director of National Intelligence. See, White House release. Bush gave him a recess appointment on January 4, 2006. See, White House release.

More News

2/10. The Department of Homeland Security (DHS) announced in a release that it has completed an exercise titled "Cyber Storm". The DHS stated that this was a "government-led cyber security exercise to examine response, coordination, and recovery mechanisms to a simulated cyber-event within international, federal, state, and local governments, in conjunction with the private sector". The DHS added that this "exercise simulated a sophisticated cyber attack through a series of scenarios directed against critical infrastructures", including "a cyber incident where a utility company's computer system is breached". The DHS did not disclose the results or findings of the exercise.

2/10. The Government Accountability Office (GAO) released a report [PDF] titled "Telecommunications: Challenges to Assessing and Improving Telecommunications For Native Americans on Tribal Lands". The report states that "As of 2000, the telephone subscribership rate for Native American households on tribal lands was substantially below the national rate, while the rate for Internet subscribership on tribal lands was unknown due to a lack of data. According to data from the 2000 decennial census, about 69 percent of Native American households on tribal lands in the lower 48 states had telephone service, which was about 29 percentage points less than the national rate of about 98 percent. About 87 percent of Native American households in Alaska native villages had telephone service, also considerably below the national rate." (Footnote omitted.)

Republican Senators Announce Agreement on PATRIOT Act Extension

2/9. Sen. John Sununu (R-NH), Sen. Larry Craig (R-ID), Sen. Lisa Murkowski (R-AK), and Sen. Chuck Hagel (R-NE) announced that they have reached an agreement with representatives of the Bush administration regarding extending the sunsetted provisions of the USA PATRIOT Act.

The House approved the conference report [219 pages in PDF] on HR 3199, the "USA PATRIOT Improvement and Reauthorization Act of 2005", on December 14, 2005, by a vote of 251-174. See, story titled "House Approves Conference Report on PATRIOT Act Extension Bill" in TLJ Daily E-Mail Alert No. 1,273, Thursday, December 15, 2005.

The Senate has not approved this conference report. A cloture motion to end a filibuster of the bill failed on December 16, 2005. The vote was 52-47. A supermajority of 60 votes is required for approval. Republicans voted 50-4. Democrats voted 2-44. See, Roll Call No. 358. The four Republicans who voted against the motion were Sen. Sununu, Sen. Craig, Sen. Murkowski, and Sen. Bill Frist (R-TN). However, Sen. Frist, the Senate Majority Leader, favored approval of the motion, but switched his vote to no at the last moment, to preserve his ability to bring a motion to reconsider. See, "Cloture Motion on PATRIOT Act Extension Bill Defeated in Senate" in TLJ Daily E-Mail Alert No. 1,275, Monday, December 19, 2005.

The just announced agreement would bring the vote in favor of another cloture motion up to 56 -- still four votes short of a 60 vote majority. However, two Democrats, Sen. Tim Johnson (SD) and Sen. Ben Nelson (D-NE), voted for the cloture motion in December. The switch of these Republican votes would deprive Democrats opposing cloture of the claim that opposition is bipartisan. In contrast, support for the cloture motion would be bipartisan, if only barely.

The four Senators who just announced an agreement with the administration stated in their first release that "The package includes modifications to the Conference Report in three specific areas to better protect civil liberties while still providing law enforcement with expanded tools to conduct terrorism investigations."

The Senators' first release offers briefs summaries of the three changes. However, the four Senators also issued a more detailed second release [PDF] that limits and qualifies the statements in the first release.

Section 215 Orders. The most controversial of the sunsetted sections of the PATRIOT Act is Section 215, which pertains to access to business records, including library records, under the Foreign Intelligence Surveillance Act (FISA).

The Senators' first release states that recipients of Section 215 orders "would have the explicit right to challenge the non-disclosure requirement" of these orders.

The Senators' second release offer more details, but not actual statutory language. It provides details that suggest that the right to challenge the non-disclosure requirement of Section 215 would be cosmetic and illusory. For example, these orders could be challenged "after one year of receipt". After one year the records would have been disclosed, privacy rights impacted, and the issue rendered moot.

Moreover, it provides that if certain Department of Justice (DOJ) officials certify to the Court "that disclosure may endanger the national security of the United States or interfere with diplomatic relations, such certification shall be treated as conclusive, unless the judge finds that the certification was made in bad faith".

And furthermore, the Court could only quash a Section 215 order if there is "no reason to believe that disclosure may endanger the national security of the United States, interfere with a criminal, counterterrorism, or counterintelligence investigation, interfere with diplomatic relations, or endanger the life or physical safety of any person". There would be no weighing or balancing. If the government can articulate any reason, the order withstands review.

Under this proposed settlement, few if any Section 215 orders would ever be quashed by a Court.

Disclosure of Attorney in NSL Challenges. The Republican Senators' first release also addresses the procedure for challenging National Security Letters (NSLs), another extrajudicial procedure. It states that "The agreement removes a requirement from the conference report that an individual provide the FBI with the name of an attorney consulted regarding an NSL."

The second release adds that the agreement "Removes from the conference report the requirement that a person inform the FBI of the identity of an attorney to whom disclosure was made or will be made to obtain legal advice or legal assistance with respect to a NSL order".

NSLs and Libraries. Third, the Senators' release states that the agreement "Clarifies current law to ensure that libraries functioning in their traditional roles, including providing Internet access, are not subject to NSLs".

Reaction. Sen. Patrick Leahy (D-VT), who is one of the leading opponents of the Conference Report, stated in a release that "A bipartisan coalition in the Senate made a valiant stand to make clear that security and liberty are not mutually exclusive values in America. We can and we should have both. But White House nay-saying and partisanship have obstructed this from becoming the better bill that it should be, and that is deeply regrettable."

The Center for Democracy and Technology (CDT) stated in its web site that "The deal makes minor changes and fails to include the common sense privacy and civil liberties protections from the bill passed unanimously by the Senate last summer."

The ACLU's Caroline Fredrickson stated in a release that "Serious problems remain in the Patriot Act that require serious reforms ... Unfortunately, the proposed changes to the reauthorization bill do not correct the secret record search powers and do not require that there be any individualized suspicion of wrongdoing by Americans before their financial, medical, library or other records can be searched. Common sense reforms could have required that records sought be connected to a suspected terrorist or terrorist organization."

FCC Report Reevaluates A La Carte Video Programming

2/9. The Federal Communications Commission's (FCC) Media Bureau (MB) released a report [61 pages in PDF] titled "Further Report On the Packaging and Sale of Video Programming Services To the Public". See also, FCC release [PDF].

This report follows the November 18, 2004, report [217 pages in PDF] of the FCC titled "Report on the Packaging and Sale of Video Programming Services to the Public". See also, story titled "FCC Releases Study on Cable and Satellite A La Carte Pricing" in TLJ Daily E-Mail Alert No. 1,024, November 23, 2004.

FCC Chairman Kevin Martin stated in a release [PDF] that "Today, the Commission issued a further report, which concludes the earlier report contained mistaken calculations, relied on unsupported and problematic assumptions, and presented an incomplete analysis. According to today's report, a careful analysis reveals that a la carte and increased tiering could offer consumers greater choice and the opportunity to lower their bills."

The just released report concludes that the "First Report presented an incomplete and flawed analysis of the costs and benefits of bundling in the MVPD marketplace, as compared to offering programming a la carte. Characterizing bundling as an economically efficient way of distributing programming, the First Report paid short shrift to the potential impact of bundling on consumers. Bundling may drive up the price of video programming, making programming less affordable and precluding some consumers from purchasing programming services all together. Moreover, bundling mutes signals from consumers about the programming they find most desirable. Consumers may find that the programming they pay for as part of a bundle contains networks they do not watch and fails to include other quality programming that they would enjoy."

It adds that "further examination reveals the promise of a la carte as a means of combating rising MVPD rates and lowering consumer bills. For example, under a la carte, a consumer could cut his programming bills merely by electing to purchase fewer networks. And a la carte could make service affordable to those who cannot afford bundled rates. A la carte also could offer consumers the ability to pay only for the programming that they value."

It also concludes that "several alternatives for increasing consumer choice merit further consideration. Preliminary analysis suggests that mixed bundles, themed tiers, and subscriber-selected tiers all potentially offer consumer benefits, as compared with bundling channels into tiers of service. Each of these options would allow some consumers to reduce their MVPD bills and permit others to purchase video programming that they do not currently receive because of bundled pricing."

The First Report stated that "a la carte regulation will likely increase operational expenses for MVPDs in three main areas: (1) equipment and infrastructure; (2) customer service operations; and (3) billing and back office support. Unless constrained by regulation, many of these increased costs would likely be passed on to subscribers, resulting in higher subscriber fees. In addition, the MVPD cost increases would be most detrimental to smaller cable operators, who often have more limited and more costly options when it comes to obtaining capital to support investment in their operations."

Sen. Ted Stevens (R-AK), Chairman of the Senate Commerce Committee, stated in a release that "If a la carte is not more expensive for consumers, I will support an effort to take such an approach, subject to discussions with providers on the downside of such a process."

Sen. John McCain (R-AZ) stated in a release that "I am pleased that the Commission has concluded that ‘a la carte’ offering could reduce consumers' cable bills by as much as 13 percent. The report confirms what I have believed for years -- if consumers are allowed to choose the channels their families view then their monthly cable bill will be less. Choice is far preferable to being forced to buy a host of channels they don't even watch."

Sen. McCain (at right) added that "It is regrettable that the cable companies continue to balk at offering channels on an ‘a la carte’ basis and instead continue to raise the price of their bundled offering. The Wall Street Journal recently reported that consumers can expect to rate increases of as much as six percent during 2006. Therefore, I will soon be introducing legislation that would entice all providers of television services to offer an ‘a la carte’ option in addition to a package of channels in return for regulatory relief. I hope that the cable industry will appreciate the ability to choose despite their failure to provide meaningful choices to their customers."

Kyle McSlarrow, head of the National Cable Telecommunications Association (NCTA), stated in a release that "Most studies conclude that a mandated a la carte regime would be more expensive for consumers and result in less diversity in programming. It is disappointing that the updated Media Bureau report relies on assumptions that are not in line with the reality of the marketplace. Over the last 25 years, the American free enterprise system created the most diverse video programming on Earth with the best value for the customer."

McSlarrow added that "The marketplace in which cable, satellite, broadcasters and others vigorously compete for customers should decide video offerings, not mandates and price controls imposed by Washington, D.C. The notion that the government knows better how to improve on a competitive marketplace is not supported by the evidence."

BellSouth's Herschel Abbott stated in a release that BellSouth "is in full agreement with the position expressed by Chairman Martin and some Members of Congress that providers of video programming need to be more responsive to consumer demands for choice with respect to the programs that come into their homes. The surest way to ensure consumer choice of programming options is through increased competition in the video market. Currently, one of the greatest roadblocks to telephone companies providing this competitive stimulant is the existing local franchising process and lack of a streamlined franchising framework. However, if these obstacles are removed, greater customer control over the programs entering their homes is just one of the many consumer benefits of telephone companies' Internet Protocol TV. As long as content can be acquired by competitors in a manner that allows flexibility, BellSouth would look forward to meeting the needs of our customers though a la carte and family-friendly tiered offerings."

PFF Paper Recommends Loser Pays Rule in Patent Litigation

2/9. The Progress and Freedom Foundation (PFF) released a paper [6 pages in PDF] titled "Patents and Loser Pays: Why Not?". It was written by the PFF's Solveig Singleton. See also, PFF release.

The paper states that "The ``American Rule´´ for attorney's fees is that each party pays its own attorney's fees, and this has been the general rule in United States since at least the eighteenth century. ... But judges have the discretion to order the loser to pay the winner's attorney's fees only in exceptional patent cases. Fees are shifted to the alleged patent infringer in only about one percent of suits terminated by pre-trial motion or by trial, almost always because the patent holder was found to be engaging in vexatious litigation or inequitable conduct, failed to investigate whether infringement was present, or abused the discovery process." (Footnotes omitted.)

In contrast, "The ``English Rule´´ or ``loser pays´´ rule is that the loser pays his own attorney's fees and those of the winner".

The paper concludes that "``Loser pays´´ rules discourage nuisance suits over time by encouraging defendants to litigate those suits. In patent law, such an effect would be desirable given current problems with patent quality and the fact that firms have little incentive to seek to invalidate even weak patents."

It adds that "loser pays is the fairest rule as a general matter, because it alone leaves the party in the right wholly compensated after the lawsuit".

People and Appointments

2/9. Claude Allen, President Bush's top domestic policy advisor, resigned. See, White House release.

Sen. Burns Introduces Bill to Expand Universal Service Programs

2/8. Sen. Conrad Burns (R-MT) introduced S 2256, the "Internet and Universal Service Act of 2006".

This bill would require the Federal Communications Commission (FCC) to "ensure that eligible telecommunications carriers have sufficient incentives, through the use of Federal universal service support mechanisms, to invest and deploy network facilities necessary to provide broadband service and broadband voice service for the benefit of all Americans in rural, insular, and high-cost areas".

It requires the FCC to complete a rulemaking proceeding within 180 days "to define advanced telecommunications infrastructure and broadband service". Although, the bill begins the process by providing that this includes "network facilities and capabilities that enable 2-way transmission of information using Internet protocol or any successor protocol".

Under this bill, subsidies would continue to be paid to "any eligible telecommunications carrier", as is currently the case, rather than to consumers of services, as some others have proposed.

Sen. Burns (at right) stated that "As consumers switch to new technologies such as wireless service, e-mail, voice over IP, universal service is slowly taking in less money every year." Hence, his bill would expand the entities that would be taxed to fund the program.

It provides that "Each provider of telecommunications, broadband service, or broadband voice service shall contribute to the Federal universal service funding".

The bill provides that "broadband service" means "transmission of information" at "200 kilobits per second in at least 1 direction", and includes, but is not limited to, DSL, cable modem, and spectrum based service.

The bill defines "broadband voice service" as a "2-way voice service" that is "interconnected with a public switched network".

The bill also provides that the taxed service providers may put a line item on their customer billing statements, but that if they do so, they "shall" label it as "Federal Universal Service Fee". This would have the effect of prohibiting service providers from accurately and fully informing their customers of the nature of program.

The bill also addresses subsidies for rural health care providers.

See also, statement in Sen. Burns' web site, and expanded version in Congressional Record, February 8, 2006, at Pages S866-7.

Walter McCormick, head of USTelecom (formerly USTA), stated in a release that "Senator Burns took a step forward in helping to shape the debate on efforts to update our telecom laws and preserve and modernize the nation’s universal service program. We appreciate this initiative on an extremely complex and critical issue and will work closely with the Commerce Committee to enact comprehensive reform legislation this year."

Rep. Smith Introduces Bill to Criminalize Pretexting to Obtain Consumer Phone or VOIP Records

2/8. Rep. Lamar Smith (R-TX) and others introduced HR 4709, the "Law Enforcement and Phone Privacy Protection Act of 2006". The bill would criminalize the practice of pretexting to obtain confidential consumer records from telecommunications carriers and VOIP service providers. It would also criminalize the sale, transfer, or purchase of such confidential records, without the authorization of the consumer. See, full story.

Martin Discusses Network Neutrality

2/8. Federal Communications Commission (FCC) Chairman Kevin Martin answered questions about network neutrality on February 8, 2006, at an event hosted by the American Enterprise Institute (AEI).

Martin (at right) participated in an AEI panel discussion on the just published book by former FCC Commissioner Harold Furchtgott-Roth titled A Tough Act to Follow: The Telecommunications Act of 1996 and the Separation of Powers [Amazon]. He also responded to questions from reporters. See, transcript of Martin's statements regarding network neutrality.

The day before, Tuesday, February 7, 2006, the Senate Commerce Committee held a hearing on net neutrality. See, story titled "Senators Debate Net Neutrality Mandate" in TLJ Daily E-Mail Alert No. 1,305, February 8, 2006. No one from the FCC testified at that hearing.

See, full story.

Rep. Wilson Advocates Updating of FISA

2/8. Rep. Heather Wilson (R-NM), a member of the House Intelligence Committee, released a statement in which she argued that "time has come to review and update the Foreign Intelligence Surveillance Act". She did not indicate how. She also said that more Members of Congress should be briefed.

"FISA was passed in 1978", Rep. Wilson said. "The law has lagged behind the pace of technology. The House Intelligence Committee and my subcommittee will evaluate and review FISA. Based on this work, we will develop legislation to update our foreign intelligence surveillance laws to keep pace with the communications technologies of the twenty-first century while protecting the civil liberties of Americans."

Wilson (at right) said that "The House Intelligence Committee as a whole has to be briefed into this program and fully informed by the Administration on exactly what is being done. We must conduct a complete review of this program. There are serious questions that need answers, and we are starting to get those answers."

She said that "I chair the House Intelligence Subcommittee that oversees the National Security Agency", but was not briefed about the NSA's program.

Rep. Wilson selected her words carefully. She did not state that any briefing should be either "public" or in the format of a "hearing". And, she did not assert that there is any public right to know anything about the NSA's program.

People and Appointments

2/8. The World Trade Organization (WTO) announced that its General Council "noted the consensus on" a slate of chairpersons of WTO bodies. See, WTO release for list of 2006 chairs.

2/8. John White was named to be Director of the Securities and Exchange Commission's (SEC) Division of Corporation Finance. He will start on March 20, 2006. He will replace Alan Beller. White is currently a partner in the law firm of Cravath Swaine & Moore. See, SEC release.

2/8. Mike Mullen was named Director of Government Relations at the National Association of Broadcasters (NAB). He previously worked for Rep. Mike Doyle (D-PA), who is a member of the House Commerce Committee, and its Subcommittee on Telecommunications and the Internet. See, NAB release.

2/8. Mike Snyder was named CEO of Vonage Holdings Corporation. Jeffrey Citron, the founder, and Chairman of the Board, was named Chairman and Chief Strategist. See, Vonage release.

More News

2/8. President Bush signed S 1932, the "Deficit Reduction Act of 2005". See, White House release. Title III of this bill is the "Digital Television Transition and Public Safety Act of 2005". That is, President Bush has signed into law the DTV transition bill. See also, story titled "Congress Enacts DTV Transition Legislation" in TLJ Daily E-Mail Alert No. 1,303, February 3, 2006.

2/8. The Department of Justice (DOJ) filed a two count criminal complaint in U.S. District Court (NDCal) against Premio Inc. alleging collusion and fraud involving the Federal Communications Commission's (FCC) e-rate tax and subsidy program. One count charges Premio with submitting rigged bids to a school district in Fresno, California. The other charges Premio with substituting ineligible equipment for approved equipment, submitting false and fraudulent documents to hide the fact that it installed ineligible equipment, and submitting false invoices. The DOJ also announced in a release that Premio has agreed to plead guilty and pay $1.7 Million in fines and restitution.

2/8. The Department of Justice, state plaintiffs, and Microsoft filed a pleading [20 pages in PDF] titled "Joint Status Report on Microsoft’s Compliance with the Final Judgments" with the U.S. District Court (DC) in U.S. v. Microsoft, D.C. No. 98-1232 (CKK). The District Court is scheduled to hold a status conference on February 14, 2006.

2/8. The Department of Commerce's (DOC) National Telecommunications and Information Adminstration (NTIA) announced that the International Telecommunication Advisory Committee's (ITAC) 5 GHz Working Group "has reached consensus on recommendations for certification criteria for Unlicensed-National Information Infrastructure (U-NII) devices employing Dynamic Frequency Selection (DFS). By utilizing DFS, unlicensed devices may detect and avoid transmitting on channels being used by military radars vital to national defense". See, NTIA release.

Senators Debate Net Neutrality Mandate

2/7. The Senate Commerce Committee (SCC) held a hearing titled "Net Neutrality". Senators offered arguments in support of, or against, a Congressional network neutrality mandate. Senators also discussed pending, and soon to be introduced, bills.

Sen. Ted Stevens (R-AK), the Chairman of the Committee, wrote in his opening statement that "How we decide the issue will determine whether cable companies and the telephone companies can generate the revenue needed to justify billions of dollars in investment to deploy fiber and upgrade existing broadband networks. It will also determine whether the Internet remains a free marketplace of ideas with no gatekeeper and free of interference or private regulation."

Sen. Stevens (at right) also spoke with reporters after the hearing. He said that he expects that Senate to enact a telecom bill this year, and that he hopes that the SCC will report a bill in March. He added that he welcomes the introduction of bills by Senators because these bills reflect their thinking on this topic.

He also stated that any bill must address universal service reform. However, he did not specify what the universal service provisions should state, including whether or not the concept of universal service should be expanded beyond the equivalent of dial tone service.

Sen. Mark Pryor (D-AR) used much of his time to discuss and question witnesses regarding universal service.

The SCC will hold a hearing on Tuesday, February 28, at 10:00 AM, titled "USF Contributions". See, notice. The SCC will hold a second hearing on February 28, at 2:30 PM, titled "USF Distribution". See, notice.

Sen. Daniel Inouye (D-HI), the ranking Democrat on the SCC, did not participate in the hearing. However, he wrote in a statement that "Despite the FCC's efforts to establish Internet freedoms through its recently released Policy Statement, its classification of broadband services has called into question the FCC's authority to prevent unfair discrimination by broadband network operators."

See, the Federal Communications Commission's (FCC) Policy Statement [3 pages in PDF] regarding network neutrality. The FCC announced this Policy Statement on August 5, 2005. See, story titled "FCC Adopts a Policy Statement Regarding Network Neutrality" in TLJ Daily E-Mail Alert No. 1,190, August 8, 2005. The FCC released the text of the Policy Statement on September 23, 2005. See, story titled "FCC Releases Policy Statement Regarding Internet Regulation" in TLJ Daily E-Mail Alert No. 1,221, September 26, 2005.

See also, the FCC's Report and Order and FNPRM that classified wireline broadband internet access services as information services. This brought these services, including DSL service, out from under the Title II regulatory regime. The FCC adopted this R&O on August 5, 2005. See, story titled "FCC Classifies DSL as Information Service" in TLJ Daily E-Mail Alert No. 1,190, August 8, 2005. The FCC released the text [133 pages in PDF] of this item on September 23, 2005.

Sen. Inouye added that "According to recent press reports, network operators are planning to charge application providers additional fees for access to their broadband networks. This is ample cause for concern."

He wrote that "The question is, how will we respond?" He provided no response to his rhetorical question.

Sen. Ron Wyden (D-OR) is a former member of the SCC. He testified as a witness in favor of a Congressionally mandated network neutrality principle. He also provided the most detailed statement of a pro network neutrality position of any Senator involved with the hearing.

He read a prepared statement. He wrote that "Powerful interests who own the pipes and access to the Internet are trying to break the Net. These special interests want to expand their control over Internet access to the limitless world of content ..."

Sen. Wyden (at left) continued that "At present, consumers use the high speed access to the Net that they have paid for to visit whatever content they want, whenever they want without having to worry about having a cable company or a phone company interfering with their use of the Net. Some of these cable and phone companies are trying to discriminate in the delivery of content. They are saying that instead of making available to everyone the same content at the same price, they want to set up sweetheart arrangements to play favorites."

"This is a fundamental shift in the way the Internet works. Small start up companies and scores of others have been able to start small and dream big because every user has had equal access to all websites. I want to keep it that way", said Wyden.

He announced that "I will shortly introduce legislation that will make sure all information is made available on the same terms so that no bit is better than another one. First, it will assure that information from a company like J. Crew is not treated worse than information from a company like LL Bean. Second, it will ensure that a company like Comcast that offers Internet access does not give preferential treatment to its own information bits compared to information bits from another company, like Yahoo. Third, broadband service providers should not be able to create private networks that are superior to the Internet access they offer consumers generally."

He argued that "These principles would prevent Internet access providers from tipping the competitive advantage toward their own services, such as phone calls over the Internet (VOIP) or television over the Internet."

Two current members of the SCC who attended the hearing made comments supportive of some kind of network neutrality mandate. Sen. Byron Dorgan (D-ND) stated that "net neutrality is a very important concept". He also lamented that the Committee would not need to have addressed this issue if the FCC had not ruled that broadband services are information services.

Sen. Barbara Boxer (D-CA) read extensively from a media account of the dangers posed by the absence of a network neutrality mandate.

In addition, Sen. Olympia Snowe (R-ME), who is a member of the SCC, but did not attend the hearing, released a statement. She wrote that we are beginning to see cases of discrimination in access to applications, software and content that ride over the internet. "For example, in the spring of 2005, the Madison River Internet service provider was found to be prohibiting all competing IP-voice service providers from using their network so customers in their footprint who wanted to use a VOIP service would be forced to choose Madison River's voice service. Clearly, the actions of the Madison River ISP are not in the interest of the consumer."

On March 3, 2005, the FCC adopted and released an order [1 page in PDF] that adopts a Consent Decree [4 pages in PDF] negotiated by the FCC's Enforcement Bureau and Madison River Communications. The Consent Decree states that it pertains to "the blocking of ports used for Voice over Internet Protocol (``VoIP´´) applications, thereby affecting customers' ability to use VoIP through one or more VoIP service providers." The Consent Decree provides that "Madison River agrees, that Madison River shall not block ports used for VoIP applications or otherwise prevent customers from using VoIP applications." The FCC also fined Madison River $15,000. See also, story titled "FCC Stops Broadband Provider From Blocking VOIP Traffic" in TLJ Daily E-Mail Alert No. 1,089, March 7, 2005.

Although, some witnesses pointed out that the FCC acted in the Madison River matter prior to its August 5, 2005, R&O that classified wireline broadband internet access services as information services. These witnesses argued that as a result of this, the FCC no longer has authority to deal with another Madison River scenario in the same manner.

Sen. Snowe also wrote that "The question we are here to discuss today is whether or not the government should take a role in defining the architecture of the Internet. Should there be a policy where all bits are given equal status when traveling on the system? Would broadband providers be able to sustain a business model where they are prohibited from prioritizing content?"

Several members of the SCC who attended the hearing offered comments critical of a network neutrality mandate.

Sen. John Ensign (R-NV) argued that the Congress should "create more incentives for companies to invest" in broadband networks. He argued that for a company to invest in new facilities, it first needs to raise money in capital markets. He continued that lenders will examine the borrower's likely return, and will not lend if there will be no return on investment. He argued that if a network developer has to provide access to companies that provide internet services, such as Yahoo and Google, this could take up the developer's bandwidth, and diminish expected return on investment.

He did say too that no one should be able to "block access to a web site".

Sen. Ensign (at right) also touted S 1504, the "Broadband Investment and Consumer Choice Act", which he introduced on July 27, 2005. It now has 16 cosponsors, all of whom are Republicans.

Later, Sen. Ensign argued that it is competition between broadband service providers that will incent them to build better networks, and provide better service.

Sen. George Allen (R-VA) raised the subject of new broadband platforms being deployed in the near future, including wireless broadband or WiFi, broadband over powerline (BPL), and satellite, thus increasing competition between broadband service providers.

Sen. Conrad Burns (R-MT) suggested that the Congress is not yet prepared to enact legislation on this issue, and that acting now might be premature. He suggested letting different business approaches play out in the market place first.

Sen. John Sununu (R-NH), who is as ardent a free market advocate on telecommunications and internet issues as any other member of the Committee, did not participate in the hearing.

The Committee heard testimony from, and questioned, two panels of witnesses. First, the Committee heard from industry representatives. Vinton Cerf (Google), Jeffrey Citron (Vonage), and Earl Comstock (CompTel) argued for a network neutrality mandate.

Walter McCormick (U.S. Telecom Association) and Kyle McSlarrow (National Cable and Telecommunications Association) argued against any such legislation. McCormick said that "We will not block, impair, or degrade content, applications, or services."

The Committee also heard from a panel that included three wise men who research, write and speak on this topic: Kyle Dixon (Progress & Freedom Foundation and previously broadband legal advisor to former FCC Chairman Michael Powell), Lawrence Lessig (Stanford Law School), and Gregory Sidak (Georgetown University Law Center). This second panel also included Gary Bachula (Internet2). Dixon and Sidak opposed a network neutrality mandate, while Lessig and Bachula favored a mandate.

See:

• prepared testimony [8 pages in PDF] of Vint Cerf
• prepared testimony [5 pages in PDF] of Walter McCormick
• prepared testimony [2 pages in PDF] of Jeffrey Citron
• prepared testimony [4 pages in PDF] of Kyle McSlarrow
• prepared testimony [15 pages in PDF] of Earl Comstock
• prepared testimony [10 pages in PDF] of  Kyle Dixon
• prepared testimony [11 pages in PDF] of Lawrence Lessig
• prepared testimony [7 pages in PDF] of Gregory Sidak
• prepared testimony [5 pages in PDF] of Gary Bachula

The following information is added to this article, in part, to facilitate retrieval of relevant results in Google, and other, searches of the TLJ web site. The FCC's Policy Statement is FCC 05-151 in CC Docket No. 02-33 (wireline broadband), CS Docket No. 02-52 (cable broadband), CC Docket No. 01-337 (ILEC broadband), GN Docket No. 00-185, and CC Docket Nos. 95-20 and 98-10. The FCC's DSL R&O is FCC 05-150 in WC Docket No. 05-271, CC Docket No. 02-33, CC Docket No. 01-337, CC Docket Nos. 95-20 and 98-10, and WC Docket No. 04-242. This Madison River order is DA 05-543 in File No. EB-05-IH-0110.

People and Appointments

2/7. Robert Eulau will resign as SVP/CFO of Rambus, effective March 2, 2006. Harold Hughes, who is the CEO, will serve as interim CFO until a replacement has been found. See, Rambus release.

2/7. David Tennenhouse was named CEO of A9.com, Inc., a subsidiary of Amazon.com, Inc. See, Amazon release.

Senate Judiciary Committee Holds Hearing on NSA Surveillance

2/6. The Senate Judiciary Committee held a hearing on the National Security Agency's (NSA) extrajudicial surveillance of communications where one party is in the U.S. and one party is outside. The hearing was titled "Wartime Executive Power and the NSA's Surveillance Authority".

Attorney General Alberto Gonzales was the only witness. The sole topic of the hearing was the legality of the program. The hearing was long, and partisan, and added little new information to what has already been publicly disclosed by administration officials.

The scope of the hearing did not encompass the facts regarding the nature of the NSA program. Gonzales said very little about the program. He merely restated, but with less detail, what he, President Bush and General Hayden have previously stated in public speeches. The formal purpose of the hearing was to examine the legal basis for the NSA program.

The hearing did offer opponents and supporters of the Bush administration a forum to engage in partisan political posturing to a broad public audience.

While the hearing ran longer than most SJC hearings other than confirmation hearings for Supreme Court and Attorney General nominees, it elicited little new information. The scope of the hearing was limited by the jurisdiction of the SJC, and the interests of SJC members. The SJC does not have oversight authority over the NSA, intelligence gathering, or foreign relations. Moreover, this is a partisan issue for SJC members. Republican members did not seek to obtain information that might be embarrassing to the Bush administration. Democratic members did not seek to obtain information that might support the Bush administration.

Nature of the NSA Program. Gonzales' most detailed description of the program, from his long prepared testimony, was the following: "This terrorist surveillance program targets communications where one party to the communication is outside the U.S. and the government has ``reasonable grounds to believe´´ that at least one party to the communication is a member or agent of al Qaeda, or an affiliated terrorist organization."

Gonzales (at right) said almost nothing about the nature of the NSA program at issue. He often referred to "communications" and "international communications". He never defined or explained these terms. For example, he never indicated whether or not this program encompasses voice communications, e-mail, communications in transit, stored communications, data transfers, databases, mail carried by the U.S. Postal Service, carrier pigeons, or anything else.

Several times Senators asked questions in which they asked about specific types of communications, such as paper mail carried by the U.S. Postal Service, and e-mail. Each time Gonzales carefully phrased a response which clarified that he was speaking only as to "communications".

Sen. Leahy did press Gonzales on the subject of mail carried by the USPS. Gonzales said that "that is not what is going on here".

Nor did Gonzales explain what he meant by the terms "targets" or "targets communications". For example, he did not use the term "intercept", "wiretap", or "acquire" in his explanation of the program. Nor did he indicate whether or not the scope of the program includes creating, blocking, delaying, diverting, and/or modifying communications.

When Gonzales discussed the FISA, he stated that he does not concede, or deny, that all, or any of the communications at issue are "electronic communications" within the meaning of the FISA. He merely argued that, even assuming for the purpose of argument that the program does involve "electronic communications" within the meaning of the FISA, the program would not violate the FISA.

Nor did Gonzales say anything about the size of this NSA program, such as how many decisions to target have been made, how many persons have been affected, how many U.S. citizens have been impacted, or how many NSA persons are involved in the program.

Said Gonzales, "I cannot and will not address operational aspects of the program". He added that press accounts of operational aspects "are in almost every case, in one way or another, misinformed, confused, or wrong".

Private Sector Involvement. Nor did Gonzales state whether or not the program involves the cooperation or assistance of any telecommunications carriers, internet service providers, software makers, equipment manufacturers, or other private sector entities.

Sen. Ted Kennedy (D-MA) gave a speech laced with hyperbole during the hearing. One of the statements that he made was that "we are sending a message to the telephone companies that they may be prosecuted".

Gonzales did not immediately respond to this assertion.

Perhaps it is relevant to this assertion that the room was almost devoid of persons who might be characterized as employees, lobbyists for, or representatives of, telecommunications or technology companies. This has also been the case for the many hearings that have been held regarding the sunsetted provisions of the USA PATRIOT Act, many of which pertain to wiretaps, electronic surveillance, and seizure of electronic records.

In contrast, hearings in the past year on issues such as network neutrality, data security, privacy of phone records, and revising the Communications Act generally, attract legions of lobbyists and representatives of telecommunications and tech sector companies and groups.

Legal Authority for the NSA Program. Gonzales and most Republicans took the position that the President has legal authority to authorize this NSA program.

Democrats mostly took the position that the program is illegal. Sen. Patrick Leahy (D-VT), the ranking Democrat on the Committee, spoke before Gonzales. Sen. Leahy announced at the outset of his opening statement, before hearing from, or questioning, Gonzales, that "This is against the law."

The Committee did not hear testimony from any witnesses who dispute the legality of the program. For an example of legal arguments against the program, see the January 9, 2006, letter [11 pages in PDF] from 13 law professors and former government officials. See also, story titled "Law Professors Assert That NSA Electronic Surveillance Program Violates Law" in TLJ Daily E-Mail Alert No. 1,287, January 11, 2006.

Several Republicans used their time and their questions to argue the legality and necessity of the NSA program, and to defend the Bush administration.

Gonzales reiterated his prior arguments. First, regardless of any statute or resolution enacted by the Congress, the President holds independent authority under the Article II of Constitution. This, said Gonzales, is sufficient legal authority for the President to authorize the NSA to operate this program.

Next, Gonzales argued that the Foreign Intelligence Surveillance Act (FISA), which requires FISA court approvals, also contains an exception, at 50 U.S.C. § 1809(a)(1), which states, "except as authorized by statute". Gonzales said that the September 2001 Congressional resolution titled the "Authorization for Use of Military Force", or AUMF, fits this exception. That is, the President has legal authority, under the FISA, to authorize the NSA program, because the NSA program is covered by the AUMF. (The AUMF was SJRes 23. It became law on September 18, 2001. It is now Public Law No. 107-40.)

Gonzales added that the AUMF does not enumerate extrajudicial surveillance as a war power. However, Gonzales argued that this is not necessary. He reasoned largely on the basis of two cases -- Justice Jackson's concurring opinion in the 1952 case Youngstown Sheet & Tube, Co. v. Sawyer, which is reported at 343 U.S. 579, and the 2004 opinion of the Supreme Court in Hamdi v. Rumsfeld, which is reported 542 U.S. 507.

Gonzales submitted a 40 page statement for the record regarding the NSA program, as well as a shorter version. Although, these merely repeat and elaborate on the legal arguments that he has made in prior speeches.

President Bush's Statements. President Bush has spoken many times since December 17, 2005, about the NSA program.

On December 17, 2005, President Bush used his regular Saturday radio address to disclose the NSA program, which had just been reported by the New York Times. See, story titled "President Bush Discloses Interception of Communications Without Court Approval" in TLJ Daily E-Mail Alert No. 1,275, December 19, 2005.

On December 19, 2005, Bush held a news conference regarding this program. See, transcript. See also, story titled "Bush, Gonzales & Hayden Discuss Presidential Intercepts and PATRIOT Act" in TLJ Daily E-Mail Alert No. 1,276, December 20, 2005

On January 11, 2006, President Bush gave a speech in which he touched on the NSA program. See, story titled "Bush Discusses NSA Surveillance and PATRIOT Act" in TLJ Daily E-Mail Alert No. 1,288, January 12, 2006.

On January 23, 2006, Bush gave a speech at Kansas State University. See also, story titled "Bush Defends NSA Electronic Surveillance Program" in TLJ Daily E-Mail Alert No. 1,295, January 24, 2006.

On January 26, 2006, President Bush held a news conference at which he discussed the program. See, transcript. See also, story titled "Bush Asserts Power to Use Technology to Protect the American People" in TLJ Daily E-Mail Alert No. 1,298, January 27, 2006.

On January 31, 2006, President Bush gave his state of the union speech.

On February 1, 2006, President Bush gave a speech in Nashville, Tennessee. See, story titled "Bush Discusses NSA Surveillance in Nashville Speech" in TLJ Daily E-Mail Alert No. 1,302, February 2, 2006.

Gonzales's Prior Statements. AG Gonzales has twice before publicly offered legal defenses of the NSA program.

On December 19, 2005, Gonzales and Gen. Hayden held a joint news conference. See, transcript. See also, story titled "Bush, Gonzales & Hayden Discuss Presidential Intercepts and PATRIOT Act" in TLJ Daily E-Mail Alert No. 1,276, December 20, 2005

On January 24, 2006, Gonzales gave a speech. See also, story titled "AG Gonzales Defends Legality of NSA E-Surveillance Program" in TLJ Daily E-Mail Alert No. 1,296, January 25, 2006.

General Hayden's Prior Statements. General Michael Hayden has twice spoken publicly and in detail about the NSA program.

On December 19, 2005, Gonzales and Gen. Hayden held a joint news conference. See, transcript. See also, story titled "Bush, Gonzales & Hayden Discuss Presidential Intercepts and PATRIOT Act" in TLJ Daily E-Mail Alert No. 1,276, December 20, 2005

On January 23, 2006, General Michael Hayden gave a speech [21 pages in PDF]. See also, story titled "Gen. Hayden Defends NSA E-Surveillance Program" in TLJ Daily E-Mail Alert No. 1,295, January 24, 2006.

Bush Nominates Robert McDowell to Be FCC Commissioner

2/6. President Bush announced his intent to nominate Robert McDowell to be a Commissioner on the Federal Communications Commission (FCC) on February 3, 2003. See, White House release. On February 6, he formally nominated McDowell. See, White House release. This nomination is for the remainder of a five year term expiring on June 30, 2009.

If confirmed by the Senate, he will replace former Commissioner Kathleen Abernathy, and fill the last remaining vacancy.

McDowell is SVP and Assistant General Counsel for the Competitive Telecommunications Association (CompTel). Before that, he was EVP and General Counsel for the America's Carriers Telecommunications Association (ACTA).

FCC Chairman Kevin Martin stated in a release that "If confirmed, Rob McDowell will a great asset to the Commission. He has a wealth of knowledge in the communications arena, and we will rely on his insight when evaluating the issues before us. I look forward to working with a full complement of Commissioners should Mr. McDowell be confirmed."

FCC Commissioner Jonathan Adelstein stated in a release that "I welcome the White House's announcement of the nomination of Robert M. McDowell to serve as a commissioner at the FCC ... Robert has a great deal of experience in the field of telecommunications that should be of great value to all of us at the Commission. I have enjoyed working with him in the past and look forward to the many contributions he will make to our deliberations upon his confirmation to the Commission."

Gary Shapiro, of the Consumer Electronics Association (CEA), stated in a release that "We congratulate Robert McDowell on his nomination to serve as FCC commissioner. We believe he is a very strong and worthy candidate. McDowell's tenure at Comptel has proven his experience and expertise in the telecommunications arena. We appreciate his dedication and work to ensure a competitive and dynamic communications marketplace. We urge the Senate to act quickly on this nomination."

Herschel Abbott, of BellSouth, stated in a release that "Mr. McDowell's 15 years of involvement in the communications industry certainly means he knows telecom issues inside and out and has the capacity to do a great job on the FCC. We are confident that he will support policies that will bring consumers the benefit of widespread broadband deployment and new competition in providing television service free of government interference."

Steve Largent, head of the CTIA, stated in a release that "Robert McDowell is in an excellent choice for a seat on the FCC. His considerable knowledge of the telecommunications industry and his firm belief in policies that promote free market competition make him an exceptional choice for this important post at this current time."

More People and Appointments

2/6. There was a ceremony at the White House for the new Chairman of the Federal Reserve Board (FRB), Ben Bernanke. See, transcript of speeches by President Bush and Bernanke.

More News

2/6. The Office of the U.S. Trade Representative (USTR) issued a release [3 pages in PDF] that touts support for the USTR's plans to negotiate a free trade agreement with the Republic of Korea.

Go to News from February 1-5, 2006.