TLJ News from November 26-30, 2006

Martin Speaks On Broadband Regulation and Competition

11/30. Federal Communications Commission (FCC) Chairman Kevin Martin gave a speech [7 pages in PDF] in which he discussed broadband regulation and competition.

He said that "high speed Internet access offered by a phone company should be treated the same way as high speed Internet access offered by a cable operator."

"We have removed legacy regulations, like tariffs and price controls, that discourage carriers from investing in their broadband networks", said Martin. "Our ultimate goal however, is for consumers to be able to choose from among a multiplicity of broadband service providers, rather than just one or two. And we are beginning to see this happen. For example, wireless broadband, broadband over powerline, and Fiber-to-the-Home are new technologies that are beginning to be deployed."

He noted that "According to our annual price survey, where there is no competition the average price for cable programming was $43.33. Add in competition from DBS and the average price is the same. In areas where there is competition from a second cable operator however, the average price for cable programming decreased to $35.94."

GAO Releases Report on Dedicated Access Services

11/30. The Government Accountability Office (GAO) released its report [82 pages in PDF] titled "Telecommunications: FCC Needs to Improve Its Ability to Monitor and Determine the Extent of Competition in Dedicated Access Services".

These services include large volumes of long distance services, secure point to point data transmissions, and reliable internet access. The report states that this market generates $16 Billion per year in revenues.

The GAO report found that "In the 16 major metropolitan areas we examined, facilities-based competition for dedicated access services exists in a relatively small subset of buildings. Our analysis of data on the presence of competitors in commercial buildings suggests that competitors are serving, on average, less than 6 percent of the buildings with at least a DS-1 level of demand. Competition is more widespread where buildings have a higher level of demand. For the subset of buildings identified as likely having companies with a DS-3 level of demand, competitors have a fiber-based presence in about 15 percent of buildings on average. For buildings identified in our model with 2 DS-3s of demand, competitors have a fiber-based presence in 24 percent of buildings on average."

The report adds that there are "entry barriers, including zoning restrictions, or difficulties in obtaining access to buildings from building owners that discourage competitors from extending their networks."

The report reviews the history of Federal Communications Commission (FCC) price regulation in this market, post 2001 price flexibility, and FCC efforts to study this market. The report finds that the "FCC must balance the additional costs of gathering more data with the potential benefit that might result from additional data. Yet without more complete and reliable measures of competition, FCC is unable to determine whether its deregulatory policies are achieving their goals."

Rep. Tom Davis (R-VA), the Chairman of the House Government Reform Committee, stated in a release that this report "raises interesting issues that should be part of the ongoing discussion regarding the telecommunications marketplace." Government agencies are a major purchaser of dedicated access services.

FCC Seeks Comments on 10 Year Old Regulations

11/29. The Federal Communications Commission (FCC) published a notice in the Federal Register (FR) requesting public comments regarding its review of regulations, pursuant to the Regulatory Flexibility Act of 1980, of regulations that become ten years old in 2006.

The Act requires the FCC to determine whether such regulations should be changed, amended, or rescinded.

This FR notice includes a list of relevant regulations. The list includes rules regarding radio frequency device regulation of CPU boards and computer power supplies, CMRS interconnection, antenna structures, satellite communications, record keeping and reporting by common carriers, interconnection, unbundling, terms and conditions for the provision of unbundled network elements, resale, tariffs of nondominant carriers, number portability, telecommunications relay service, payphone service, geographic rate averaging and rate integration, hearing aid compatibility, connection of computer modems and other terminal equipment to the PSTN, cable ownership rules, open video systems, Family Radio Service (FRS), Low Power Radio Service (LPRS), and fixed microwave services.

The deadline to submit comments is January 29, 2007. See, Federal Register, November 29, 2006, Vol. 71, No. 229, at Pages 69085-69094.

People and Appointments

11/29. President Bush named Christopher Oprison to be an Associate Counsel to the President. He previously worked for the law firm of Skadden Arps. See, White House release.

11/29. President Bush named Cheryl Stanton to be an Associate Counsel to the President. She previously worked in the Morristown, New Jersey, office of the law firm of Olgetree Deakins Nash Smoak & Stewart, where she represented employers in discrimination, harassment, and ERISA litigation, and in labor arbitrations. See, White House release.

11/29. President Bush named Scott Stanzel to be Deputy Assistant to the President and Deputy Press Secretary. He was previously Senior Product Manager of the Security Technology Unit at Microsoft. Before that, he was Press Secretary of the Bush-Cheney 2004 re-election campaign. He has also worked for Sen. Charles Grassley (R-IA). See, White House release.

11/29. President Bush named Alan Swendiman to be a Special Assistant to the President and Director, Office of Administration. He was previously General Counsel of the General Services Administration. See, White House release.

11/29. Mark Paoletta joined the Washington DC office of the law firm of Dickstein Shapiro. He will work in the firm's Government Law & Strategy group. He was previously Chief Counsel for the House Commerce Committee's Subcommittee on Oversight and Investigations, which conducted, among other things, an investigation of pretexting by Hewlett Packard. Dickstein Shapiro issued a release that does not disclose whether or not Paoletta will specialize in representing companies that will be investigated by the HCC in the Democratic controlled 110th Congress.

More News

11/29. The Federal Communications Commission (FCC) published a notice in the Federal Register that announces, describes, and sets the effective date (November 1, 2006) of its Memorandum Opinion and Order [25 pages in PDF] that concluded that Massport's restrictions on Continental Airline's use of its Wi-Fi antenna are pre-empted by the FCC's OTARD rules. This item is FCC 06-157 in ET Docket No. 05-247. See, Federal Register, November 29, 2006, Vol. 71, No. 229, at Pages 69052-69054. See also, story titled "FCC Rules Boston Airport Cannot Regulate WiFi" in TLJ Daily E-Mail Alert No. 1,481, November 2, 2006.

11/29. The Federal Communications Commission (FCC) released the text [47 pages in PDF] of its Report and Order (R&O) in its proceeding titled "In the Matter of Revision of Procedures Governing Amendments To FM Table of Allotments and Changes of Community of License in the Radio Broadcast Services". This R&O is FCC 06-163 in MB Docket No. 05-210. The FCC adopted, but did not release, this item at its November 3, 2006, meeting.

11/29. Federal Communications Commission (FCC) Commissioner Jonathan Adelstein gave a speech [PDF] on satellite communications in New York, New York, at an event titled "ISCe Satellite Investment Symposium (ISIS) NYC '06".

Deputy USTR Bhatia Discusses Tech, Trade and Satellites in India

11/28. Deputy U.S. Trade Representative Karan Bhatia gave a speech in New Dehli, India. He spoke about US technology companies in India, the need for India to continue to decrease trade and investment barriers and government regulation, Doha negotiations, intellectual property rights (IPR), satellite communications, and agriculture.

Karan BhatiaDoha Negotiations. Bhatia (at right) said that "The United States continues to seek a big Doha outcome". He said that "few countries would stand to gain more than India" from successful Doha negotiations, "so it has been puzzling to us that India has not been more aggressive and more creative in seeking an outcome from Doha that works for India."

US Tech Companies in India. Bhatia said that "India has also become a more attractive destination for international corporations." He elaborated that "India plays a critical role across the spectrum of General Electric's long term plans. IBM is India’s largest foreign employer -- with over 40 thousand employees -- and recently announced $6 billion in new investment." He added that "many software and IT companies, such as Microsoft, Texas Instruments and Dell, have located facilities in India for R&D, manufacturing and customer support."

But, he said that "For India to sustain or increase economic growth, it must continue to liberalize services, manufacturing and agriculture sectors by eliminating non-tariff barriers and lowering tariffs -- both bound and applied rates."

He argued that this is in the interest of both the US and India, and that other Asian nations are already liberalizing their economies. He also commented on "the backdrop of a intensely competitive Asian economy -- where you see country after country reforming, moving them away from state control and protection, exposing domestic producers to competition, knowing that it is only through such competition that their economies will truly become globally competitive."

IPR. He also touched briefly on IPR. He said that "India’s investment environment has also benefited from new protections for intellectual property, although more work remains to be done in this area."

Satellite Communications. Bhatia spoke a length about satellite communications in India. He argued that India needs to introduce competition.

He stated that "The current regulations, which essentially provide a monopoly on the sale of satellite capacity for domestic use to one company, deny key Indian industries the access to competitive services that are critical to India’s transformation as an information-based economy."

He continued that "These restrictions are out of step with practices in almost every major economy of the world. Most countries with domestic satellites systems (such as the U.S., EU, Australia, Brazil, Canada, Mexico, Indonesia, to name a few) either have Open Skies policies or have regulations which permit the sale of foreign satellite services without the need to sell through the domestic satellite operator. Indeed, India is almost alone in restricting entry in this market." (Parentheses in original.)

He added that "Allowing direct access to foreign satellite capacity would enable Indian service suppliers to obtain the satellite capacity they need provide solutions to meet the growing domestic communications needs of Indian industry. Increased bandwidth capabilities will enable the telecom operators to expand their current offerings of key services such as broadband Internet access, virtual private networks, file transfer and distance learning capabilities, to name a few."

Bernanke Discusses State of Economy and Computing

11/28. Federal Reserve Board (FRB) Chairman Ben Bernanke gave a speech in New York, New York, in which he discussed the state of the economy, and the role of information technology (IT) in productivity growth.

Citing Department of Commerce (DOC) data, Bernanke said that "real gross domestic product (GDP) increased at an annual rate of 2.6 percent in the second quarter of 2006 and at a rate of only 1.6 percent in the third quarter. These figures are down noticeably from the 3-1/2 percent average pace of growth of the preceding two years."

On November 29, the DOC released its revised third quarter GDP growth estimate -- 2.2 percent. (This is growth from the previous quarter, at a seasonally adjusted annual rate, adjusted for inflation.) See, DOC short release and detailed release [15 pages in PDF].

"In the business sector, capital investment has continued to expand at a healthy pace," said Bernanke. "Overall, the economy is likely to expand at a moderate pace going forward. A reasonable projection is that economic growth will be modestly below trend in the near term but that, over the course of the coming year, it will return to a rate that is roughly in line with the growth rate of the economy's underlying productive capacity."

He also discussed IT and productivity growth. "With regard to productivity, I remain optimistic that the recent favorable trends will continue. The price of computing power continues to fall sharply, having declined by nearly half between 2000 and 2005. Increased computing power has contributed, in turn, to the development and growth of other commercially relevant technologies, such as biotechnology, and has led to improvements in efficiency, through better supply-chain management, for example."

He added that "whatever the pace of future technological progress, further diffusion of already-existing technologies and applications to more firms and industries should continue to increase aggregate productivity for a time."

7th Circuit Holds Illinois Video Game Law Unconstitutional

11/28. The U.S. Court of Appeals (7thCir) issued its opinion [21 pages in PDF] in Entertainment Software Association v. Blogojevich, a constitutional challenge to the Illinois Sexually Explicit Video Game Law (SEVGL), in which the Court of Appeals affirmed the judgment of the District Court that the statute violates the First Amendment.

The Court of Appeals held that there are numerous constitutional infirmities with the statute. It held that the state's criminalization of the sale of "sexually explicit" video games to minors is overbroad, not narrowly tailored, and is not the less restrictive alternative. It also held that the state's mandating of labels on games and signs in stores constitutes impermissible compelled speech.

The Illinois legislature enacted the SEVGL, which requires video game retailers to place a four square inch label with the number 18 on any "sexually explicit" video game. It also requires video game retailers to place a sign in their stores explaining the video game rating system and to provide customers with brochures about the video game rating system. It also criminalizes the sale or rental of sexually explicit video games to minors.

The legislature also enacted a related Violent Video Game Law (VVGL) that is not at issue on appeal.

The SEVGL defines "sexually explicit" video games as those that "the average person, applying contemporary community standards would find, with respect to minors, is designed to appeal or pander to the prurient interest and depict or represent in a manner patently offensive with respect to minors, an actual or simulated sexual act or sexual contact, an actual or simulated normal or perverted sexual act or a lewd exhibition of the genitals or post-pubescent female breast."

The Entertainment Software Association (ESA) and other representatives of video game manufacturers and retailers filed a complaint in U.S. District Court (NDIll) against Rod Blagojevich, in his capacity as Governor of of the state of Illinois, and other state officials, alleging that the statute violates the First Amendment.

The District Court held that both the SEVGL and VVGL are unconstitutional under the First Amendment, as applied to the states via the Fourteenth Amendment, for not being narrowly tailored, and for being compelled speech.

Illinois filed the present appeal, but only as to the SEVGL. The Court of Appeals affirmed.

It first addressed whether the statute is narrowly tailored. It reasoned that the SEVGL is a content based restriction on speech to which the strict scrutiny standard applies. To pass scrutiny it "must be narrowly tailored to promote a compelling Government interest."

The Court of Appeals concluded that shielding children from indecent sexual material and assisting parents in protecting their children from that material is a compelling government interest. However, it concluded that the SEVGL is not narrowly tailored to promote this interest.

The Court wrote that Illinois argued that the SEVGL only affects minors. But, the Court wrote, "our narrow tailoring inquiry must be broader than the question of whether adults will be affected by the challenged legislation. The Constitution also requires us to ask whether legislation unduly burdens the First Amendment rights of minors."

The Court of Appeals turned for authority to the 1968 opinion of the Supreme Court in Ginsberg v. New York, which is reported at 390 U.S. 629, and the 1973 opinion of the Supreme Court in Miller v. California, which is reported at 413 U.S. 15. These cases both articulated three prong tests for statutes that regulate material intended for minors.

The Court of Appeals concluded that Illinois drafted its statutory definition of "sexually explicit" material with the first two prongs in mind, but failed to include language that would satisfy either the third prong of the Ginsberg test ("utterly without redeeming social importance for minors") or the third prong of the Miller test ("taken as a whole, do not have serious literary, artistic, political, or scientific value"). Hence, it concluded that "These deficiencies are sufficient for this court to conclude that the statute is not narrowly tailored and is overbroad."

The Court of Appeals added that even if the statute were to satisfy the Ginsberg/Miller test, "the statute could still not survive strict scrutiny because the plaintiffs have identified other less restrictive alternatives to the SEVGL. Most obviously, the State could have simply passed legislation increasing awareness among parents of the voluntary ESRB ratings system".

The Court of Appeals continued. It also held that the SEVGL's labeling and signage requirements are compelled speech in violation of the First Amendment.

This case is Entertainment Software Association, et al. v. Rod Blagojevich, et al., U.S. Court of Appeals for the 7th Circuit, App. Ct. Nos. 06-1012, 06-1048 and 06-1161, appeals from the U.S. District Court for the Northern District of Illinois, Eastern Division, D.C. No. 05 C 4265, Judge Matthew Kennelly presiding. Judge Williams wrote the opinion of the Court of Appeals, in which Judges Bauer and Rovner joined.

USTR Schwab Discusses Trade Agenda

11/28. Susan Schwab, the U.S. Trade Representative, gave a speech at an event hosted by the U.S. Chamber of Commerce titled "Next Steps for the American Trade Agenda".

She said that the "Conventional Wisdom persists that the election will hobble or stop the administration’s trade agenda dead in its tracks. ... People ask me if the Administration’s trade agenda will have to change now that Democrats are in a majority. The answer is no. The mission of opening markets, spurring development, and keeping the United States at the fore of a rules-based trading system transcends party ID."

She said that the agenda for 2006 includes permanent normal trade relations for Vietnam, and that the agenda for 2007 and 2008 includes Peru/Colombia, Panama, and Korea/Malaysia. She did not mention Russia in the prepared text of her speech.

She also discussed the Doha round negotiations. She said that "We walked away from a bad deal in July; if necessary we will do so again -- but we cannot let a strong, potential Doha deal slip through our fingers."

People and Appointments

11/28. Scott Taub, the Deputy Chief Accountant in the Securities and Exchange Commission's (SEC) Office of the Chief Accountant, will leave the SEC later this year. He has worked on SEC implementation of the Sarbanes Oxley Act. See, SEC release.

More News

11/28. The Department of Commerce (DOC) published a notice in the Federal Register (FR) that states that it is selling advertising space in a web site operated by the DOC and Department of State (DOS). The web site is a part of the DOC/DOS initiative titled "U.S. Electronic Education Fair for China". The notice states that the purpose "is to inform Chinese students who are interested in studying outside of China about the breadth and depth of the higher education opportunities available in the U.S." The price of a banner ad is $8,000. The deadline to purchase ad space is 3:00 PM on December 8, 2006. See, FR, November 28, 2006,  Vol. 71, No. 228, at Page 68800.

11/28. Securities and Exchange Commission (SEC) Chairman Chris Cox gave a speech the impending "merger of the oversight functions of the nation's two largest securities regulators, the New York Stock Exchange and the National Association of Securities Dealers". He added that "Whereas today we have two separate and uncoordinated enforcement systems, the NASD and the NYSE are close to creating a single member firm regulator for the nation's securities markets. They haven't yet reached a definitive agreement. Some important details remain to be negotiated, and of course any such transaction will require public comment, and Commission approval."

Supreme Court Denies Stay in NYT Phone Records Subpoena Case

11/27. The Supreme Court issued an order [PDF] in New York Times v. Gonzales, denying the NYT's request for a stay pending Supreme Court review. The NYT seeks review of the U.S. Court of Appeals' (2ndCir) decision regarding government access to confidential phone records of NYT reporters held by phone companies.

The order states, in full, that "The application for stay of mandate of the United States Court of Appeals for the Second Circuit pending the filing and disposition of a petition for a writ of certiorari, presented to Justice Ginsburg and by her referred to the Court, is denied."

See, February 24, 2005, opinion [121 pages in PDF] of the U.S. District Court (SDNY). See also, the August 1, 2006, majority opinion [33 pages in PDF] of the Court of Appeals written by Judge Ralph Winter, and the dissenting opinion [38 pages in PDF] written by Judge Sack.

This case is New York Times Company v. Alberto Gonzales, et al., U.S. Supreme Court, Sup. Ct. No. 06A525, a petition for writ of certiorari to the U.S. Court of Appeals for the 2nd Circuit, App. Ct. No. 05-2639. The Court of Appeals heard an appeal from the U.S. District Court for the Southern District of New York, D.C. No. 04 Civ. 7677 (RWS), Judge Sweet presiding.

Gingrich Discusses Limits of Free Speech on Internet

11/27. Former Rep. Newt Gingrich (R-GA) gave a speech [excerpt] about terrorists at the Loeb School of Communications in Manchester, New Hampshire. He predicted that "we will adopt rules of engagement that use every technology we can find to break up their capacity to use the internet, to break up their capacity to use free speech". See also, full speech audio and excerpt audio.

Newt GingrichGingrich (at right) published a partial transcript in his web site. He stated that "my prediction to you is that ether before we lose a city, or if we are truly stupid, after we lose a city, we will adopt rules of engagement that use every technology we can find to break up their capacity to use the internet, to break up their capacity to use free speech, and to go after people who want to kill us to stop them from recruiting people before they get to reach out and convince young people to destroy their lives while destroying us."

He continued, "This is a serious problem that will lead to a serious debate about the first amendment, but I think that the national security threat of losing an American city to a nuclear weapon, or losing several million Americans to a biological attack is so real that we need to proactively, now, develop the appropriate rules of engagement."

"And, I further think that we should propose a Genève convention for fighting terrorism which makes very clear that those who would fight outside the rules of law, those who would use weapons of mass destruction, and those who would target civilians are in fact subject to a totally different set of rules that allow us to protect civilization by defeating barbarism before it gains so much strength that it is truly horrendous."

Gingrich concluded that "This is a sober topic, but I think it is a topic we need a national dialogue about, and we need to get ahead of the curve rather than wait until actually we literary lose a city which could literally happen within the next decade if we are unfortunate."

Gingrich delivered this speech in the state of New Hampshire. This state will hold a Presidential primary election in early 2008 that will be important for any candidate. Prospective candidates often make early trips to states with early primaries or caucuses.

Ed Black, head of the Computer and Communications Industry Association (CCIA), stated in a release that "Because Mr. Gingrich has at times shown insight into the technology and Internet world, his comments are especially disturbing. An open and free Internet offers the greatest potential for the advancement of human freedom, dignity, and the core principles that are the very soul of our nation."

Black continued that "Precisely because of its freedom and openness, the Internet has developed into an invaluable tool that has facilitated collaboration, enlivened debate, sped discourse, and allowed for the maturation of ideas faster than previously possible at any point in human history. Much like the American Revolution before it, freedom of speech is one of the bedrock principals on which the Information Revolution has been conditioned and has thrived. Destroying this freedom and openness will cause more harm than terrorists could ever hope to achieve on their own."

He added that "Malicious actors will always exist and seek to take advantage of all means that will help them further their ends. Specifically targeting bad actors and crafting smart, precise countermeasures to combat them is the way to stop them before we 'lose a city.' Overbroad regulations curtailing free speech will harm everyday Americans, while doing little to combat the true source of the problem. As many great Americans before us have pointed out, the way to counter hateful speech is with more, better articulated speech."

Copyright Office Releases DMCA Anti-Circumvention Exemptions

11/27. The Copyright Office (CO) concluded its third triennial rulemaking proceeding to designate exemptions to the anti-circumvention provisions of the Digital Millennium Copyright Act (DMCA). The CO announced six exemptions which will remain in effect for three years.

These six exemptions relate to the use of rootkits on CDs and DVDs, e-book controls that affect the read aloud function, programs protected by dongles, programs that enable cellphones to connect to a wireless network (where circumvention is for the purpose of connecting to a network), programs and games in obsolete formats, and audiovisual works in university libraries.

17 U.S.C. § 1201 provides, in Subsection (a)(1)(A), that "No person shall circumvent a technological measure that effectively controls access to a work protected under this title ...".

Then, Subsections 1201(a)(1)(B) through (E) provide for rulemaking proceedings conducted by the CO every three years to establish exemptions to the prohibition of (a)(1)(A) for certain non-infringing uses.

The CO published a notice in the Federal Register (FR) that announces, describes, recites, and sets effective dates, for this rule. The effective date of this rule is November 27, 2006. It remains in effect until October 27, 2009. See, FR, November 27, 2006, Vol. 71, No. 227, at Pages 68472-68480.

The CO also published a statement, assigned to the Librarian of Congress, that elaborates on nature of this rulemaking. It states that "It is important to understand the purposes of this rulemaking, as stated in the law, and the role I have in it. This is not a broad evaluation of the successes or failures of the DMCA. The purpose of the proceeding is to determine whether current technologies that control access to copyrighted works are diminishing the ability of individuals to use works in lawful, noninfringing ways. The DMCA does not forbid the act of circumventing copy controls, and therefore this rulemaking proceeding is not about technologies that control copying. Nor is this rulemaking about the ability to make or distribute products or services used for purposes of circumventing access controls, which are governed by a different part of section 1201."

This proceeding was conducted by, and this rule was written by, attorneys and other staff in the office of the Register of Copyrights, which is a part of the Library of Congress.

The CO received, and published in its web site, 74 initial comments, and 35 reply comments.

The six categories of exemptions are set out below. This language amends the CO's rule on DMCA anti- circumventions exemptions, which is codified at 37 C.F.R. § 201.40.

First, the new rule creates an exemption for any "Audiovisual works included in the educational library of a college or university's film or media studies department, when circumvention is accomplished for the purpose of making compilations of portions of those works for educational use in the classroom by media studies or film professors."

Second, the new rule creates an exemption for any "Computer programs and video games distributed in formats that have become obsolete and that require the original media or hardware as a condition of access, when circumvention is accomplished for the purpose of preservation or archival reproduction of published digital works by a library or archive. A format shall be considered obsolete if the machine or system necessary to render perceptible a work stored in that format is no longer manufactured or is no longer reasonably available in the commercial marketplace."

Third, the new rule creates an exemption for any "Computer programs protected by dongles that prevent access due to malfunction or damage and which are obsolete. A dongle shall be considered obsolete if it is no longer manufactured or if a replacement or repair is no longer reasonably available in the commercial marketplace."

Fourth, the new rule creates an exemption for any "Literary works distributed in ebook format when all existing ebook editions of the work (including digital text editions made available by authorized entities) contain access controls that prevent the enabling either of the book's read-aloud function or of screen readers that render the text into a specialized format."

The CO found that "Some literary works are distributed in ebook form with the read-aloud and screen reader functions disabled through the use of digital rights management tools. In order to alter the usage settings of such ebooks in order to enable read-aloud and screen reader functionality, a user would have to circumvent access controls."

See also, comment [PDF] of Mark Richert (American Foundation for the Blind) and Michael Richards and Joseph DiScipio (Fletcher Heald & Hildreth).

Fifth, the new rule creates an exemption for any "Computer programs in the form of firmware that enable wireless telephone handsets to connect to a wireless telephone communication network, when circumvention is accomplished for the sole purpose of lawfully connecting to a wireless telephone communication network."

Sixth, the new rule creates an exemption for any "Sound recordings, and audiovisual works associated with those sound recordings, distributed in compact disc format and protected by technological protection measures that control access to lawfully purchased works and create or exploit security flaws or vulnerabilities that compromise the security of personal computers, when circumvention is accomplished solely for the purpose of good faith testing, investigating, or correcting such security flaws or vulnerabilities."

This sixth exemption addresses the situation exposed by Sony BMG's brief use of rootkit technology on music CDs. See, stories titled "Texas Sues Sony BMG Alleging Violation of Texas Spyware Statute" in TLJ Daily E-Mail Alert No. 1,258, November 22, 2005, and "Texas Amends Spyware Complaint Against Sony BMG" in TLJ Daily E-Mail Alert No. 1,280, December 29, 2005. Some Sony music CDs, distributed in 2005, installed digital rights management (DRM) software, and concealed that software.

The CO found that "The rootkit creates security vulnerabilities by providing a cloak that conceals malicious software, a cloak that, in fact, was exploited by disseminators of malware within days of the discovery of the XCP rootkit." The CO found that this warrants the creation of a limited exemption "for the purpose of good faith testing, investigating, or correcting such security flaws or vulnerabilities". See, Federal Register at page 68477.

Edward Felten (Princeton) and Deirdre Mulligan (UC Berkeley) had sought a broader exemption for "sound recordings and audiovisual works distributed in compact disc format and protected by technological measures that impede access to lawfully purchased works by creating or exploiting security vulnerabilities that compromise the security of personal computers". The Computer and Communications Industry Association (CCIA) also filed a comment seeking a broader exemption for any "access control measures which threaten critical infrastructure and potentially endanger lives". See, CCIA comment [PDF], Mulligan's and Felten's comment [13 pages in PDF].

TLJ spoke with Matthew Schruers of the CCIA. He said that "we are encouraged that the Office has recognized that this is a problem, and acted to remedy it."

Rejected Proposals. The CO also received numerous comments requesting that other exemptions also be recognized. The CO rejected, and the Librarian of Congress concurred in the rejection of, these other requests.

The CO rejected proposals to create exemptions for all works, for the purpose of making back up copies, for fair use purposes, and for other broad purposes.

The CO also rejected various proposals that were not articulated with specificity, or evidence in support.

Porn Filters. The CO rejected requests regarding compilations consisting of lists of internet locations blocked by commercially marketed filtering software applications that are intended to prevent access to domains, websites or portions of web sites, but not including lists of internet locations blocked by software applications that operate exclusively to protect against damage to a computer or a computer network or lists of internet locations blocked by software applications that operate exclusively to prevent receipt of email.

The CO had previously created similar exemptions in 2000 and 2003 to permit circumvention to access the block lists of porn filters.

However, the CO noted that "proponents in the current rulemaking proceeding made no attempt to make any factual showing whatsoever, choosing instead to rest on the record from three years ago", and that the record revealed no use of the 2003 exemption.

Space Shifting. The CO rejected requests to permit circumvention of technological protection measures applied to movies, music and other works on DVDs, CDs, and other media in order to copy these works to other media or devices.

The CO concluded that "the reproduction of those works onto new devices is an infringement of the exclusive reproduction right unless some exemption or defense is applicable. In the absence of any persuasive legal authority for the proposition that making copies of a work onto any device of the user's choosing is a noninfringing use, there is no basis for recommending an exemption to the prohibition on circumvention." See, Federal Register at page 68478.

DVDs and Linux. The CO rejected proposals to allow circumvention of Content Scrambling System (CSS) in order to use computers running the Linux operating system to view motion pictures on DVDs.

The CO found that "there is evidence in the record that Linux-based DVD players currently exist". It added that "there are many readily available ways in which to view purchased DVDs".

Broadcast Flag. The CO rejected proposals to create an exemption related to a broadcast flag. The CO wrote that "A number of comments assert that broadcast flags for television and radio broadcasts would interfere with time shifting, format-shifting, and recording for personal use. However, there is currently no broadcast flag mandate for either television or radio broadcasts and whether such a mandate will exist within the next three years is a matter of speculation. If it does exist, it will be due in whole or in part to Congressional action. Moreover, even if an audio or television broadcast flag were to be established, the precise substance of the requirement is unknown at this time. The Register cannot recommend an exemption based upon speculation about a legal regime that may or may not be imposed in the next three years." See, Federal Register at page 68479.

Region Coded DVDs. The CO rejected proposals to permit circumvention in order to obtain access to motion pictures protected by region coding. The CO also denied similar requests in 2000 and 2003.

The CO concluded that region coding imposes an "incovenience rather than actual or likely harm, because there are numerous options available to individuals seeking access to content from other regions".

The CO reasoned that one option available to US consumers is to buy a foreign DVD players capable of playing the foreign region code involved, and buy DVDs with the corresponding foreign regional code.

The CO also stated that region coding on DVDs "serves legitimate purposes as an access control, such as preventing the marketing of DVDs of a motion picture in a region of the world where the motion picture has not yet been released in theaters, or is still being exhibited in theaters."

The CO does not note that some content owners protect decades old content with region coding, and decline to export such region coded content to other regions, or to mail to other regions DVDs sold through web sites or by mail order.

One option for US consumers, that is precluded by the CO's refusal to grant an exemption, would be to purchase in the US DVDs that a business has purchased abroad and shipped to the US for resale, after the business has circumvented, and then play the DVD on a DVD player made for the US market. Another option, which remains available to US consumers, would be to fly to another continent, buy the foreign region coded DVD, buy a DVD player that plays content so coded, and fly back to the US.

The CO concluded that an exemption is not necessary because US consumers have "inexpensive options". See, Federal Register at page 68478.

See also, stories titled "Copyright Office Announces Proceeding on DMCA Anti-Circumvention Exemptions" in TLJ Daily E-Mail Alert No. 1,229, October 7, 2005, and "Copyright Office Delays Release of Triennial DMCA Exemptions Rule" in TLJ Daily E-Mail Alert No. 1,478, October 30, 2006.

FCC to Conduct Media Ownership Studies

11/27. The Federal Communications Commission (FCC) released a Pubic Notice [2 pages in PDF] titled "FCC Names Economic Studies to Be Conducted As Part of Media Ownership Rules Review". It states that the FCC will conduct ten peer reviewed economic studies as part of its long running review of its media ownership rules. See also, FCC web page for these studies.

The FCC's notice, released on November 22, does not explain the FCC's understanding of the process of peer review.

The FCC's notice announces the titles of the studies, and some of the prospective authors.

FCC Commissioner Jonathan Adelstein released a statement [PDF] in which he wrote that this notice "ultimately undermines the public's confidence by raising more questions than it answers. The legitimacy of the studies is directly correlated to the transparency of the process undertaken to develop the studies and select the authors."

rightAdelstein (at right) elaborated that "The descriptions of the studies are scant, lacking any sense of the Commission's expectations for scope, proposed methodology and data sources. In certain instances, the truncated period of time to complete the studies is an ingredient for a study that doesn't engender public faith and confidence. The release of this deficient Public Notice is unfortunate given the importance of these studies in evaluating the impact of media ownership on the American public."

FCC Commissioner Michael Copps released a statement [PDF] in which he wrote that "Any FCC decision that could fundamentally reshape the nation's media environment must be reached through a process that is open and transparent to the American people. Today's announcement of the Commission’s new media ownership studies, unfortunately, raises more questions in the public’s mind than it answers. How were the contractors selected for the outside projects? How much money is being spent on each project -- and on the projects collectively? What kind of peer review process is envisioned? Why are the topics so generalized rather than being targeted to more specific questions?".

While Commissioner Copps seeks "a process that is open and transparent to the American people" in this matter, he is an active proponent for secrecy and nontransparency in most other FCC matters. For example, he has argued at FCC events, and in Congressional testimony, that the Commission should be able to conduct agency business in secret, unbound by the open meeting statute that requires other agencies to conduct their business in public. See, for example, story titled "Copps and Stevens Advocate Less Transparency at FCC" in TLJ Daily E-Mail Alert No. 1,272, December 14, 2005.

Meanwhile, Randolph May of the Free State Foundation, wrote in a release dated November 27 that the media ownership rules were written between the 1940s and 1970s, "when most people got their news and information from the local newspaper or a few over-the-air broadcast stations-in other words, before cable television, before satellite TV, before wireless networks and, most significantly, before the Internet." He argued that these rules "should be substantially relaxed or eliminated to reflect the realities of the diversity of information sources available in today's media marketplace".

People and Appointments

11/27. Chad Sweet was named Chief of Staff at the Department of Homeland Security (DHS). See, DHS release.

Go to News from November 21-25, 2006.