Bush Signs Internet Tax Ban Bill

10/31. President Bush signed into law HR 3678 [LOC | WW], the "Internet Tax Freedom Act Amendments Act of 2007". See, White House release. The previous moratorium would have expired on November 1, 2007. This bill contains a seven year extension.

FCC Adopts R&O Abrogating Contracts Between MDU Owners and Cable Companies

10/31. The Federal Communications Commission (FCC) adopted, but did not release, a Report and Order (R&O) that asserts regulatory authority over the content of contracts negotiated by owners of multiple dwelling units (MDUs), such as apartment buildings, and cable companies.

The FCC issued a short release [PDF] that describes this R&O, and all five Commissioners wrote statements. The release is short on detail. However, it states that the R&O "prohibits the enforcement or execution of existing exclusivity clauses and the execution of new ones by MVPDs subject to section 628 of the Communications Act". MVPDs is an acronym for multichannel video programming distributors. Cable companies are one kind of MVPD.

FCC Chairman Kevin Martin wrote in his statement [PDF] that "Exclusive contracts between incumbent cable operators and owners of ``multiple dwelling units´´ (MDUs) have been a significant barrier to competition. Today's order removes this barrier."

Martin (at right) added that "people who live in apartment buildings often have no choice of companies when it comes to their video service provider. This is because building owners often strike exclusive deals with one cable operator to serve the entire building, eliminating competition. There is no reason that consumers living in apartment buildings should be locked into one service provider. This phenomenon is particularly problematic given the large number of Americans that live in apartment buildings."

FCC Commissioner Robert McDowell concurred, offered faint praise, and questioned the legality of this R&O. He wrote in his statement [PDF] that "I am concerned about the legal sustainability of the Order, should it be appealed. My concern is this: after unanimously inviting cable companies and building owners to strike such deals in 2003, the FCC may now be abrogating those exact same agreements immediately rather than waiting for them to expire and without providing a grace period."

He continued that "In some cases, cable companies relied upon our 2003 Order to make arrangements with owners of older buildings to wire them for the first time, or to upgrade them with newer technologies, in exchange for a limited period of time when they could be the exclusive video service provider to allow for recovery of their investments. The record indicates that many buildings may have been upgraded, or brought online for the first time, as a result of this policy. To flash cut to a new regulatory regime without a sensible transition period only begs for an appeal that could result in a court throwing out all of our Order, the good with the bad."

He also questioned the sufficiency of the "evidence in the record".

FCC Commissioner Deborah Tate, who lacks expertise in real property and contract law, wrote in her statement [PDF] that "This Order does not abrogate existing contracts, but rather declares exclusivity clauses to be unenforceable."

The FCC's release also states that the R&O makes several findings.

First, it finds that "exclusivity clauses that bar competitive entry harm competition and broadband deployment and can insulate the incumbent MVPD from any need to improve its service".

Second, it finds that "exclusivity clauses are widespread in agreements between MVPDs and MDU owners."

Third, it finds that "incumbent cable operators have increased the use of exclusivity clauses in their agreements with MDU owners with the entry of LECs into the video marketplace".

Fourth, it finds that "the use of exclusivity clauses in contracts for the provision of video services to MDUs constitutes an unfair method of competition or an unfair act or practice under Section 628(b)."

The FCC's release also states that the FCC adopted a Further Notice of the Proposed Rulemaking (FNPRM) "that seeks comment on whether we should take action to address exclusivity clauses entered into by DBS providers, private cable operators, and other MVPDs who are not subject to Section 628. The Further Notice also seeks comment on whether the Commission should prohibit exclusive marketing and bulk billing arrangements."

The release states that the R&O contains "rules". The release does not disclose the nature of these "rules".

The FCC did not release the text of the R&O. It only issued a short self-commending release in which it praised its efforts to "foster greater competition" and "increase choice and competition".

Reaction. The telecommunications companies lobbied for this R&O, and are the primary beneficiaries. They praised it.

Susanne Guyer of Verizon stated in a release that "Millions of consumers live in apartments, condos or other private developments, and, until now, many of them have been denied the benefits of video competition as a result of exclusive access agreements used by cable providers to shield themselves from competition ... The FCC decision will provide access to new competitive options for residents of these properties and encourages further deployment of broadband networks."

Walter McCormick, head of the USTelecom, stated in a release that "Today, the FCC took a strong step forward to help bring video and broadband competition to consumers living in apartments and condominiums. The Commission's action will ensure that all consumers -- in particular seniors on fixed incomes and minorities -- benefit from greater choices, lower prices and more innovative offerings for video and high-speed services."

Cable companies opposed this R&O. Dan Brenner, of the National Cable & Telecommunications Association (NCTA), stated in a release that "the FCC's action to terminate existing contracts is an unprecedented, legally suspect step that could harm consumers and jeopardize the delivery of advanced services to low-income neighborhoods where other video providers have chosen not to offer service".

He added that "We continue to support a regulatory structure that treats all providers equally so that companies can compete in the marketplace, and not in the halls of government. But today's FCC action to ban future exclusive contracts eliminates these contracts for some but not all video providers. If eliminating exclusive contracts for some video providers is good for consumers, then it should have been applied to all providers."

Randolph May, head of the Free State Foundation, stated in a release that "The FCC's decision to prohibit cable operators from entering into exclusive contracts with apartment building owners is the type of decision, wholly apart from the policy pros and cons, which raises substantial rule of law concerns. The agency's statutory authority to take this action, especially abrogating existing contracts, is questionable. With questionable statutory authority, and constitutional property rights values clearly implicated, the FCC should have acted more modestly."

FCC Proceeding Information. The FCC adopted its Notice of Proposed Rulemaking (NPRM) on March 22, 2007, and released the text [19 pages in PDF] on March 27. See, stories titled "FCC Adopts MDU Forced Access NPRM" in TLJ Daily E-Mail Alert No. 1,556, March 26, 2007, and "FCC Releases MDU NPRM" in TLJ Daily E-Mail Alert No. 1,557, March 27, 2007. See also, notice in the Federal Register, April 18, 2007, Vol. 72, No. 74, at Pages 19448-19453. This NPRM is FCC 07-33 in MB Docket No. 07-51.

The just adopted R&O is FCC 07-189 in MB Docket No. 07-51.

Commentary on FCC's R&O Regarding MDU Owners and Cable Companies

10/31. The Federal Communications Commission (FCC) adopted, but did not release, a Report and Order (R&O) that asserts regulatory authority over the content of contracts negotiated by owners of multiple dwelling units (MDUs), such as apartment buildings, and cable companies.

Section 628(b). The R&O reveals that the statutory provision that the FCC relies upon in adopting this R&O is Subsection 628(b) of the Communications Act, which is codified at 47 U.S.C. § 548(b).

This subsection provides that "It shall be unlawful for a cable operator, a satellite cable programming vendor in which a cable operator has an attributable interest, or a satellite broadcast programming vendor to engage in unfair methods of competition or unfair or deceptive acts or practices, the purpose or effect of which is to hinder significantly or to prevent any multichannel video programming distributor from providing satellite cable programming or satellite broadcast programming to subscribers or consumers."

Subsection 623(c) also gives the FCC authority to write implementing regulations.

The R&O finds that certain contracts between MDUs and MVPDs constitute "an unfair method of competition or an unfair act or practice" under Section 628(b). Notably, the FCC's release does not claim that there are "deceptive acts".

There are numerous weaknesses in this assertion. First, while this section regulates the actions of a "cable operator", it does not regulate MDU owners. A R&O implementing Section 628(b) cannot be enforced against MDU owners. Yet, as a practicable matter, if this R&O is to be enforced, it will have to be applied to some MDU owners.

Second, this section only affects acts that hinder or prevent MVPDs "from providing satellite cable programming or satellite broadcast programming to subscribers or consumers". Yet, the R&O abrogates contracts that do not hinder this.

That is, this section is subject to the interpretation that is is merely a Congressional attempt to restrict incumbent cable companies from abusing market power to obtain exclusive access to programming. In contrast, this R&O goes to exclusive access to real property for the purpose of installing wiring. Even if the cable companies have engaged in "unfair methods of competition", they have not used these "unfair methods of competition" to obtain what Section 628(b) prohibits them from obtaining.

Third, this interpretation would entail construing Section 628(b) as redundant of Section 1 of the Sherman Act (15 U.S.C. § 1), and Section 5 of the Federal Trade Commission Act (15 U.S.C. § 45), but only for communications, and with the FCC, rather than the DOJ's Antitrust Division and the Federal Trade Commission (FTC) as the antitrust enforcer.

The FCC's release uses the phrase "MVPDs subject to section 628". Not all MVPDs are subject to this section. Only three categories are subject to this section: "cable operator", "satellite cable programming vendor in which a cable operator has an attributable interest", and "satellite broadcast programming vendor".

It should also be noted that since the FCC relies upon Section 628(b), and Section 628(b) regulates a "cable operator", then any broadband service provider or MVPD that is not a "cable operator", remains free to enter into an exclusive contract with an MDU owner. The FCC's reliance upon Section 628(b) enables the FCC to only abrogate and preclude some types of exclusive contracts.

Property Rights. The FCC's R&O refers to MDUs. This is not a category of regulated entities under the Communications Act. MDUs are real property. Real property, with some exceptions not applicable here, is defined state law. No state has defined the property rights of MDU owners in a way the would abrogate existing contracts with cable operators.

Property exists in the rights accorded to the owner. These rights vary among different types of property. However, across almost all forms of property, the most fundamental right is the right to exclude. The FCC's R&O diminishes apartment building owners' right to exclude others.

The FCC's release, and the statement of the Commissioners, repeatedly refer to "consumers". For the purpose of analyzing the legality of the FCC's R&O, these "consumers" are tenants. They merely hold leasehold interests. Apartment buildings are owned by their owners. They are the holders of the relevant property rights. Their contract rights and their property rights are affected by the FCC's R&O and any attempts that the FCC or service providers to enforce it.

There are three specific prohibitions in the US Constitution that prohibit the states and the federal government from taking property and/or abrogating contracts. There are more in state constitutions and statutes.

First, Article I, Section 10 provides that "No State shall ... pass any ... Law impairing the Obligation of Contracts".

Second, the 5th Amendment provides that "nor shall private property be taken for public use without just compensation". The Fifth Amendment applies on its face to federal action. Hence, this restricts the FCC's authority to issue and enforce its R&O. The Supreme Court has also extended this to the states via the incorporation doctrine.

Commissioner McDowell wrote that "Arguments that our actions today may constitute a regulatory taking that requires compensation may have merit as well".

Also, the 5th Amendment and the 14th Amendment provide that no person shall be deprived of property without due process of law. These apply to federal and state deprivations.

Possible Legal Challenges. There are more avenues for judicial review of the legality of this R&O than there are for most items adopted by the FCC. The most common route, a petition for review of a final order of the FCC, is just one possibility in this case.

Commissioner Robert McDowell's statement [PDF] highlights one argument that cable operators might raise in a petition for review. Cable operators might also assert the inapplicability of Section 628(b) to the contracts at issue, and other arguments.

Legalities aside, the FCC has considerable power over regulated entities, such as the phone and cable companies, in large part because they are repeat players before the FCC. However, apartment building owners around the country are not. Many are unaware of the FCC's existence. Nor will many be impressed by the FCC's self-congratulatory tributes to its own contributions to consumer choice and competition.

The legality of the FCC's R&O could be tested in private litigation. For example, a hypothetical apartment building owner has entered into a contract with a cable company to wire its building, the building is wired, and the contract contains an exclusivity clause that is now retroactively condemned by the FCC. A hypothetical second service provider then seeks access to the property. The building owner refuses. The second provider will of course assert the validity of the FCC's R&O. The FCC may, or may not, have leverage over the cable company. However, apartment building owners may file actions in state or federal courts for declaratory and injunctive relief.

The FCC's lawyers can remove most actions to the federal District Court. But even there, they would likely face a Judge who is a product of the local legal community, and who is likely to be familiar with real property and contract law, but not federal communications law.

As another example, a landlord might sue a cable company with whom it has contracted if the cable company asserts that any other provisions of the contract are abrogated along with the exclusivity provision. Also, tenants might sue their landlords. Also, class action lawyers might file actions on behalf of huge classes of tenants against apartment building owners and/or cable companies. The R&O's finding of "unfair method of competition or an unfair act" may entice class action firms to file private antitrust and unfair trade practices actions under federal or state law.

The FCC's prowess in evading legal challenges that are initiated by repeat players before the FCC may not prevent this R&O from being subjected to judicial review.

Matthew Berry and the FCC's Office of General Counsel (OGC) lawyers, and DOJ lawyers, will do their best, perhaps as intervenors or amici, to assert justiciability arguments, and to find procedural flaws, in efforts to obtain dismissal without reaching the merits. The task of defending this R&O on the merits would be daunting.

Commissioner McDowell wrote, "I wish the Commission's appellate lawyers the best of luck".

Competition. The FCC's release and the Commissioners assert that this R&O promotes "competition". The FCC's release also states that these exclusive contracts constitute "an unfair method of competition or an unfair act or practice under Section 628(b)".

The FCC is not following its more usual method of regulation -- ex ante promulgation of rules, followed by enforcement actions against violators of those rules. It is enforcing no rules.

This FCC action bears some some similarity to the DOJ's and FTC's antitrust model of regulation. Those agencies do not write ex ante rules. Rather, they engage in ex post application of competition law and economics on a case by case basis.

However, while the FCC has no rules, and is apparently applying competition analysis in an ex post fashio, it also states that its R&O contains "rules". Also, the FCC is not proceeding on a strictly case by case basis. The FCC release does not state that this R&O applies to specific enumerated contracts between named entities. Rather, it is industry wide, prophylactic, and both retroactive and prospective.

Also, the FCC currently lacks the ability to engage in economic analysis of competition in the manner of the DOJ and FTC. For example, the DOJ maintains about fifty economists with Ph.D.s, mostly from top economics departments, plus support staff. (See, speech by Thomas Barnett of October 31, 2007.) The FCC lacks this capacity to conduct economic analysis.

The FCC's does not disclose the nature of its economic analysis in its short release. Critics of this R&O might question this analysis when once the FCC has released the text of the R&O.

Competition exists in markets. Three fundamental components of markets are property rights, freedom to contract, and enforceability of those contracts in courts of law. This R&O attacks all three of these components of markets and competition. In this sense, it takes away from market participants the things that they use to compete in markets. It thereby harms competition.

Of course, exercises of antitrust authority involve limiting the property rights and contracts of companies that abuse market power. However, in this proceeding the entities whose property is being accessed by government order -- apartment building owners -- have no market power, either nationally, or in local communities. Neither suppliers nor consumers in markets for rental residential units are concentrated. Landlords compete for tenants.

On the other hand, the markets for broadband access and video are concentrated. However, the FCC and telephone companies argue that network neutrality mandates are not necessary because there is vigorous competition between telcos and cable. Is the argument of the FCC and telcos that there is vigorous competition for the purpose of assessing the need for network neutrality mandates, but that there is not vigorous competition for the purpose of assessing MDU mandates?

Government agencies, and the organized groups whose interests they vindicate, sometimes assert that they are promoting competition when they compel some market participants to share, make available, license, disclose, or open something that they have created or own. Their assertions sometimes are unfounded in economic analysis.

In this case, apartment building owners are being compelled to open their property. Cable companies, who may have invested in wiring some property only because of guarantees in contracts with the property owners, are now required to surrender those contract guarantees.

The incumbent telephone companies, who lobbied for this R&O, have long argued that the 1996 Act's requirement that they share their network elements with competing service providers creates only artificial competition. They oppose unbundling of telco broadband services, but now back MDU unbundling of broadband from bedrooms. They have also argued that government mandates for network neutrality or open access to their networks would not benefit competition. But now, the telecos and FCC, are arguing that abrogating contracts and compelling access is good for competition.

FCC Adopts 2nd Report and Order on Video Franchising

10/31. The Federal Communications Commission (FCC) adopted, but did not release, a Second Report and Order concerning video franchising.

The FCC adopted its original Report and Order and Further Notice of Proposed Rulemaking on December 20, 2007. See, story titled "FCC Adopts Order Affecting Local Franchising Authorities" in TLJ Daily E-Mail Alert No. 1,510, December 27, 2006. The FCC released the text [109 pages in PDF] on March 5, 2007. See, story titled "FCC Releases Text of Video Franchising Order and Further NPRM" in TLJ Daily E-Mail Alert No. 1,548, March 7, 2007. That item is FCC 06-180 in MB Docket 05-311.

The first order applied only to competitive entrants. It did not extend to incumbent cable operators.

FCC Chairman Kevin Martin wrote in a statement [PDF] that "In our prior order in this docket, the Commission took action to remove regulatory barriers to competition in the video marketplace". He continued that "Our findings in that order only applied to new entrants."

"In today's item we find that some of the Commission's findings in that order apply equally to incumbent providers as they do to new entrants." However, he added that "It is important to emphasize that today’s order in no way gives incumbents a unilateral right to breach their existing contractual obligations."

FCC Commissioners Robert McDowell and Deborah Tate also supported this item.

FCC Commission Michael Copps, who dissented from the FCC's first video franchising order last December, wrote in his statement [PDF] that "I dissent to today’s item because I believe the legal and factual justifications for this new decision -- concerning the negotiations between existing franchise holders and local governments -- are even weaker. And they are even more contrary to good government. If our previous decision was a body blow to the principle of federalism, today’s decision is the coup de grace."

Commissioner Copps (at right) also wrote, "Nor could I find sufficient justification in the plain language of the statute for the FCC to insert itself into the franchise negotiation process."

The FCC is basing its video franchising actions upon Section 621 of the Communications Act of 1934, as amended by the Cable Television Consumer Protection and Competition Act of 1992.

This section is codified at 47 U.S.C. § 541. Subsection (a)(1) provides that "A franchising authority may award, in accordance with the provisions of this subchapter, 1 or more franchises within its jurisdiction; except that a franchising authority may not grant an exclusive franchise and may not unreasonably refuse to award an additional competitive franchise. Any applicant whose application for a second franchise has been denied by a final decision of the franchising authority may appeal such final decision pursuant to the provisions of section 555 of this title for failure to comply with this subsection."

FCC Commissioner Jonathan Adelstein also dissented from this and the first order. He wrote in his statement [PDF] that this item adds "further disruption, confusion and complication to the operation of the local franchising process. Similar to its predecessor order, the instant Order’s attempt to provide comparable regulatory relief to incumbent cable operators is arbitrary and capricious."

The FCC issued a short release on October 31 that describes its just adopted second order. It enumerates numerous findings.

It states that the FCC "Found that the Commission's findings in the First Report and Order that certain specified costs, fees, and other compensation required by local franchising authorities must be counted toward the statutory five percent cap on franchise fees, should be extended to incumbents".

The FCC's release also states that the FCC found that "many" of its "determinations relating to public, educational, and governmental (``PEG´´) and institutional networks (``I-Nets´´) should be extended to incumbents".

The FCC's release also states that the FCC found that its "findings in the First Report and Order regarding mixed-use networks also apply equally to incumbents and new entrants, and should be extended to incumbents."

The FCC's release also states that the FCC found that "other provisions of the First Report and Order, regarding build-out and time limits for franchise negotiations, are only applicable to new entrants.

The FCC's release also states that the FCC found it "cannot preempt local or state cable customer service requirements, nor can it prevent local franchising authorities and cable operators from agreeing to more stringent standards."

Finally, the FCC's release states that these findings will be effective 30 days after publication of a notice in the Federal Register.

This item is FCC 07-190 in MB Docket No. 05-311.

FCC Extends LNP Requirements to Interconnected VOIP

10/31. The Federal Communications Commission (FCC) adopted, but did not release, a Report and Order, Declaratory Ruling, Order on Remand, and Notice of Proposed Rulemaking that, among other things, extends the FCC's local number portability (LNP) rules to interconnected voice over internet protocol (VOIP) providers and the telecommunications carriers that obtain numbers for them.

The FCC issued a short release [PDF] that describes this item. It also states that the order portion of this item provides that "telephone companies may not obstruct or delay number porting by demanding excess information from the customer’s new provider".

The FCC's release states that this item concludes that "LNP validation for a simple number port should be based on no more than four fields: (1) 10-digit telephone number; (2) customer account number; (3) 5-digit zip code; and (4) pass code, if applicable."

The FCC's release states that this item "tentatively concluded that it should require the industry to complete simple ports in 48 hours."

FCC Commissioner Robert McDowell (at left) wrote in his statement [PDF] that "In this world of converging telecommunications technologies, it is vital that the Commission ensure that our regulations do not favor one type of service provider over another and that consumers are empowered to choose among all the services these new technologies offer."

He added that this item "fosters regulatory parity. Because VoIP services are increasingly becoming a substitute for traditional telephone service in the marketplace, it is critical that we extend local number portability obligations to those service providers. Just as we have previously required interconnected VoIP providers to comply with obligations for E911, universal service, customer proprietary network information protections and disability access, extending our local number portability requirements levels out the regulatory landscape even further."

This item is FCC 07-188 in the FCC's proceedings numbered WC Docket No. 04-36 (the FCC's huge omnibus IP-enabled services proceeding), CC Docket No. 95-116 (LNP proceeding), CC Docket No. 99-200, and 07-244.

4th Circuit Rules in Pole Attachments Case

10/31. The U.S. Court of Appeals (4thCir) issued its opinion [16 pages in PDF] in Time Warner v. Carteret-Craven, a pole attachments case in which the Court of Appeals affirmed the judgment of the District Court for the electric utility company.

Carteret-Craven Electric Membership Corporation is an electric utility in the state of North Carolina. It owns poles. Time Warner Entertainment (TWE) is a cable company that is entitled to attach cable to utility poles. Carteret-Craven demanded payment from TWE of $20 per pole, well above the rate set by the Federal Communications Commission (FCC)

The federal Pole Attachments Act, which is codified at 47 U.S.C. § 224, provides that the FCC "shall regulate the rates, terms, and conditions for pole attachments to provide that such rates, terms, and conditions are just and reasonable, and shall adopt procedures necessary and appropriate to hear and resolve complaints concerning such rates, terms, and conditions".

It defines "pole attachment" as "any attachment by a cable television system or provider of telecommunications service to a pole, duct, conduit, or right-of-way owned or controlled by a utility".

It defines "utility" as "any person who is a local exchange carrier or an electric, gas, water, steam, or other public utility, and who owns or controls poles, ducts, conduits, or rights-of-way used, in whole or in part, for any wire communications".

However, it excepts "any person who is cooperatively organized, or any person owned by the Federal Government or any State". Carteret-Craven EMC is an exempt cooperative. Hence, TWE has no recourse under the federal statute.

TWE filed a complaint in U.S. District Court (EDNC) against Carteret-Craven alleging both violation of a North Carolina statutory duty imposed on electric cooperatives to charge only reasonable and nondiscriminatory rates, and a North Carolina common law duty as an electric utility to charge only reasonable and nondiscriminatory rates. Federal jurisdiction was based upon diversity of citizenship.

The District Court dismissed both claims pursuant to Rule 12(b)(6) for failure to state a claim. TWE brought the present appeal. However, it only appealed the dismissal of the common law claim.

The Court of Appeals affirmed. It held that under North Carolina law, the "common law duty requiring an electric public utility to charge reasonable and nondiscriminatory rates for electric service does not clearly apply to pole-attachment agreements". As a federal court, exercising diversity jurisdiction over a state law claim, the Court of Appeals declined to extend state common law.

However, the Court of Appeals added that "We appreciate, with genuine sympathy to Time Warner’s argument, the efficiency that Time Warner seeks to effect by using existing electric utility poles for the distribution of its cable service. Indeed, this efficiency is precisely the reason for Congress' enactment of the Pole Attachment Act. But Congress specifically excluded cooperatives. The proposed pole-attachment agreement between Time Warner and Carteret-Craven Electric must, we conclude, be reached through private negotiation, if at all. And if any regulation or compulsion is to be applied to pole-attachment agreements, it should be done by the North Carolina legislature, the North Carolina Utilities Commission, the North Carolina state courts, or indeed, Time Warner’s fellow cooperative members, but not by us."

This case is Time Warner Entertainment - Advance/Newhouse Partnership v. Carteret-Craven Electric Membership Corporation, U.S. Court of Appeals for the 4th Circuit, App. Ct. No. 06-1974, an appeal from the U.S. District Court for the Eastern District of North Carolina, at Greenville, D.C. No. 4:05-cv-00146-D, Judge James Dever presiding. Judge Niemeyer wrote the opinion of the Court of Appeals in which Judges Michael and Ellis joined.

More FCC News

10/31. The Federal Communications Commission (FCC) had placed on the agenda for its event on October 31, 2007, adoption of a Notice of Proposed Rulemaking (NPRM) regarding changes to its implementation of 47 U.S.C. § 224, which provides that the FCC "shall regulate the rates, terms, and conditions for pole attachments". The FCC removed this item from its agenda. This is FCC's proceedings numbered RM-11293 and RM-11303.

10/31. The Federal Communications Commission (FCC) held a hearing titled "Localism Hearing". All five Commissioners spoke. See, statement [PDF] of Kevin Martin, statement [PDF] of Michael Copps, statement [PDF] of Jonathan Adelstein, statement [PDF] of Deborah Tate, and statement [PDF] of Robert McDowell.

10/31. The Federal Communications Commission (FCC) published a notice in the Federal Register that sets comment deadlines for its Notice of Proposed Rulemaking (NPRM) regarding its program access and retransmission consent rules and whether it may be appropriate to preclude the practice of programmers to tie desired programming with undesired programming. Initial comments are due by November 30, 2007. Reply comments are due by December 17, 2007. The FCC adopted this NPRM on September 11, 2007, and released the text [144 pages in PDF] on October 1, 2007. It is FCC 07-169, in MB Docket No. 07-198. See, Federal Register, October 31, 2007, Vol. 72, No. 210, at Pages 61590-61603. See also, story titled "FCC Adopts R&O and NPRM Regarding Program Access Rules" in TLJ Daily E-Mail Alert No. 1,640, September 17, 2007.

CDT Proposes That FTC Create a Do Not Track List for Consumer Internet Use

10/31. Center for Democracy and Technology (CDT) and other groups submitted to the Federal Trade Commission's (FTC) a comment [7 pages in PDF] titled "Consumer Rights and Protections in the Behavioral Advertising Sector". The FTC is holding a two day workshop on November 1-2, 2007, titled "Ehavioral Advertising: Tracking, Targeting, and Technology".

The CDT and others argue that online tracking and targeting of consumers threatens their privacy rights, and that the FTC should "take proactive steps to adequately protect consumers", including through the creation of "a national Do Not Track List similar to the national Do Not Call List".

See, full story.

Industry Groups Advocate Self-Regulation of Online Advertising Practices

10/31. Internet, online advertising, and software companies filed comments with the Federal Trade Commission's (FTC) in advance of its November 1-2, 2007, workshop titled "Ehavioral Advertising: Tracking, Targeting, and Technology". They argue that online advertising is beneficial to consumers because it drives the proliferation of free online content and services. They argue that the government should generally rely upon industry self-regulation.

Mike Zaneis of the Interactive Advertising Bureau (IAB), submitted a comment [47 pages in PDF; 1.1 MB] to the Federal Trade Commission's (FTC) in which he argued that online advertising is important to the growth of the internet and e-commerce, online advertising benefits consumers "through the availability of free content and services online", and that the IAB has developed "best practices and standards".

The IAB represents Yahoo, AOL, MSN, Google, Forbes.com, New York Times Digital, CNET Networks, and others.

Zaneis argued that "consumers enjoy the benefits of Internet advertising through the availability of free content and services online. Whether it is customized homepages, a multitude of search engines, free news and entertainment sites, or enhanced services such as video, social networking, and online entertainment or video gaming, the interaction among consumers, publishers, and advertisers fuels the engine that drives the Internet."

He continued that IAB members have incentives for self-regulation. "Consumer confidence in online channels is critical to the vitality of our member companies". Also, the IAB has issued a "Interactive Advertising Bureau Privacy Guidelines" which is at pages 44-47 of the comment.

He concluded that "industry guidelines are the most effective means for setting business standards for legitimate targeted marketing. ... Self-regulation is an extremely effective and efficient means to promote legitimate practices while protecting consumer privacy."

In addition, Randall Rothenberg, head of the IAB, wrote in his November 1, 2007, prepared statement for the FTC's workshop that "The unprecedented proliferation of goods, services, and information diversity that characterize the Internet has been generated within a framework of industry self-regulation and market forces."

He said that it is "incumbent on the business community to ensure that interactive advertising, marketing, and data-use practices are responsible."

Hence, the government "must be prudent in ensuring that no regulation is drawn that would curtail interactive advertising's potential to continue to support this extraordinary pattern of innovation and consumer benefit".

The Network Advertising Initiative (NAI) submitted a comment [PDF] in which it argued that "the online advertising industry currently affords more consumer privacy safeguards through, among other things, privacy policy disclosures, ability to opt-out, ability to manage cookies in the web browser and use of P3P, than any other marketing channel. The Internet has afforded a unique set of easily accessible tools to allow consumers to make granular decisions that simply are not available in an offline context."

It also noted that the FTC "has had numerous successful enforcement actions against companies that have engaged in deceptive practices online".

The NAI comment concludes that "the NAI membership is committed to monitoring the self-regulatory landscape and working with academics, advocates and regulators to address the need for new privacy protections where they emerge".

The NAI states that it "represents Acerno, Advertising.com (an AOL company), AlmondNet, Atlas (a Microsoft company), DoubleClick, Revenue Science, Safecount, Specific Media, Tacoda (an AOL company), 24/7 RealMedia, and [x+1]".

The Software and Information Industry Association (SIIA) submitted a comment [PDF] stating that its members "depend on effective and innovative advertising strategies to gain new customers, maintain existing customers and, in many cases, provide a financial basis for new entrants into the market".

It wrote that not all behavioral advertising involves the collection, use or maintenance of personally identifiable information, and that "to the degree that behavioral advertising involves the collection and use of personally identifiable information, it is the view of SIIA that the FTC’s well-establish approach of enforcing privacy promises, as well as specific statutory provisions, provide the FTC with an already existing and workable framework." (Footnotes omitted.)

Antitrust Division Chief Outlines Application of Antitrust to Innovation

10/31. Thomas Barnett, Assistant Attorney General in charge of the Department of Justice's (DOJ) Antitrust Division, gave a speech at George Mason University in northern Virginia titled "Maximizing Welfare Through Technological Innovation".

He discussed increases to efficiency. He first identified what he understands by efficiency. He said that one type is "incremental dynamic efficiency". It "relates to streamlining or otherwise reducing the cost of production using existing technology. ... As an example, think of fine tuning a production line so that it can produce ten widgets per hour instead of eight."

Another is "leapfrog dynamic efficiency, which refers to gains that come from entirely new ways of producing products or services. As an example, think about making video telephone calls on wireless Internet connections rather than landline analog telephones".

He said that economists, and the Antitrust Division, care about "dynamic efficiency -- particularly leapfrog dynamic efficiency" because it "accounts for the lion's share of efficiency/welfare gains".

He said that "simple competition within a given technology is not enough. We need to foster conditions that shift the supply curve ``out,´´ and dynamic efficiency, particularly leapfrog dynamic efficiency, is how best to achieve this result."

He continued that "Since dynamic efficiency is crucial, preserving innovation incentives is one of the most important concerns of U.S. antitrust law. This can mean bringing an action to prevent conduct that reduces innovation or it can mean declining to act where overly aggressive antitrust enforcement risks chilling the type of vigorous, innovative competition that brings long-term benefits to consumers."

He added that "we recognize that when innovation leads to dynamic efficiency improvements and a period of market power, it is not a departure from competition, but it is a particular type of competition, and one that we should be careful not to mistake for a violation of the antitrust laws".

Barnett's speech was about economic principles, and not political processes. He offered an argument as to how antitrust regulators should act. He did not discuss whether antitrust regulators around the world, who are given broad powers, and wide discretion, and who are ultimately responsible to political actors, do in fact follow, or can be to be expected to follow, the principles that he espouses.

GAO Reports on NIPP Cyber Security Plans

10/31. The Government Accountability Office (GAO) released a report [54 pages in PDF] titled "Critical Infrastructure Protection: Sector-Specific Plans' Coverage of Key Cyber Security Elements Varies".

This report states that "federal policy has established a framework for public and private sector partnerships and identified 17 critical infrastructure sectors". These include information technology (IT), telecommunications, banking and finance, and others. (See, the Homeland Security Presidential Directive 7, issued on December 17, 2003, and the Department of Homeland Security's (DHS) National Infrastructure Protection Plan (NIPP), issued in June of 2006.)

The report states that the "NIPP requires each of the lead federal agencies associated with the 17 critical infrastructure sectors to develop plans to address how the sectors’ stakeholders would implement the national plan and how they would improve the security of their assets, systems, networks, and functions. These sector-specific plans are to, among other things, describe how the sector will identify and prioritize its critical assets, including cyber assets, and define approaches the sector will take to assess risks and develop programs to protect these assets."

This report examines the extent to which each of these 17 industry sectors' plans address key aspects of cyber security. The report finds that the IT and telecom plans fully addressed almost all of 30 its criteria, and partially addressed the others.

In contrast, the banking and finance sector's plan, and many others', left unaddressed or partially addressed many of the 30 criteria.

People and Appointments

10/31. Norihiko Minato was named head of the AT&T Asia Pacific and Japan region, effective November 1, 2007. He will replace Gopi Gopinath who will lead AT&T's global business services in India. See, AT&T release.

More News

10/31. The House Ways and Means Committee approved HR 3688 [LOC | WW], the "United States-Peru Trade Promotion Agreement Implementation Act". The US and Peru entered into this trade promotion agreement on April 12, 2006. See, story titled "US and Peru Sign Trade Agreement" in TLJ Daily E-Mail Alert No. 1,349, April 13, 2006. It was amended on June 24 and June 25, 2007. Chapter 16 [33 pages in PDF] pertains to intellectual property, Chapter 14 [15 pages in PDF] pertains to telecommunications, and Chapter 15 [3 pages in PDF] pertains to electronic commerce. Susan Schwab, the U.S. Trade Representative (USTR), stated in a release that "With this vote, committee members are opening up Peru's market to U.S. exports and cementing the benefits of two-way trade for both our nations. I look forward to an overwhelming bipartisan vote by the full House in favor of this agreement."

10/31. The Copyright Office (CO) published a notice in the Federal register that sets the deadline to submit comments to the Copyright Royalty Judges regarding proposed regulations that set the rates and terms for the use of sound recordings by preexisting subscription services for the period January 1, 2008, through December 31, 2012. The deadline is November 30, 2007. See, Federal Register, October 31, 2007, Vol. 72, No. 210, at Pages 61585-61588.

House Passes Senate Version of Internet Tax Ban Bill

10/30. The House approved the Senate's version of HR 3678 [LOC | WW], the "Internet Tax Freedom Act Amendments Act of 2007", without further amendments, by a vote of 402-0. See, Roll Call No. 1,014.

The same bill has been approved by both the House and Senate. It is now ready for signature by President Bush. It provides for a seven year extension.

On October 16, 2007, the House approved the House Judiciary Committee's (HJC) version of HR 3678, by a vote of 405-2. See, Roll Call No. 968. That House version [8 pages in PDF] contained a four year extension. On October 25, 2007, the Senate approved its version, with a seven year extension, by unanimous consent.

See also, story titled "Senate Approves 7 Year Extension of Internet Tax Ban" in TLJ Daily E-Mail Alert No. 1,663, October 26, 2007, and stories titled "Summary of HR 3678" and "House to Consider Extension of Act Limiting Internet Taxes" in TLJ Daily E-Mail Alert No. 1,655, October 16, 2007.

Rep. Roy Blunt (R-MO), the House Republican Whip, stated in a release that "When it comes to taxing the Internet, Republicans have not wavered in our belief that it ought not happen today, tomorrow, four-years from now, or any time after that. Democrats in Congress have taken a far more `nuanced´ position on the matter, having decided that imposing new taxes on our digital economy right now is unpalatable, but that resurrecting the plan sometime in the future may hold greater promise.

He continued that "Today's vote on extending the ban to seven years -- after Democrats rejected both six-year and eight-year extensions in committee -- demonstrates the majority's inconsistency on this issue. Democrats had an opportunity three weeks ago to support Republican legislation to extend the ban far beyond the four-year window, but chose to send a far weaker message to American consumers and small businesses instead. Although they missed a clear chance then, I’m glad today they followed the lead of the Senate and gave our chamber the opportunity to go on record in support of a longer ban. But nothing short of a permanent moratorium will be enough for House Republicans -- and, toward that end, we will continue to fight."

Some Democrats, such as Rep. Zoe Lofgren (D-CA) and Rep. Anna Eshoo (D-CA), have supported permanent extensions. Rep. Lofgren consistently voted for permanent or longer extensions during the HJC's mark up of the bill.

Rep. Eshoo (at right) cast one of only two votes against the bill on October 16, 2007. She voted on the basis that it was not a permanent extension. See, Congressional Record, October 16, 2007, at Page H11571, and Rep. Eshoo's October 30 release and October 25 release. Rep. Eshoo is also the sponsor of HR 743 [LOC | WW], the "Permanent Internet Tax Freedom Act".

Sen. Ted Stevens (R-AK) stated in a release after the House vote that "I am pleased that the House passed the bipartisan Senate compromise that extends the moratorium for another seven years, which is the longest moratorium to date ... Since the tax moratorium was first adopted, tremendous investment, growth and innovation in broadband deployment has occurred. Affordable access to the Internet is particularly important to small businesses in rural and remote communities across our nation. Passage of this bill will ensure that the Internet remains tax-free for many years to come.”

The National Cable and Telecommunications Association (NCTA) praised the House vote in a release. It wrote that "Keeping the Internet free of new and unnecessary state and local taxes will encourage even more consumers to subscribe to broadband and help accomplish a shared vision of universal broadband deployment for all Americans."

Verizon also praised the House vote. It wrote in a release that "Broadband access is now a crucial driver of America’s economy, and this moratorium extension will ensure continued investment and growth in the broadband marketplace."

The National Association of Manufacturers (NAM) stated in a release that "American businesses of all sizes rely on high-speed, broadband Internet access to remain competitive in the global marketplace. Were the moratorium allowed to expire, more than 7,000 tax jurisdictions would have inherited authority to tax Internet access for everyone."

The US Telecom, CTIA -- Wireless Association, AeA, and other information and communications technology groups also praised the House vote.

House Commerce Committee Approves Bill to Expand FTC Authority

10/30. The House Commerce Committee (HCC) approved by voice vote HR 3526 [LOC | WW], a bill to include all banking agencies within the existing regulatory authority under the Federal Trade Commission Act (FTCA) with respect to depository institutions.

Rep. Barney Frank (D-MA) introduced this bill on September 14, 2007. It was referred to both the HCC and the House Financial Services Committee (HFSC), which Rep. Frank chairs. The HFSC approved the bill on September 18, 2007.

On October 23, 2007, the HCC's Subcommittee on Commerce, Trade and Consumer Protection held a hearing.

Also on October 23, the HCC/SCTCP approved by voice vote an amendment [1 page in PDF] offered by Rep. Bobby Rush (D-IL). It then approved by voice vote the bill as amended.

This October 23 amendment provides for a Government Accountability Office (GAO) report "on the status of regulations of the Federal banking agencies and the National Credit Union Administration regarding unfair and deceptive acts or practices by the depository institutions."

The full committee marked up the bill on October 30. It approved an amendment [2 pages in PDF] offered by Rep. John Dingell (D-MI), the Chairman of the Committee. It provides for concurrent Federal Trade Commission (FTC) rulemaking authority.

House Commerce Committee Approves 911 VOIP Bill

10/30. The House Commerce Committee (HCC) amended and approved by voice vote HR 3403 [LOC | WW], the "911 Modernization and Safety Act of 2007". This bill requires interconnected VOIP service providers to provide 911 and E911 services. The Federal Communications Commission (FCC) has already accomplished this by rulemaking in 2005. This bill affirms, revises, and further defines the legal framework.

Rep. Bart Gordon (D-TN) (at right), the sponsor of this bill, stated in a release that this bill "is a common sense public safety bill ... Regardless of where you live or what phone technology you use, you should be able to reach 911 during an emergency. This bill gives us an opportunity to incorporate Internet phones into the nation's 911 system, modernize 911 for the digital age and improve 911 services for the deaf community."

Legislative History. Rep. Gordon introduced HR 3403 on August 3, 2007.

He also promoted 911 VOIP legislation in the 109th Congress. For example, he offered an amendment during the HCC's markup of its huge telecommunications reform bill on April 26, 2006, that was related to HR 3403. The HCC approved the amendment. The full House approved the bill. However, the Senate did not, and the bill did not become law. See, story titled "Amendment by Amendment Summary of Full Committee Mark Up of COPE Act" in TLJ Daily E-Mail Alert No. 1,360, April 28, 2006. (This was amendment 21.)

On September 19, 2007, the HCC's Subcommittee on Telecommunications and the Internet (STI) held a hearing. See, prepared testimony [PDF] of Jason Barbour (National Emergency Number Association), prepared testimony [PDF] of Catherine Avgiris (Comcast), prepared testimony [PDF] of Robert Mayer (USTelecom), prepared testimony [PDF] of Christopher Putala (Earthlink and VON Coalition), and letter [PDF] of Craig Donaldson (Intrado).

On October 10, 2007, the HCC/STI approved by voice vote an amendment in the nature of a substitute [13 pages in PDF] offered by Rep. Gordon. The Subcommittee then approved by voice vote the bill as amended. Also, Rep. Mike Doyle (D-PA) offered but withdrew an amendment [1 page in PDF].

The full committee marked up the bill on October 30, 2007. It approved manager's amendment [3 pages in PDF] offered by Rep. Gordon by voice vote. It then approved the bill as amended by voice vote.

FCC Rules. The FCC first imposed 911/E911 regulation upon interconnected VOIP service providers in May of 2005. The FCC was supported by many in Congress, incumbent phone companies, and law enforcement agencies. It had scant statutory authority (Title I), but its imposition of carrier like 911/E911 regulation upon VOIP is now a two and one half year old fait accompli.

The FCC adopted its 911 VOIP order on May 19, 2005, and released the text [90 pages in PDF] on June 3, 2005. See story titled "FCC Releases VOIP E911 Order" in TLJ Daily E-Mail Alert No. 1,148, June 6, 2005. See also, stories titled "FCC Adopts Order Expanding E911 Regulation to Include Some VOIP Service Providers", "Summary of the FCC's 911 VOIP Order", "Opponents of FCC 911 VOIP Order State that the FCC Exceeded Its Statutory Authority", and "More Reaction to the FCC's 911 VOIP Order", in TLJ Daily E-Mail Alert No. 1,139, May 20, 2005.

This item is FCC 05-116 in the FCC's proceedings titled "In the Matter of IP-Enabled Services" and numbered WC Docket No. 04-36, and titled "E911 Requirements for IP-Enabled Service Providers" and numbered WC Docket No. 05-196.

Statutory Authority. In its 2005 rulemaking the FCC relied upon nebulous Title I authority. This bill gives the FCC express statutory authority to promulgate regulations regarding imposing 911 regulations on interconnected VOIP service providers.

This bill refers to "IP enabled voice services providers", which produces the acronym IPEVSP. The FCC has used the term interconnected voice over internet protocol (VOIP) service provider. This bill states that its term (IPEVSP) has the same meaning as the FCC's definition of interconnected VOIP service provider.

The bill as amended on October 30 provides that it shall not be construed as "altering, delaying, or otherwise limiting the ability of the Commission to enforce the rules adopted in the Commission’s First Report and Order in WC Docket Nos. 04-36 and 05-196".

Duty to Provide 911 Service. This bill provides that IPEVSPs have a basic duty to provided 911 and E911 services.

It states that "It shall be the duty of each IP-enabled voice service provider to provide 911 service and E–911 service to its subscribers in accordance with the requirements of the Federal Communications Commission ... as in effect on the date of enactment of the 911 Modernization and Public Safety Act of 2007 and as such requirements may be modified by the Commission from time to time."

Right of Access to 911 Capabilities. Having imposed a basic requirement upon IPEVSPs, the bill then grants that IPEVSPs have a basic right of access to the "capabilities" of other providers -- and this would include incumbent local exchange carriers (ILEC) facilities -- under the same rates, terms and conditions as commercial mobile service providers.

Specifically, the bill provides that "An IP-enabled voice service provider that seeks capabilities from an entity with ownership or control over such capabilities to comply with its obligations" quoted above "shall, for the exclusive purpose of complying with such obligations, have the same rights, including rights of interconnection, and on the same rates, terms, and conditions, as apply to a provider of commercial mobile service" as defined by 47 U.S.C. § 332(d).

The bill then requires the FCC to write rules that implement both this duty to provide service, and this right of access.

The bill further authorizes the FCC to delegate authority to states to enforce these regulations.

There is no requirement in the Communications Act, FCC rules, other FCC determinations, or other law, that local exchange carriers (LECs) interconnect with IPEVSPs. This bill imposes no requirement, other than for accessing capabilities to perform their 911 obligations, that LECs interconnect with IPEVSPs.

No State Diversion of 911 Taxes. The bill provides that state and local governments may impose "a fee or charge applicable to commercial mobile services or IP-enabled voice services specifically designated ... for the support or implementation of 911 or E-911 services". However, if they do so, then they can only spend funds so raised "in support of 911 and E-911 services, or enhancements of such services" as specified in the law adopting the fee or charge.

The bill further provides that "For each class of subscribers to IP-enabled voice services, the fee or charge may not exceed the amount of any such fee or charge applicable to the same class of subscribers to telecommunications services.

IPEVSP Immunity. The bill extends existing immunities wireline carriers and wireless carriers to IPEVSPs.

The FCC acted with inconsistency in 2005. It imposed carrier like 911/E911 obligations upon interconnected VOIP service providers, but did not extend to them the immunities provided to carriers.

Section 4 of the Wireless Communications and Public Safety Act of 1999 enumerates several grants of protection from liability for various entities, including communications carriers. Section 4 is codified at 47 U.S.C. § 615a.

The 1999 Act is Public Law No. 106-81. Various provisions of the Act are now codified in various sections of the U.S. Code, including 47 U.S.C. § 222, 47 U.S.C. §251(e), 47 U.S.C. § 615, and 47 U.S.C. § 615a.

The bill extends immunity to any "IP-enabled voice service provider".

CPNI. The bill also creates an exception for IP-enabled voice service providers in the customer proprietary network information (CPNI) section, which is codified at 47 U.S.C. § 222.

Other Government Access to Databases. The bill provides that "No administrator of any database used for the purpose of facilitating the provision of emergency services may use for any competitive purpose data obtained from unaffiliated telecommunications carriers or IP-enabled voice service providers in the course of maintaining and operating that database."

However, creates a exception. It provides that "Nothing in this section is intended to prohibit government agencies otherwise authorized under law from requesting information contained in any such database."

House Commerce Committee Approves Broadband Mapping Bill

10/30. The House Commerce Committee (HCC) amended and approved by voice vote HR 3919 [LOC | WW], the "Broadband Census of America Act of 2007".

On May 17, 2007, the HCC's Subcommittee on Telecommunications and the Internet held a hearing on the broadband mapping generally. See, prepared testimony [PDF] of Larry Cohen (Communications Workers of America), prepared testimony [PDF] of Ben Scott (Free Press), prepared testimony [PDF] of Kyle McSlarrow (National Cable and Telecommunications Association), prepared testimony [PDF] of Brian Mefford (Connect Kentucky), prepared testimony [PDF] of Steve Largent (CTIA -- Wireless Association), prepared testimony [PDF] of Walter McCormick (US Telecom), and prepared testimony [PDF] of George Ford (Phoenix Center for Advanced Legal and Economic Public Policy Studies).

On October 10, 2007, the HCC's Subcommittee on Telecommunications and the Internet (STI) approved, without amendment, by voice vote, a committee print [19 pages in PDF] of this legislation.

Rep. Ed Markey (D-MA) and others introduced this bill on October 22, 2007.

At the October 30, 2007, full committee markup, the HCC approved an amendment in the nature of a substitute [22 pages in PDF] offered by Rep. Markey.

This bill requires the Federal Communications Commission (FCC) to annually "conduct an assessment and publish a report on the nature and deployment of, and subscription to, broadband service capability throughout the States". The bill also specifies in detail the nature and content of these reports.

The bill also requires the National Telecommunications and Information Administration (NTIA) to publish online a broadband inventory map.

The bill also authorizes the appropriation of $20 Million per year for three years for broadband mapping, with at least $15 Million for grants.

Rep. Markey (at right) stated that "This legislation reflects the growing consensus -- if not unanimity -- around the fact that current data collection methods used by the Federal Communications Commission (FCC) are inadequate and highly flawed. We must have more reliable information about broadband deployment and consumer adoption as a first step in developing any comprehensive blueprint for America's broadband future."

He added that this would help not only national policy makers, but would also "assist local communities to assess their own broadband inventory. Moreover, local planning grants will permit such communities to effectively organize to spur deployment and usage of broadband services in local areas".

Steve Largent, head of the CTIA -- Wireless Association, stated in a release that "The wireless industry agrees that a U.S.-based broadband census and inventory map can be a timely and useful tool to aid policymakers in the effort to provide equal access to broadband services to all Americans, regardless of economic status or location."

Verizon's Peter Davidson stated in a release that "Getting broadband to as many people as possible, no matter where they live, is an important policy goal ... This legislation includes provisions that will help identify those communities and parts of the country unserved or underserved by broadband."

House Commerce Committee Approves Do Not Call Registry Fee Extension Bill

10/30. The House Commerce Committee (HCC) approved by voice vote HR 2601 [LOC | WW], the "Do-Not-Call Registry Fee Extension Act of 2007".

Rep. Cliff Stearns (R-FL) and others introduced this bill on June 6, 2007.

On October 23, 2007, the HCC's Subcommittee on Commerce, Trade and Consumer Protection (SCTCP) held a hearing on the bill.

Also on October 23, 2007, the HCC/SCTCP approved by voice vote an amendment in the nature of a substitute [9 pages in PDF] offered by Rep. Stearns. It then approved by voice vote the bill as amended.

At the October 30 full committee meeting the HCC approved the bill without further amendment.

This bill extends the authority of the Federal Trade Commission (FTC) to collect Do-Not-Call Registry fees to fiscal years after fiscal year 2007.

This bill also lower fees for telemarketers who access the database to $54 per area code, or a maximum of $14,850. Currently, telemarketers pay $62 for each area code, with the first five area codes free, and total fees capped at $17,050.

The related bill in the Senate is S 781 [LOC | WW], the "Do-Not-Call Registry Fee Extension Act of 2007". The Senate Commerce Committee (SCC) approved an amended version [7 pages in PDF] of this bill on August 2, 2007. See, story titled "Senate Commerce Committee Approves Bill to Revise and Extend Do Not Call Registry Fees" in TLJ Daily E-Mail Alert No. 1,620, August 1, 2007.

House Commerce Committee Approves Bill to Preclude Expiration of Do Not Call Registrations

10/30. The House Commerce Committee (HCC) amended and approved by voice vote HR 3541 [LOC | WW], the "Do-Not-Call Improvement Act of 2007",

Rep. Mike Doyle (D-PA), Rep. Chip Pickering (R-MS), and Rep. Rick Boucher (D-VA) introduced this bill on September 17, 2007.

The HCC approved an amendment in the nature of a substitute [2 pages in PDF] at the October 30 meeting.

Rep. Doyle stated in a release that "Most folks who've signed up with the registry don't even realize that their names will be automatically removed after five years. I don't think they should even have to worry about it. My bill will give 150 million Americans a little much-needed peace and quiet".

This bill would amend the Do-Not-Call Implementation Act, which was enacted in 2003 to implement a Do Not Call Registry. The 2003 Act is Public Law No. 108-10. It is codified at 15 U.S.C. § 6101 note. Section 3 of the 2003 Act requires the Federal Communications Commission (FCC) to adopt certain rules. Section 2 authorizes the Federal Trade Commission (FTC) to adopt rules.

The 2003 Act is silent on the subject of automatic expiration. However, the FCC and FTC wrote a five year expiration into their rules.

HR 3541 provides as follows: "NO AUTOMATIC REMOVAL OF NUMBERS. -- Telephone numbers registered on the national `do-not-call´ registry of the Telemarketing Sales Rule (16 C.F.R. 310.4(b)(1)(iii)) since the establishment of the registry and telephone numbers registered on such registry after the date of enactment of this Act, shall not be removed from such registry except as provided for in subsection (b) or upon the request of the individual to whom the telephone number is assigned."

The related, but not identical, bill in the Senate is S 2096 [LOC | WW]. The Senate Commerce Committee (SCC) amended and approved it on October 30, 2007. See, story in this issued titled "Senate Commerce Committee Approves Bill to Preclude Expiration of Do Not Call Registrations".

Senate Commerce Committee Approves Bill to Preclude Expiration of Do Not Call Registrations

10/30. The Senate Commerce Committee (SCC) amended and approved S 2096 [LOC | WW], the "Do-Not-Call Improvement Act of 2007".

This bill would prevent the automatic expiration and removal of numbers from the Do Not Call Registry. Currently, under Federal Communications Commission (FCC) and Federal Trade Commission (FTC) rules, registrations expire after five years.

Sen. Byron Dorgan (D-ND) introduced this bill on September 27, 2007. See, story titled "Sen. Dorgan Introduces Bill to Prevent Automatic Expiration of Do Not Call Registrations" in TLJ Daily E-Mail Alert No. 1,648, October 1, 2007.

The related bill in the House is HR 3541 [LOC | WW], the "Do-Not-Call Improvement Act of 2007". The House Commerce Committee amended and approved it on October 30. See, story in this issue titled "House Commerce Committee Approves Bill to Preclude Expiration of Do Not Call Registrations".

On October 30, the SCC approved an amendment in the nature of a substitute [2 pages in PDF].

This bill, as amended, provides that "The registration of a telephone number on the do-not-call registry of the Telemarketing Sales Rule (16 C. F. R. 310.4(b)(1)(iii)) shall not expire at the end of any specified time period."

It adds that the FTC "shall reinstate the registration of any telephone number that has been removed from the registry before the date of enactment of this Act under a Federal Trade Commission rule or practice requiring the removal of a telephone number from the registry 5 years after its registration."

The bill also provides that the FTC "may check telephone numbers listed on the do-not-call registry against national databases periodically and purge those numbers that have been disconnected and reassigned."

The SCC issued a release that states that "Currently, each number in the ``Do-Not-Call´´ registry will expire five years after its initial registration. Almost 52 million (51,968,777) numbers will expire before September 30, 2008. S. 2096 would create a permanent registry extension which would save Americans from having to re-register their phone numbers. It also removes the need for the Federal Trade Commission to undertake a costly education campaign to remind Americans to re-enroll their number on the ``Do-Not-Call´´ list. Currently, more than 200,000 numbers in Alaska are part of the ``Do-Not-Call´´ registry."

Sen. Ted Stevens (R-AK) stated that "It is time to make the `Do-Not-Call´ list the `Never-Call´ list."

House Commerce Committee Approves SAFER NET Act

10/30. The House Commerce Committee (HCC) amended and approved by voice vote HR 3461 [LOC | WW], the "Safeguarding America’s Families by Enhancing and Reorganizing New and Efficient Technologies Act of 2007". This produces the acronym of SAFER NET Act.

Rep. Melissa Bean (D-IL) (at right) and others introduced this bill on August 4, 2007. As introduced, this bill would create a public awareness and education campaign regarding internet safety to be run by the Federal Trade Commission (FTC).

The FTC would be tasked with promoting safe online activity, including matters related to e-commerce, protecting financial information and privacy, cybercrime, and threats to juveniles presented by inappropriate online content and predators.

On October 23, 2007, the HCC's Subcommittee on Commerce, Trade and Consumer Protection held a hearing.

Also on October 23, the HCC/SCTCP approved by voice vote an amendment [1 page in PDF] offered by Rep. Bobby Rush (D-IL). It then approved by voice vote the bill as amended.

Rep. Rush's amendment reduced the authorization for appropriation for fiscal year 2008 from $10 Million per year to $5 Million.

At the October 30 full committee meeting, the HCC approved an amendment [2 pages in PDF] offered by Rep. Mary Bono (R-CA). This amendment establishes at the Department of Commerce's National Telecommunications and Information Administration (NTIA) "an Online Safety and Technology working group comprised of representatives of relevant sectors of the business community, public interest groups, and other appropriate groups and Federal agencies"

The purpose of this NTIA working group is to review and evaluate "(1) the status of industry efforts to promote online safety through educational efforts, parental control technology, blocking and filtering software, age-appropriate labels for content or other technologies or initiatives designed to promote a safe online environment for children; (2) the status of industry efforts to promote online safety among providers of electronic communications services and remote computing services by reporting apparent child pornography under section 13032 of title 42 ... (3) the practices of electronic communications service providers and remote computing service providers related to record retention in connection with crimes against children; and (4) the development of technologies to help parents shield their children from inappropriate material on the Internet."

Finally, Rep. Bono's amendment requires the NTIA's working group to report to the Congress its findings.

However, the bill as amended includes no authorization for the appropriation of funds for the NTIA working group.

Senate Commerce Committee Approves Community Broadband Act

10/30. The Senate Commerce Committee (SCC) amended and approved S 1853 [LOC | WW], the "Community Broadband Act of 2007".

This bill pertains to municipal projects to provide broadband services to the public. (Actually, the bill covers any "advanced telecommunications capability".)

The SCC stated in a release that "This legislation would allow municipalities to help fill the void in broadband access and enhance public safety development while bringing broadband services to their residents."

The SCC approved two amendments [PDF], and then approved the bill as amended. The amendments pertain to the consequences of a failure due to bankruptcy of a government provider of services.

This bill first provides government entities may provide broadband services. It provides  that "No State or local government statute, regulation, or other State or local government legal requirement may prohibit, or have the effect of prohibiting, any public provider from providing advanced telecommunications capability, or services using advanced telecommunications capability, to any person or any public or private entity."

Second, the bill prohibits such government entities from discriminating against private sector providers. It provides that "To the extent any public provider regulates competing providers of advanced telecommunications capability or services, such public provider shall apply its ordinances and rules and policies, including those relating to the use of public rights-of-way, permitting, performance bonding, and reporting, without discrimination in favor of itself or any other provider of advanced telecommunications capability or service that such provider owns or with which such provider is affiliated."

Third, the bill also provides that the government must provide the public with notice and an opportunity to be heard before it provides service to the public.

Sen. Frank Lautenberg (D-NJ) introduced this bill on July 23, 2007.

Both the House and SCC telecommunications reform bills in the 109th Congress included related language. However, neither bill became law.

DOJ Requires Divestitures in AT&T's Acquisition of Dobson

10/30. The Department of Justice's (DOJ) Antitrust Division filed a civil complaint in U.S. District Court (DC) against AT&T and Dobson Communications Corporation alleging violation of federal antitrust laws in connection with AT&T's proposed acquisition of Dobson.

The parties simultaneously filed a proposed consent decree that requires divestitures in markets in Kentucky, Oklahoma, Missouri, Pennsylvania and Texas, including rights to the Cellular One brand.

Thomas Barnett, Assistant Attorney General in charge of the DOJ's Antitrust Division, stated in a release that "The required divestitures will preserve competition for residents in rural areas in Kentucky, Oklahoma, Missouri, Pennsylvania and Texas and ensure that these consumers continue to enjoy the benefits of competition, such as lower prices, and higher quality".

The DOJ release elaborates that "The divestitures are required to assure continued competition in markets where the merger would otherwise result in a significant loss of competition. In three rural service areas (RSAs) in Kentucky and Oklahoma, AT&T and Dobson each hold one of the two cellular licenses and are the most significant competitors. In two RSAs in Missouri and Texas, AT&T has a minority equity interest in, and important control rights over, the primary wireless competitor to Dobson. According to the complaint, the proposed transaction would substantially reduce competition for mobile wireless telecommunications services in these five markets where the businesses wholly or partially owned by Dobson and AT&T collectively serve more than 60 percent of subscribers. The proposed divestitures remedy the competitive problem caused by the otherwise overlapping ownership."

It adds, "Similarly, the divestiture of the Cellular One brand and associated rights will ensure continued competition in two markets in Pennsylvania and Texas where a Cellular One licensee is the primary wireless competitor to AT&T. Without the divestiture, AT&T would have had the incentive and ability to harm competition by limiting and eliminating the Cellular One licensee's ability to use the brand effectively."

The Federal Communications Commission (FCC) is also reviewing this transaction. Dobson stated in a release that the West Virginia Public Service Commission and the Arizona Corporation Commission have approved this transaction.

More News

10/30. The Electronic Privacy Information Center (EPIC) and others sent a letter [5 pages in PDF] to the Internet Corporation for Assigned Names and Numbers (ICANN) urging the removal of registrants' contact information from the publicly accessible WHOIS database. They argued that "Current ICANN WHOIS policy conflicts with national privacy laws, including the EU Data Protection Directive, which requires the establishment of a legal framework to ensure that when personal information is collected, it is used only for its intended purpose. As personal information in the directory is used for other purposes and ICANN's policy keeps the information public and anonymously accessible, the database could be found illegal according to many national privacy and data protection laws including the European Data Protection Directive, European data protection laws and legislation in Canada and Australia." See also, story titled "House Subcommittee Holds Hearing on Access to WHOIS Database" in TLJ Daily E-Mail Alert No. 1,423, August 2, 2006.

10/30. The Progress & Freedom Foundation (PFF) released a paper [14 pages in PDF] titled "Inadvertent Filesharing Revisited: Assessing LimeWire’s Responses to the Committee on Oversight and Government Reform". The authors are Tom Sydnor (PFF), Lee Hollaar (University of Utah, School of Computing), and John Knight (University of Utah student). See also, PFF release. And see, story titled "Representatives Write FTC Regarding Inadvertent P2P File Sharing" in TLJ Daily E-Mail Alert No. 1,658, October 19, 2007.

10/30. Several Republican Representatives spoke in the House in support of making the research and development (R&D) tax credit permanent. The current R&D tax credit expires on December 31, 2007. Bills such as HR 2138 [LOC | WW], the "Investment in America Act of 2007 ", would make the R&D tax credit permanent, and repeal the alternative incremental credit. Rep. Pete Roskam (R-IL) stated that "At a time of increasing globalization, America's prosperity depends more than ever on its capacity to innovate." He said that "significant economic benefits that flow from R&D activities". Rep. Tim Walberg (R-MI) said that "This legislation would keep high-tech, high-paying jobs in America by maintaining important incentives and enable American companies to grow, become more competitive globally, and ultimately result in additional high-paying American jobs." Rep. Adrian Smith (R-NE) said that "We are the strongest Nation on Earth, in large part because of the innovation inspired through research and development. This has been a driving force through our history, leading us to discoveries which add convenience, comfort and productivity to our lives. ... In our increasingly competitive global economy, it is essential we ensure there is a permanent, meaningful incentive for all businesses to invest in research and development. See, Congressional Record, October 30, 2007, at Pages H12157-9.

House to Vote on Senate Version of Internet Tax Ban Extension

10/29. Rep. Steny Hoyer (D-MD), the House Majority Leader, announced in a release that on Tuesday, October 30, 2007, the House will consider the Senate's version of HR 3678 [LOC | WW], the "Internet Tax Freedom Act Amendments Act of 2007", under suspension of the rules. See also, Rep. Hoyer's schedule for October 30.

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

On October 16, 2007, the House approved the House Judiciary Committee (HJC) version of HR  3678 , by a vote of 405-2. See, Roll Call No. 968. That House version [8 pages in PDF] contains a four year extension.

October 25, 2007, the Senate approved its version, with a seven year extension, by unanimous consent.

See, story titled "Senate Approves 7 Year Extension of Internet Tax Ban" in TLJ Daily E-Mail Alert No. 1,663, October 26, 2007. See also, stories titled "Summary of HR 3678" and "House to Consider Extension of Act Limiting Internet Taxes" in TLJ Daily E-Mail Alert No. 1,655, October 16, 2007.

Rep. Hoyer made the assertion that "This is responsible legislation that puts an end to the pattern of short-term extensions passed by Republicans."

When the House Judiciary Committee (HJC) marked up its version of the bill the Republicans voted in unison for a permanent extension, while all of the Democrats on the HJC, except Rep. Zoe Lofgren (D-CA) backed a four year extension. Then, the House Democratic leadership brought the bill to the floor under a procedure that did not allow any amendments to be considered.

Supreme Court Denies Cert in JTEKT v. US

10/29. The Supreme Court of the US (SCUS) denied certiorari in JTEKT Corporation v. US, Sup. Ct. No. 06-1632, a case regarding a Department of Commerce (DOC) determination under a protectionist US anti-dumping statute, and a World Trade Organization (WTO) report that the statute is in violation of US treaty obligations.

JTEKT sold products in the US at prices that the DOC determined where too low, too competitive, and in violation of the US anti-dumping statute. That the statute was violated is not in dispute. At issue is the effect of the WTO's determination that the statute violates free trade treaty obligations of the US. The DOC, Court of International Trade, and U.S. Court of Appeals (FedCir) all concluded that the WTO report does not affect the DOC determination. By denying certiorari, the SCUS lets stand this conclusion.

The SCUS wrote in its Orders List [13 pages in PDF] at page 11 that "The motion of Government of Japan for leave to file a brief as amicus curiae is granted. The petition for a writ of certiorari is denied."

The SCUS denied certiorari without writing an opinion, which is its normal practice. However, the Department of Justice's (DOJ) Office of the Solicitor General (OSG) filed a brief urging the SCUS to deny certiorari.

It wrote that the question presented is "Whether a party is entitled to have the final results of the Department of Commerce's administrative review of antidumping duties set aside on the basis of an adverse World Trade Organization (WTO) report, where Commerce's final results are indisputably consistent with the governing domestic statute as well as with Commerce's policies at the time the results were issued, and where Congress has specifically provided that WTO reports have no domestic legal effect except as implemented by the Executive Branch or Congress, neither of which has called into question the continuing validity of the final results here at issue."

The OSG wrote that JTEKT and the other petitioners argue "that the final results are in ``violation of the United States' treaty obligations,´´ as construed by the WTO. That argument is one that Congress has expressly foreclosed by specifying that no party can challenge agency action ``on the ground that such action * * * is inconsistent with´´ one of the Uruguay Round Trade Agreements. 19 U.S.C. 3512(c)(1)(B). Nor can petitioners circumvent that limitation by urging the Court to vacate and remand a determination that is concededly proper as a matter of domestic law in order for Commerce to conform that determination to an adverse WTO report. Vacating the final results on that ground would give impermissible judicial effect to the WTO body's report in a context where Congress has specified that such decisions have no legal effect ``unless and until´´ the political branches have implemented them."

See also, December 8, 2006, opinion of the U.S. Court of Appeals (FedCir), and opinion of the Court of International Trade, which is reported at 341 F. Supp. 2d 1334.

Summary of Teleworker and Mobile Worker Protection Bills

10/29. The House Judiciary Committee's (HJC) Subcommittee on Commercial and Administrative Law will hold a hearing on HR 3359 [LOC | WW], the "Mobile Workforce State Income Tax Fairness and Simplification Act of 2007" on Thursday, November 1, 2007.

Introduction. This bill, like several others pending bills, would limit that ability of states to collect taxes from nonresident workers on the basis that they use new information and communications technologies to perform work for companies locating in the tax collecting state.

The issue is basic. State legislators, state agencies, and state tax collectors have incentives to provide services and benefits to the people who vote within their states. These services and benefits cost money. These same state governments have incentives to shift as much of the tax burden as possible to people who do not vote in their states. Hence, state governments seek means to impose taxes on non-voters via some connection or nexus to the state, through business activity taxes, discriminatory sales taxes, mobile worker taxes, and teleworker taxes.

Workers use the roads of the state in which they reside, send their children to their state's schools, and avail themselves of police and fire protection in the state in which they live. However, when another state taxes them, they are not availing themselves of the services and benefits provided by that other state.

Also, multiple tax regimes impose multiple and burdensome withholding, reporting, and filing obligations. Moreover, risks of multiple taxation of incomes creates a disincentive for both companies and workers to make use of new information technologies. This results in lost efficiency, lost worker productivity, lower quality of life for workers, fewer job opportunities for disabled persons, and greater road and rail use, and the resulting higher levels of congestion, pollution, and dependence on imported oil.

HR 3359. Rep. Hank Johnson (D-GA) and Rep. Chris Cannon (R-UT) introduced HR 3359, the "Mobile Workforce State Income Tax Fairness and Simplification Act of 2007", on August 3, 2007. Rep. Sue Myrick (R-NC) and Rep. Walter Jones (R-NC) have since joined in cosponsoring the bill. Rep. Cannon introduced a similar bill in the 109th Congress, HR 6167.

HR 3359 provides that "No part of the wages or other remuneration paid to an employee who performs duties in more than one State or locality shall be subject to the income tax laws of any State or locality other than -- (1) the State or locality of the employee's residence; and (2) the State or locality in which the employee is physically present performing duties for more than 60 days during the calendar year in which the income is taxed."

Rep. Johnson issued a release in August that states that this bill "would establish national tax standards for employees working on temporary assignments out-of-state who are often subjected to non-resident personal income tax requirements. The bill also lends support to their employers who face corresponding withholding requirements for these mobile workers."

He stated that "We need simplified and fair laws for employees conducting business outside of their state. This bill is designed to provide a uniform and easily administrable rule to address the inconsistent income tax requirements that employees and employers face when filing income taxes".

The bill was referred to the House Judiciary Committee (HJC). Both Rep. Johnson and Rep. Cannon are members.

HR 2242. Rep. Rodney Frelinghuysen (R-NJ) introduced HR 2242 [LOC | WW], an untitled bill, on May 9, 2007.

It provides that "A State may not impose a tax on the income earned in the State by nonresidents unless the tax is of substantial equality of treatment for the citizens of the State and the nonresidents so commuting."

It was referred to the HJC. Rep. Frelinghuysen is not a member.

Rep. Frelinghuysen introduced a substantially identical bill in the 109th Congress, HR 86.

HR 1360. Rep. Chris Shays (R-CT) introduced HR 1360 [LOC | WW], the "Telecommuter Tax Fairness Act of 2007", on March 6, 2007. It is cosponsored by Rep. Rosa DeLauro (D-CT) and Rep. Frank Wolf (R-VA).

This bill provides that "In applying its income tax laws to the compensation of a nonresident individual, a State may deem such nonresident individual to be present in or working in such State for any period of time only if such nonresident individual is physically present in such State for such period and such State may not impose nonresident income taxes on such compensation with respect to any period of time when such nonresident individual is physically present in another State."

The bill adds that "For purposes of determining physical presence, no State may deem a nonresident individual to be present in or working in such State on the grounds that -- (1) such nonresident individual is present at or working at home for convenience, or (2) such nonresident individual's work at home or office at home fails any convenience of the employer test or any similar test."

Rep. Wolf, a cosponsor of HR 1360, sent a letter to President Bush on October 2, 2007, regarding telework. He wrote that "Nearly 20 million Americans telework today, and according to experts, at least 40 percent of American jobs are compatible with telework. Telework reduces traffic congestion and air pollution. It reduces gas consumption and our dependency on foreign oil. Telework is good for families -- working parents have flexibility to meet everyday demands. Telework provides people with disabilities greater job opportunities. Telework helps fill our nation's labor market shortage. It is also a good way for retirees to pick up part-time work."

He continued that "Companies save significantly when they have a strong telecommuting program. At one national telecommunications company, nearly 25 percent of its employees work from home at least one day per week. The company found positive results in the way of fewer days of sick leave, better worker retention, higher productivity, and increased morale."

Rep. Wolf added that the "Texas Transportation Institute at Texas A&M University released its annual traffic congestion study which calculates that congestion creates a $78 billion annual drain on the U.S. economy due to 4.2 million lost hours of productivity and 2.9 billion gallons of wasted gas."

S 785. S 785 [LOC | WW], the "Telecommuter Tax Fairness Act of 2007", introduced by Sen. Chris Dodd (D-CT) and Sen. Joe Lieberman (D-CT) on March 6, 2007, is substantially identical to HR 1360.

Sen. Dodd stated in the Senate on March 6, 2007, that "Technology continues to transform the way business is conducted in America and all over the world. Telecommunications advances such as cell phones, email, the Internet, and mobile networking have not only made Americans more productive, they have also given people greater flexibility in where they can work without compromising productivity. As a result, more Americans now have the freedom to work from home or other alternative offices when their physical presence is not required at their primary place of work." See, Congressional Record, March 6, 2007, at Page S2720.

He continued that "This option to telecommute offers tremendous benefits for businesses, families, and communities. It helps employers lower costs and raise worker productivity, and individuals better manage the demands of work and family. It also reduces congestion on our roads and rails, and in so doing, lowers pollution."

However, he said that "some states continue to maintain and enforce outdated laws that unfairly penalize people who choose to work from home." He identified the state of New York as one of the "most aggressive".

He added that workers are subjected to "double taxation" of the same income.

He concluded that "double taxation is not only unfair, it also discourages people from telecommuting when we should be doing the opposite".

Previous versions of this bill include S 2785 (108th Congress), the "Telecommuter Tax Fairness Act of 2004", and S 1097 (109th Congress), also titled the "Telecommuter Tax Fairness Act of 2005".

See also, story titled "Dodd and Lieberman Introduce Bill to End Double State Taxation of Teleworkers" in TLJ Daily E-Mail Alert No. 976, September 14, 2004, and story titled "Connecticut Legislators Seek End to New York's Taxation of Out of State Workers" in TLJ Daily E-Mail Alert No. 1,244, November 1, 2005.

Comparison of Bills. HR 3359, the Johnson-Cannon bill, would provide protection to mobile workers, who spend less than sixty days in a state. That state could not tax them at all under this bill. It does not even allow states to tax workers based on the number of days they are in state.

However, this bill would also benefit some teleworkers -- those who go into an out of state office on less than 60 days each year. The number is significant. It would allow a teleworker to go to the office one day per week, and attend a few additional meetings, without being taxed by the state where the office is located, but where they do not reside.

In contrast, a teleworker who travels to an out of state office two or more days per week could be subjected, under this bill, to income taxes in that state on their entire income. And of course, their entire income could also be taxed by the state of their residence.

Hence, this bill offers more benefits to traveling workers.

HR 1360 and S 785, in contrast, are drafted more to protect Connecticut teleworkers from abusive tax collection practices of the state of New York, and workers in similar situations. It would allow states to tax non-resident teleworkers, but only for the amount of time that they are actually in state.

Supreme Court. The Supreme Court of the US (SCUS) has declined an opportunity to apply either the due process clause, nor the dormant commerce clause, of the Constitution to strike down state tax laws that burden out of state workers.

See, Huckaby v. New York State Division of Tax Appeals, certiorari denied, October 31, 2005, Sup. Ct. No. 04-1734. See, SCUS docket. See also, story titled "Supreme Court Denies Cert in Challenge to State Income Tax on Out of State Teleworkers", TLJ Daily E-Mail Alert No. 1,244, November 1, 2005.

People and Appointments

10/29. President Bush will give a Presidential Medal of Freedom to C-SPAN's Brian Lamb at a White House ceremony on November 5, 2007. A White House release states that Lamb "has elevated America's public debate and helped open up our government to citizens across the Nation. His dedication to a transparent political system and the free flow of ideas has enriched and strengthened our democracy." The National Cable & Telecommunications Association (NCTA) stated in a release that Lamb "was the industry's torch carrier in persuading Congress more than a quarter-century ago to support his then-revolutionary idea of televising Congressional proceedings -- no easy task at the time."

More News

10/29. The Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA) announced in a release that it will "consult with interested stakeholders regarding the mid-term review of the Joint Project Agreement (JPA)" between the DOC and the Internet Corporation for Assigned Names and Numbers (ICANN). It also stated that the NTIA "will soon release" a Notice of Inquiry (NOI). Comments will be due by February 15, 2008.

10/29. The Supreme Court of the US (SCUS) denied certiorari in Advanced Cellular Systems v. Puerto Rico Telephone Company, a bankruptcy case. See, Orders List [13 pages in PDF] at page 4, and SCUS docket. This lets stand the March 28, 2007, opinion of the U.S. Court of Appeals (1stCir). This case is Advanced Cellular Systems, Inc., et al. v. Puerto Rico Telephone Company, dba Verizon Wireless, U.S. Supreme Court, Sup. Ct. No. 07-269, a petition for writ of certiorari to the U.S. Court of Appeals for the 1st Circuit, App. Ct. No. 06-1332.

10/29. The Center for Democracy and Technology (CDT) and others filed their amicus curiae brief [46 pages in PDF] with the U.S. Court of Appeals (3rdCir) in ACLU v. Gonzales, a long running challenge to the constitutionality of the Child Online Protection Act (COPA), which is codified at 47 U.S.C. § 231. The COPA bans sending to minors over the web material that is harmful to minors. The COPA also allows web site operators to distribute pornography, but requires those web sites which distribute material that is harmful to children to verify adult status through the use of credit cards, adult access codes, adult PIN numbers, or other technologies. The amici include the CDT, Computer & Communications Industry Association (CCIA), Information Technology Association of America (ITAA), and other internet, publishing, content, journalism and library groups. They argue that the "COPA creates significant burdens on constitutionally protected speech on the Internet while being less effective than a broad range of less restrictive alternatives, including both technological user empowerment tools and parental guidance." The Congress enacted the COPA in late 1998.

FCC Imposes Universal Service and E911 Location Accuracy Requirements on Alltel

10/26. The Federal Communications Commission (FCC) adopted and released a Memorandum Opinion and Order (MOO) in which it approved Alltel's merger with Atlantis.

In this MOO the FCC continues its practice of using antitrust merger review proceedings (which are nominally license transfer proceedings) to pursue policy goals unrelated to the transaction under review.

This approval contains conditions pertaining to universal service support and E911 location tracking accuracy. These conditions bind only the parties to the transaction, and not other similarly situated companies.

First, this approval is conditioned upon the capping of Alltel's high cost universal service support at June 2007 levels on an annualized basis for an indeterminate period.

The MOO states that "we impose an interim cap on high-cost, competitive ETC support provided to ALLTEL as a condition of this transaction, which will apply until fundamental comprehensive reforms are adopted to address issues related to the distribution of support and to ensure that the universal service fund will be sustainable for future years. As a result of this condition, ALLTEL will be capped at the level of support that it received as a competitive ETC for 2007, measured as of the end of June 2007 on an annualized basis."

Second, the MOO states that "we find it appropriate to condition ALLTEL’s receipt of high cost funds in excess of annualized, June 2007 levels on a showing of current PSAP-level compliance for those PSAPs in their study area that are capable of receiving E911 Phase II location data."

Commissioner Robert McDowell (at left) wrote in a statement [PDF] that "This ``Jack in the Box´´ surprise requirement that suddenly sprung up appears as an illogical afterthought. It is unclear to me how ALLTEL might fulfill this condition given that the Commission currently has an open proceeding addressing the details of how carriers must implement PSAP-level accuracy."

On September 11, 2007, the FCC adopted a Report and Order (R&O) regarding E911 Phase II location accuracy requirements at the Public Safety Answering Point (PSAP) service area level. However, the FCC has yet to release that R&O. To date, the FCC has only issued a short release [PDF].

See also, story titled "FCC Adopts E911 Location Tracking Accuracy Benchmarks" in TLJ Daily E-Mail Alert No. 1,640, September 17, 2007, and story titled "FCC Extends E911 Location Tracking Rules to Interconnected VOIP" in TLJ Daily E-Mail Alert No. 1,589, May 31, 2007.

Commission McDowell wrote in his September 11 statement [PDF] that that R&O is "fraught with highly dubious legal and policy maneuvering that bypasses a still developing record on what should be the reasonable and appropriate implementation details".

This MOO is FCC 07-185 in WT Docket No. 07-128.

ITIF Report Advocates Legislation to Accelerate Adoption of Health Care IT

10/26. The Information Technology and Innovation Foundation (ITIF) released a report [23 pages in PDF] titled "Improving Health Care: Why a Dose of IT May Be Just What the Doctor Ordered". The author is the ITIF's Daniel Castro.

The report notes the President Bush issued an executive order in 2004 calling for the deployment of a nationwide interoperable health information technology network, including electronic health records (EHR), within 10 years.

See, April 27, 2004, executive order regarding "the development and nationwide implementation of an interoperable health information technology infrastructure". See also, stories titled "President Bush Advocates Conversion to Electronic Medical Records" and "Bush Addresses Privacy of Electronic Medical Records" in TLJ Daily E-Mail Alert No. 886, April 28, 2004.

The ITIF report continues that the Department of Health and Human Services (HHS) "has led this effort. Unfortunately, the results of the national health information network initiative to date have been disappointing. So far, for example, HHS has not established comprehensive standards for the network."

It report asserts that "The strategy of building the network from the bottom up by establishing many regional health information organizations (RHIOs) throughout the country is not working."

It states that part of the problem is that "most of the benefits of health IT accrue largely to parties other than health care providers, there is no convincing value proposition to encourage providers to make long-term investments in EHRs."

The report argues that federal legislation in several areas is necessary.

It states that "Federal leadership is needed to respond to the various challenges of promoting the widespread adoption and use of EHRs."

"Congress should work to pass additional legislation that supports the adoption of EHRs and national health data standards." It states that S 1693 [LOC | WW], the "Wired for Health Care Quality Act", introduced by Sen. Ted Kennedy (D-MA) and Sen. Mike Enzi (R-WY), and HR 3800 [LOC | WW], the "Promoting Health Information Technology Act",  introduced by Rep. Anna Eshoo (D-CA), "would provide new leadership, funding, and organization at the national level to promote health IT".

The ITIF report also argues that "Congress should pass legislation supporting the creation of health record data banks", through bills such as HR 2991 [LOC | WW], the "Independent Health Record Trust Act", introduced by Rep. Dennis Moore (D-KS) and Rep. Paul Ryan (R-WI)

The report also advocates requiring "medical practices to disclose patient health information electronically upon request.

PK's Sohn Advocates Six Changes to Copyright Law

10/26. Gigi Sohn, head of the Public Knowledge (PK), a Washington DC based group, gave a speech at Boston University in Boston, Massachusetts, in which she proposed six reforms to copyright law. See also, PK release.

She said that "copyright law has become out of touch with our technological reality to the detriment of creators and the public. Pre-VCR copyright policies must be transformed to embrace our new user generated culture". She offered six proposals.

First, "Fair Use Reform. The existing four-part legal test for fair use should be expanded to add incidental, transformative and non-commercial personal uses of content. In addition, Congress should provide that making a digital copy of a work for indexing searches is not an infringement."

Second, "Limits on Secondary Liability." Sohn argued that the Supreme Court's 1984 opinion in Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, "should be codified".

Third, "Protections Against Copyright Abuse." She argued that the Digital Millennium Copyright Act (DMCA), which is codified at 17 U.S.C. § 1201, et seq., "should be expanded to deter copyright holders from filing frivolous requests that material be taken down from a web site. Congress should provide legal relief for legitimate users of a work should copyright owners overstate their rights." See also, the Copyright Office's summary of the DMCA [PDF].

Fourth, "Fair and Accessible Licensing. Congress should simplify the Byzantine world of obtaining rights to use a musical work, and should require broadcasters to pay performance royalties as satellite and Internet radio do."

Fifth, "Orphan Works Reform. Congress should limit damages for the use of works for which a copyright can not be found after a good-faith search. In addition, competitive visual registries should be established to protect visual artists and photographers."

Sixth, "Notice of Technological and Contractual Restrictions on Digital Media. Copyright holders should be required to provide clear and simple notice to consumers of any technological or contractual limitations on a consumer’s ability to make fair use or other lawful use of a product. There would be legal consequences if that notice isn’t followed."

People and Appointments

10/26. The Senate confirmed Christopher Egan to be the Representative of the US to the Organization for Economic Cooperation and Development (OECD). See, Congressional Record, October 26, 2007, at Page S13495. The Senate Foreign Relations Committee report lists the many large financial contributions made by Egan or his relatives, mostly to Republican candidates and committees, but also to a few Democrats and others, including Sen. Joe Lieberman (D-MA, Rep. Mike Capuano (D-MA), Rep. David Obey (D-WI), and Ralph Nader. See, Congressional Record, October 24, 2007, at Page S13362.

More News

10/26. Sen. Jay Rockefeller (D-WV) introduced S 2248 [61 pages in PDF], the "Foreign Intelligence Surveillance Act of 1978 Amendments Act of 2007". It was referred to the Senate Intelligence Committee (SIC), which reported it, on October 26, 2007. See, Senate Report No. 110-209. This is the language approved by the SIC at its mark up session on October 18, 2007.

10/26. The U.S. Court of Appeals (3rdCir) issued two corrections [3 pages in PDF] to its October 16, 2007, opinion [PDF] in Time Warner Telecom v. FCC. This opinion denied petitions for review of the FCC's August 2005 order that classifies wireline broadband internet access service as an information service. See also, story titled "3rd Circuit Upholds FCC's Wireline Broadband Order" in TLJ Daily E-Mail Alert No. 1,656, October 17, 2007.

Go to News from October 21-25, 2007.