|TLJ News from June 26-30, 2006|
DC Circuit Denies Petitions for Review in Case Regarding Forbearance from Application of Intercarrier Compensation Rules for ISP Bound Traffic
6/30. The U.S. Court of Appeals (DCCir) issued is opinion [28 pages in PDF] in In Re Core Communications, a case regarding the intercarrier compensation rules for telecommunications traffic bound for internet service providers (ISPs) contained in the Federal Communications Commission's (FCC) 2001 ISP remand order.
The FCC granted CLEC Core Communications' petition to forbear from applying some of those rules, but denied its petition to forbear from applying others. Core Communications then filed a petition for review with the Court of Appeals challenging those parts of the FCC's order denying forbearance. ILEC BellSouth filed a petition for review challenging those parts of the FCC's order that granted forbearance.
47 U.S.C. § 251(b)(5), which was enacted as part of the Telecommunications Act of 1996, provides that local phone companies must compensate each other for handling each other's local calls. It requires that they "establish reciprocal compensation arrangements for the transport and termination of telecommunications."
The FCC wrote implementing rules in 1996 that provided that § 251(b)(5) applies "only to traffic that originates and terminates within a local area." The FCC then concluded in a 1999 declaratory ruling (DR) that dial-up calls to an ISP for connection to the internet constitute interstate traffic, subject to FCC jurisdiction under § 201 of the Act. However, the U.S. Court of Appeals (DCCir) vacated this DR for inadequate explanation in its March 27, 2000, opinion in Bell Atlantic Telephone Cos. v. FCC, 206 F.3d 1.
Then, in 2001, the FCC adopted its ISP remand order, concluding that calls delivered to ISPs are not subject to the mandatory reciprocal compensation obligations of § 251(b)(5), but imposing an interim intercarrier compensation regime for ISP bound traffic. Four interim provisions regarding rates caps, the mirroring rule, growth caps, and the new markets rule, are the subject of Core Communications' petition for forbearance, and the present petitions for review.
See also, story titled "Reciprocal Compensation" in TLJ Daily E-Mail Alert 170, April 20, 2001.
The Court of Appeals denied all petitions for review.
This case is In Re Core Communications, petitioner, Level3 Communications LLC, et al., intervenors, U.S. Court of Appeals for the District of Columbia, App. Ct. Nos. 04-1368, 04-1423, and 04-1424, petitions for review of a final order of the FCC. Judge Garland wrote the opinion of the Court of Appeals, in which Judges Sentelle and Tatel joined.
9th Circuit Addresses 10b Securities Fraud Primary Violation Liability
6/30. The U.S. Court of Appeals (9thCir) issued its opinion [27 pages in PDF] in Simpson v. AOL, a class action securities fraud case against America Online and others involving the overstatement of revenues of Homestore.com. The District Court dismissed the securities claims. The Court of Appeals affirmed, but remanded to the District Court to allow the plaintiffs to amend their complaint.
This case involves primary violation liability under Section 10(b) of the Securities Exchange Act of 1934, which is codified at 15 U.S.C. § 78j(b). The Supreme Court held in its 1994 opinion in Central Bank of Denver v. First Interstate Bank of Denver, which is reported at 511 U.S. 164, that a private plaintiff may not maintain an aiding and abetting suit under Section 10(b).
In the present case the Court of Appeals held that "the scope of § 10(b) includes deceptive conduct in furtherance of a ``scheme to defraud,´´ when all elements of § 10(b) are otherwise satisfied". The Court of Appeals also concluded "that Plaintiff's complaint insufficiently alleged that Defendants were primary violators of § 10(b) based on their conduct in the furtherance of the scheme", but remanded to the District Court to allow the plaintiffs to amend their complaint.
This case is T. Jeffrey Simpson and California State Teachers Retirement System v. America Online, et al., U.S. Court of Appeals for the 9th Circuit, App. Ct. No. 04-55665, an appeal from the U.S. District Court for the Central District of California, D.C. No. CV-01-11115-MJP, Judge Marsha Pechman presiding. Judge Ronald Gould wrote the opinion of the Court of Appeals, in which Judges Robert Beezer and Thomas Nelson joined.
SEC's Atkins Discusses E-Proxies, XBRL and 404 Reform
6/29. Securities and Exchange Commission (SEC) Commissioner Paul Atkins gave a speech in Philadelphia, Pennsylvania. He discussed the SEC's e-proxy proceeding, its interactive data initiative, and reform of its Section 404 rules, which particularly burden small publicly traded technology companies.
Atkins (at right) said that an "important rulemaking under consideration at the Commission is the proposal to allow for the Internet delivery of proxy materials. This proposal would allow issuers to take advantage of the Internet, a cost-effective medium with which increasing numbers of shareholders are increasingly familiar. Shareholders who prefer paper would be able to continue to receive proxy materials in paper form. Because of the convenience and interactive potential of the Internet, the proposal could enhance shareholders' familiarity with the companies in which they invest."
See also, story titled "SEC Proposes to Allow Internet Delivery of Proxy Materials" in TLJ Daily E-Mail Alert No. 1,263, December 1, 2006.
He next discussed interactive data. "In another attempt to take advantage of the opportunities afforded to us by the Internet, Chairman Cox has spearheaded an initiative on the use of interactive data. Earlier this month, the SEC conducted an Interactive Data Roundtable. Interactive data offers the promise of faster, more accurate and cost effective financial reporting that enables professional and retail investors and analysts to collect, compare and analyze information better. Twenty companies have volunteered to take part in a test group. In exchange for benefits such as expedited reviews of their SEC registration statements and annual reports, these companies will agree to furnish for one year the financial data in their periodic reports to the SEC using the XBRL data-tagging format. I will be interested to hear their experiences."
See also, the SEC's February 2005 rule changes that initiated the SEC's XBRL Voluntary Program, and its web page summary of the program.
SEC Chairman Chris Cox has frequently spoken about the XBRL program. See for example, speech of November 7, 2005, in Tokyo, Japan, and speech of November 11, 2005, in Boca Raton, Florida. See also, story titled "SEC Chairman Cox Discusses Use of Interactive Data in Corporate Reporting" in TLJ Daily E-Mail Alert No. 1,250, November 9, 2005.
Finally, Atkins discussed Section 404 reform. See also, Atkins speech of June 15, 2006, and story titled "Atkins Says SEC Seeks More Rational Approach to Section 404" in TLJ Daily E-Mail Alert No. 1,395, June 20, 2006.
He said that "the implementation of Section 404 of the Sarbanes-Oxley Act has been the cause of particular concern. ... I have had the opportunity to speak with a number of issuers on this subject. The stories that I hear are, frankly, frightening. For large companies, the expenses far outpace everyone's estimates. For small companies, the money and time diverted to Section 404 implementation are having a tangible effect. In the real world, of course, resources are limited. The more that companies spend on things like internal controls, the less they can invest in developing and marketing products, hiring and retaining talent, and embracing new technologies. That does not mean that internal controls and other organizational costs are not important. They are; but, there must be a balance."
He added that "The burden of these rules also can affect business opportunities. Some companies have avoided new acquisitions, delayed or cancelled upgrading their computer systems, or not added a new product line lest they set off a new flurry of internal control documentation."
On May 8, 2006, the Government Accountability Office (GAO) released a report [93 pages in PDF] titled "Sarbanes-Oxley Act: Consideration of Key Principles Needed in Addressing Implementation for Smaller Public Companies". The report found that smaller public companies face disproportionately higher costs of compliance than do larger companies, and that the Act creates other difficulties for smaller companies. See, story titled "GAO Reports that Section 404 of Sarbanes Oxley Burdens Small Public Companies" in TLJ Daily E-Mail Alert No. 1,366, May 9, 2006.
Atkins concluded that "I am optimistic, however, that real changes will be made for small and large companies. In the aftermath of last month's Section 404 Roundtable at the SEC, both the Commission and the PCAOB have pledged to take steps to streamline Section 404 implementation. Not only do we have a new chairman at the SEC, but now we have new leadership at the Public Company Accounting Oversight Board. Changes are long overdue. I am confident that, if such steps are taken, Section 404 can achieve its intended and laudable purpose of improving the integrity of financial information and providing shareholders with additional insight into the credibility of financial statements."
House Approves Financial Data Resolution
6/29. The House approved HRes 895, a resolution that praises the federal government program that accesses and stores financial transactions data, by a vote of 227-183. See, Roll Call No. 357.
Rep. Mike Oxley (R-OH), the Chairman of the House Financial Services Committee, introduced this resolution on June 28. The Committee held no hearings, and took no action on this resolution. See also, floor statement by Rep. Oxley.
The New York Times reported on the program on June 23, 2006.
The resolution states that the "House of Representatives -- (1) supports efforts to identify, track, and pursue suspected foreign terrorists and their financial supporters by tracking terrorist money flows and uncovering terrorist networks here and abroad, including through the use of the Terrorist Finance Tracking Program".
Second, its states that the House "finds that the Terrorist Finance Tracking Program has been conducted in accordance with all applicable laws, regulations, and Executive Orders, that appropriate safeguards and reviews have been instituted to protect individual civil liberties, and that Congress has been appropriately informed and consulted for the duration of the Program and will continue its oversight of the Program".
Third, it states that the House "condemns the unauthorized disclosure of classified information by those persons responsible and expresses concern that the disclosure may endanger the lives of American citizens, including members of the Armed Forces, as well as individuals and organizations that support United States efforts".
Finally, the resolution has unkind words for news reporters, and for freedom of speech or of the press. It states that the House "expects the cooperation of all news media organizations in protecting the lives of Americans and the capability of the government to identify, disrupt, and capture terrorists by not disclosing classified intelligence programs such as the Terrorist Finance Tracking Program."
The resolution was approved on a nearly straight party line vote. Republicans voted 210-8 for the resolution. Democrats voted 17-174.
The Republicans who voted against were Roscoe Bartlett (MD), Scott Garrett (NJ), Walter Jones (NC), Donald Manzullo (IL), Butch Otter (ID), Ron Paul (TX), Christopher Shays (CT), and James Walsh (NY)
There is a pattern. Five of the eight are members of the House Financial Services Committee, the committee with expertise. The five are Garrett, Jones, Manzullo, Paul, and Shays.
The seventeen Democrats who voted for this resolution either face serious challenges from a Republican candidate in the November election, or represent Districts that would enable a Republican to mount a serious challenge if the Democratic incumbent were to vote against resolutions of this nature.
House Approves CJS/Science/Tech Appropriations Bill
6/29. The House amended and approved HR 5672, the "Science, State, Justice, Commerce, and Related Agencies Appropriations Act for Fiscal Year 2007". It began consideration of this bill on June 27, continued on June 28, and finished on Thursday morning, June 29. The vote on final approval was 393-23. See, Roll Call No. 349.
On June 28, the House rejected by a vote of 189-230 an amendment offered by Rep. Jerrold Nadler (D-NY) that would have prohibited the use of funds to issue a national security letter to a health insurance company under any of the provisions of law amended by Section 505 of the USA PATRIOT Act. See, Roll Call No. 344.
The House approved by voice vote an amendment offered by Rep. Sherrod Brown (D-OH) to increase funding by an additional $3 Million to monitor imports from China. See also, Rep. Brown's Senate campaign web site.
The House approved by voice vote an amendment offered by Rep. Tim Murphy (R-PA) to increase and immediately decrease funding for the Federal Communications Commission (FCC) to encourage the FCC to promulgate a rule on caller ID services.
The House ruled out of order an amendment offered by Rep. Diane Watson (D-CA) to prohibit the use of funds to negotiate the accession by the Russian Federation into the World Trade Organization (WTO).
This bill includes appropriations for many technology related entities, including the FCC, NTIA, NIST, OSTP, Antitrust Division, and numerous DOJ units involved in electronic surveillance and data collection.
See also, story titled "House Begins Consideration of CJS/Science/Tech Appropriations Bill" in TLJ Daily E-Mail Alert No. 1,401, June 28, 2006.
6/29. The Senate Judiciary Committee (SJC) had scheduled an executive business meeting for June 29, 2006, at 9:30 AM. It did not obtain a quorum. No business was conducted. The SJC also failed to obtain a quorum at its June 22 meeting. The agenda for the June 29 meeting included consideration of the nominations of Neil Gorsuch (to be Judge of the U.S. Court of Appeals for the 10th Circuit), Jerome Holmes (10th Circuit), Gustavo Antonio Gelpi (U.S.D.C., Puerto Rico), Daniel Jordan (U.S.D.C., Southern District of Mississippi), Alexander Acosta (U.S. Attorney for the Southern District of Florida), Martin Jackley (U.S. Attorney for the District of South Dakota), Brett Tolman (U.S. Attorney for the District of Utah). The agenda also included consideration of S 2453, the "National Security Surveillance Act of 2006", S 2455, the "Terrorist Surveillance Act of 2006", S 2468, a bill to provide standing for civil actions for declaratory and injunctive relief to persons who refrain from electronic communications through fear of being subject to warrantless electronic surveillance for foreign intelligence purposes, S 3001, the "Foreign Intelligence Surveillance Improvement and Enhancement Act of 2006", S 2831, the "Free Flow of Information Act of 2006", HR 1036, the "Copyright Royalty Judges Program Technical Corrections Act", and S 1845, the "Circuit Court of Appeals Restructuring and Modernization Act of 2005". All of these bill were also on last week's agenda. Some have long been included on meeting agendas, but never considered.
6/29. David Fiske, a spokesman for the Federal Communications Commission (FCC), stated, with reference to Council Tree Communications v. FCC, U.S. Court of Appeals (3rdCir), App. Ct. No. 06-2943, that "We are pleased the advanced wireless auction will proceed on schedule furthering the goal of providing new and better wireless services to American consumers." This pertains to Auction 66, the FCC's auction of Advance Wireless Services (AWS) licenses in the 1710-1755 MHz and 2110-2155 MHz (AWS-1) bands.
Senate Commerce Committee Marks Up Communications Bill
6/28. The Senate Commerce Committee (SCC) met in open mark up session on Thursday, June 22, Tuesday, June 27, and Wednesday, June 28, to mark up S 2686, the "Communications, Consumer's Choice, and Broadband Deployment Act of 2006".
On June 22, the SCC substituted its June 16 discussion draft [159 pages in PDF] of the bill. This renumbered the bill HR 5252, which is the number of the "Communications Opportunity, Promotion, and Enhancement Act of 2006", or COPE Act. The House approved its vastly different version of this bill on June 8, 2006.
The SCC also changed the title of its bill on June 28 to "Advanced Telecommunications and Opportunity Reform Act". The acronyms for the titles of these two bills reflect the names of two longtime staff members of the House Commerce Committee (HCC) and SCC, respectively.
See also, story titled "House Approves COPE Act, Without Network Neutrality Amendment" in TLJ Daily E-Mail Alert No. 1,388, June 9, 2006. The final House vote was 321-101. See, Roll Call No. 241.
The SCC conducted its business in three open public mark up sessions. The second and third sessions each lasted a full day. In addition, members and staff negotiated, drafted, and revisions numerous amendments outside of the public mark up sessions.
The SCC approved during its public sessions several blocs of amendments, referred to as "managers' packages", that had been prepared outside of the public session. The SCC has not yet published the complete text of all amendments offered, or even all amendments approved. Nor has it yet published a copy of the final bill as amended and approved.
The SCC proceeded in a usually informal and collegial manner in its public mark up sessions. The debates were substantive and cordial. Most of the amendments that were adopted were approved without objection. The SCC did conduct 16 roll call votes over three days. However, it considered over 200 amendments.
The SCC approved many amendments without releasing copies of the amendments. The SCC approved many amendments, subject to further drafting or revisions. The SCC left the staff with authority to make technical and conforming amendments. Given the size of the bill, the number of amendments, and the haste of the mark up, there will likely be many such amendments. Thus, until the final version of the SCC's bill is published, the exact language of the bill unknown.
Sen. Stevens stated during the mark up, and in response to questions from reporters, that this is a bipartisan bill. At the conclusion of the markup Democratic Senators praised Sen. Stevens and the mark up process.
Most of the roll call votes were characterized by partisan division. Notably, the key votes on network neutrality, a build out requirement for video services, and Sen. Inouye's substitute bill, all failed on straight or nearly straight party line votes. The vote on final approval was 15-7. All 12 Republicans voted yes, while the Democrats split 3-7.
Yet, the Committee considered over 200 amendments during the three days of mark up. Most were not offered, withdrawn, included in managers' packages, or approved individually without objection. Thus, while some of the most important questions were decided by partisan votes, the SCC acted by consensus on an overwhelming percentage of the issues taken up.
Sen. Stevens, who wore a fashionable blue tie at the June 28 mark up, was asked afterwards by reporters if the Incredible Hulk tie is coming out for the floor debate. He said "no". However, he concluded that "deep down inside I'm still the meanest old son of a bitch you ever met."
This issue contains additional stories on the mark up of each title of the bill. See, stories titled:
See also, table titled "Roll Call Votes on HR 5252, Senate Commerce Committee, June 22, 27 & 28, 2006".
Mark Up of Title I -- Interoperable Emergency Communications
6/28. Title I of HR 5252, as approved by the Senate Commerce Committee (SCC) on June 28, 2006, is titled "War on Terrorism". The SCC completed its consideration of most amendments to Title I on June 22.
Subtitle A of Title I deals with service members calling home. Section 101 of Title I is titled "Telephone rates for members of armed forces deployed abroad". This was a not controversial, and was not amended at the mark up. This section provides that the FCC "shall take such action as may be necessary to reduce the cost of calling home for Armed Forces personnel who are stationed outside the United States ... including the reduction of such costs through the waiver of government fees, assessments, or other charges for such calls." However, this section also provides that the FCC "may not regulate rates in order to carry out this section".
Section 102 repeals Section 213 of the Telecommunications Authorization Act of 1992, which is codified at 47 U.S.C. § 201 note. It required the FCC to "make efforts to reduce telephone rates for Armed Forces personnel in" in certain countries. Section 213 does not list such countries as Iraq, Afghanistan and Kuwait. Nor does it authorize the FCC to waive fees.
Subtitle B of Title I has just one section (151), It deals with interoperable emergency communications. It was the subject of some discussion and debate on June 22. The SCC considered several amendments to expand the types of entities eligible to receive interoperability grants. Sen. Ted Stevens (R-AK) opposed such proposals, arguing that all of the funds should go to first responders.
For example, Sen. Maria Cantwell (D-WA) offered, but later withdrew, an amendment that would have made governmental authorities involved in preparing for the 2010 winter Olympics eligible for interoperability funds. These games will be in Vancouver, Canada, which is just across the border from Sen. Cantwell's state of Washington. Sen. Stevens argued that the full billion dollars should go to first responders, and should not be delayed until 2010.
However, the SCC approved one amendment offered by Sen. Ben Nelson (D-NE). It adds to the end of Section 151 the following: "The Assistant Secretary shall take into consideration the role of the Public Safety Answering Points (PSAPs) and E-911 systems, and shall reserve a portion of the funds made available to carry out this section to provide interoperable communications system grants for projects to PSAPs that enable interoperability and that advance E-911 deployment."
The SCC also approved a managers' package of amendments, without objection that includes two relevant amendments. One, offered by Sen. Inouye, imposes a public interest requirement on the seamless mobility streamlined process directive. A second, offered by Sen. McCain and Sen. Boxer, moves the administration of the public safety grant program from the Department of Commerce to the Department of Homeland Security (DHS).
Mark Up of Title II -- Universal Service, Interconnection, VOIP, and VOIP Preemption
6/28. Title II of HR 5252, as approved by the Senate Commerce Committee (SCC) on June 28, 2006, is titled "Universal Service Reform; Interconnection". The SCC began its consideration of this title on June 22, and finished on June 27.
This title taxes VOIP services as part of the FCC's universal service subsidy program. This title amends 47 U.S.C. § 254(d) to provide that "Each communications service provider shall contribute" to the universal service program. It also provides that a "communications service" includes "broadband service, or IP-enabled voice service (whether part of a bundle of services or offered separately)". (Parentheses in original.)
Furthermore, it provides that the FCC "may assess the interstate, intrastate, and international portions of communications service for the purpose of universal service contributions.
The managers' package, approved at the beginning of the June 22 markup, includes 11 amendments to Title II.
The SCC distributed a summary of these amendments, which contains the
"To make clear that the State preemption provisions do not affect tax laws" (Stevens)
• "To improve Universal Service support of high-cost communications transport services in insular areas" (Inouye)
• "To clarify treatment of rural carriers" (Burns)
• "To clarify treatment of certain rural carriers" (Stevens)
• "To ensure IP-enabled voice service providers are subject to the rules regarding provision of payphone service" (Rockefeller)
• "To establish a new performance goal for the Schools and Libraries Program" (Snowe and Rockefeller)
• "To amend the low-income adjustment in the Universal Service contribution mechanism. With modifications" (Nelson FL and Allen)
• "To help protect disabled access to new communications technologies" (Nelson FL and McCain)
• "To provide for a Universal Service Fund contribution exemption for certain nonprofit organizations" (Cantwell)
• "Vendors with one criminal conviction of e-rate fraud, shall be permanently barred from participating in the E-rate program" (DeMint)
On June 22, Sen. John Sununu (R-NH) offered an amendment, on behalf of Sen. John McCain (R-AZ), which would have placed a cap on both universal service collections and distributions of $6,520,066,000, to be adjusted annually for inflation. Sen. Stevens supported the concept of a cap. Sen. Dorgan opposed the amendment. Sen. Sununu withdrew the amendment.
On June 22, Sen. Sununu (at right) offered a first decree amendment, and two second degree amendments to his first degree amendment, regarding interconnected VOIP service providers, including interconnection and compensation rights and obligations, and preemption of certain types of state laws. The three amendments were considered together, and approved by one roll call vote of 14-8. See, Roll Call No. 1.
In short, the third discussion draft includes, in Title II, a section 715 titled "Rights and Obligations of IP-Enabled Voice Service Providers". Sen. Sununu's amendments revise Section 715, and add a new Section 1007 to Title X of the bill, the miscellaneous provisions title.
See, §§ 715 and 1007, as amended.
Also, on June 27, Sen. Byron Dorgan (D-ND) offered an amendment that would have removed Sen. Sununu's amendments. It failed on a roll call vote of 7-15. See, Roll Call No. 2. This was essentially a second vote on the same issue.
Rockefeller offered an amendment that would have created a new universal service subsidy program for first responders. Committee staff stated that it would create a new entitlement. Sen. Stevens opposed the amendment, arguing that universal service is a "communications right", rather than a first responders right. Sen. Stevens said also that he supports subsidies for such a program, but with the funding to come out of revenues from development of an oil field located on the ANWR in Alaska. Sen. Rockefeller opposes this.
Sen. Rockefeller's amendment would have provided subsidies for "public service agencies for purposes of increasing interoperability among the communications systems of such agencies". It would have been funded by taxes on telecommunications carriers, broadband services, and VOIP services.
This amendment failed on a roll call vote of 10-12. This was a straight party line vote, with all of the Democrats voting yes, and all of the Republicans voting no. See, Roll Call No. 3.
Sen. Dorgan offered an amendment, that was approved without objection, that amends 47 U.S.C. § 254(d) to provide an opportunity for Congressional review of any universal service contribution rules. It provides that "Any rule issued under subsection (d) shall -- (1) be submitted to Congress, along with any data and information relied upon to establish such rule; and (2) not take effect until the date that is 90 days after the date of such submission".
Sen. Ensign had prepared, but did not offer at the SCC mark up sessions, three amendments related to universal service. The SCC prepared a ten page document titled "Executive Session Amendment List" (ESAL), and dated June 22, 2006, that described these and other amendments.
One amendment was "To prohibit unauthorized and inappropriate uses of e-Rate funds". A second was "To minimize fraud, waste, and abuse in the e-Rate program." A third was "To ensure consumers are aware of the source of items in their phone bills." Sen. Ensign said that he may offer these amendments on the Senate floor.
Sen. Boxer withdrew an amendment "To exempt certain communications services from making Universal Service contributions." Sen. Sununu withdrew an amendment "To create a State pilot project."
Sen. Pryor withdrew an amendment "To delete the 2-way capability component from the definition of IP-enabled voice service in the Universal Service provisions." He added the he would would with others on revising his amendment for later inclusion in the bill.
Sen. George Allen (R-VA) offered an amendment. The SCC's ESAL states that this is "To modify the definition of facilities-based, with respect to IP-enabled voice service providers."
That is, the discussion draft provides that a "facilities based ... IP-enabled voice service" has certain rights and obligations. The discussion draft further provides that the FCC will define what "facilities based" means. Sen. Allen's amendment provides instead that "The term 'facilities-based' includes an IP-enabled voice service provider with control and operation within a local access transport area of -- (A) communications switching and routing equipment; (B) long-haul trunks; or (C) local transmission facilities."
Sen. Stevens accepted the amendment, and stated that after further revisions, will be included in the bill via a subsequent managers' amendment.
Sen. Bill Nelson (FL) withdrew an amendment regarding allocation of revenues between various services when services are bundled.
Mark Up of Title III -- Video Franchising
6/28. Title III of HR 5252, as approved by the Senate Commerce Committee (SCC) on June 28, 2006, is titled "Streamlining the Franchising Process". The SCC rejected efforts to impose a build out requirement.
This is the title of the bill that Sen. Stevens refers to as the "guts of the bill". It also was the subject of lengthy debates, and numerous amendments.
On June 27 the SCC approved a managers' package of amendments that includes six amendments to this title. On June 28 the SCC approved a managers' package of amendments that includes five more amendments. The SCC also considered numerous amendments individually.
On June 27, Sen. Daniel Inouye (D-HI) offered an amendment, that was approved without objection, regarding video satellite services. The discussion draft provides that "No State or local government may regulate direct broadcast satellite services (as that term is used in section 335 of this Act)." (Parentheses in original.)
Sen. Inouye's amendment changes this to "Nothing in this Act permits a State or local government to regulate direct broadcast satellite services (as that term is used in section 335 of this Act)." Committee staff explained that this amendment would leave in place the status quo, narrow the scope of the savings clause, and allow taxation. Sen. Stevens stated that this language does not allow franchise fees.
On June 27, the SCC rejected amendment offered by Sen. Frank Lautenberg (D-NJ) that would have grandfathered any state video franchising regime enacted by the end of 2006. It would have substantially undermined the purpose of Title III of the bill. It failed on a vote of 8-14. See, Roll Call No. 6.
On June 27, the SCC rejected an amendment offered by Sen. Lauthenberg regarding consumer protection authority of state and local governments. It failed on a vote of 10-12. See, Roll Call No. 5.
On June 28, the SCC rejected by a vote of 10-12 an amendment offered by Sen. John Kerry (D-MA) that would have amended Title III to impose a build out requirement. It was a nearly straight party line vote. All Republicans, except Sen. Olympia Snowe (R-ME), voted against the amendment, while all Democrats, except Sen. Ben Nelson (NE), voted for the amendment. See, Roll Call No. 8.
On June 28, the SCC rejected an amendment offered by Sen. Barbara Boxer (D-CA) that would have imposed a quasi build out requirement. It failed on a vote of 10-12. See, Roll Call No. 14.
On June 28, the SCC rejected an amendment offered by Sen. McCain that would have imposed an a la carte programming mandate. It failed by a vote of 2-20. See, Roll Call No. 11. Only Sen. McCain and Sen. Snowe voted for this amendment.
Sen. Inouye argued against this amendment on the basis that if adopted, it would sacrifice diversity. He argued that it would put in jeopardy channels such as Discovery Channel, History Channel, and Learning Channel.
Mark Up of Title IV -- Video Content and Broadcast Flag
6/28. Title IV of HR 5252, as approved by the Senate Commerce Committee (SCC) on June 28, 2006, is titled "Video Content". It includes a broadcast flag mandate for video.
Mark Up of Title V -- Municipal Broadband
6/28. Title V of HR 5252, as approved by the Senate Commerce Committee (SCC) on June 28, 2006, is titled "Municipal Broadband". Section 501 provides the title "Community Broadband Act".
The managers' package of amendments approved on June 22 includes one amendment to this title. The SCC's summary of this managers' package states that this amendment consists of "Bipartisan technical corrections to the community broadband network". No other amendments to this title were offered during the mark up sessions. There was little discussion or debate.
This title provides that local governments can offer their own broadband services, if they do not compete unfairly with services offered by private sector entities.
It is based upon S 1294, the "Community Broadband Act", which was introduced by Sen. Frank Lautenberg (D-NJ) (at left) and others on June 23, 2005, and S 1504, the "Broadband Investment and Consumer Choice Act", which was introduced on July 27, 2005, by Sen. John Ensign (R-NV) and others.
The key clause, found at § 502 provides that "No State statute, regulation, or other State legal requirement may prohibit or have the effect of prohibiting any public provider from providing, to any person or any public or pri1vate entity, advanced telecommunications capability or any service that utilizes the advanced telecommunications capability provided by such public provider."
It then provides that state and local governments cannot discriminate in favor of their own services. For example, it provides that "the public provider shall apply its ordinances, rules, policies, and fees, including those relating to the public rights-of-way, permitting, performance bonding, and reporting, without discrimination in favor of itself or any other advanced telecommunications capability provider that such public provider owns or is affiliated with, as compared to other providers of such capability or services."
It also provides that "If a public provider decides not to initiate a project to provide advanced telecommunications capability or any service that utilizes the advanced telecommunications capability provided by such public provider to the public through a public-private partnership, then, before the public provider may provide such advanced telecommunications capability or any such service that utilizes the advanced telecommunications capability provided by such public provider to the public, the public provider shall ... publish notice of its intention ... and ... provide an opportunity for commercial enterprises to bid to provide such capability or service during the 30-day period following publication of the notice."
Mark Up of Title VI -- Use of Broadcast White Space
6/28. Title VI of HR 5252, as approved by the Senate Commerce Committee (SCC) on June 28, 2006, is titled "Wireless Innovation Networks". It pertains to the use of broadcast white space for wireless broadband services. There was little discussion of this title. Although, several Senators praised this section. There were no amendments.
There are two sections in this title. § 601 merely provides that this title is the "Wireless Innovation Act of 2006" or "WIN Act of 2006". § 602 requires the Federal Communications Commission (FCC) to complete its broadcast white space rulemaking proceeding, to permit unlicensed, non-exclusive use of unassigned, non-licensed television broadcast channels.
It states that "Within 270 days after the date of enactment of that Act, the Commission shall adopt technical and device rules in ET Docket No. 04–186 to facilitate the efficient use of eligible broadcast television frequencies by certified unlicensed devices, which shall include rules and procedures -- (1) to protect licensees from harmful interference from certified unlicensed devices; (2) to require certification of unlicensed devices designed to be operated in the eligible broadcast television frequencies ... (3) to require manufacturers of such devices to include a means of disabling or modifying the device remotely if the Commission determines that certain certified unlicensed devices may cause harmful interference to licensees; ..."
This is based upon a bill sponsored by Sen. George Allen (R-VA) (at right) and others. On February 17, 2006, Sen. Allen introduced S 2327, the "Wireless Innovation Act of 2006". See, story titled "Sen. Allen Introduces Bill to Allow Unlicensed Wireless Use of Broadcast White Space" in TLJ Daily E-Mail Alert No. 1,314, February 21, 2006.
S 2327 merely requires the FCC to complete its rulemaking proceeding. The version approved by the SCC now also includes instructions to the FCC regarding the contents of those rules.
Back on May 13, 2004, the FCC adopted a notice of proposed rulemaking (NPRM) regarding use by unlicensed devices of broadcast television spectrum where the spectrum is not in use by broadcasters. The FCC released the text [38 pages in PDF] of this item on May 25, 2004. This NPRM is FCC 04-113 in ET Docket Nos. 04-186 and 02-380. See also, story titled "FCC Adopts NPRM Regarding Unlicensed Use of Broadcast TV Spectrum" in TLJ Daily E-Mail Alert No. 898, May 14, 2004.
The FCC has not taken action in this proceeding.
Mark Up of Title VII -- Digital Television
6/28. Title VII of HR 5252, as approved by the Senate Commerce Committee (SCC) on June 28, 2006, is titled "Digital Television". It contains provisions related to manufacturers providing information to consumers related to the transition to digital television, as well as public service announcements, and public outreach by the Federal Communications Commission (FCC). It also requires the FCC create a DTV Working Group.
The discussion draft [159 pages in PDF] also states that "After March 1, 2007, it is unlawful to import into the United States or ship in interstate commerce for sale or resale to the public, a television broadcast receiver ... that is not equipped with a tuner capable of receiving and decoding digital signals."
The discussion draft also provides, among other things, that the FCC "may not revise the digital television reception capability implementation schedule".
The discussion draft also contains a digital stream requirement for the blind. It also addresses international coordination and border stations.
The managers' package of amendments approved on June 22 includes four amendments to this title. The SCC's summary of this package offers the following descriptions:
• "To limit that prohibition on importation and interstate shipment of
analog-only receivers to manufacturers and importers." (McCain)
• "To revise the membership requirements of the DTV Working Group." (Rockefeller)
• "Primary video." (DeMint)
• "To require the DTV working group to recommend to the Commission procedures for contacting persons with disabilities." (Nelson and McCain)
On June 27, the SCC approved an amendment offered by Sen. Bill Nelson (D-FL) to enhance consumer awareness regarding the DTV transition.
On June 27, Sen. Barbara Boxer (D-CA) withdrew her amendment to strike the provision relating to energy standards for converter boxes.
On June 27, Sen. John Kerry (D-MA) withdrew his amendment to ensure that the no-material-degradation standard applies to both audio and video quality, including digital signals processed through a converter box. He also withdrew his amendment relating to disqualification of certain stations for mandatory carriage of multiple digital signals.
Mark Up of Title VIII -- Mandating Web Site Warning Labels and Censoring Web Page Source Code
6/28. Title VIII of HR 5252, as approved by the Senate Commerce Committee (SCC) on June 28, 2006, is titled "Protecting Children". The discussion draft [159 pages in PDF] included only one brief Section 801, which requires the Federal Communications Commission (FCC) to promulgate regulations that require video services to prevent the offering of child pornography.
On June 27 the SCC approved an amendment the combines two very similar amendments offered by Sen. Conrad Burns (R-MT) and Sen. John Kerry (D-MA).
The Burns Kerry composite amendment does two things. First, it prohibits publication of web sites with sexually explicit material without the warning labels to be proscribed by the Federal Trade Commission (FTC). This is a compelled speech mandate.
Second, it prohibits embedding words in the source code of web pages to deceive anyone into viewing obscene material, or to deceive any minor into viewing material that is harmful to minors.
Sen. Burns' (at left) amendment states that "It is unlawful for the operator of a website that is primarily operated for commercial purposes knowingly, and with knowledge of the character of the material, to place sexually explicit material on the website unless -- (i) the first page of the website viewable on the Internet does not include any sexually explicit material; and (ii) each page or screen of the website that does contain sexually explicit material also displays the matter prescribed by the Federal Trade Commission ..."
It provides an exemption for password protected web sites. It also exempts telecommunications carriers, internet access services, and anyone "engaged in the transmission, storage, retrieval, hosting, formatting, or translation of a communication made by another person, without selection or alteration of the content ..."
Sen. Burns' amendment also states that "It is unlawful for any person knowing to embed words, symbols, or digital images into the source code of a website with the intent to deceive another person into viewing material that is obscene." The word "knowing" will probably be changed to "knowingly" by SCC staff.
The Burns and Kerry amendments contain provisions that are very similar to provisions in numerous stand alone bills.
See, for example, S 3499, the "Internet Safety (Stop Adults Facilitating the Exploitation of Youth) Act of 2006", introduced by Sen. Jon Kyl (R-AZ) on June 13, 2006, and Section 3 of S 3432, the "Project Safe Childhood Act", introduced by Sen. Rick Santorum (R-PA) on June 6, 2006.
These bills follow proposals made by the Department of Justice (DOJ) in April. The DOJ sent a letter and proposed bill [10 pages in PDF] to House Speaker Denny Hastert on April 20, 2006. See also, story titled "Gonzales Proposes Data Retention Mandate, Web Site Labeling, and Ban on Deceptive Source Code" in TLJ Daily E-Mail Alert No. 1,357, April 25, 2006.
The managers' package of amendments approved on June 27 also includes one amendment to Title VIII offered by Sen. Jay Rockefeller (D-WV). The SCC's summary states that this "Prohibits interactivity with commercial matter during children's programming".
The managers' package of amendments approved on June 28 also lists two amendments to Title VIII. The SCC's summary states that these were offered by Sen. Burns and Sen. Kerry, and were merged. These are likely the same as the above described amendments.
Mark Up of Title IX -- Network Neutrality
6/28. Title IX of HR 5252, as approved by the Senate Commerce Committee (SCC) on June 28, 2006, is titled "Internet Consumer Bill of Rights Act". This was the most controversial title of the bill, and provoked the most heated debate. The bill contains no hard network neutrality mandate. Sen. Olympia Snowe (ME) and the SCC Democrats backed a network neutrality amendment that failed on a roll call vote of 11-11. See, Roll Call No. 13.
In addition, there was a network neutrality provision in Sen. Daniel Inouye's substitute bill, which substitute failed on a roll call vote of 10-12. See, Roll Call No. 15.
The SCC's Executive Session Amendment List (ESAL) listed numerous other network neutrality amendments. The SCC briefly addressed some of these on June 28. Sen. Stevens stated, without clarity, that some of these would be addressed in a subsequent managers' package of amendments.
The content of discussion draft's [159 pages in PDF] Title IX is summarized below. However, there was little discussion of the content of the bill during the long debate. Rather, the members debated the merits of Sen. Snowe's (at right) amendment, which is summarized further below.
Consumer Bill of Rights. The new Title IX contains an "Internet Consumer Bill of Rights Act of 2006". It requires, at § 903, that,
"each Internet service provider shall allow each subscriber to---
(1) access and post any lawful content of that subscriber’s choosing;
(2) access any web page of that subscriber's choosing;
(3) access and run any voice application, software, or service of that subscriber's choosing;
(4) access and run any video application, software, or service of that subscriber's choosing;
(5) access and run any email application, software, or service of that subscriber's choosing;
(6) access and run any search engine of that subscriber's choosing;
(7) access and run any other application, software, or service of that subscriber’s choosing;
(8) connect any legal device of that subscriber's choosing to the Internet access equipment of that subscriber, if such device does not harm the network of the Internet service provider; and
(9) receive clear and conspicuous information, in plain language, about the estimated speeds, capabilities, limitations, and pricing of any Internet service offered to the public."
It defines the term "internet service" as "any service that provides access to the public Internet directly to the public", and the term "subscriber" as "a retail end user that purchases Internet service".
This section protects only "subscribers" from certain potential business practices of their "internet service providers". It does not regulate the relationship between service providers and internet content companies.
Free Speech Rights. § 904 contains two clauses under the heading of "Application of the First Amendment".
First, it provides that "no Federal, State, or local government may limit, restrict, ban, prohibit, or otherwise regulate content on the Internet because of the religious views, political views, or any other views expressed in such content unless specifically authorized by law". While the SCC held a long debate on June 28, this provision was not explained or debated. The First Amendment's free speech clause, and its incorporation into the Fourteenth Amendment, already limits governments attempts to regulate expression. Moreover, no government can authorize the violation of First Amendment rights.
Second, it provides that "no Internet service provider engaged in interstate commerce may limit, restrict, ban, prohibit, or otherwise regulate content on the Internet because of the religious views, political views, or any other views expressed in such content unless specifically authorized by law." The First Amendment only regulates state action. This appears to be an attempt to extend a limited First Amendment like restriction to internet service providers.
Stand Alone Internet Access Service. § 905 of the bill requires that "An Internet service provider shall offer to any potential subscriber any Internet service such provider offers without requiring that subscriber to purchase or use any telecommunications service, information service, IP-enabled voice service, video service, or other service offered by such Internet service provider."
The House bill also has a stand alone offering requirement. It provides that "A broadband service provider shall not require a subscriber, as a condition on the purchase of any broadband service the provider offers, to purchase any cable service, telecommunications service, or VOIP service offered by the provider."
The House bill only affects broadband offerings, while the Senate draft affects all internet access offerings.
Exceptions. § 906 of Title IX allows internet service providers to "protect the security, privacy, or integrity of the network", "facilitate diagnostics, technical support, maintenance, network management, or repair of the network or service of such provider", "prevent or detect unauthorized, fraudulent, or otherwise unlawful uses of the network or service of such provider", "block access to content, applications, or services that Federal or State law expressly authorizes to be blocked, including child pornography", provide parental controls, and allow subscribers to block content.
§ 910 contains two further exceptions. First, it provides that "Nothing in this title shall ... preclude an Internet service provider from displaying advertisements in connection with a broadband service". Second, it provides that "Nothing in this title shall ... apply to a service in which Internet service is not the primary service, such as a video service offered under Title VI of the Communications Act ..."
Adjudicative Enforcement by FCC. Title IX then provides that the FCC must write procedural rules that establish an adjudicatory enforcement of the Consumer Bill of Rights set out in Section 903, but that it must not write substantive rules on the same subject.
§ 907(a) provides that the FCC "shall, by rule, establish an adjudicatory enforcement procedure under which -- (1) any subscriber aggrieved by a violation of the requirements of section 903 may initiate an enforcement action by filing a complaint, in such form and in such manner as the Commission may prescribe; and (2) the Commission shall make a determination, after notice and an opportunity for a hearing, with respect to any bona fide complaint not later than 120 days after the date on which such complaint is received."
But then, § 908 provides that "Except as provided in section 907(a), the Commission shall not --- (1) promulgate any regulations implementing this title; nor (2) enlarge or modify the obligations imposed on Internet service providers through the adjudicatory process under section 907."
This FCC adjudicatory process would only address alleged violations of the § 903 Consumer Bill of Rights. It would not encompass alleged violations of § 904 (free speech) or § 905 (stand alone service).
Snowe Dorgan Amendment. Sen. Snowe, Sen. Byron Dorgan (D-ND), Sen. Maria Cantwell (D-WA), Sen. Barbara Boxer (D-CA), and Sen. John Kerry (D-MA) offered a network neutrality amendment.
This is related to a stand alone bill, S 2917, the "Internet Freedom Preservation Act", introduced by Sen. Snowe and others on May 19, 2006. See also, story titled "Snowe and Dorgan Introduce Net Neutrality Bill" in TLJ Daily E-Mail Alert No. 1,375, May 22, 2006. However, the amendment is significantly different from the S 2917.
The amendment provides that the Federal Communications Commission's (FCC) August 2005 broadband policy statement [3 pages in PDF] "is hereby incorporated into this Act and the Commission shall enforce such statement and the principles stated therein." It further provided that "In addition to the principles contained in the broadband policy statement, end users shall be entitled to service from each broadband Internet access provider that does not discriminate in the carriage and treatment of Internet traffic based on the source, destination, or ownership of such traffic."
The amendment also gives the FCC authority to enforce these principles in adjudicatory proceedings. It further provides that the FCC "shall adjudicate any complaint alleging violation of this section" within 90 days of receipt of a complaint. The FCC could impose fines of up to $500,000 per violation, and adopt appropriate orders.
However, this amendment also provided that the FCC shall not promulgate regulations.
Debate. During the debate Sen. Stevens (at right) was the primary opponent of Sen. Snowe's amendment. Although Sen. Jim DeMint (R-SC) and others also argued against it. Sen. Snowe and Sen. Dorgan were the primary advocates of the amendment.
Sen. Snowe argued that if her amendment were not approved, the underlying bill would permit the telephone and cable companies "to come in through the back door with a hidden tax". She said that neither the government nor network providers should tax the net.
She cautioned that without her amendment "we are going to have a two tiered internet".
Sen. Dorgan read from statement made by Cablevision's Tom Rutledge about Vonage. Sen. Dorgan said this: "So anyone who buys Vonage on our network using our data service really doesn't know what they are doing. Out service is better. It is quality of service. We actually prioritize the bits so that the voice product is a better product. Cablevision says, you can get Vonage, or you can get us. We actually prioritize the bits, so that our product is the better product." Sen. Dorgan said this is precisely what the amendment is about.
Sen. Stevens and Sen. DeMint both argued that Google prioritizes search results. Sen. DeMint defended prioritization. He said that "the ability to differentiate is the key to adding value to any product". He predicted that adoption of the amendment would "restrict investment" and "buildout".
Sen. Stevens argued that the amendment would be "heavy handed regulation". He added that no one yet has defined what network neutrality is, and that there has not yet been discrimination, so the Congress should not yet mandate it.
Sen. Cantwell argued that if the amendment is not adopted TCP will come to mean "telecom control protocol".
Antitrust and Network Neutrality. Sen. Stevens also commented on addressing network neutrality with a competition law approach.
He said during the mark up on June 28 that "We already have unfair competition. I have already said if you want to make a special provision with regard to antitrust laws, that's going to come out of the Judiciary Committee. We made an agreement, I don't know if you know this, with the Judiciary Committee. We will not deal with antitrust concepts in this Committee. They are going to look at the internet from the point of view of antitrust, and they are going to report something concerning antitrust to the floor. And we will decide whether we have to do this bill, or have do it separately."
Sen. Stevens also spoke with reporters after the June 28 mark up. He said that "the bill will have to be slimmed down on the Senate floor. He explained "several bills were added ... the question is whether they invade other jurisdictions. We are going to have to face other committees in saying wait a minute, that is part of our jurisdiction ..." He declined to provide details in response to a question regarding which parts of the bill may face jurisdictional objections.
He added that "Sen. Specter and I talked. In the beginning, we had amendments that would have been offered that dealt with antitrust concepts of net neutrality. In my judgment, people who are talking about net neutrality are really talking about antitrust activity. And, he agreed. And, I think he may disagree on net neutrality, on the vote we had here. But, he also has an interest in the antitrust concept as it applies to communications. And, I think you may see them take that up. He may, he didn't say that he would, he would consider bringing an amendment to the floor, as I indicated, from the Committee, if they can get an agreement, that may concern the antitrust activity as it applies to the communications industry."
On May 25, 2006, the House Judiciary Committee (HJC) amended and approved HR 5417, the "Internet Freedom and Nondiscrimination Act of 2006", a network neutrality bill sponsored by Rep. James Sensenbrenner (R-WI), Rep. John Conyers (D-MI), Rep. Rick Boucher (D-VA), and Rep. Zoe Lofgren (D-CA). See, story titled "House Judiciary Committee Approves Net Neutrality Bill" in TLJ Daily E-Mail Alert No. 1,379, May 26, 2006. For a summary of the base bill, see story titled "Sensenbrenner and Conyers Introduce Net Neutrality Bill" in TLJ Daily E-Mail Alert No. 1,375, May 22, 2006.
When the House considered its version of HR 5252, the COPE Act, the House Rules Committee did not make in order an amendment that contained the language of HR 5417. Hence, the full House did not vote on it.
Prospects in the Senate. Sen. Boxer predicted that "if this amendment goes down, you can expect a massive fight on your hands." Sen. Stevens responded that "If this amendment is adopted this bill is never going to come out of the Congress." That is, the House rejected Rep. Ed Markey's (D-MA) network neutrality amendment on June 8, 2006, by a vote of 152-269. See, Roll Call No. 239.
If proponents of network neutrality carry through on threats to filibuster any bill without a network neutrality mandate, then under Senate rules, Sen. Stevens would need to muster 60 votes to overcome the filibuster.
Sen. Stevens spoke with reporters after the mark up on June 28. He said that while the SCC split evenly on the network neutrality amendment, there is more opposition to the amendment in the full Senate.
He said that "I believe that the vote on the floor will not be that close. I think the vote on the House floor will reflect the Senate today, unless it is whipped to the point of becoming a political issue here. It was not whipped over there on a political basis."
He also pointed out that some of the Senators on the SCC who voted for network neutrality may reconsider before the bill reaches the Senate floor. He said that there are many other provisions of the bill that they want to see enacted into law.
Mark Up of Titles X and XI -- Miscellaneous Provisions
6/28. Title X of HR 5252, as approved by the Senate Commerce Committee (SCC) on June 28, 2006, is titled "Miscellaneous". Title XI was added during the June 27 mark up session. The SCC's summary of the June 27 managers' package of amendments identifies this title as "New Items Not Currently in the Bill".
These two titles, as amended, include provisions regarding jurisdiction of the federal courts in the District of Columbia over challenges to FCC actions, allowing secret FCC proceedings, FCC restructuring, limits on lobbying for former FCC employees, media ownership rules, commercial broadcasting on school buses, caller ID spoofing, the FCC's Form 477 broadband reporting, the FCC's definition of broadband as 200 kpbs, the content of phone bills, and low power FM. These two titles now also include a permanent extension of the Internet Tax Freedom Act, and a new moratorium on certain new and discriminatory wireless taxes.
The discussion draft [159 pages in PDF] includes a provision that gives the federal courts in the District of Columbia exclusive jurisdiction over challenges to rulings and regulations of the Federal Communications Commission (FCC). It also includes provisions enhancing the FCC's ability to conduct its activities and operations in secret. See, story titled "Stevens Bill Includes Changes to FCC and Judicial Procedure" in TLJ Daily E-Mail Alert No. 1,396, June 21, 2006.
The June 27 managers' package includes seven amendment to Title X. The SCC's summary describes these as follows:
• "The underlying bill preempts some state and local franchising laws. This
amendment, requested by the cities, makes clear that the State preemption
provisions do not affect any state or local tax law." (Stevens)
• "To improve public safety by requiring a status report on the establishment of the E-911 Implementation and Coordination Office under the ENHANCE 911 Act." (Nelson FL and Burns)
• "To require the Federal Communications Commission to study telemedicine and report to Congress on the availability and needs of broadband facilities capable of providing telemedicine services." (Nelson FL and Allen)
• "To amend the Children's Television Privacy Act of 1990 to apply the time limitations on advertising in children's programming to video service providers. Under current law, such requirements only apply to broadcasters." (Nelson FL and Pryor)
• "To ensure that the provisions of title V (forfeitures and penalties for obscenity or other violations of the Communications Act of 1934) that apply to cable television operators also apply to video service providers." (Lautenberg)
• "To ensure that the provisions of the title VII of the Communications Act of 1934 (miscellaneous provisions) that apply to cable television operators also apply to video service providers." (Nelson FL and Pryor)
• "To hold independent network affiliates harmless from section 503(b) penalties for network programming they have not had an opportunity to preview or with respect to which they have received no notice from the network as to objectionable content." (Nelson NE)
The June 28 managers' package includes another amendment to Title X, which the SCC's summary describes as follows: "To encourage diversity in media ownership", offered by Sen. John Kerry (D-MA) and Sen. Bill Nelson (FL).
The June 27 managers' package includes two amendments to be placed in the new
Title XI. The SCC's summary describes these as follows:
• "Relating to directing the FCC to revisit broadband speeds. The FCC's current speed for broadband is 200 kilobits per second which is quite slow. The Inouye amendment would require that speeds be periodically updated." (Inouye)
• "To establish an Office of Indian Affairs in the Federal Communications Commission. There are already staff performing this role at the FCC, but this would require the office as a matter of law." (Inouye, Cantwell and Dorgan)
The SCC approved on June 28 an amendment to Title XI offered by Sen. Byron Dorgan (D-ND) that requires the FCC to conduct a study of "commercial proposals to broadcast radio or television programs for reception onboard specially equipped school buses operated by, or under contract with, local public educational agencies."
Sen. Dorgan joked that such broadcasting is a form of "child abuse". Sen. Conrad Burns (R-MT) joked that the SCC could save the FCC's money. "We could always ride the bus. Save a lot of money." Sen. Sununu suggested that schools would be smart enough to reject these broadcasts on their own. The amendment was approved without objection.
The SCC approved on June 28 an amendment to Title XI offered by Sen. Bill Nelson (FL) and Sen. Olympia Snowe (ME) titled "Truth in Caller ID". It is directed at caller identification spoofing. It is very similar to HR 5126, the "Truth in Caller ID Act of 2006", which the House approved on June 6, 2006.
The SCC approved on June 28 an amendment to Title X offered by Sen. Daniel Inouye (D-HI) which the SCC's ESAL describes as "To provide for competition in special access markets."
The SCC amended and approved on June 28 an amendment to Title X offered by Sen. Dorgan, Sen. Trent Lott (R-MS), and Sen. Maria Cantwell (D-WA) regarding the FCC's just announced media ownership rulemaking proceeding. Sen. Dorgan stated that this amendment requires the FCC to submit its proposed rules to the Congress and public before adopting them. Sen. Stevens said that it also reinstates the FCC's rules in effect prior to the FCC's June 2, 2003 order. Sen. Ensign expressed opposition, but added that he would not request a roll call vote.
The SCC approved on June 28 an amendment to Title X offered by Sen. Nelson (FL) and Sen. Burns. Sen. Burns stated that this requires that the money collected for 911 and E911 be used for call centers and 911 and E911 technologies. He said that currently "the states were using the money for other than what it was collected for".
The SCC approved on June 28 an amendment to Title X offered by Sen. Nelson (FL) regarding the one year restriction on lobbying by certain former employees of the Federal Communications Commission (FCC).
The SCC approved, subject to revision, on June 28 an amendment to Title X offered by Sen. Nelson (FL) and Sen. Snowe that creates an Office of Consumer Advocate at the FCC. Sen. Ensign said that the FCC needs restructuring, but that the SCC should first hold hearings, and then legislate on a range of topics related to organization of the FCC. Sen. Snowe said that the FCC is "underfunded and overburdened".
The SCC approved on June 28 an amendment to Title X offered by Sen. Nelson (FL) that requires the FCC to revise its Form 477, which pertains to broadband reporting. The amendment requires service providers to submit more information in these reports.
The SCC approved on June 28 an amendment to Title X offered by Sen. Ted Stevens (R-AK) and Sen. Mark Pryor (D-AR) that requires the FCC to adopt rules "establishing customer service and consumer protection requirements for providers of commercial mobile service or private mobile service".
The SCC approved on June 28 an amendment to Title X offered by Sen. Jay Rockefeller (D-WV) that bears the title "Truth in Telephone Charges Act of 2006". However, whether this amendment promotes, or inhibits, truth in billing is a matter of debate. It requires that nothing be included on a subscribers bill. It prevents inclusion of some items about which subscribers might wish to be informed.
This amendment would require the FCC to "initiate and conclude a proceeding under part I of title II of the Communications Act of 1934 ... to prevent a telecommunications carrier from listing any charge or fee on the billing statement of a subscriber as a separately stated charge or fee other than a charge or fee (1) for telecommunications service or other services provided to a subscriber; (2) for nonpayment, early termination of service, or other lawful penalty; (3) for Federal, State, or local sales or excise taxes; or (4) expressly authorized by a Federal, State or local statute, regulation, or rule to appear on a subscriber's billing statement as a separately stated charge or fee."
The SCC approved on June 28 an amendment offered by Sen. George Allen (R-VA) that permanently extends the Internet Tax Freedom Act. It was approved by a vote of 19-3. See, Roll Call No. 12. Sen. Rockefeller, Sen. Dorgan, and Sen. Lautenberg voted no.
This short amendment provides in substantive part that "Section 1101(a) of the Internet Tax Freedom Act (47 U.S.C. 151 note) is amended by striking ``taxes during the period beginning November 1, 2003, and ending November 1, 2007:´´ and inserting ``taxes:´´."
The SCC approved an amendment to Title XI offered by Sen. McCain and Sen. Cantwell titled the "Local Community Radio Act of 2006". It pertains to low power FM. It was approved by a vote of 14-7. See, Roll Call No. 9.
The SCC approved an amendment to Title XI offered by Sen. McCain and others titled the "Cell Phone Tax Moratorium Act of 2006". It was approved by a vote of 21-1. See, Roll Call No. 10. Sen. Rockefeller cast the sole vote against.
It provides that "No State or political subdivision thereof shall impose a new discriminatory tax on or with respect to mobile services, mobile services providers, or mobile services property, during the 3-year period beginning on the date of enactment of this Act."
Reaction to the Senate Commerce Committee' Mark Up of HR 5252
6/28. Representatives of many groups and companies released comments on the Senate Commerce Committee's (SCC) mark up of HR 5252.
The CTIA's Steve Largent stated in a release that the SCC "took a significant step in the right direction for American consumers by recognizing the value and benefits provided by a national framework for the wireless industry. It's a simple equation: A consistent and light regulatory touch creates a stable environment and when that's provided for the hypercompetitive wireless industry, great things happen for consumers. We're also pleased with the tax moratorium placed on the excessive and arbitrary fees imposed on wireless consumers and companies at the state and local levels, and will continue working to establish a more reasonable and equitable tax structure. We remain committed to working with Chairman Stevens and Senator Rockefeller on the truth-in-billing amendment. If the goal of this legislation is to let consumers know just who is charging them what, this measure might not achieve its intended purpose."
BellSouth's Herschel Abbott stated in a release that "BellSouth congratulates Chairman Stevens on his skillful management of the complex process of getting this bill ready for the floor. This legislation is vital for American consumers who are looking for more competition in the video area and new services from broadband connections. As occurred in the House of Representatives, the so-called net neutrality issue was laid to rest after exhaustive debate. We look forward to seeing this bill scheduled for action on the Senate floor shortly after the Independence Day recess to provide the House and Senate time to resolve the considerable differences that exist between the House and Senate communications bills."
The USTA's Walter McCormick stated in a release that the SCC "took a bold step toward real video choice for consumers and ensuring the future for universal service. The bill reported from committee will update our communications laws to reflect today's highly competitive marketplace and unleash a new wave of innovation and economic growth. The Committee should also be commended for its sound judgment in rejecting calls for the government to regulate the Internet."
The National Cable and Telecommunications Association's (NCTA) Kyle McSlarrow commented on the SCC's rejection of an a la carte mandate. He stated in a release that "We are very pleased with the defeat of the amendment and will continue to oppose unnecessary government regulation of the pricing and packaging of video services, which most studies show will diminish diversity in programming and result in higher prices for fewer channels."
McSlarrow in a June 27 release that "we are very pleased that an amendment was defeated that would have undermined the bill's national framework by permitting states to adopt their own franchising schemes. We are also pleased the committee defeated an amendment that would have re-imposed economic regulation on the sale and transfer of cable systems. Finally, we applaud the committee for approving an amendment that reaffirms the interstate nature of VoIP service, which we believe strikes an appropriate balance between federal and state oversight of this emerging service."
McSlarrow stated in a release after final approval that "This legislation establishes a deregulatory framework that will encourage significant competition in the telecommunications marketplace, especially for local telephone service. Cable operators are deploying Internet telephone service in markets across the United States and the provisions included in this bill, and similar language in the House version, will result in more competition for telephone service and billions of dollars of savings for American consumers. We also applaud the committee’s rejection of unnecessary regulation of the Internet and the unwarranted re-imposition of antiquated rate and basic tier regulation of video services."
The National Association of Manufacturer's (NAM) Dorothy Coleman sated in a release that "It is critical that we create an environment to encourage needed investment. Video is an important driver for broadband and standardizing the franchise process will encourage its deployment. In a time of increased global economic competition, bold steps are necessary ... The committee’s bill is an attractive pro-investment vehicle. We appreciate, too, that the Committee rejected efforts to impose new restrictions on the Internet in the guise of `net neutrality.´"
Ben Scott, of the Free Press, stated in a release that "The tie vote in the Commerce Committee shows the gathering momentum for Network Neutrality across political lines. In the past several weeks, this fundamental principle has moved from obscurity to the center stage in the debate over our nation's telecommunications policy. The issue of Net Neutrality will continue to gain speed as the full Senate takes up a bill that will determine the fate of Internet freedom. The voices of millions of average citizens are just starting to break through the misinformation and lies being peddled by the big phone and cable companies who want to erect tollbooths on the Internet. Across the country, people are catching on to these companies' plans, and they won't forget which leaders stood up for the public interest."
Jeannine Kenney, of the Consumers Union, stated in a release that "The network neutrality nondiscrimination principle, which protects competition, maximizes consumer choice, and guarantees fair market practices, is one step closer to being abandoned with the Senate Commerce Committee's vote. This endangers the most important engine for economic growth and democratic communication in modern society. Nondiscrimination made possible the grand successes of the Internet. Its removal can take them away. The biggest winners today are big money and special interest industry groups -- and no one else. But this fight is far from over. The public can win back Internet freedom by ringing up their Senators and telling them that consumers need more broadband choices than monopoly cable and phone providers that discriminate."
Gigi Sohn, of the Public Knowledge, stated in a release that "Over the course of two days, the Senate Commerce Committee handed control of Internet content to the telephone and cable companies, and control over the design of consumer electronics to the movie and recording industries. In each case, big companies win, and consumers lose."
Sohn added that "In failing to approve strong Net Neutrality language, the Committee gave the telephone and cable companies something they have not had in the history of the Internet -- a way to control what goes over the Net. They would be free to discriminate in favor of content in which they have a financial interest or in favor of those companies which can afford special new fees the companies charge. Under this regime, the telephone and cable companies would have no incentive to make any improvements to today's Internet, on which consumers, innovators and small businesses depend. We are grateful for the strong support we did receive from the Committee members who voted for Net Neutrality."
Roll Call Votes on HR 5252
Senate Commerce Committee
June 22, 27 & 28, 2006
Roll Call Votes:
1. Sununu. 6/22. VOIP preemption. Approved 14-8.
2.Dorgan. 6/27. VOIP preemption. Failed 7-15.
3. Rockefeller. 6/27. Universal service support for first responders. Failed 10-12.
4. Dorgan. 6/27. Strike repeal of § 617. Failed 9-13.
5.Lautenberg. 6/27. State consumer protection authority. Failed 10-12.
6. Lautenberg. 6/27. Grandfathering of state franchise regulation. Failed 8-14.
7. Dorgan. 6/27. Limit FTCA exemption for carriers. Failed 9-12.
8. Kerry. 6/28. Title III build out requirement. Failed 10-12.
9. McCain. 6/28. Low Power FM. Approved 14-7.
10. McCain. 6/28. Partial moratorium on wireless taxes. Approved 21-1.
11. McCain. 6/28. A la carte. Failed 2-20.
12. Allen. 6/28. Make permanent the ITFA. Approved 19-3.
13. Snowe/Dorgan. 6/28. Network neutrality. Failed 11-11.
14. Boxer. 6/28. Another build out requirement. Failed 10-12.
15. Inouye. 6/28. Substitute bill. Failed 10-12.
16. Final passage. 6/28. Approved 15-7.
Senate Commerce Committee Approves Communications Bill
6/28. The Senate Commerce Committee (SCC) approved a broad communications reform bill at the conclusion of a day long mark up. This bill is now numbered HR 5252. However, it was introduced as as S 2686, and originally had the title "Communications, Consumer's Choice, and Broadband Deployment Act of 2006".
This bill is much different from the version of HR 5252 that the House approved on June 8, 2006. See, story titled "House Approves COPE Act, Without Network Neutrality Amendment" in TLJ Daily E-Mail Alert No. 1,388, June 9, 2006.
The vote on final approval was 15-7. The twelve Republican members, along with Sen. Daniel Inouye (D-HI), Sen. Ben Nelson (D-FL), and Sen. Mark Pryor (D-AR), voted for the bill.
On June 28, the SCC debated, and rejected by a vote of 11-11, an amendment offered by Sen. Olympia Snowe (R-ME), Sen. Byron Dorgan (D-ND), and others, that would have imposed a network neutrality mandate.
The SCC also rejected by a vote of 10-12 an amendment offered by Sen. John Kerry (D-MA) that would have amended Title III, which pertains to video services, to impose a build out requirement. It was a nearly straight party line vote. All Republicans, except Sen. Snowe, voted against the amendment, while all Democrats, except Sen. Ben Nelson, voted for the amendment.
The SCC rejected by a vote of 2-20 an amendment offered by Sen. John McCain (R-AZ) that would have provided that for video service providers to receive the benefits of Title III of the bill, they must first offer a la carte programming.
The SCC approved by a vote of 14-7 an amendment offered by Sen. McCain regarding low power FM.
The SCC approved by a vote of 21-1 an amendment offered by Sen. McCain to impose a three year moratorium on new and discriminatory taxes on wireless services.
The SCC approved by a vote of 19-3 an amendment offered by Sen. George Allen (R-VA) that would make permanent the Internet Tax Freedom Act (ITFA)
The SCC began this mark up on Thursday, June 22. See, story titled "Senate Commerce Committee Begins Mark Up of Communications Reform Bill" in TLJ Daily E-Mail Alert No. 1,398, June 23, 2006, and story titled "Senate Commerce Committee to Continue Mark Up of Communications Bill" in TLJ Daily E-Mail Alert No. 1,400, June 27, 2006. It then held a full day mark up session on Wednesday, June 27. See, story titled "Senate Commerce Committee Continues Mark Up of Communications Reform Bill" in TLJ Daily E-Mail Alert No. 1,401, June 28, 2006.
The SCC considered over 200 amendments in three mark up sessions. This article is brief and incomplete. TLJ intends to publish a full review of the markup on Wednesday, July 5.
Senate Finance Committee Approves Tax Bill with Communications and Tech Provisions
6/28. The Senate Finance Committee (SFC) amended and approved S 1321, the "Telephone Excise Tax Repeal Act of 2005". This bill repeals the federal telephone excise tax that dates back to the Spanish American War. However, the bill, as amended, also includes numerous other tax provisions, including some that affect technology and communications. See, full story.
Privacy International Files Complaints Against US for Collection of Financial Data
6/28. Privacy International (PIS) filed complaints [PDF] with government regulators in seventeen countries regarding "recently publicised activities of the Society for Worldwide Interbank Financial Telecommunications (SWIFT) involving the covert disclosure of personal information relating to nationals of the EU, the United States and other countries." See also, PI release.
PI filed complaints in France, Canada, Italy, Spain, Belgium, the Netherlands, the United Kingdom, Sweden, Germany, Hungary, Switzerland, the Czech Republic, Australia, New Zealand, Hong Kong, Portugal and Greece.
The complaint alleges that "This disclosure of data has been undertaken ostensibly on the grounds of counter-terrorism. The disclosures involve the mass transfer of data from the SWIFT centre in Belgium to the United States, and possibly direct access by U.S. authorities both to data held within Belgium and data residing in SWIFT centres worldwide. It appears that the activity was undertaken without regard to legal process under Data Protection provisions, and it is possible that the disclosures were made without any legal basis or authority whatever."
It adds that "In all cases the disclosures were made without the knowledge or consent of the individuals to whom the data related. To the best of our knowledge, the disclosure activity is ongoing. The scale of the operation, involving millions of records, places this disclosure in the realm of a fishing exercise rather than legally authorised investigation."
FCC Releases Order and NPRM Regarding VOIP and Universal Service Taxes
6/28. The Federal Communications Commission (FCC) released the text [151 pages in PDF] of its Report and Order and Notice of Proposed Rulemaking that imposes universal service program taxes on interconnected voice over internet protocol (VOIP) service providers.
The FCC adopted this item on June 21, 2006. See, story titled "FCC to Tax Interconnected VOIP Service Providers" in TLJ Daily E-Mail Alert No. 1,397, June 22, 2006. This item is FCC 06-94 in Docket Nos. 06-122, 04-36, 96-45, 98-171, 90-571, 92-237, 99-200, 95-116, 98-170.
Comments in response to the NPRM portion of this item will be due within 30 days of publication of a notice in the Federal Register. This publication has not yet taken place. Reply comments will be due within 60 days of such publication. This item opens yet another universal service docket. The NPRM portion states that comments should be filed in this new docket, WC Docket No. 06-122.
The NPRM portion seeks comments on the interim rules regarding the percentage of revenues of VOIP and wireless service providers that will be subject to taxation.
The order portion of this item states that "we raise the interim wireless safe harbor from its current 28.5 percent level to 37.1 percent. Second, we establish universal service contribution obligations for providers of interconnected voice over Internet Protocol (VoIP) service."
This item requires "interconnected VoIP services" to pay universal service taxes. It further states that the FCC has defined "interconnected VoIP services" as "those VoIP services that: (1) enable real-time, two-way voice communications; (2) require a broadband connection from the user’s location; (3) require IP-compatible customer premises equipment; and (4) permit users to receive calls from and terminate calls to the PSTN."
In addition, this item announces that "the definition of interconnected VoIP services may need to expand as new VoIP services increasingly substitute for traditional phone service."
The statutory basis for this item is 47 U.S.C. § 254(d), which provides that "Every telecommunications carrier ... shall contribute ...". It adds that "Any other provider of interstate telecommunications may be required to contribute ...". This item asserts that interconnected VOIP service providers are "providers of interstate telecommunications" within the meaning of subsection 254(d).
This item continues the FCC's ongoing process of selectively applying components of its Title II common carrier regulatory regime to VOIP and other information services.
For example, on May 19, 2005, the FCC applied 911/E911 regulation to interconnected VOIP service providers. See, story titled "FCC Adopts Order Expanding E911 Regulation to Include Some VOIP Service Providers" and story titled "Summary of the FCC's 911 VOIP Order" in TLJ Daily E-Mail Alert No. 1,139, May 20, 2005.
Similarly, on August 5, 2005, the FCC applied CALEA like regulation and mandates to interconnected VOIP services and facilities based broadband internet access services. See, story titled "FCC Amends CALEA Statute" in TLJ Daily E-Mail Alert No. 1,191, August 9, 2005.
Moreover, the FCC's omnibus IP enabled services proceeding, WC Docket No. 04-36, remains active.
The FCC's orders on Vonage's and Pulver's petitions, its orders regarding classification of cable modem service and DSL service, and the FCC's "self-congratulatory paean to its deregulatory largesse" (Justice Antonin Scalia's words), have been accompanied by the FCC's decisions that reapply components of the old telecommunications regulatory regime, or apply such regulation for the first time to previously unregulated services. Perhaps this is the sort of "Möbius-strip reasoning" that Justice Scalia predicted in his dissent in NCTA v. Brand X. See, June 27, 2005, opinion [59 pages in PDF] of the Supreme Court, and story titled "Supreme Court Rules in Brand X Case" in TLJ Daily E-Mail Alert No. 1,163, June 28, 2005.
6/28. The Department of Justice's (DOJ)
Antitrust Division announced in a
that "Effective today, and until further notice, all premerger filings
should be directed to:
Department of Justice
Office of Operations
Premerger Notification Unit
600 E Street, N.W.
Washington, D.C. 20530
The DOJ has relocated its Hart Scott Rodino premerger unit because of the effects of the flooding of the basement of the DOJ's main building, also known as the Robert F. Kennedy building. The notice adds that "FedEx airbills should use the above address information. Delivery of premerger and notification report forms and other materials to the Premerger Unit will be similar to the procedures in place at the RFK building."
6/28. The U.S. District Court (WDNC) sentenced David Chen Pui and David Lee Pruett to prison terms of 8 and 18 months, respectively. They previously each pled guilty to a single felony count of conspiracy to commit copyright infringement, in connection with their involvement with online software piracy. The DOJ stated in a release that "These are the first federal criminal sentences for members of the so-called “warez scene” from the Charlotte component of Operation FastLink, an ongoing federal crackdown against the organized piracy groups responsible for most of the initial illegal distribution of copyrighted movies, software, games and music on the Internet. Operation FastLink has resulted, to date, in more than 120 search warrants executed in 12 countries; the confiscation of hundreds of computers and illegal online distribution hubs; and the removal of more than $50 million worth of illegally-copied copyrighted software, games, movies and music from illicit distribution channels."
6/28. Federal Communications Commission (FCC) Commissioner Deborah Tate gave a speech [PDF] at a Federal Communications Bar Association (FCBA) lunch.
6/28. The New York University School of Law's Brennan Center for Justice released a report [32 pages in PDF] titled "The Machinery of Democracy: Protecting Elections in An Electronic World". It analyses the security vulnerabilities in the three most commonly purchased electronic voting systems. It concludes that all have vulnerabilities.
Senate Commerce Committee Continues Mark Up of Communications Reform Bill
6/27. The Senate Commerce Committee (SCC) continued its mark up of the "Communications, Consumer's Choice, and Broadband Deployment Act of 2006".
It began this mark up on Thursday, June 22. See, story titled "Senate Commerce Committee Begins Mark Up of Communications Reform Bill" in TLJ Daily E-Mail Alert No. 1,398, June 23, 2006, and story titled "Senate Commerce Committee to Continue Mark Up of Communications Bill" in TLJ Daily E-Mail Alert No. 1,400, June 27, 2006.
The SCC will continue this mark up at 10:00 AM on Wednesday, June 28, in Room 216 of the Senate's Hart Building.
The SCC has, with exceptions, been considering amendments title by title. The SCC completed Title I amendments (interoperability of emergency communications), and started Title II amendments (universal service, interconnection, and VOIP), on June 22.
On June 27, the SCC completed its consideration of amendments to Title II. It also completed its consideration of amendments to Title III (video franchising), Title IV (video content, and audio and video flag), Title V (municipal broadband), Title VI (WIN Act, regarding white space), Title VII (digital television transition), Title VIII (video transmission of child pornography). It also began consideration of amendments to Title X (miscellaneous provisions).
However, the SCC skipped over amendments to Title IX (network neutrality). It also held over or postponed key amendments to other titles. For example, it has yet to consider an amendment to Title IV that would impose a build out requirement. It has yet to consider an a la carte amendment. While the Committee completed its consideration of VOIP preemption, it has yet to consider amendments regarding wireless preemption. That is, some of the most debated amendments, and final approval, are scheduled for Wednesday, June 28.
The SCC approved a managers package of consensus amendments on June 27. Sen. Ted Stevens (R-AK) also stated that the SCC is working on yet another managers package of amendments. Several amendments discussed on Tuesday, June 27, were withdrawn, subject to an agreement that they would be revised, and included in this managers package.
The SCC held a long debate over the whether or not to remove the amendments offered by Sen. John Sununu (R-NH), and approved by roll call vote, on Thursday, June 22, regarding federal preemption of certain types of state and local regulation of VOIP services. See, story titled "Senate Commerce Committee Begins Mark Up of Communications Reform Bill" in TLJ Daily E-Mail Alert No. 1,398, June 23, 2006. This story contains Sen. Sununu's amendments. The effort to remove these amendments failed on a roll call vote.
The SCC also held a long debate over an amendment offered by Sen. Frank Lautenberg (D-NJ) that would have grandfathered any state video franchising regime enacted by the end of 2006. It would have substantially undermined the purpose of Title III of the bill. It failed on a roll call vote.
The SCC rejected an amendment offered by Sen. Byron Dorgan (D-ND) that would have limited the common carrier exemption under the Federal Trade Commission Act.
The SCC rejected an amendment offered by Sen. Jay Rockefeller (D-WV) that would have created a new universal service entitlement program for first responders.
Sen. Barbara Boxer (D-CA) withdrew her amendments regarding surveillance and data collection programs of the National Security Agency (NSA). She said that she would take these to the Senate floor.
The SCC approved an amendment, subject to revisions, offered by Sen. Conrad Burns (R-MT) that mandates warning labels on web sites with sexual explicit content.
This article is brief and incomplete. TLJ intends to publish a more detailed review of the entire mark up.
House Begins Consideration of CJS/Science/Tech Appropriations Bill
6/27. The House began its consideration of HR 5672, the "Science, State, Justice, Commerce, and Related Agencies Appropriations Act for Fiscal Year 2007". It will continue on Wednesday, June 28.
This bill includes appropriations for many technology related entities, including the Federal Communications Commission (FCC), National Telecommunications and Information Administration (NTIA), National Institute of Standards and Technology (NIST), Office of Science and Technology Policy (OSTP), Antitrust Division, and numerous units of the Department of Justice involved in electronic surveillance and data collection.
The House approved by voice vote an amendment offered by Rep. Nancy Johnson (R-CT) to increase funding for the Federal Bureau of Investigation's (FBI) Innocent Images Program by $3,300,000.
The House rejected an amendment offered by Rep. Jerrold Nadler (D-NY) to increase funding for the FBI by $40 Million. The vote was 176-243. See, Roll Call No. 328.
DC Circuit Remands FCC Denial of SBC's Petition for Forbearance
6/27. The U.S. Court of Appeals (DCCir) issued its opinion [17 pages in PDF] in AT&T v. FCC, remanding the FCC's order that denied, on procedural grounds, SBC's (now AT&T) petition for forbearance from Title II common carrier regulation certain of its internet protocol platform services.
See, the FCC's May 5, 2005, Memorandum Opinion and Order [12 pages in PDF] in its proceeding titled "In the Matter of Petition of SBC Communications Inc. for Forbearance from the Application of Title II Common Carrier Regulation to IP Platform Services". This MOO is FCC 05-95 in WC Docket No. 04-29.
See also, story titled "FCC Denies SBC's Petition for Forbearance of Common Carrier Regulation of IP Services" in TLJ Daily E-Mail Alert No. 1,130, May 6, 2005.
Section 10 of the Communications Act, which is codified at 47 U.S.C. § 160(a), provides, in part, that the FCC:
"shall forbear from applying any regulation or any provision of this chapter
to a telecommunications carrier or telecommunications service, or class of
telecommunications carriers or telecommunications services, in any or some of
its or their geographic markets, if the Commission determines that--
(1) enforcement of such regulation or provision is not necessary to ensure that the charges, practices, classifications, or regulations by, for, or in connection with that telecommunications carrier or telecommunications service are just and reasonable and are not unjustly or unreasonably discriminatory;
(2) enforcement of such regulation or provision is not necessary for the protection of consumers; and
(3) forbearance from applying such provision or regulation is consistent with the public interest."
SBC filed its petition on February 4, 2004. It requested that the FCC forbear from applying Title II common carrier regulation to "those services that enable any customer to send or receive communications in IP format over an IP platform, and the IP platforms on which those services are provided".
SBC also simultaneously filed with the FCC a related petition for declaratory ruling. However, the FCC shortly thereafter instituted in omnibus IP enabled services proceeding (WC Docket No. 04-36. The FCC consolidated the declaratory ruling petition into the IP enabled services proceeding.
The FCC order on SBC's forbearance petition stated that "We find that it would be inappropriate to grant SBC's petition because it asks us to forbear from requirements that may not even apply to the facilities and services in question. We also find that SBC's petition and the evidence proffered is not sufficiently specific to enable us to determine whether the requested forbearance satisfies the requirements of section 10".
The Court of Appeals held that "Because we agree that the Commission lacks section 10 authority to reject a petition as procedurally improper just because it requests forbearance from uncertain regulatory obligations, we reject the Commission's first rationale for denying SBC’s petition. And because the Commission has failed to explain how its second rationale is consistent with the specificity standard it has applied in other contexts, we remand the case for further explanation and consideration consistent with this opinion."
This case is AT&T, petitioner v. FCC and USA, respondents, and Time Warner Inc. and Time Warner Cable, intervenors, U.S. Court of Appeals for the District of Columbia, App. Ct. No. 05-1186, a petition for review of a final order of the FCC. Judge Tatel wrote the opinion of the Court of Appeals, in which Judge Williams joined. Judge Randolph wrote a brief concurring opinion.
AG Gonzales Talks About International IPR Enforcement in Israel
6/27. Attorney General Alberto Gonzales gave a speech in Tel Aviv, Israel, in which he discussed multinational efforts to address intellectual property theft.
He said that the U.S. is "working with our international partners on a range of other transnational crimes, such as intellectual property theft", including Israel.
Gonzales (at right) said that "Intellectual property crimes have become terribly common. Counterfeit and pirated goods are too easy to access -- from bootleg CDs, DVDs and games, to fake watches and sunglasses on street corners, to online file sharing. Although these crimes may appear harmless to some, the fact of the matter is that this manner of theft is one of the most damaging to our global economy."
"Criminals who manufacture and sell fake merchandise steal business from honest merchants, defraud innocent customers, illegally profit from the hard work of employees and entrepreneurs, and undermine our shared values of competition and creativity. This underground economy costs legitimate businesses billions of dollars every year, and causes significant harm to our economies", said Gonzales.
"Intellectual property crime is now undeniably global in nature. The digital age has created a world without borders for large criminal conspiracies, so our law enforcement efforts must be global and borderless as well. Every member of the global economy has a responsibility to keep counterfeit goods out of the world market."
He stated that "America and Israel are working together to meet that responsibility. In 2004, the U.S. and Israel were two of 12 countries to participate in what was then the largest multi-national law enforcement effort ever directed at online piracy, called ``Operation Fastlink.´´"
He concluded that "Operation Fastlink included the simultaneous execution of over 120 total searches in 27 states and 12 countries. This unprecedented international effort resulted in hundreds of computers and illegal online distribution centers being confiscated or dismantled, and more than 50 million dollars worth of illegally-copied copyrighted software, games, movies and music being seized. Operation Fastlink has already resulted in 30 felony convictions in the United States."
While Gonzales said that the US and Israel are working together, representatives of various US IP industries have long complained about IPR theft inside Israel, and the lack of IP laws and enforcement in Israel.
The Office of the U.S. Trade Representative (USTR) announced in its 2006 Special 301 Report, which reviews the adequacy and effectiveness of IPR protection in other countries, that "Israel will remain on the Priority Watch List in 2006".
The USTR explained the reason for this. "In March 2005, Israel passed legislation that weakened protection against unfair commercial use of undisclosed test and other data submitted by pharmaceutical companies seeking marketing approval for their products, despite extensive efforts between the United States Government and the Israeli Government to bridge differences on this issue. Intensifying concerns of the United States, the Israeli Government passed legislation in December 2005 that significantly reduced the term of pharmaceutical patent extension granted to compensate for delays in obtaining regulatory approval of a drug."
The USTR added that the U.S. "is also monitoring the status of copyright legislation that would weaken protections for U.S. rights holders of sound recordings; the United States urges Israel to provide national treatment for U.S. rights holders in accordance with its international obligations, including those under the 1950 United States-Israel Bilateral Copyright Agreement."
Finally, the USTR wrote that the U.S. "continues to urge Israel to strengthen its data protection regime in order to promote increased bilateral trade and investment in the field of pharmaceuticals and other knowledge-based sectors."
Although, to the extent that the U.S. has a "data protection regime", it is minimal.
Cox Addresses Use of Technology to Empower Consumers and Investors
6/27. Securities and Exchange Commission (SEC) Chairman Chris Cox gave a speech at Stanford University in Palo Alto, California, in which he addressed many topics, including how information technology can be employed to empower consumers and investors.
Cox (at left) said that "The purpose of so many of these SEC initiatives -- including our e-proxy proposal, our push for interactive data, our updating of the executive compensation rules, and our emphasis on plain English -- is to empower investors."
E-Proxy Proposal. Cox did not speak in detail about the SEC's electronic proxy proposal in this speech. However, see story titled "SEC Proposes to Allow Internet Delivery of Proxy Materials" in TLJ Daily E-Mail Alert No. 1,263, December 1, 2005. See also, Cox's speech of March 21, 2006, and story titled "SEC Chairman Cox Addresses Internet Proxy Proposal" in TLJ Daily E-Mail Alert No. 1,334, March 22, 2006.
Interactive Data. Cox discusses interactive data and XBRL in many of his speeches. Some of his speeches are devoted to this topic.
See, Cox's May 30, 2006, speech and story titled "Chris Cox Discusses Interactive Data" in TLJ Daily E-Mail Alert No. 1,382, June 1, 2006. See also, speech of November 7, 2005, in Tokyo, Japan, and speech of November 11, 2005, in Boca Raton, Florida. See also, story titled "SEC Chairman Cox Discusses Use of Interactive Data in Corporate Reporting" in TLJ Daily E-Mail Alert No. 1,250, November 9, 2005. And see, the SEC's February 2005 rule changes that initiated the SEC's XBRL Voluntary Program.
He said in his speech at Stanford that "Interactive data can make a company's financial information, such as that concerning executive compensation, far more useful. That's why an increasing number of companies are participating in the Commission's program to use interactive data in their SEC filings. Just last week, four more companies joined: Automatic Data Processing, Ford Motor Company, Ford Motor Credit Company, and Radyne Corporation."
He added, "here's a secret almost nobody knows: the power of interactive data can be applied beyond financial statement disclosure to virtually any text, footnotes, or other information in your shareholder communications."
Technology and Empowerment of Consumers and Investors. Cox said that "Here in Silicon Valley, where technology is everyone's business, there's been a long-running debate about the state of customer service. Many people complain that the advent of touch tone caller menus, long hold times, outsourced tech support, and mechanized consumer relations have all but eliminated customer service."
He said that "Others point to the amazing consumer empowerment that comes with worldwide comparison shopping on the Internet, easy-to-access research about products and services, and build-to-order customization of virtually anything one wishes -- all delivered to your doorstep -- as evidence that in the 21st century, the customer is truly king."
"The truth is, both camps may be right", said Cox.
He continued that "Investors are getting access to a wider range of investment products and services than ever before, and their transaction costs are lower than they've ever been. But when it comes to being able to find their way through the prospectus and the proxy statement and all the other investor communications the SEC requires, the customers have to do all the work."
He argued that "There's no reason that we can't rely upon technology to empower investors with opportunities for easy comparison shopping on the Internet; easy-to-access research about investment products and services; and even build-to-order customization of their own investment research, online."
Congressional Leaders Say No Doha Deal Is Better Than a Bad Deal
6/27. U.S. Trade Representative Susan Schwab, Secretary of Agriculture Mike Johanns, and several legislators from agriculture states held a news conference at which they discussed Doha round negotiations. See, audio recording [WM] of the event.
Several Congressional leaders said that the US should not conclude an agreement that does not provide market access for US agricultural products. "No deal is better than a bad deal", said Rep. Bob Goodlatte (R-VA), Chairman of the House Agriculture Committee.
The agriculture legislators did not discuss technology, communications, e-commerce, or intellectual property related issues. However, these legislators, including two Republicans, said that they cannot support an agreement that does not include meaningful market access for US agriculture products.
Under trade promotion authority, which expires next summer, the Congress votes to either approve or reject a trade agreement, but it cannot amend it.
The speakers were asked about the possibility that TPA will be extended. Sen. Baucus said that it depends on what comes out of the present negotiations. He added that TPA is very helpful, and advances the US's interests.
Sen. Chambliss said that if no deal is reached in the Doha Round, it will show that US negotiators are willing to "walk away from the table". This will reduce opposition in the Congress to TPA, and thus increase the chances of getting an extension.
Schwab said that she and Johanns are going to Geneva, Switzerland, this week "for what we hope will be a breakthrough". But, she stated that "we can't be stampeded into reaching an agreement just because of deadlines."
Johanns said that "we are at a very critical stage in the Doha Round". He called this a "make or break" stage for the United States. "We can't afford to see this round pass us by." And, he said that "we have got to get market access in return".
Sen. Saxby Chambliss, Chairman of the Senate Agriculture Committee, discussed the meaning of the Doha Round for US farmers and ranchers. He said that "we are not going to unilaterally disarm when in comes to reaching a final agreement in the Doha round."
He elaborated that the US made a meaningful proposal last October, but that the EU responded with something that was not meaningful. He continued that Europe pays twice as much as the US in domestic support, and that their agricultural tariffs are twice as high as those in the US.
Sen. Chambliss concluded that the U.S. needs to "see reciprocation from the other side", but that so far, "we haven't seen that".
Sen. Max Baucus (D-MT), the ranking Democrat on the Senate Finance Committee (SFC), expressed support for free trade, but added that the US should not "reach an agreement just for the sake of reaching an agreement". He said that "No deal is much better than a bad deal", and that the EU wants the US to agree to a bad deal. He said that the EU's proposal does not provide for market access.
Rep. Goodlatte said that "it is important that we not loose sight of our goals and fail to see the forest for the trees." He continued that the US introduced a good proposal, but now "we are being called upon to give even more, and receive even less".
He said that we want "real expansion of market access". He added that "now is the time for the rest of the world to step up to that challenge". He concluded that "no deal is better than a bad deal".
Sen. Tom Harkin (D-IA), ranking Democrat on the Senate Agriculture Committee said that "since the Doha Round was launched back in 2001" he has supported the agriculture negotiations. He stated that "I am very hopeful about this". However, he added that he is concerned about trading partners' requests that the US curb domestic support, without gaining access to foreign markets.
He also said that any final Doha Round agreement should leave no doubt as to the ability of the US to provide "green box programs", such as renewable energy. He concluded that "we should not settle for a modest result".
The legislators also praised Schwab and Johanns.
Bush and Snow Criticize Reporting of Government Financial Data Program
6/27. President Bush spoke, and answered questions, at a White House event on June 26, 2006. He addressed, among other things, the New York Times' disclosure of a Department of the Treasury program involving the collection of data regarding banking transactions.
President Bush said that "Congress was briefed. And what we did was fully authorized under the law. And the disclosure of this program is disgraceful. We're at war with a bunch of people who want to hurt the United States of America, and for people to leak that program, and for a newspaper to publish it does great harm to the United States of America. What we were doing was the right thing. Congress was aware of it, and we were within the law to do so."
He added that "The 9/11 Commission recommended that the government be robust in tracing money. If you want to figure out what the terrorists are doing, you try to follow their money. And that's exactly what we're doing. And the fact that a newspaper disclosed it makes it harder to win this war on terror." See, transcript.
In addition, Secretary of the Treasury John Snow wrote a letter to the New York Times on June 26, 2006, complaining about its news reporting. He stated that "The New York Times' decision to disclose the Terrorist Finance Tracking Program, a robust and classified effort to map terrorist networks through the use of financial data, was irresponsible and harmful to the security of Americans and freedom-loving people worldwide. In choosing to expose this program, despite repeated pleas from high-level officials on both sides of the aisle, including myself, the Times undermined a highly successful counter-terrorism program and alerted terrorists to the methods and sources used to track their money trails."
Also, on June 27, 2006, Privacy International released a short paper titled "Pulling a Swift one? Bank transfer information sent to U.S. authorities".
People and Appointments
6/27. President Bush announced his intent to nominate Jay Cohen to be Under Secretary for Science and Technology at the Department of Homeland Security (DHS). He is a retired naval officer. Most recently, he was Chief of Naval Research at the Department of the Navy. See, White House release and DHS release.
6/27. Michael Chertoff, Secretary of Homeland Security, named William Webster to be Chair of the Department of Homeland Security's (DHS) Homeland Security Advisory Council (HSAC), and James Schlesinger to be the Vice Chair of the HSAC. Webster was previously Vice Chair of the HSAC, and Schlesinger was previously a member of the HSAC. Chertoff also named Glenda Hood and Rick Stephens to be new members of the HSAC. Hood was previously a member of the HSAC's State and Local Senior Advisory Council. Stephens was previously a member of the HSAC's Private Sector Senior Advisory Committee. In addition, Herb Kelleher was named Chair of the Private Sector Senior Advisory Committee (PVTSAC), and Stephens was named Vice Chair. Also, Governor Jim Douglas of Vermont and New York State Senator Michael Balboni were named to the HSAC's State and Local Senior Advisory Committee. Finally, Sandra Archibald and William Parrish were named to the HSAC's Academe and Policy Research Senior Advisory Committee. See, DHS release.
6/27. The Senate Finance Committee held a hearing on the nomination of Henry Paulson to be Secretary of the Treasury. See, Paulson's prepared testimony, Sen. Charles Grassley's (R-IA) opening statement [PDF], and Sen. Max Baucus's (D-MT) opening statement [PDF].
6/27. The Center for Democracy and Technology (CDT) released a paper [16 pages in PDF] titled "Spyware Enforcement". See also, summary.
6/27. The Progress and Freedom Foundation (PFF) released a paper [10 pages in PDF] titled "How Long is Long Enough? Copyright Term Extensions and the Berne Convention". The author is the PFF's Patrick Ross.
6/27. The Copyright Office published a notice in the Federal Register a minor technical amendment to its rules regarding notices of termination of transfers and licenses to clarify determination of the date on which notice was served. It provides that in instances where first class mail is used, the date on which notice of termination is served is the day on which the notice was mailed. See, Federal Register, June 27, 2006, Vol. 71, No. 123, at Page 36486.
6/27. AT&T and the US settled United States ex rel. JA Russo Associates, Inc. v. AT&T Corporation, a civil action pending in the U.S. District Court (CDCal) alleging violation of the False Claims Act. AT&T agreed to pay $2.9 Million. The Department of Justice (DOJ) stated in a release that the complaint alleged that AT&T defrauded the General Services Administration (GSA) "by knowingly passing through to government customers, in violation of the terms of AT&T’s contract with GSA certain, costs and fees known as Presubscribed Interexchange Carrier Charges. The charges are a fee that long distance companies pay to local telephone companies to recover part of the costs of providing facilities that link each telephone customer to the telephone network." This case is D.C. No. Civil No. 04-1142-DOC (FMOx).
Senate Commerce Committee to Continue Mark Up of Communications Bill
6/26. The Senate Commerce Committee (SCC) is scheduled to continue the mark up of the "Communications, Consumers’ Choice, and Broadband Deployment Act", which it began on Thursday, June 22, 2006.
See, story titled "Senate Commerce Committee Begins Mark Up of Communications Reform Bill" in TLJ Daily E-Mail Alert No. 1,398, June 23, 2006.
The SCC is marking up the third discussion draft [159 pages in PDF] of the bill. The bill was introduced as S 2686, but is now numbered HR 5252, which is the number of the House COPE Act.
On June 22, the SCC dealt with over twenty amendments. Most were in a managers package that was approved without debate or objection. Sen. Ted Stevens (R-AK), the Chairman of the SCC, told reporters after the meeting that there are over one hundred amendments. He said that he hoped that the mark up would be completed on June 27, but that if it is not, it will continue on Wednesday, June 28. He said "It depends on the patience of the Committee."
The SCC is proceeding title by title. It has completed consideration of amendments to Title I, and started on Title II. There are ten titles.
Sen. Stevens (at right) discussed net neutrality after the June 22 mark up. The following is the entirety of his comments.
"If this is not a bipartisan bill, I have never seen one. But there is still objections from the other side, that is true. And, based on one issue, one issue, and it would all go away. And that is net neutrality. I firmly believe that we have done what we need to do about net neutrality in this bill. We have consumer protection at the FCC. In addition to that, we have the FCC ready to raise the flag anytime they see anything they can define as net neutrality."
"No one has been able to define net neutrality to me yet. So, I don't see legislating on something that no one can define. But if the FCC can find something, to define this net neutrality problem, they can raise the flag. And, I am willing to put in this bill a provision that gives a fast track to any legislation that is necessary to meet that objection. But, until someone really defines it, why should we destroy a bill, and we will, if that net neutrality provision goes in this bill, the other side is going to vote against it. So, just make up your mind now."
"I think we have got the votes to get the bill out of committee. The question is whether we have sixty votes. In the end, people are going to have to see that net neutrality, the legislation may come about, if anyone ever figures out what it is."
"Today it is a fear of enormous entities, all of which have buildings full of lawyers. Now, why should we hire millions of lawyers at the FCC to try and control those people. Let them --. We provide that the antitrust laws apply to communications period. So, if there is any antitrust activity, let them fight it out in the courts. And remember, there is treble damages for antitrust. So, that is a real whopper. That is much better than having the right to go to the FCC, the right to go to court, on any communications antitrust activity."
Sen. Stevens was also asked whether or not this bill is now a major rewrite of the communications laws. He said that "This is a new communications bill. It is trying to level the field between telecommunications, communications, information services, and data services, whatever ..."
Sen. Stevens was also asked if he "intervened at the FCC to stop the must-carry vote, because you wanted to take care of must carry, digital must carry, multicast must carry, in this bill?" He responded that "It's not true. I made a misstatement ... but other than that I have said nothing about that it." See, story titled "FCC Drops Multicast Must Carry Item" in TLJ Daily E-Mail Alert No. 1,394, June 19, 2006.
Eliot Spitzer Urges Senate to Enact Net Neutrality Mandate
6/26. Eliot Spitzer, Attorney General of the state of New York, wrote a letter [3 pages in PDF] to Sen. Ted Stevens (R-AK) and Sen. Daniel Inouye (D-HI) urging them to include a network neutrality mandate, such as that contained in S 2917, the "Internet Freedom Preservation Act, in the Senate Commerce Committee's communications reform bill. He also wants state AGs to have enforcement authority.
Sen. Olympia Snowe (R-ME) and Sen. Byron Dorgan (D-ND) introduced S 2917 on May 19, 2006. See, story titled "Snowe and Dorgan Introduce Net Neutrality Bill" in TLJ Daily E-Mail Alert No. 1,375, May 22, 2006.
AG Spitzer wrote that "Recent concentration in the communications industry places net neutrality in jeopardy. As a result of the mergers of SBC with AT&T and Verizon with MCI, two companies now own half of the nation's Internet backbone facilities. These two companies are also vertically integrated businesses that dominate data and voice telecommunications, and provide a large and growing share of broadband Internet access to customers of all sizes."
Spitzer continued that "AT&T and Verizon have wasted no time in stating their plans to abandon nondiscriminatory treatment of Internet traffic in favor of giving priority to content supplied by their own subsidiaries and affiliates, and charging unaffiliated Internet content providers a premium if they wish to receive the same treatment." (Footnote omitted.)
He wrote that "Such unprecedented discriminatory policies would create ``fast lanes´´ for content offered by larger, well-funded businesses and ``slow lanes´´ for all others. It would restrict the unfettered flow of information that has made the Internet so invaluable to our open democratic society, and it would threaten to disrupt the Internet's robust e-commerce."
Spitzer added that the Federal Communications Commission (FCC) "should be authorized to enforce these provisions through compliance orders, including stiff penalties, and awarding damages to competitors, consumers and Internet users who are harmed by an Internet backbone or service provider's illegal actions."
S 2917 would also give enforcement authority to the FCC. However, Spitzer urged the Senate to also allow state enforcement, and private lawsuits. He wrote that "State Attorneys General and private parties should also be authorized to bring civil actions in any U.S. District Court to enforce these provisions."
FTC Advocates Open and Accessible Whois Database
6/26. The Federal Trade Commission (FTC) Commissioner Jonathan Liebowitz gave a speech [12 pages in PDF] at a meeting of the Internet Corporation for Assigned Names and Numbers (ICANN) in Marrakech, Morocco, regarding access to the Whois database.
He stated that "The FTC believes that the Whois databases, despite their limitations, are nevertheless critical to the agency’s consumer protection mission, to other law enforcement agencies around the world, and to consumers. The use of these databases to protect consumers is at risk as a result of the Generic Names Supporting Organization’s ("GNSO") recent vote to define the purpose of Whois data as technical only. The FTC is concerned that any attempt to limit Whois to this narrow purpose will put its ability to protect consumers and their privacy in peril."
He added that the "Whois databases often are one of the first tools FTC investigators use to identify wrongdoers." He related numerous FTC consumer protection cases, and the role played by the Whois database in the FTC's investigations.
The FTC announced in a release that it approved Liebowitz's statement by a 5-0 vote.
Supreme Court Grants Cert in Bell Atlantic v. Twombly
6/26. The Supreme Court granted certiorari in Bell Atlantic v. Twombly, a case involving the pleading requirements for an action under Section 1 of the Sherman Act against regional bell operating companies (RBOCs). See, Order List [13 pages in PDF] at page 3.
Introduction. The legal is issue is whether a complaint that alleges parallel or similar behavior, and conspiracy to limit competition, but includes no allegations in support other than the similar or parallel conduct, is sufficient to survive a motion to dismiss.
This is a class action antitrust suit against the RBOCs alleging conspiracy to exclude competitors from, and not to compete against one another in, their respective geographic markets for local telephone and high speed internet services.
However, the Supreme Court's opinion will affect proceedings in a variety of other communications and information technology sectors, as well as non-tech industries.
The U.S. District Court (SDNY) dismissed the complaint for failure to state a claim. The U.S. Court of Appeals (2ndCir) vacated and remanded. See, October 3, 2005, opinion [43 pages in PDF]. And now, the Supreme Court has agreed to hear the case.
See, full story.
Supreme Court Grants Cert in Patent Obviousness Case
6/26. The Supreme Court granted certiorari in Teleflex v. KSR, a patent case involving the issue of obviousness. See, Order List [13 pages in PDF] at page 3.
The facts giving rise to this case are not related information technology. This is a patent dispute involving adjustable floor pedals. The Court of Appeals merely issued a non-precedential opinion. However, this case has attracted the attention of technology companies such as Cisco and Microsoft.
They, and other amici, urged the Supreme Court to take the case, and use it as a vehicle for overturning a string of Federal Circuit opinions that they believe make it too easy to obtain and defend questionable patents -- patents that are obvious in light of the prior art. They argue that the current state of the law makes it more risky and expensive for innovative companies like Cisco and Microsoft to bring new products to market. And this, they argue, inhibits technological innovation.
TLJ summarized the issue, the precedent, the proceedings below, and several amicus briefs in an earlier story. See, story title "Supreme Court Requests Brief From Solicitor General in Patent Obviousness Case" in TLJ Daily E-Mail Alert No. 1,227, October 5, 2005. See also, brief [23 pages in PDF] of Cisco and Microsoft, brief [25 pages in PDF] of the Progress and Freedom Foundation (PFF), and brief [31 pages in PDF] of a group of law professors.
The Solicitor General filed a brief last month urging the Supreme Court to grant certiorari.
Jim DeLong of the PFF stated in a release on June 26, 2006 that "Our position stems logically from our dedication to the importance of intellectual property rights. For any IP regime to work, the nature of the rights must be well defined and appropriately limited. We think a good Supreme Court decision on the merits in KSR will actually enhance the rights of inventors, and the overall utility of the patent system as the great engine of American innovation."
This case is Teleflex, Inc., et al v. KSR International Co., Sup. Ct. No. 04-1350, a petition for writ of certiorari to the U.S. Court of Appeals for the Federal Circuit. The Court of Appeals number is 04-1152. The District Court number is 02-74586.
Flooding of Government Buildings
6/26. The Attorney General Alberto Gonzales released a statement regarding rain related flooding of the basement of Department of Justice's (DOJ) headquarters building: "Like several other buildings along Constitution Avenue, the Department of Justice Robert F. Kennedy (Main Justice) Building experienced basement flooding during last night's storm. The building has also experienced storm-related electrical outages. The Department is in the process of implementing our well established continuity of operations plan to ensure that all essential Justice Department functions continue to operate efficiently in the designated alternate locations. Only a tiny fraction - less than 2 percent - of the Department's 120,000 person work force operates out of the affected building and all impacted and essential personnel are now working out of designated alternate locations. We are working around the clock to restore operational capacity to the building although it is unclear at this time when the building will be functional."
6/26. The Department of Commerce (DOC) released a statement: "The Commerce Department's Herbert C. Hoover Building (HCHB) will be open for normal business on Tuesday, June 27, 2006."
6/26. The U.S. Court of Appeals (9thCir) issued its opinion [25 pages in PDF] in Davel v. Qwest, a dispute between pay phone service providers and Qwest regarding payment for access. This opinion addresses the payphone industry provisions of 47 U.S.C. § 276, the Federal Communications Commission's (FCC) payphone orders, the filing of tariffs, the primary jurisdiction doctrine, the filed rate doctrine, and the statute of limitations contained in 47 U.S.C. § 415. This case is Davel Communications, Inc., et al. v. Qwest Corporation, U.S. Court of Appeals for the 9th Circuit, App. Ct. No. 04-35677, an appeal from the U.S. District Court for the Western District of Washington, D.C. No. CV-03-03680-MJP, Judge Marsha Pechman presiding.
6/26. The Progress and Freedom Foundation (PFF) released a paper titled "Social Networking Websites & Child Protection: Toward a Rational Dialogue", by the PFF's Adam Thierer. The paper praises the "beneficial side of social networking, and indeed the Internet as a whole, for children", and suggests that the government should be putting perverts in jail for longer terms, rather than attempting to regulating access to social networking web sites. The House Commerce Committee's (HCC) Subcommittee on Oversight and Investigations will hold two hearings titled "Making the Internet Safe for Kids: The Role of ISP’s and Social Networking Sites" on Tuesday, June 27, and Wednesday, June 28. It will hear from representatives of myspace.com and facebook.com on June 28.
6/26. The U.S. Patent and Trademark Office (USPTO) published a notice in the Federal Register that states that it is changing its procedures regarding when the examination of a patent application may be accelerated. New patent applications are normally taken up for examination in the order of their United States filing date. The notice states that "Under one of these procedures, the USPTO will advance an application out of turn for examination if the applicant files a grantable petition to make special under the accelerated examination program. The USPTO is revising its procedures for applications made special under the accelerated examination program with the goal of completing examination within twelve months of the filing date of the application. The USPTO is similarly revising the procedures for other petitions to make special, except those based on applicant's health or age or the recently announced Patent Prosecution Highway (PPH) pilot program between the USPTO and the Japan Patent Office." These changes apply to petitions to make special filed on or after August 25, 2006. See, Federal Register, June 26, 2006, Vol. 71, No. 122, at Pages 36323-36327. See also, USPTO release.
Go to News from June 21-25, 2006.