TLJ News from October 16-20, 2007

Sen. Hatch Introduces R&D Tax Credit Bill

10/19. Sen. Orrin Hatch (R-UT) and others introduced S 2209 [LOC | WW], the "Research Credit Improvement Act of 2007", another bill to revise and make permanent the research and development (R&D) tax credit, which is codified at 26 U.S.C. § 41.

Sen. Hatch sponsors legislation in every Congress that would make the R&D tax credit permanent. Instead, the Congress enacts short term extensions.

Sen. Hatch issued a release that states that this bill would "permanently extend the credit and provide a stronger alternative simplified credit that addresses changes in business models and economic circumstances that prevent some businesses from getting full benefit of the credit."

Sen. Max Baucus (D-MT), the lead cosponsor of the bill, stated in this release that "The research and development credit is all about fostering American competitiveness. Simply, this bill will create and sustain jobs in America".

The other original cosponsors of this bill are Sen. Maria Cantwell (D-WA), Sen. Gordon Smith (R-OR), Sen. Mike Crapo (R-ID), Sen. Olympia Snowe (R-ME), Sen. Blanche Lincoln (D-LA), and Sen. John Kerry (D-MA).

ITIF Paper Summarizes Broadband Policy Debate

10/19. The Information Technology and Innovation Foundation (ITIF) released a paper [PDF] titled "The Role of Competition in a National Broadband Policy". The author is Robert Atkinson, head of the ITIF.

He wrote that "broadband displays natural monopoly or duopoly characteristics. Because of the nature of the broadband industry, there are significant tradeoffs between more competition and goals of efficiency, innovation, low prices, and higher speeds and broader deployment." He argued that while most participants in the current debate advocate competition, "competition is not an end in itself but rather a means by which the economic system produces the benefits citizens desire."

Robert AtkinsonAtkinson (at right) wrote that there are two views of competition, the "engineers' view" and the "economists' view".

The engineer's view is that "It is expensive to build a standard broadband network to homes, and even more expensive to build a high performance one with large data capacity (e.g., fiber optic). Given these economics and since Internet protocol networks are just transmitting bits from applications that reside outside the network, why not just build one network?" (Parentheses in original.)

Thus, "broadband networks are a natural monopoly; hence, encouraging the deployment of more than one will lead to a waste of societal resources."

In contrast, wrote Atkinson, the economists' view is that "competition brings important consumer benefits by forcing companies to cut costs, improve service, and reduce ``excessive´´ profits. Without competition, companies get lazy, limit their innovation, provide poor service, and reap monopoly profits."

"Both engineers and economists bring important perspectives to the issue, and ignoring either set will lead us to the wrong policy conclusions." He continued that "The issue, then, becomes one of how to attain the right balance between the cost-efficiency of fewer networks and the competitive benefits of more networks."

He also stated that there are currently four policy options:

As for two pipes, he wrote that now, "cable and telco broadband providers are competing quite intensely to gain new customers", and this "appears to compensate for the fact that the market is largely a duopoly." But what happens when "most households have adopted broadband?" It may be difficult to switch providers, so "broadband providers may be able to exercise more market power."

As for deploying more pipes, Atkinson argued that "The right policy regarding more broadband pipes is: ``Enable, but don’t promote.´´"

With respect to unbundling proposals, he concluded that "unbundling or open pipes is not a transitional model to get to facilities-based competition."

"Unbundling has both benefits and costs. First, on the plus side, unbundling is a relatively quick way to get competition." However, "On the negative side, though, unbundling reduces incentives of incumbents to invest in larger pipes. If the incumbent has to resell the pipe, particularly at very low prices, where is the incentive to invest a large amount of capital in a better pipe (e.g., fiber)?" (Parentheses in original.)

As for the fourth option, regulation, he argued that it "has the advantage of limiting any current or potential abuse of market power", but that it "can also reduce incentives for investment". He added that two alternative methods of regulation are regulating prices, and "antitrust and consumer protection rules".

Atkinson advised that "Although each policy track will achieve some benefits, each also brings with it costs and risks. Policymakers need to balance the desire for more competition to enhance consumer welfare in the broadband realm with the need for the most efficient broadband industry structure."

PFF Paper Equates Fairness Doctrine with Net Neutrality

10/19. The Progress & Freedom Foundation (PFF) published a short paper [3 pages in PDF] in its web site titled "Net Neutrality: A Fairness Doctrine for the Internet". The author is the PFF's Adam Thierer.

He opposed both the Federal Communications Commission's (FCC) repealed fairness doctrine, which regulated broadcast speech, and current network neutrality proposals, which would regulate internet access providers. Thierer argued that both are advanced by similar persons for similar reasons.

Adam ThiererThierer (at right) wrote that "Proponents of net neutrality use the same kind of fantastic rhetoric to describe it that they once used for the Fairness Doctrine: it's a way to ``save the Internet´´ from ``media barons,´´ they say, who're apparently hell-bent on controlling all our thoughts and activities."

He continued that "It’s a brilliant tactic by the Left. Why exert all your energy attempting to reimpose ``fairness´´ mandates on broadcasters alone when you can capture them, and much more, by regulating the entire Internet?"

"So the liberals got smart and came up with the perfect solution: use net neutrality as a backdoor way to reimpose the Fairness Doctrine on the entire media marketplace."

House Judiciary Committee to Hold Hearing on Arbitration Fairness Act

10/19. The House Judiciary Committee (HJC) will hold a hearing on HR 3010 [LOC | WW], the "Arbitration Fairness Act of 2007", on Thursday, October 25, 2007. This bill is a response to the growing use of arbitration clauses in a wide range of contracts between businesses and consumers, including many in the information and communications technology sectors. See, full story.

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Henry Paulson10/19. Henry Paulson (at left), the Secretary of the Treasury, released a statement following the Meeting of G-7 Finance Ministers and Central Bank Governors in which he addressed trade and investment barriers and Doha round trade talks. He wrote that "I urged my counterparts to step up efforts to restart the Doha talks". He added that "A Doha agreement is within reach and we should not lose the opportunity before us. Success on Doha is the single most effective thing we can do to raise living standards around the world. Reducing trade and investment barriers and maintaining open markets is critical to ensuring that the benefits of trade are shared broadly. I also emphasized that the United States is committed to working with our global trading partners to ensure a successful Doha Round."

10/19. The Government Accountability Office (GAO) released a report [36 pages in PDF] titled "Defense Trade: Clarification and More Comprehensive Oversight of Export Exemptions Certified by DOD Are Needed".

10/19. The Center for Democracy and Technology (CDT) submitted a comment [8 pages in PDF] to the Federal Trade Commission (FTC) in advance of its workshop titled "Ehavioral Advertising: Tracking, Targeting, and Technology", to be held in Washington DC on November 1-2, 2007. See, conference web site. The CDT wrote that "The three FTC spyware principles serve as a useful starting point for developing a policy prescription for behavioral advertising, but they do not provide a complete framework. CDT is hopeful that by conceptualizing behavioral advertising in light of work that the FTC has already done, comprehensive privacy protections can be applied to one of the practices that underlies both spyware and behavioral advertising -- the tracking of users’ Internet activity without proper user control. The FTC has already laid the groundwork to bring our inadequate policies for protecting privacy in behavioral advertising up to the level that consumers deserve."

10/19. A grand jury of the U.S. District Court (SDCal) returned an indictment that charges Qing Li with conspiring to export accelerometers to the People's Republic of China (PRC) in violation of export control laws. The Department of Justice (DOJ) stated in a release that "Li and her co-conspirator used e-mail messages and telephone calls to negotiate the illegal export transaction with an undercover" U.S. Immigration and Customs Enforcement (ICE) agent in San Diego.

10/19. Securities and Exchange Commission (SEC) Commissioner Annette Nazareth gave a speech in Los Angeles, California, regarding the role of securities regulators during times of turmoil in securities markets. She touched on the role of securities trading technology and "complex quantitative computer models" in recent hedge fund related trading, as well as in October of 1987.

10/19. The Department of Commerce's (DOC) Bureau of Industry and Security (BIS) published a notice in the Federal Register that announced, describes, recites, and sets the comment deadline (December 18, 2007) for, its proposed rules changes that would require that export and reexport license applications, classification requests, encryption review requests, License Exception AGR notifications and related documents be submitted to the BIS via its Simplified Network Application Process (SNAP-R) system. See, Federal Register, October 19, 2007, Vol. 72, No. 202, at Pages 59231-59238.

Rep. Allen and Rep. Michaud Introduce Broadband Data Bill

10/18. Rep. Thomas Allen (D-ME) and Rep. Michael Michaud (D-ME) introduced HR 3893 [LOC | WW], the "Connect America Now Act", a bill that would create a federal grant program for the study of broadband deployment.

The bill would create a program titled "State Broadband Data and Development Grant Program". It would be administered by the Department of Commerce (DOC), not the Federal Communications Commission (FCC).

It would provide grants "for the development, implementation and support of statewide initiatives to identify and track the availability and adoption of broadband services within each State".

Grant money would be used "to provide a baseline assessment of broadband service deployment in each State", "to identify barriers to the adoption by individuals and businesses of broadband service and related information technology services", and "to create within each State a geographic inventory map of broadband service, which shall (A) identify gaps in such service through a method of geographic information system mapping of service availability at the census block level; and (B) provide a baseline assessment of statewide broadband deployment in terms of households with high-speed availability".

The bill further provides that funding could be used "to establish programs to improve computer ownership and Internet access for unserved and underserved populations".

The bill would authorize the appropriation of $40 Million for each of fiscal years 2008 through 2012.

The bill was referred to the House Commerce Committee (HCC).

House Republicans Seek Vote on FCC Fairness Doctrine Bill

10/18. House Republicans, who are in the minority in the House, are seeking to compel a vote on HR 2905 [LOC | WW], the "Broadcaster Freedom Act", by introducing, and soliciting signatures for, a discharge petition.

Rep. Mike Pence (R-IN), who was a talk radio host before being elected to the House in 2000, is leading the effort.

He stated in the House on Thursday, October 18, 2007, that "This summer, some of the most powerful Members of Congress, the House and the Senate, advocated a return of censorship to the airwaves of America in the form of the so-called Fairness Doctrine. I, along with more than 200 of my colleagues, introduced the Broadcaster Freedom Act. It would ensure that no future President could regulate the airwaves of America without an act of Congress." See, Congressional Record, October 18, 2007, at Page H11733.

"Yesterday, House Republicans introduced a discharge petition to bring the Broadcaster Freedom Act to the floor of Congress." He continued that "The American people should know, if 218 Members of Congress sign this petition, we can have an up-or-down vote on legislation that would keep the Fairness Doctrine from ever coming back."

He argued that "if you believe in broadcast freedom, if you believe in the freedom of the press, if you believe that freedom of the press is not a partisan issue, sign the petition. Bring the Broadcaster Freedom Act to the floor of the Congress and freedom will win again in Congress."

Rep. Pence spoke again later in the day. He said that "The reality is, faced with recordkeeping, red tape, potential legal fees that would attach to a Fairness Doctrine challenge filed with the FCC, and potential loss of their license, most of the 2,000 radio stations today that carry talk radio simply wouldn't carry it any more." (See, Pages H11761-2.)

Rep. Pence said that "after the Reagan administration struck down the Fairness Doctrine, we saw an explosion of talk radio. Frankly, most of the talk shows that have succeeded on a national level reflect a center right philosophical perspective", but that "in many of the largest markets around the country, some of the most popular talk show hosts are self-described liberals, or progressives".

USTR Releases Its Recommendations for Reforms in Japan

10/18. The Office of the U.S. Trade Representative (OUSTR) released a document [50 pages in PDF] titled "Annual Reform Recommendations from the Government of the United States to the Government of Japan under the U.S.-Japan Regulatory Reform and Competition Policy Initiative".

This document makes recommendations to the government of Japan regarding things that it could do to open new markets, reduce burdensome regulations, increase transparency, and stimulate competition. This document contains no recommendations to the government of the US regarding things that it could do to open new markets, reduce burdensome regulations, increase transparency, and stimulate competition in the US.

Susan SchwabSusan Schwab (at right) stated in a release that "These tangible reform steps will help boost growth and opportunity by lowering costs, raising efficiency, and spurring new innovative products and services that will benefit all Japanese citizens."

The OUSTR document addresses topics such as medical devices, pharmaceuticals, and financials services. It also addresses information and communications technologies.

Wireless Services. The report recommends that Japan "Conduct broadband wireless spectrum assignment currently under consideration (two licenses proposed for 2.5 GHz spectrum) in a timely, transparent, objective and non-discriminatory manner that adheres to principles of technology neutrality". (Parentheses in original.)

It also recommends that Japan "Ensure new entrants’ ability to roam onto existing mobile networks, particularly of the dominant NTT DoCoMo network", and "Clarify that spectrum user fees will not be applied to license-exempt use of spectrum, the imposition of which could unduly constrain innovative uses of spectrum and require burdensome and inefficient collection mechanisms."

Wireline Interconnection. The report recommends that Japan "Ensure that interconnection rates offered by NTT East and West continue to be set in a transparent manner, consistent with cost-oriented principles, even after transition away from long-run incremental cost (LRIC) methodology is implemented", and "Ensure that interconnection arrangements offered by NTT East and West for their Next Generation Network (NGN) are developed in a transparent manner, where all interested parties have an opportunity to comment on economic and technical requirements NTT seeks to impose prior to implementation".

Copyright. The report urges Japan to extend the maximum term of copyrights "toward life of the author plus 70 years for works generally, and to 95 years from publication for works for which the term is not based on a human life." It also requests that Japan adopt a system of statutory damages for copyright infringement.

It also recommends that Japan "Take the necessary measures to defend against infringement online, including via peer-to-peer services, by streamlining the ``notice and takedown´´ system with a faster and more reliable method for requiring disclosure to right holders of contact information for subscribers who use networks to infringe."

It also urges the adoption of "effective civil and criminal remedies for unauthorized circumvention of access controls, and all forms of trafficking in devices or services to circumvent technological protection measures".

People and Appointments

10/18. The U.S. Patent and Trademark Office (USPTO) announced the appointment of members of its Performance Review Board. See, notice in the Federal Register, October 18, 2007, Vol. 72, No. 201, at Page 59081.

10/18. President Bush announced his intent to designate Paul Schneider as acting Deputy Secretary for the Department of Homeland Security. See, White House release and statement by Secretary of Homeland Security Michael Chertoff.

10/18. President Bush nominated five persons to be Members of the Broadcasting Board of Governors: Joaquin Blaya (for the remainder of a three-year term expiring on August 13, 2008 and an additional term expiring on August 13, 2011), Edward Kaufman (for the remainder of a three-year term expiring on August 13, 2009), Susan McCue for the remainder of a three-year term expiring on August 13, 2010), Dennis Mulhaupt (for the remainder of a three-year term expiring on August 13, 2008 and an additional three-year term expiring on August 13, 2011), and Steven Simmons for the remainder of a three-year term expiring on August 13, 2009). See, White House release and release.

10/18. Kevin Martin (Chairman of the Federal Communications Commission) and John Kneuer (head of the National Telecommunications and Information Administration) named 25 members of the Joint Advisory Committee on Communications Capabilities of Emergency Medical and Public Health Care Facilities. See, FCC Public Notice [5 pages in PDF] (DA-07-4325).

10/18. Helane Morrison, the Securities and Exchange Commission's (SEC) Regional Director in San Francisco, will leave the SEC at the end of October. She will become General Counsel, Chief Compliance Officer, and a Principal at Hall Capital Partners. The SEC's San Francisco office is responsible for northern California, Washington, Oregon, Montana, Idaho and Alaska. See, SEC release.

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10/18. The U.S. District Court (DC) issued an Memorandum Opinion and Order [5 pages in PDF] in CPI v. FCC, a Freedom of Information Act (FOIA) case involving the Federal Communications Commission's (FCC) data regarding broadband deployment. This order denies the Center for Public Integrity's (CPI) motion to alter or amend the District Court's Memorandum Opinion [18 pages in PDF] of August 27, 2007. See, story titled "District Court Grants Summary Judgment to FCC in Broadband Data FOIA Case" in TLJ Daily E-Mail Alert No. 1,629, August 28, 2007. This case is Center for Public Integrity v. FCC, et al., U.S. District Court for the District of Columbia, D.C. No. 06-01644 (ESH), Judge Ellen Huvelle presiding.

House Delays Consideration of RESTORE Act

10/17. The House began its consideration of HR 3773 [LOC | WW], the "Responsible Electronic Surveillance That is Overseen, Reviewed, and Effective Act of 2007", the "RESTORE Act", a bill to reform the Foreign Intelligence Surveillance Act (FISA).

On October 16, 2007, the House Rules Committee (HRC) adopted a rule for consideration of HR 3773. This rule, HRes 746, provides for consideration of the following language: Part A [35 pages in PDF] and Part B [8 pages in PDF], and does not allow any further amendments to be offered during consideration by the full House.

The House approved this resolution on October 17, 2007, by a vote of 223-196. See, Roll Call No. 975. It was a nearly straight party line vote, with Democrats voting yes, and Republicans voting no. However, the House Democratic leadership then removed the bill from further consideration.

The House Majority Leader, Rep. Steny Hoyer (D-MD), stated in a release that "We have every intention of completing consideration of this critical legislation ..."

Senate Commerce Committee Considers Wireless Issues

10/17. The Senate Commerce Committee (SCC) held a hearing titled "Consumer Wireless Issues".

Sen. Ted Stevens (R-AK) wrote in his prepared statement that "I certainly understand and experience the frustration that all consumers feel sometimes when dealing with mass products. But I also worry that if Congress acts to rashly the end result could be that consumer prices would go up, or that some consumers would be forced into less attractive wireless plans."

See also, prepared testimony [PDF] of Lori Swanson (Minnesota Attorney General), prepared testimony [PDF] of Lowell McAdam (CEO of Verizon Wireless), prepared testimony of Mike Higgins (Central Texas Telephone Cooperative), prepared testimony of Chris Murray (Consumers Union), prepared testimony of Patrick Pearlman (Public Service Commission of West Virginia), and prepared testimony [PDF] of Jerry Ellig (George Mason University).

Verizon Wireless's McAdam argued that the wireless industry is competitive and innovative, and that prices have plummeted, so the Congress should not interrupt the regulatory regime that has made this possible.

However, he said that the Congress should address the "threat of patchwork state utility-style economic regulation" and "the unfair and discriminatory state and local tax burden that has been inflicted on wireless consumers".

The Consumer Union's Murray complained that wireless carriers are imposing unreasonable early termination fees, locking handsets, and "locking out competitive applications".

Minnesota's Swanson argued in favor of state consumer protection regulation, and opposed federal preemption.

West Virginia's Pearlman testified in support of S 2033 [LOC | WW], the "Cell Phone Consumer Empowerment Act of 2007", sponsored by Sen. Amy Klobuchar (D-MN) and Sen. Jay Rockefeller (D-WV). He too testified in opposition to federal preemption of state regulation. See, following story titled "Summary of S 2171 and S 2033, Bills Pertaining to Regulation of Wireless Services".

Higgins testified from the perspective of a small rural wireless services provider. Regarding handset locking, he noted that Apple would never make an iPhone available to small rural carriers, and this harms rural consumers.

He also offered a numerous policy recommendations, including licensing spectrum in smaller geographic areas, and limiting the amount of spectrum that the nationwide carriers may hold, particularly in rural areas.

Summary of S 2171 and S 2033, Bills Pertaining to Regulation of Wireless Services

10/17. On October 16 Sen. Mark Pryor (D-AR) introduced S 2171 [LOC | WW], the "Uniform Wireless Consumer Protection Act", a bill to establish a uniform national set of customer service and consumer protection requirements, via Federal Communications Commission (FCC) rulemaking, for providers of wireless telecommunications services.

The bill excludes states from some types of regulation of wireless services, but permits others.

This bill would amend 47 U.S.C. § 332 at subsection (c)(3). The statute currently prohibits states from regulating "rates", allows certain other state regulation, and allows states to petition the FCC for authority to regulate the rates for any commercial mobile service.

The bill would revise the language of subsection (c)(3) to prevent states from regulating or adjudicating entry, rates, or terms and conditions. But, the bill would require that the FCC adopt within one year "a final rule establishing customer service and consumer protection requirements for providers of commercial mobile service or private mobile service".

The bill was referred to the SCC. Sen. Pryor is a member.

The bill provides that "a State or local government shall not regulate or adjudicate -- (I) the entry of, or the rates charged by, any provider of commercial mobile service or private mobile service for any such mobile service or any other service that is primarily intended for receipt on or use with a wireless device that is utilized by a customer of such mobile service in connection with such mobile service; or (II) any terms and conditions of such mobile service or any other such service, except pursuant to a law or regulation generally applicable to businesses in the State other than a law or regulation that regulates or has the effect of regulating the entry or rates for any such service".

Sen. Pryor stated in the Senate that "While we have accomplished the goal of growing the wireless industry, we have yet to establish a uniform set of customer service and consumer protection requirements. Now is the time to finish the job we started in 1993 by enacting a national framework that will drive a new era of consumer-friendly wireless services." See, Congressional Record, October 16, 2007, a Pages S12940-1.

He also said that "The ability of wireless to travel beyond State boundaries tests our customary approaches to customer service and consumer protection standards at the state and local level. But nothing in this bill should be misconstrued as a statement against consumer obligations by State and local governments. As a former Attorney General of Arkansas, I feel very strongly about the inimitable ability of State and local governments to oversee and enforce consumer protections. State and local governments are unmatched in their function to provide effective protection and enforcement, and final rules must recognize and require a strong role for states in wireless consumer protection."

There is another bill, S 2033 [LOC | WW], the "Cell Phone Consumer Empowerment Act of 2007". It would provide for federal and state regulation of wireless services, impose limitations upon early termination fees, and require disclosure by service providers of their wireless telephone service areas.

S 2033 would also require the FCC to conduct a rule making proceeding to implement this legislation.

It would also require the FCC to conduct a study of handset locking.

S 2033 would also regulate the content of bills. For example, it would require bills to itemize taxes and other fees imposed upon consumers. However, it adds that "No charge which is not required to be recovered from a subscriber under a Federal, State, or local statute or regulation may be included in the section of the bill described" above. For example, the bill requires service providers to mislead consumers about the e-rate taxes and subsidies. These taxes are imposed upon service providers, and passed on to consumers.

S 2033 was introduced on September 7, 2007, by Sen. Amy Klobuchar (D-MN) and Sen. Jay Rockefeller (D-WV). It too was referred to the SCC.

Bill Would Prohibit Lobbyists from Purchasing Seats at Congressional Committee Meetings

10/17. Sen. Claire McCaskill (D-MO) introduced S 2177 [LOC | WW], the "Get in Line Act", a bill to amend the Lobby Disclosure Act (LDA) to prohibit the practice of purchasing seats in Congressional hearing rooms from persons who arrive early, wait in line, and then sell their seats.

The practice creates a market for seats, and enables lobbyists and others to obtain many of the public seats at popular hearings and markups. The practice is frequently employed by lobbyists and representatives of information technology and communications industry companies and groups to obtain seats at hearings and markups related to Federal Communications Commission (FCC) regulation, communications reform, spectrum management, patent reform, and some copyright issues.

The practice is more common at Senate committee meetings than at House committee meetings, because of the smaller public seating sections of many of the Senate committee meeting rooms, such as the Senate Commerce Committee's Room 253 of the Russell Building, and the Senate Judiciary Committee's (SJC) Room 226 of the Dirksen Building.

Sen. McCaskill, who is a member of the SCC, issued a release that states that "Even before dawn, professional ``line standers,´´ who are paid to hold a place in line for lobbyists attending Congressional hearings, filed into the Hart Senate Office Building after waiting outside for hours. All too often, the result is hearing rooms filled to capacity with lobbyists who paid a ``line stander´´ for a seat, preventing citizens from observing the legislative process."

Sen. McCaskill did not address the use of larger rooms. Communications and information technology related hearings and markups of Senate committees that are moved to Hart 216, Dirksen 106, or Dirksen G-50 rarely fill up. The transactions that S 2177 is intended to terminate could in significant part be ended by committee chairmen's use of these rooms, or the Caucus Room of the Cannon House Office Building, for popular meetings.

Congressional staff have priority access to meetings. Former Sen. Strom Thurmond (R-SC) once lead a battalion of interns into a confirmation hearing in the huge Hart 216 for a Supreme Court nominee. This filled up the entire public seating section, and prevented a group opposed to the nominee from disrupting or distracting the opening day's hearing.

Witnesses, their staff, and relevant administration and agency officials also have priority access, and usually obtain front row seating.

Reporters who have been credentialed by the Senate Standing Committee of Correspondents also usually have priority access to committee rooms.

For many technology related issues, the seating is ample, and there is no market for seats. For example, hearings related to the PATRIOT Act, Foreign Intelligence Surveillance Act (FISA), electronic surveillance and data acquisition in new technologies, cyber security, and cyber crime rarely fill up. Hearings and markups of the House Science Committee (HSC) rarely fill up. The House Ways and Means Committee has a huge meeting room, so its technology related proceedings rarely fill up.

Industry sectors affected by the FISA and PATRIOT Act have largely boycotted relevant committee meetings since 2005, even though some companies are intensely interested in the subject matter. Indeed, the public seating sections at some hearings have been almost empty. The HJC's meeting to mark up the RESTORE Act (a FISA reform bill) earlier this month filled up, and there were industry representatives in the room. However, the mark up of the RESTORE Act was followed immediately by the mark up of a bill to extend the ban on certain internet taxes. This was the reason that industry representatives attended. Also, a group of protesters attended the beginning of the mark up of the RESTORE Act. By the time that the HJC completed its mark up of the RESTORE Act, there were numerous vacant seats inside the room. There was free access to the room for the other items on the agenda.

S 2177 would not prohibit all sales of seats. It would amend Lobby Disclosure Act (LDA), which is codified at 2 U.S.C. § 1601, et seq., to prohibit the sale of seats to persons required to register as lobbyists by the LDA, and employees of any organization that employs or retains such lobbyists. However, this would cover most persons who purchase seats.

S 2177 would require "A committee of the Senate that is unable to accommodate all persons wishing to sit in the hearing room for a committee hearing or business meeting shall -- (1) make all reasonable accommodations for such overflow, including opening up an overflow room with a video monitor showing the hearing or meeting if possible; and (2) stream the hearing or meeting on the committee website to the extent practicable".

Most of the committee meetings of the House and Senate Commerce and Judiciary Committees for which there is a market for seats are already web cast. Persons who purchase seats have additional reasons to purchase seats, or standing room, in the room in which the meeting is held. These reasons include associating with other industry and group representatives, speaking with and giving written material to reporters, being seen by Representatives, Senators and staff, and obtaining a better view of the meeting than a web cast or overflow room video monitor provides.

Line standers are typically organized and paid by businesses that in turn sell seats to their clients, which include companies, trade groups, lobbying firms, and law firms. These line standing businesses also tend to provide a degree of order and self-policing to line standing. It is in their proprietary interest to do so. In their absence, line jumping at some popular committee meetings is rampant. Removing the line standing businesses, in some cases, would benefit line jumpers, rather than honest folk who show up early and stand in line.

Sen. McCaskill wrote in her release that "The lobbyists’ motivation is to secure prime real estate in the room with a goal of making eye contact with members of Congress. They believe that being seen in the front row will help members know who truly cares about the issue at hand, potentially giving a leg up to those lobbyists seeking to yield additional influence on votes. The pay-to-play system of attending hearings is yet another example of where big money talks on Capitol Hill."

She also asserted that the line standing practice is "similar to offering gifts to members of Congress and their staff".

However, the current market for seats or standing room involves exchanges between those who purchase seats, and those who stand in line for seats. Nothing of value is transferred to any members of Congress or their staff.

The bill was referred to the Senate Committee on Homeland Security and Governmental Affairs. It has no cosponsors.

House Bill Would Require Schools Receiving E-Rate Subsidies to Train Kids in Appropriate Online Behavior

10/17. Rep. Brad Ellsworth (D-IN) introduced HR 3871 [LOC | WW], the "e-Keep the Internet Decent and Safe Act of 2007" or "e-KIDS Act of 2007", a bill to require schools that receive e-rate subsidies to instruct children about "appropriate online behavior" in social networking web sites, and with respect to "cyberbulling".

This bill would amend 47 U.S.C. § 254(h)(5)(B). Section 254 pertains to Federal Communications Commission (FCC) administered universal service tax and subsidy programs. Subsection 254(h)(5) imposes obligations upon schools that receive e-rate subsidies.

Subsection 254(h)(5)(b) already requires schools receiving e-rate subsidies to certify that they are enforcing "a policy of Internet safety for minors that includes monitoring the online activities of minors and the operation of a technology protection measure with respect to any of its computers with Internet access that protects against access through such computers to visual depictions that are (A) obscene; (B) child pornography; or (C) harmful to minors", and that they are "enforcing the operation of such technology protection measure during any use of such computers by minors".

HR 3871 would add an additional requirement. Schools receiving e-rate subsidies must also certify that they are "educating minors about appropriate online behavior, including interacting with other individuals on social networking websites and in chat rooms and cyberbullying awareness and response".

This requirement would not apply to use of internet access at schools by adults. This requirement would not apply to libraries that receive e-rate subsidies. This requirement would not apply to schools that are not subsidized by the e-rate program.

The bill was referred to the House Commerce Committee (HCC).

Representatives Write FTC Regarding Inadvertent P2P File Sharing

10/17. Rep. Henry Waxman (D-CA), the Chairman of the House Government Oversight and Reform Committee (HGORC), and others, sent a letter [7 pages in PDF] to Deborah Majoras, Chairman of the Federal Trade Commission (FTC), urging the FTC to "investigate promptly recent disclosures regarding inadvertent file sharing over peer-to-peer (P2P) networks and to take steps to ensure that potential risks posed by P2P networks are incorporated into the Commission's ongoing efforts to combat identity theft."

Most of the 18 members who signed the letter are Democrats. However, the letter is also signed by Rep. Tom Davis (R-VA), the ranking Republican on the HGORC, Rep. Darrell Issa (R-CA), and Rep. Chris Cannon (R-UT).

The letter continues that while "P2P networks have the potential to deliver innovative and lawful applications that will enhance business and academic endeavors, reduce transaction costs, and increase available bandwidth, these networks must also be used in a way that protects sensitive government, personal, and corporate information and copyright laws. In our view, the FTC should play an important role towards that end."

The letter states that some peer to peer (P2P) file sharing systems trick users into sharing files that they do not intend to share, and that "we believe that the problem of inadvertent file sharing is a much more significant problem than previously thought."

The letter also attached copies of a letter [7.5 MB in PDF] from Streamcast and a letter [3.5 MB in PDF] from Limewire to the HGORC regarding inadvertent file sharing.

The letter propounds several interrogatories to the FTC, and requests a response by November 1, 2007. It asks several questions regarding the activities and understanding of the FTC with respect to inadvertent file sharing.

It also asks "Does the FTC have sufficient enforcement authority to address problems associated with inadvertent file sharing or does it need additional authority?"

The HGORC held a hearing on July 24, 2007, titled "Inadvertent File Sharing Over Peer to Peer Networks". See, HBORC web page with hyperlinks to prepared testimony.

See also, November 2006 report [80 pages in PDF] to the U.S. Patent and Trademark Office (USPTO) titled "Filesharing Programs and ``Technological Features to Induce Users to Share´´", by Tom Sydnor, John Knight, and Lee Hollaar. The USPTO published this report in its web site, with a forward by Jon Dudas, head of the USPTO.

Tom Sydnor of the Progress & Freedom Foundation (PFF) stated in release regarding Rep. Waxman's letter that "Inadvertent sharing is a proven threat to personal, corporate, and national security that also creates needless conflicts between copyright holders and consumers. It is essential for both state and federal law-enforcement authorities to determine why distributors of popular filesharing programs have failed to eliminate a threat identified over five years ago."

Judge Niemeyer Opines That Congress Should Revise Copyright Act on Joinder of Claims and Claim Preclusion

10/17. The U.S. Court of Appeals (4thCir) issued its opinion [PDF] in Frederick Bouchat v. Bon-Ton Department Stores, a copyright infringement case. The Court of Appeals affirmed the judgment of the District Court, which held that the defendants infringed the plaintiff's copyright, but that he is entitled to no damages.

When the professional football team now know as the Baltimore Ravens moved from Cleveland, Ohio, to Baltimore, Maryland, and changed its public name from Browns to Ravens, the plaintiff, Frederick Bouchat, drew a logo for the Ravens. The team used his work. In previous litigation, he sued the Baltimore Ravens and National Football League Properties (NFLP) for copyright infringement. The District Court found that the defendants infringed his copyright, but held that he was not entitled to damages. The Court of Appeals affirmed. See, October 8, 2003, opinion [PDF] of the Court of Appeals. That case was Frederick Bouchat v. Baltimore Ravens Football Club, Inc., et al., No. 02-1999, an appeal from the U.S. District Court for the District of Maryland, at Baltimore, Judge Marvin Garbis presiding, D.C. No. CA-97-1470-MJG. That case is also known as Bouchat I.

Bouchat also filed separate complaints in the same District Court against numerous downstream infringers. These entities used the logo with the permission of the NFLP, but not Bouchat. The case caption takes up the first twenty pages of the just released opinion. These defendants include broadcast and media entities which licensed the use of the infringing logo, publishers of game day magazines, and makers of video games. These complaints are the subject of the present appeal. The District Court held that the defendants infringed Bouchat's copyright, but awarded no damages.

The Court of Appeals affirmed. It held that "the doctrine of claim preclusion prevents Bouchat from obtaining actual damages from the licensees and that his failure to register his copyright before infringement began renders him ineligible for statutory damages."

Judge Niemeyer wrote a concurring opinion regarding the use of multiple actions by one plaintiff for infringements of one work. He opined that while federal civil procedure encourages claim joinder and judiciary efficiency, the Copyright Act encourages the opposite. Niemeyer finds this to be a problem that will get worse with new technologies. He recommended that the Congress examine the issue.

Judge Niemeyer wrote that "The Copyright Act strives to be complete and comprehensive by creating causes of action at the subatomic level. Yet in doing so, the Act loses focus on the bigger picture. In granting an author a separate "exclusive right" in every reproduction, derivative preparation, distribution, performance, display, and digital audio transmission of his work, see 17 U.S.C. § 106, the Act gives the author a right to institute an action for each infringement of each exclusive right, see id. § 501. The enforcement rights are further sub-atomized by the Act’s definition of distribution as any sale or other transfer of ownership, rental, lease, or lending. See id. § 106(3). And with respect to each infringement, the owner may receive actual damages or disgorgement of profits or, by election made "any time before judgment, statutory damages of not less than $750 or more than $30,000 as the court considers just." Id. § 504. The Act provides for a separate statutory damage award "for all infringements involved in the action, with respect to any one work." Id. § 504(c)."

The Copyright Act "undoubtedly encourages multiple, separate infringement actions because a statutory damage award is available in each action for ``all infringements involved in the action´´ with respect to any one work." (Emphasis in original.) He added that "Even as the Copyright Act seems to encourage claim splitting and manipulation of the litigation process, federal judicial policy encourages resolving in one action all claims arising out of a transaction or occurrence."

He argued that this demonstrates that "the Copyright Act pulls in tension from traditional joinder and claim preclusion policies and tends to undermine good judicial administration aimed at efficiency and justice. As a consequence, this case easily could have presented the fundamental but difficult issue whether a copyright owner must join all related infringers -- from the original copier to the downstream licensees -- in a single infringement action, or whether he has the prerogative to proceed piecemeal against the gamut of infringers. Today, however, we do not resolve these nettlesome issues because of the peculiar circumstances created by Bouchat’s desire to leverage his win in Bouchat I into a claim for statutory damages in the cases before us now."

He concluded that "these issues will arise with increasing frequency -- especially in view of advanced technology for copying and transmitting data, which facilitates massive infringements -- and therefore Congress should reconsider them soon to define a more workable balance."

This case is Frederick Bouchat v. Bon-Ton Department Stores, et al., U.S. Court of Appeals for the 4th Circuit, App. Ct. Nos. 03-2173, 03-2174, 03-2389 and 04-1008, appeals from the U.S. District Court for the District of Maryland, at Baltimore, D.C. Nos. CA-01-1996-1-MJG, CA-99-1576-1-MJG, CA-01-647-MJG, and CA-03-2229-MJG), Judge Marvin Garbis presiding. Judge Michael wrote the opinion of the Court of Appeals, in which Judge Niemeyer joined. The third Judge on the panel, Widener, died after oral argument.

The defendants include Sony Corporation, Sony Interactive, Warner Brothers, Warner Brothers and Time Warner, Inc., Walt Disney Company, Inc., Infinity Broadcasting Corp., Fox Entertainment Group, National Broadcasting Company, Inc., ABC, Inc., ABC Sport, Inc., Turner National Television, Turner Network Television, Inc.,  Thomson Consumer Electronics, Inc., Vivendi Universal Games, Inc., Sierra Entertainment, Inc.. Cendent Software, PSINet, Sprint Communications Company, LP, and many other entities.

1st Circuit Rules in Reciprocal Compensation Case

10/17. The U.S. Court of Appeals (1stCir) issued its opinion in Global Naps v. Verizon New England and Massachusetts Department of Telecommunications and Energy, a case regarding the interpretation of an interconnection agreement between Verizon New England and Global NAPs 47 U.S.C. § 251, and reciprocal compensation.

The issue is whether Verizon owed reciprocal compensation to Global NAPs for ISP calls delivered in Massachusetts during the relevant time period. The Massachusetts DTE, following a ruling of the FCC, held that these are not local calls that trigger a reciprocal compensation obligation.

Global Naps sought judicial review, but the U.S. District Court (DMass) upheld the MDTE's interpretation in an opinion reported at 447 F. Supp. 2d 39.

Global Naps brought the present appeal. The Court of Appeals affirmed.

This case is Global Naps, Inc. v. Verizon New England, Inc., et al., U.S. Court of Appeals for the 1st Circuit, App. Ct. No. 06-2701, an appeal from the U.S. District Court for the District of Massachusetts.

More News

10/17. Sen. Harry Reid (D-NV) spoke in the Senate regarding legislation to reform the Foreign Intelligence Surveillance Act (FISA). He said that Sen. Jay Rockefeller (D-WV) and Sen. Kit Bond (R-MO), the Chairman and Vice Chairman of the Senate Intelligence Committee (SIC), "are moving forward this week to have a markup on the Intelligence bill. It will be bipartisan." Sen. Reid also said that Sen. Patrick Leahy (D-VT), the Chairman of the Senate Judiciary Committee (SJC), "has announced he would move very quickly with the Judiciary Committee". Both the SIC and SJC have jurisdiction over FISA reform legislation. Sen. Reid concluded, "Hopefully, we can have that bill to us within the next couple of weeks. We should get that done so it is not a last-minute deal like it was right before we broke for one of our breaks." See, Congressional Record, October 17, 2007, at Page S12948. See also, speech in the Senate by Sen. Mitch McConnell (R-KY) criticizing the RESTORE Act, the House passed FISA reform bill. Congressional Record, October 17, 2007, at Page S12947.

10/17. The U.S. Court of Appeals (6thCir) issued its opinion [PDF] in Bridgeport Music v. Justin Combs Publishing, a copyright case involving song sampling. The plaintiff copyright owners prevailed in the District Court, and were awarded compensatory and punitive damages. The Court of Appeals affirmed in part and reversed in part. It reversed on several issues pertaining to damages. This case is Bridgeport Music, Inc, et al. v. Justin Combs Publishing, et al., U.S. Court of Appeals for the 6th Circuit, App. Ct. No. 06-6294, an appeal from the U.S. District Court for the Middle District of Tennesse, at Nashville, D.C. No.05-00155, Judge Todd Campbell presiding. Judge Rogers wrote the opinion of the Court of Appeals, in which Judges Martin and Hood joined.

10/17. The Federal Communications Commission (FCC) filed its brief [51 pages in PDF] with the U.S. Court of Appeals (DCCir) in New Jersey Department of the Public Advocate, Division of the Rate Counsel v. FCC, App. Ct. No. 07-1020, a petition for review of an order of the FCC pertaining to payphone service providers.

3rd Circuit Upholds FCC's Wireline Broadband Order

10/16. The U.S. Court of Appeals (3rdCir) issued its opinion in Time Warner Telecom v. FCC, denying the petitions for review of the Federal Communications Commission's (FCC) wireline broadband order.

In August of 2005 the FCC adopted an order that classifies wireline broadband internet access service as an information service. That order relieved the incumbent local exchange carriers of Title II common carrier regulation of their wireline broadband internet access services.

See, stories titled "FCC Classifies DSL as Information Service", "Reaction to the FCC's Classification of DSL", and "FCC Adopts a Policy Statement Regarding Network Neutrality" in TLJ Daily E-Mail Alert No. 1,190, August 8, 2005.

Numerous independent internet service providers, competing telecommunications service providers, cable modem providers, and groups challenged the FCC's authority to adopt this order.

The Court of Appeals wrote that the petitioners "argue that the FCC's order allows telephone companies to deny competitors access to their wirelines, thereby resulting in decreased competition and consumer choice in the market for broadband Internet service."

However, it concluded that "the FCC’s order is based on a reasonable interpretation of the Communications Act of 1934, ... and a proper exercise of agency discretion. Accordingly, we will deny the petition for review."

Previously, the Supreme Court upheld the FCC's classification of cable modem service as an information service. See, June 27, 2005, opinion [59 pages in PDF], and stories titled "Supreme Court Rules in Brand X Case" and "Reaction to the Supreme Court's Opinion in the Brand X Case" in TLJ Daily E-Mail Alert No. 1,163, June 28, 2005.

FCC Chairman Kevin Martin stated in a release [PDF] that "I am pleased that the Court affirmed the FCC’s decision to remove outdated, decades-old regulations from today’s broadband services. By removing such regulations, the Commission encouraged broadband investment and fostered competition. As a result of the Commission's deregulatory policies, broadband adoption has increased and consumers have benefited in the form of lower prices and improved broadband service."

Robert McCormick, head of US Telecom, stated in a release that "The court has upheld Chairman Martin’s determination to put consumers in charge of the broadband market. This important FCC order has helped to spur broadband delivery in communities across the nation and all of the life-enhancing benefits that come with it such as better healthcare, education and energy conservation. This was the right decision for Americans and will ensure that these pro-consumer policies remain in place."

This case is Time Warner Telecom, Inc., et al. v. FCC and USA, U.S. Court of Appeals for the 3rd Circuit, App. Ct. Nos. 05-4769, 05-5153, 06-1466, and 06-1467, petitions for review of a final order of the FCC.

House Approves Boucher-Pence Media Shield Bill

10/16. The House amended and approved HR 2102 [LOC | WW], the "Free Flow of Information Act of 2007", which limits the ability of the federal entities to compel journalists to provide testimony or documents, or disclose sources, related to their work. The vote on final approval was 398-21. See, Roll Call No. 973.

The House approved by voice vote an amendment [4 pages in PDF] offered by Rep. Rick Boucher (D-VA), sponsor of the bill. The House then approved the bill as amended.

See, full story.

Rep. Schultz Introduces Bill to Fund Programs Related to Internet Crimes Against Children

10/16. Rep. Debbie Schultz (D-FL) introduced HR 3845 [LOC | WW], the "Providing Resources, Officers, and Technology to Eradicate Cyber Threats to Our Children Act of 2007", or "PROTECT Our Children Act".

It was referred to the House Judiciary Committee (HJC). She is a member.

This bill would not amend the criminal code, or other substantive or procedural law. Rather, it would create programs, and authorize massive funding -- about a billion dollars over eight years.

It would create at the Department of Justice (DOJ) an Internet Crimes Against Children Task Force program. This would include both a national task force, and a task force for each of the states. It would also provide for federal grants to these state task forces. It would authorize the appropriation of $60 Million for Fiscal Year 2008. This annual authorization would grow to $100 Million by FY 2015.

The bill would also create a National Internet Crimes Against Children Data Network Center. It would also authorize the appropriation of $2 Million per year.

The bill would also authorize increased funding for the DOJ's Federal Bureau of Investigation's (FBI) computer forensics operations. The bill states that "The Attorney shall establish additional computer forensic capacity to address the current backlog for computer forensics, including for child exploitation investigations."

This language means that the increased computer forensics capabilities could also be used for activities other than child exploitation investigations. For example, it could also be used to support computer hacking and intellectual property investigations and prosecutions.

The bill would also authorize more funding for the FBI's existing Innocent Images program, in which FBI agents pose online as minors in order to catch adults who seek to exploit children. The bill would authorize the appropriation of $20 Million in FY 2008, growing to $25 Million in FY 2015. Use of this money would be restricted to the Innocent Images program.

The bill would also provide more customs agents for child exploitation related matters, and authorize the appropriation of $15 Million per year.

8th Circuit Rules that First Amendment Supersedes Right of Publicity in Fantasy Baseball Case

10/16. The U.S. Court of Appeals (8thCir) issued its divided opinion [13 pages in PDF] in CBC v. Major League Baseball, a case regarding the right of publicity, the First Amendment, and fantasy baseball's use of the names of baseball players.

CBC filed a complaint in U.S. District Court (EDMo) against Major League Baseball Advanced Media (MLBAM) seeking a declaratory judgment regarding CBC's right to use the names of baseball players in connection with internet and e-mail based fantasy baseball products.

MLBAM counterclaimed alleging that CBC violated its right of publicity under state law. The MLB Players Association intervened. The District Court granted summary judgment to CBC.

The Court of Appeals affirmed. It concluded that the baseball players "offered sufficient evidence to make out a cause of action for violation of their rights of publicity under Missouri law", but that "CBC's first amendment rights in offering its fantasy baseball products supersede the players' rights of publicity".

The Court of Appeals did not reach the issue of whether federal copyright law preempts the players' state law rights of publicity.

The dissent did not go to the right of publicity, First Amendment, or copyright issues. Rather, the dissenter would have reversed on contract grounds.

This case is C.B.C. Distribution and Marketing, Inc. v. Major League Baseball Advanced Media, L.P., et al., U.S. Court of Appeals for the 8th Circuit, App. Ct. Nos. 06-3357/3358, appeals from the U.S. District Court for the Eastern District of Missouri. Judge Arnold wrote the opinion of the Court of Appeals, in which Judge Loken joined. Judge Colloton dissented.

House to Consider Extension of Act Limiting Internet Taxes

10/16. The full House is scheduled to consider HR 3678 [LOC | WW], the "Internet Tax Freedom Act Amendments Act of 2007", under suspension of the rules, on Tuesday, October 16, 2007. See, Majority Leader Steny Hoyer's calendar for Tuesday October 16.

Suspension of the rules means that the bill cannot be amended, and must win a two thirds majority for approval.

The Congress enacted the original Internet Tax Freedom Act (ITFA) in late 1998. It is codified at 47 U.S.C. § 151 note.

The original ban was for three years. The Congress has since provided short extensions, further definitions, and added to the exemptions. The current ban expires in two weeks, on November 1, 2007.

The House Judiciary Committee (HJC) amended and approved HR 3678 on Wednesday afternoon, October 10, 2007. The HJC approved an amendment in the nature of a substitute [PDF] offered by Rep. John Conyers (D-MI), the Chairman of the HJC. The HJC the approved the bill as amended by a vote of 38-0.

The bill as approved would extend the ban for four years, until November 1, 2011.

However, there was first considerable debate over the appropriate term of extension. The bill as approved has a four year extension. Rep. Bob Goodlatte (R-VA) lead an effort to obtain a longer extension. He first offered an amendment that would have permanently extended the ban. It failed on a roll call vote of 15-21. Rep. Zoe Lofgren (D-CA) from Silicon Valley voted for the amendment. Otherwise, only Republicans voted for it, and only Democrats voted against.

Rep. Goodlatte then offered an amendment that provided for an eight year extension. It was approved by a vote of 20-18. On this vote three Democrats, Rep. Lofgren, Rep. Linda Sanchez (D-CA), and Rep. Artur Davis (D-GA), joined with Republicans. Moreover, Republicans managed to turn out every one of their members for this vote, while several Democrats missed the vote.

Rep. Conyers treated the vote as a fluke, and held up the mark up while he sought a way to undo it. After a delay, Rep. Davis offered a motion to reconsider. Only members who voted for a proposition can bring a motion to reconsider it. The vote to reconsider passed by a vote of 21-16. Both Rep. Davis and Rep. Sanchez switched sides. Rep. Lofgren was the only Democrat to consistently support longer extensions. Then, the Committee voted a second time on Rep. Goodlatte's eight year extension amendment. On the second vote it failed 17-22.

Rep. Goodlatte also offered a third amendment that would have extended the ban for six years. It failed 16-21.

Rep. Goodlatte is a Co-Chairman of the Congressional Internet Caucus. So is Rep. Rick Boucher (D-VA). Rep. Boucher voted against all of Rep. Goodlatte's amendments to lengthen the extension.

Rep. Conyers argued that extending the ban is pro consumer, pro technology, and pro innovation, but that it should only last for four years. Moreover, he said the four year extension is the result of a carefully negotiated compromise.

Rep. Lofgren and the Republican proponents of a permanent ban argued that this is necessary to provide certainty, to incent investment in new facilities, and to promote broadband depolyment.

Summary of HR 3678

10/16. The following is a summary of HR 3678 [LOC | WW], the "Internet Tax Freedom Act Amendments Act of 2007", as approved by the House Judiciary Committee (HJC) on October 10, 2007, in the form of an amendment in the nature of a substitute [8 pages in PDF] offered by Rep. John Conyers (D-MI), the Chairman of the HJC.

This bill would extend the current ban, which expires on November 1, 2007, to November 1, 2011.

The current ban provides that "No State or political subdivision thereof may impose ... Taxes on Internet access" or "Multiple or discriminatory taxes on electronic commerce".

There are, however, grandfathered taxes, and numerous exceptions.

The bill extends the grandfather provisions for four years. However, it phases out certain grandfathered taxes. Rep. Conyers wrote in his summary that it phases out "those states that claim to be grandfathered as a result of the Internet Tax Nondiscrimination Act of 2004 and allows those states that have issued public rulings before July 1, 2007 that are inconsistent with the foregoing rules to be held harmless until November 1, 2007."

The bill also changes the definition of "Internet access". It provides that it "(A) means a service that enables users to connect to the Internet to access content, information, or other services offered over the Internet". Moreover, this includes "the purchase, use or sale of telecommunications by a provider of a service described in subparagraph (A) to the extent such telecommunications are purchased, used or sold (i) to provide such service; or (2) to otherwise enable users to access content, information or other services offered over the internet".

The bill continues that "Internet access" includes "services that are incidental to the provision of the service described in subparagraph (A) when furnished to users as part of such service, such as home page, electronic mail and instant messaging (including voice- and video capable electronic mail and instant messaging), video clips, and personal electronic storage capacity". (Parentheses in original.)

However, the bill provides that "Internet access" does not include "voice, audio or video programming ... that utilize Internet protocol ..."

The bill also addresses gross receipts taxes. Rep. Conyers wrote in his summary that "A small group of states have recently enacted taxes that apply to almost all large businesses in the state -- including Internet access providers. The new gross receipts taxes in these states serve as general business taxes and either substitute for or supplement the corporate income tax currently in place in those states, whereas in all other states, corporate income taxes serve as the general business tax. The result is that an Internet access provider could potentially decide not to pay the tax on its receipts attributable to providing Internet access service in those select states."

He wrote that the bill creates "an exemption for states that have enacted laws that would structure their gross receipts taxes in such a way as to be a substitute for state corporate income taxes that are not taxes on Internet access."

The bill removes Section 1108, which currently provides that "Nothing in this Act shall be construed to affect the imposition of tax on a charge for voice or similar service utilizing Internet Protocol or any successor protocol. This section shall not apply to any services that are incidental to Internet access, such as voice-capable e-mail or instant messaging."

More Capitol Hill News

10/16. The House approved HR 3678 [LOC | WW], the "Internet Tax Freedom Act Amendments Act of 2007", without amendment, by a vote of 405-2. See, Roll Call No. 968. This bill provides a four year extension to the ITFA's ban on certain internet taxes.

10/16. The House approved by voice vote HRes 716, a resolution expressing the sense of Congress with respect to raising awareness and enhancing the state of computer security, and supporting the goals of National Cyber Security Awareness Month. Rep. Jim Langevin (D-RI) is the sponsor.

10/16. The Senate approved HR 3093 [LOC | WW], the Departments of Commerce and Justice and Science Appropriations bill for FY 2008. by a vote of 75-19. See, Roll Call No. 372.

10/16. Rep. Steve Cohen (D-TN), Rep. John Conyers (D-MI), and Rep. Linda Sanchez (D-CA) introduced HR 3848 [LOC | WW], the "Security from Political Interference in Justice Act of 2007". This bill would attempt to limit White House staff communications with employees of the DOJ regarding any "ongoing investigation" by the DOJ, by requiring the DOJ and White House Counsel to disclose such communications in reports to the House Judiciary Committee (HJC) and the Senate Judiciary Committee (SJC). This bill is different from, but related to, S 1845 [LOC | WW]. See also, story titled "Sen. Whitehouse and Sen. Leahy Sponsor Bill to Limit Contacts Between White House and DOJ" in TLJ Daily E-Mail Alert No. 1,632, August 31, 2007. The bill was referred to the HJC. All of the original sponsors are members.

10/16. Rep. Al Wynn (D-MD) and Rep. G.K. Butterfield (D-NC) introduced HR 3862 [LOC | WW], the "Preparing America's Seniors for the Digital Transition Act of 2007", a bill to "improve public awareness in the United States among older individuals and their families and caregivers about the impending Digital Television Transition through the establishment of a Federal interagency taskforce between the Federal Communications Commission, the Administration on Aging, the National Telecommunications and Information Administration, and the outside advice of appropriate members of the aging network and industry groups". It was referred to the House Commerce Committee.

People and Appointments

10/16. President Bush nominated Brian Miller to be a Judge of the U.S. District Court for the Eastern District of Arkansas. See, White House release.

10/16. President Bush nominated Gus Coldebella to be General Counsel of the Department of Homeland Security (DHS). See, White House release.

Go to News from October 11-15, 2007.