House Commerce Committee Democrats Seek Delay of Spectrum Bill Mark Up

11/30. Rep. Henry Waxman (D-CA) and Rep. Anna Eshoo (D-CA) sent a letter to Rep. Fred Upton (R-MI) and Rep. Greg Walden (R-OR) requesting that the mark up of spectrum legislation, scheduled for Thursday, December 1, 2011, be postponed.

Rep. Waxman and Rep. Eshoo are the ranking Democrats on the House Commerce Committee (HCC) and its Subcommittee on Communications and Technology. Rep. Upton and Rep. Walden are the Chairmen of the HCC and its SCT.

The bill to be marked up has not yet been introduced. However, on Tuesday, November 29, HCC Republicans released a discussion draft [113 pages in PDF] of the "Jumpstarting Opportunity with Broadband Spectrum (JOBS) Act of 2011".

HCC Democrats introduced their own bill, HR 3509 [LOC | WW], the "Wireless Innovation and Public Safety Act of 2011", on November 29. See, story titled "House Subcommittee on Communications and Technology to Mark Up Spectrum Bill" in TLJ Daily E-Mail Alert No. 2,315, November 29, 2011.

The two Democrats wrote that the Republican bill was not released until "Tuesday, so a delay will give members and stakeholders more time to understand the new language."

"Second, we were engaged in constructive negotiations toward a bipartisan bill that were abruptly ended in early October. A delay would provide an opportunity for us to resume these negotiations and to share relevant information we have learned since then."

Both draft bills provide for allocation of the D Block for a public safety network. Rep. Waxman and Rep. Eshoo argued that the Republican bill has three flaws: "(1) its diffuse governance provisions for the public safety network; (2) its prohibition on allocating spectrum from incentive auctions for unlicensed use; and (3) its limitations on the FCC’s authority to craft auction rules in the public interest."

They wrote that the Democratic bill provides for a "national nonprofit corporation" to build the network, while the Republican draft provides for building by the "50 states", with "significant authority over the deployment of the public safety network be contracted out to a private company". They expressed concerns about the "accountability of a private contractor and the costs to the taxpayer".

Sen. Kay Hutchison (R-TX), the ranking Republican on the Senate Commerce Committee (SCC), stated in a release that "I'm very glad that the House Energy & Commerce Committee is placing a priority on providing our nation's first responders with the spectrum they need to build a robust nationwide public safety wireless network.  While there are some differences between our bills, I believe the House's JOBS Act is complimentary to the bipartisan bill Chairman Rockefeller and I have passed in the Senate Commerce Committee, S. 911.  I look forward to working with my House colleagues to incorporate their priorities into S. 911 so we can send a final spectrum bill to the President's desk sometime this winter."

Gordon Smith, head of the National Association of Broadcasters (NAB), stated in a release that "Chairman Walden's bill represents a major step forward in ensuring that local television stations will continue to be able to serve our vast and diverse audiences with local news, entertainment, sports and emergency weather information. Our position remains unchanged since this debate began: NAB has no quarrel with voluntary spectrum auctions so long as non-volunteer broadcasters and our viewers are not punished."

Steve Largent, head of the CTIA, stated in a release that the "CTIA and the wireless industry welcome the mark-up of the JOBS Act of 2011. This bill takes the important step of authorizing voluntary incentive auctions, which will make a substantial down payment toward solving the looming spectrum crisis." He urged that "Congress should make every effort to get this done this year."

Representatives Introduce Cyber Threat Information Sharing Bill

11/30. Rep. Mike Rogers (R-MI) and Rep. Dutch Ruppersberger (D-MD) introduced HR 3523 [LOC | WW], the "Cyber Intelligence Sharing and Protection Act of 2011". See, discussion draft [11 pages in PDF]. The HIC scheduled an immediate mark up of this bill -- Thursday, December 1, 2011, at 3:00 PM.

This is a bill to promote, but not mandate, information sharing. It would allow sharing. It would create new immunities. On the other hand, it would create no new regulatory regime, no new criminal prohibition regime, no data retention mandate, and no new government surveillance powers.

See, full story.

Rep. Markey Comments on Kindle Fire and Privacy

11/29. Rep. Ed Markey (D-MA) commented on Amazon and its new Kindle Fire tablet. He released his correspondence with Amazon, and stated that he wants more information, and will follow up.

However, while Rep. Markey has raised concerns and asked questions, he has not criticized any of Amazon's business practices, or called for any responsive regulatory action or legislation.

Amazon provides an electronic device (the Kindle Fire), an internet browser on that device (the Amazon cloud accelerated Silk), and a wide range of web based services, including online sales of physical and digital products, media streaming, cloud computing, and e-books.

Rep. Markey's concerns are related to the circumstances that Amazon's device and browser are bundled, and that communications between the device and web sites are routed through Amazon's cloud.

Rep. Markey sent a letter to Amazon on October 14. He stated in an October 14 release that "As the use of mobile devices, especially tablets, becomes ubiquitous, we must ensure that user privacy is protected and proper safeguards are in place so that consumers know if and when their personal information is being used and for what purpose."

Rep. Markey wrote that his concern is that by "coupling Fire with Silk, Amazon can essentially track each and every Web click of its customers. Amazon will know where people shop, what items they buy, when they buy them, and how much they pay."

He asked "What information does Amazon plan to collect about users of Kindle Fire?" He also asked how it intends to use this information, and will it sell or share information with other companies.

Amazon's Paul Misener responded in a letter to Rep. Markey on November 3. He wrote that "Amazon Silk logs aggregate browsing information -- the logs are not associated with customer identities." He added that "Silk will only aggregate browsing activity across all users. It will not link browsing activity to individual customers' browsing habits."

Regarding "customer information", Misener stated that "We do not sell (or rent) the information to others and do not have plans to do so." (Parentheses in original.)

Rep. Markey published this letter in his web site on November 29. He stated in a release on November 29 that "Amazon's responses to my inquiries do not provide enough detail about how the company intends to use customer information, beyond acknowledging that the company uses this valuable information". Rep. Markey added that "I plan to follow-up with the company for additional answers on this issue".

House Subcommittee on Communications and Technology to Mark Up Spectrum Bill

11/29. House Commerce Committee (HCC) Republicans released a discussion draft [113 pages in PDF] of a yet to be introduced bill titled the "Jumpstarting Opportunity with Broadband Spectrum (JOBS) Act of 2011".

The HCC's Subcommittee on Communications and Technology (SCT) will meet to mark up this bill on Thursday, December 1, 2011, at 10:00 AM. See, notice and majority staff memorandum.

This Republican bill would give the Federal Communications Commission (FCC) authority to conduct incentive auctions. It would also reallocate the 700 MHz D Block for a public safety network, provide $6.5 Billion to build that network, and provide for the governance of that network.

Also on November 29, HCC Democrats released a discussion draft [151 pages in PDF] of a yet to be introduced bill titled the "Wireless Innovation and Public Safety Act of 2011". This bill would also provide the FCC with incentive auction authority, and reallocate the D Block for a public safety network.

Rep. Greg Walden (R-OR), Chairman of the HCC/SCT, stated in a release that "Following nearly a year of hearings, meetings, and negotiations, I am disappointed that we could not develop a bipartisan bill. But for the sake of the economy and public safety, we need to take the best ideas, which are represented in the JOBS Act, and move forward with a subcommittee vote on Thursday. No party, special interest, or lobby gets everything they want in this legislation. But for the American people, it delivers on three important goals for the country: job creation, a nationwide public safety network, and deficit reduction."

He said that the Republican bill "would give the public safety sector the contiguous 20-MHz block of spectrum they have asked for, along with up to $6.5 billion to build an interoperable public safety network that Americans deserve".

Rep. Henry Waxman (D-CA), the ranking Democrat on the HCC, stated in a release that "we are still hoping for bipartisan action on this critical issue".

The Senate Commerce Committee (SCC) amended and approved S 911, the "Strengthening Public-safety and Enhancing Communications Through Reform, Utilization, and Modernization Act" or "SPECTRUM Act", in a rapid mark up session on June 8, 2011. However, the SCC has yet report that bill, and the full Senate has not yet passed that bill.

Vincent Morris, Sen. Rockefeller's SCC Communications Director, stated in a release on November 29 that "our plan for some time has been to wrap the broad provisions of S911 into a larger deficit or omnibus or gang of 6 package. We are still pursuing that option and the Leader's comments this afternoon on the fact that he does not expect a separate floor vote on the issue do not change a thing. We are focused on the big picture. In fact, given the movement on spectrum in the House this week, things are looking very good and we still hope to see a good outcome on public safety legislation come about this year."

FTC Imposes Privacy Related Terms on Facebook

11/29. The Federal Trade Commission (FTC) released an administrative complaint against Facebook, and an Agreement Containing Consent Order [10 pages in PDF] that settles the action. Both pertain to Facebook's sharing of users' information.

The FTC also issued a release that summarizes the complaint and agreement. It states, for example, that "Facebook changed its website so certain information that users may have designated as private -- such as their Friends List -- was made public. They didn't warn users that this change was coming, or get their approval in advance."

It also states that "Facebook represented that third-party apps that users' installed would have access only to user information that they needed to operate. In fact, the apps could access nearly all of users' personal data -- data the apps didn't need."

The order provides that Facebook "shall not misrepresent in any manner, expressly or by implication, the extent to which it maintains the privacy or security of covered information".

It also requires that Facebook disclose to its users certain information regarding its sharing with third parties of nonpublic user information, specifies the manner in which such information must be disclosed, and requires that Facebook obtain affirmative express consent from users before such sharing.

It further requires that within sixty days Facebook "implement procedures reasonably designed to ensure that covered information cannot be accessed by any third party from servers under" Facebook's control.

It also requires that Facebook shall establish, and reduce to writing, a privacy controls and procedures program, and retain a "qualified, objective, independent third-party professional", approved by the FTC, to monitor this program, and write biennial assessments and reports.

It also imposes numerous other record keeping and reporting requirements upon Facebook.

This order has a duration of twenty years.

The ability of the FTC to investigate Facebook's privacy practices, and impose requirements upon Facebook, under its existing statutory authority with respect to "unfair or deceptive acts or practices in or affecting commerce", which is codified at 15 U.S.C. § 45, may also bolster the arguments of legislators and policy advocates who argue that a new statutorily based regulatory regime that addresses the business practices of social media is not now necessary.

Sen. John Rockefeller (D-WV), the Chairman of the Senate Commerce Committee (SCC), commended the FTC, but also reiterated his support for new legislation.

Sen. Rockefeller (at left) stated in a release that "With today's settlement, Facebook agrees to end deceptive practices and undergo rigorous oversight. But this action against Facebook is just the first step toward protecting consumer privacy. Ultimately, I believe legislation is needed that empowers consumers to protect their personal information from companies surreptitiously collecting and using that personal information for profit."

He added that "It's unacceptable for any company, including Facebook, to change customer privacy settings without their knowledge or consent, especially a company with 800 million users. I commend the way the FTC has used its enforcement authority to improve protections for consumers in an ever-evolving online and mobile world."

Sen. Kay Hutchison (R-TX) stated in a release that "I'm glad to see that Facebook and the FTC have come to an agreement that will look out for the best interests of Facebook users. Privacy on the internet, particularly with regard to a service that has become as pervasive as Facebook, is extremely important and should be a top priority for the industry."

Rep. Anna Eshoo (D-CA) stated in a release that "I welcome the settlement reached today by Facebook and the Federal Trade Commission. By making important and positive improvements to its approach to protecting user privacy, Facebook has made a commitment that will put consumers first."

She added that "The importance of personal privacy is woven into the fabric of our country, and use of personal data by any company must be transparent and secure. I’ve always believed that companies, whether large or small, should provide tools that give consumers confidence that their information will not be shared more broadly than they intended. Today’s agreement upholds this belief."

Ed Black, head of the Computer and Communications Industry Association (CCIA), stated in a release that "To have an open online culture people need to know how information will be used so they can decide what information to share and with whom. We appreciate the FTC’s willingness to examine online privacy practices and to work with companies toward solutions that protect privacy while maintaining the ability to innovate in the social media arena."

He also stated that "Today's settlement shows that private companies and regulators can work together to protect both consumers and innovation." He also commented that a twenty year oversight term "may be unnecessarily long when dealing with dynamic companies".

Berin Szoka, head of the Tech Freedom, stated in a release that "while Congress struggles to craft 'comprehensive baseline privacy' legislation in the European model, the FTC is using its existing 1938 authority over unfair or deceptive trade practices to build a common law of privacy. This is a process of discovery: what's the right balance between protecting privacy and the consumer benefits of encouraging the development of new services? That process won't be perfect or easy, but it's much more likely to keep up with technological change than legislation or prophylactic regulation would be, and less likely to fall prey to regulatory capture by incumbents as a barrier to competition."

Szoka (at right) added that "Case-by-case adjudication is a venerable American tradition -- one that's more, not less, vital in the rapidly changing field of consumer privacy. Rather than rushing to write new laws, Congress should focus on ensuring the FTC has the resources it needs to use its existing authority effectively. That means, most of all, having a larger core of technologists on staff to guide what is supposed to be our expert agency on privacy."

Daniel Castro of the Information Technology and Innovation Foundation (ITIF) stated in a release that this settlement "FTC highlights the fact the U.S. has a healthy self-regulatory privacy system in place that protects consumers while still allowing for innovation."

He argued that "Rather than impose heavy-handed regulations or engage in expensive and unproductive litigation, policymakers should continue to work in partnership with the private sector to balance privacy with innovation."

FCC Staff Releases Items in AT&T T-Mobile Merger Proceeding

11/29. Rick Kaplan, Chief of the Federal Communications Commission's (FCC) Wireless Telecommunications Bureau (WTB) issued an Order [4 pages in PDF] that grants AT&T's and Deutsch Telekom's request to withdraw all applications associated with the proposed merger of AT&T and T-Mobile USA. The order states that the FCC will also release a pre-decisional staff report.

This just released order states that the public docket in this proceeding remains open. (This is FCC WT Docket No. 11-65.)

The FCC is by statute a commission, comprised five commissioners, which meets and acts as a commission. Yet, the Commission neither met nor took any action. This is not the procedure ordained by the statute. But, this is not unusual for the FCC. For example, the landmark broadband plan was also only a staff report that was not adopted by the Commission.

This order also states that "We are releasing the final Staff Analysis and Findings". However, the FCC has not yet published this document in its web site.

The FCC's Kaplan, Renata Hesse and Austin Schlick spoke to reporters late Tuesday afternoon. They summarized the contents of this document. However, a precondition for participating in the conference call was not reporting their statements. Hence, their statements are not quoted here. On the other hand, Commission Mignon Clyburn released a statement that summarizes the report. It is quoted below.

The Commission has not either approved or denied the merger related applications. Hence, this document is a preliminary and pre-decisional recommendation of staff. In almost all cases, the FCC and other agencies and executive departments do not release such documents, refuse requests for copies, and vigorously oppose Freedom of Information Act (FOIA) requests for such documents, regardless the parties' and public's interest in obtaining them. However, release of this document cannot be argued to be in violation of the FCC merger review rules, because the FCC has no merger review rules.

Also, despite the procedural irregularity, the FCC's release of this pre-decisional staff report is highly useful for understanding Chairman Julius Genachowski's and FCC staff's understanding of the proposed transaction, and mergers in general.

The three Democrats on the Commission released statements. FCC Chairman Genachowski wrote in his release that "Competition is the engine of our free market economy and a cornerstone of the FCC's mandate. Our review of this merger has had a clear focus: fostering a competitive market that drives innovation, promotes investment, encourages job creation, and protects consumers. These goals will remain the focus if any future merger application is filed."

Michael Copps wrote in his release that "While I welcome withdrawal of this application, I would like to think we will no longer be expending significant FCC resources to examine this paradigm-shifting and complex transaction. I would hope the withdrawal is not a strategic gambit along the road to resubmission of this or a similar application in the months ahead. That would not strike me as a good route to travel."

Clyburn wrote in her release that she supports the release of the staff report. She also explained her concerns about the merger, stopping just short of expressing opposition. "My concern that the proposed merger could substantially lessen competition in the mobile wireless service market begins with what I see in the current state of the market. Increased consolidation, over the past several years, has resulted in fewer regional and rural service providers that are able to discipline the largest carriers. Voice and data roaming and other network sharing agreements would stimulate the deployment of networks to more Americans, but the denial of these agreements and those opportunities would prevent the smaller carriers from providing competitive service offerings to their subscribers, resulting in pockets of this Nation not being robustly served."

Clyburn (at right) also summarized key elements of the staff report. She wrote that it "concludes that the proposed merger would substantially lessen competition whether reviewed at the local market or national market level, and there are substantial questions whether the claimed public interest benefits would occur".

She stated, "we ask whether by removing T-Mobile, AT&T and competitors would be more likely to raise prices. After a detailed analysis of these issues, the staff concluded that the removal of T-Mobile as a competitor would create these incentives for AT&T and other competitors because these two companies compete with each other for customers and respond to each other’s competitive strategies."

She continued that "The staff also considered the Applicants’ argument that the merger would not result in these competitive harms because smaller regional mobile wireless carriers are available to effectively compete. The staff was not persuaded by this argument because these smaller mobile wireless carriers do not have the resources to replace T-Mobile’s competitive strength in the market. These smaller carriers have considerably less spectrum, smaller service footprints, lower Average Revenue Per Unit and, as I implied earlier, have difficulties obtaining roaming agreements. Furthermore, it appears the proposed merger would make it even more difficult for these smaller carriers to compete because the merged entity would make it more difficult for them to acquire the more advanced and popular handsets and acquire the backhaul services. For these and additional reasons, the staff report finds that the proposed merger would substantially lessen competition in the market for mobile telephony/broadband services."

She elaborated that "These smaller carriers have considerably less spectrum, smaller service footprints, lower Average Revenue Per Unit and, as I implied earlier, have difficulties obtaining roaming agreements. Furthermore, it appears the proposed merger would make it even more difficult for these smaller carriers to compete because the merged entity would make it more difficult for them to acquire the more advanced and popular handsets and acquire the backhaul services. For these and additional reasons, the staff report finds that the proposed merger would substantially lessen competition in the market for mobile telephony/broadband services."

She also summarized the staff report's findings regarding innovation, customer service, and jobs. "With regard to the impact of the proposed merger on innovation in the industry, the staff Analysis and Findings also finds harm because by removing T-Mobile, the proposed merger would remove a disruptive force in the mobile wireless services market. TMobile exerts that disruptive force by engaging in both price and technical innovation."

Next, "the staff found that the proposed merger could adversely impact customer service." Finally, "staff also stated that they were not persuaded by the Applicants’ contention that the proposed merger would result in the creation of more jobs".

Gigi Sohn (at right), head of the Public Knowledge, a group that opposes this merger, stated in a release that "Despite AT&T's efforts to suppress the results of the FCC inquiry, FCC Chairman Julius Genachowski is to be commended for making this critical information public. We expect that the data the Commission staff uncovered will dissuade AT&T from not only taking any more action on this deal, but from trying to make any further purchases of competitors."

Craig Aaron, head of the Free Press, another opponent of the merger, stated in a release that "Chairman Genachowski should be praised for refusing to let AT&T bury its findings in an 11th-hour maneuver. Its formal withdrawal of the FCC application was nothing more than a tactical gambit intended to block the truth about this harmful deal from public view. The idea that AT&T deserved a chance to preview or rebut the staff report is laughable, considering the deal's proponents had eight full months to make their case at the FCC and failed to do so. And complaining that the merging parties deserved a hearing on the staff's findings sounds awfully strange coming from companies that pulled their application just to evade that very same hearing."

AT&T's Jim Ciconi stated in a release that "The FCC has recognized that it is required by its own rules to dismiss our merger application. This makes all the more troubling their decision to nonetheless release a preliminary staff report on the merger. This report is not an order of the FCC and has never been voted on. It is simply a staff draft that raises questions of fact that were to be addressed in an administrative hearing, a hearing which will not now take place. It has no force or effect under law, which raises questions as to why the FCC would choose to release it. The draft report has also not been made available to AT&T prior to today, so we have had no opportunity to address or rebut its claims, which makes its release all the more improper."

Randall May, head of the Free State Foundation (FSF), stated in a release that "It makes sense for the FCC to grant AT&T/T-Mobile's withdrawal request. The FCC can pretty much make the parties start all over again if they ever re-file their merger application, but it can't make the parties pursue an application they don't want to pursue. As for the FCC staff report, it may be appropriate to share with DOJ because it is consistent with normal practice for the two agencies to share information and opinions regarding mergers. But it is another matter to release the report to the public because it is a pre-decisional staff memorandum that normally wouldn't be released publicly, at least not without the Commission formally voting to put its official imprimatur on the contents of the report. I doubt if the commissioners are prepared to do that."

Groups Seek FCC Release of Hearing Designation Order

11/28. Various groups advocate release by the Federal Communications Commission (FCC) of a Hearing Designation Order in the FCC's review of the proposed merger of AT&T and T-Mobile USA.

On November 22, 2011, FCC Chairman Julius Genachowski announced that he proposed that the FCC's review of the proposed merger of AT&T and T-Mobile be designated for administrative hearing. See, story titled "Genachowski Proposes That FCC Designate AT&T T-Mobile Merger for Administrative Hearing" in TLJ Daily E-Mail Alert No. 2,313, November 22, 2011.

AT&T and Deutsche Telekom then promptly notified the FCC of the withdrawal of pending applications associated with the merger. See, related story in this issue titled "AT&T Withdraws Merger Applications".

The Dish Network filed a notice of ex parte communication on November 28, 2011, in which it disclosed that its Deputy General Counsel spoke with FCC Chief of Staff Ed Lazarus on the 28th. This notice states that "DISH urged the Commission to vote on and release the Hearing Designation Order (``HDO´´) circulated on Wednesday, November 23, 2011. The release of the HDO can be done simultaneously -- if the Commission chooses to do so -- with the grant of AT&T’s motion to withdraw their applications."

Cathy Sloan of the Computer and Communications Industry Association (CCIA) stated in a release that "The FCC has spent many months examining the likely impact of AT&T’s proposed takeover of its competitor T-Mobile. As the agency charged with protecting the public interest in affordable telecommunications, the FCC has unique expertise on how this combination would harm consumers and small businesses. That information is now available and should be released immediately. This analysis is vitally important to the future of Internet access and the public has a right to see it."

Matt Wood of the Free Press stated in a release on November 26 that "AT&T is desperately trying to salvage its deal with talk of divestitures, but it's time for it to stop glossing over the harm this deal would cause to jobs, competition and prices, and to pull the plug on this merger once and for all."

The Public Knowledge (PK) and Media Access Project (MAP) filed a pleading with the FCC on November 28 outright opposing AT&T's withdrawal of pending applications. They request that the FCC "deny AT&T's recent request to dismiss its application without prejudice and issue a Hearing Designation Order".

They wrote that the FCC "is under no obligation to stand idly by while AT&T attempts to game the system and circumvent Commission review of its application".

The PK and MAP elaborated that "AT&T and Deutsche Telekom AG have explicitly and publicly stated that they are not requesting a withdrawal because they are re-thinking their proposed license transaction, but rather because they intend to seek a favorable decision in federal court, which the companies can then use to pressure the Commission to approve the merger. AT&T and Deutsche Telekom fear that the Commission’s opinion as the relevant expert agency will hurt their arguments at trial, but the Commission has ample authority to continue to investigate the parties’ application despite the consequences that investigation may have on AT&T's trial strategy." (Footnotes omitted.)

They also assert that withdrawing the applications "would thwart the fair and efficient operation of the Commission's procedural regulations".

Actually, the FCC has no procedural regulations for its antitrust merger reviews. The FCC began its lengthy and complex reviews of mergers involving companies regulated by the FCC shortly after passage of the Telecommunications Act of 1996. However, nothing in the statute directed the FCC to conduct these reviews, and the FCC has not since promulgated either substantive or procedural rules for these proceedings.

FCC rules are codified in Title 47 of the Code of Federal Regulations. Part I of Subchapter A pertains to "Practice and Procedure". The FCC has adopted rules for many things, but not for merger reviews. There is a Subpart F pertaining to "Wireless Radio Services". It states that its purpose is to "establish the requirements and conditions under which entities may be licensed in the Wireless Radio Services". The PK/MAP filing cites these rules. The FCC also has rules governing complaints against common carriers. The PK/MAP filing also sites these as authority for the proposition that the FCC possesses the discretion to deny requests to withdraw applications associated with FCC merger reviews.

People and Appointments

11/28. The Senate confirmed Christopher Droney to be a Judge of the U.S. Court of Appeals (2ndCir) by a vote of 88-0. See, Roll Call No. 209. See also, story titled "Obama Nominates Droney for 2nd Circuit" in TLJ Daily E-Mail Alert No. 2,233, May 5, 2011.

Go to News from November 21-25, 2011.