TLJ News from June 1-5, 2012

Sen. Grassley and Rep. Issa Write DHS Regarding Preference for Paper over E-Mail

6/5. Sen. Charles Grassley (R-IA) and Rep. Darrell Issa (R-CA) sent a letter to the Department of Homeland Security (DHS) regarding the DHS's assertion that it is unable to produce documents to Congress electronically.

They wrote that "By unnecessarily printing tens of thousands of pages of documents, DHS is harming the environment and wasting taxpayer money. Moreover, the practice of electronic document production is standard for most federal departments and agencies".

They also noted that President Obama, in Executive Order 13589, directed agencies to cease printing documents when an electronic version is sufficient.

Sen. Charles GrassleySen. Grassley (at right) stated in a release that "It's ironic that the agency striving for expertise on cybersecurity is reluctant to send emails to Congress".

He added that "It would be like if CBO presented estimates to Congress with an abacus or if the transportation secretary rode around town in a horse and buggy. The purpose of the letter is to find out what’s behind the apparent preference for paper over email."

Executive Order 13589 provides, in part, that "Agencies are encouraged to limit the publication and printing of hard copy documents and to presume that information should be provided in an electronic form, whenever practicable, permitted by law, and consistent with applicable records retention requirements. Agencies should consider using acquisition vehicles developed by the OMB's Federal Strategic Sourcing Initiative to acquire printing and copying devices and services."

Disney Announces Children's Food Advertising Standards

6/5. The Walt Disney Company announced in a release that it has adopted food advertising standards to "inspire kids to lead healthier lifestyles" for all Disney owned TV, radio, cable and web assets.

Michelle Obama stated in a White House news office release that "Disney is doing what no major media company has ever done before in the U.S. -- and what I hope every company will do going forward."

Former Federal Communications Commission (FCC) Commissioner Deborah Tate also focused on industry voluntary adoption of children' advertising standards.

Disney stated in its release that it is "the first major media company to introduce new standards for food advertising on programming targeting kids and families." It elaborated that "Under Disney's new standards, all food and beverage products advertised, sponsored, or promoted on Disney Channel, Disney XD, Disney Junior, Radio Disney, and Disney-owned online destinations oriented to families with younger children will be required by 2015 to meet Disney’s nutrition guidelines. The nutrition guidelines are aligned to federal standards, promote fruit and vegetable consumption and call for limiting calories and reducing saturated fat, sodium, and sugar."

The White House news office release states that "American children see an estimated $1.6 billion a year worth of food and beverage marketing, and many of those ads are" for foods "that are high in calories and sugar, but low in nutrition."

FCC Paper Analyzes Using Markets to Allocate Interference Rights

6/5. The Federal Communications Commission (FCC) released online a paper [23 pages in PDF] titled "Using a Market to Obtain the Efficient Allocation of Signal Interference Rights". This paper had previously been circulated without formal release, and cited in other works.

The FCC allocates spectrum bands, adopts service rules governing use of spectrum bands, and then auctions the spectrum. Service rules govern such things as transmitting power, the amount of bandwidth over which it can operate, and limits on the amount of radiation outside the licensee's assigned bandwidth that adjacent and non-adjacent bands can experience. These service rules are established by the FCC in an administrative process.

This paper examines the possibility of allowing markets to address service rule issues. This paper applies economic theory, and especially a game theoretical analysis, to examine whether an administrative process or a market process would achieve greater efficiency in spectrum usage.

This paper states that in the administrative process, the FCC operates without complete information regarding licensees' costs and benefits, and hence, it cannot set an efficient set of service rules.

This paper finds that "in a three-person game in which market participants know the value that other participants place on different signal interference levels (i.e., have complete information), a market might be able to efficiently allocate interference rights." (Parentheses in original.)

However, it also concedes that the assumptions may not hold in the field, and that there is also a collective action problem.

This paper builds on the landmark article by Ronald Coase titled "The Federal Communications Commission", published in the Journal of Law and Economics, Volume 2, October 1959.

The authors of the just released paper are Mark Bykowsky and William Sharkey, who are economists in the FCC's Office of Strategic Planning and Policy Analysis. See also, FCC release.

See also, 2012 paper titled "Spectrum Trading with Interference Rights" by Martin Weiss and Liu Cui, and 2011 paper titled "Tradable Spectrum Interference Rights" by Weiss and Cui.

SASC Approves Defense Authorization Bill with Cyber Warfare and ICT Provisions

6/4. Sen. Carl Levin (D-MI), the Chairman of the Senate Armed Services Committee (SASC), introduced S 3254 [LOC | WW], the "National Defense Authorization Act for Fiscal Year 2013" on June 4, 2012. The SASC approved it on June 4. See, Senate Report No. 112-173. It contains numerous provisions that relate to cyber warfare and information and communications technology. See, full story.

Rep. Markey and Rep. Barton Write Facebook Regarding Plans to Target Children

6/4. Rep. Ed Markey (D-MA) and Rep. Joe Barton (R-TX) sent a letter [3 pages in PDF] to Mark Zuckerberg, CEO of Facebook, regarding Facebook's plans to allow children ages 12 and younger to use Facebook.

Their letter references the June 3, 2012, story in the Wall Street Journal by Anton Troianovski and Shayndi Raice titled "Facebook Explores Giving Kids Access".

Rep. Ed MarkeyRep. Markey (at right) and Rep. Barton wrote that "Permitting children under 13 to use the social networking site raises a number of important questions about how Facebook would comply with COPPA."

The Children's Online Privacy Protection Act (COPPA), which is codified at 15 U.S.C. §§ 6501-6506, bans operators of web sites and online services that are directed to children from collecting information from children under thirteen without parental consent.

The COPPA was S 2326 in the 105th Congress. S 2326 was enacted into law as part of a large omnibus appropriations bill in October of 1998. See, TLJ story titled "Internet and Tech Bills Become Law", October 22, 1998. See also, TLJ web page titled "Children's Online Privacy Protection Act" (1998).

Rep. Markey and Rep. Barton added that "we strongly believe that children and their personal information should not be viewed as a source of revenue."

The two also noted the Federal Trade Commission (FTC) action against Facebook last year regarding its deceptive and privacy invasive practices involving the sharing of users' information.

On November 29, 2011, the FTC released an administrative complaint against Facebook, and an Agreement Containing Consent Order [10 pages in PDF] that settles the action.

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."

See also, story titled "FTC Imposes Privacy Related Terms on Facebook" in TLJ Daily E-Mail Alert No. 2,315, November 29, 2012.

Rep. Markey and Rep. Barton also propounded numerous interrogatories, to be answered by Facebook by June 25, 2012.

For example, they ask, "What options is Facebook exploring to allow children age 12 and younger to use the social networking site? ... Is Facebook planning to mandate consent from a child or their parent before the company collects, uses, or discloses personal information about kids ages 12 and younger? How does Facebook plan to obtain this consent? How will Facebook verify that a user is indeed a parent?"

They also ask "How does Facebook plan to use information the company collects about children in this age group?"

See also, Rep. Markey's release and Rep. Barton's release.

CCIA Launches Disruptive Competition Project

6/4. The Computer & Communications Industry Association (CCIA) announced the launch of a "Disruptive Competition Project" or "DisCo".

The CCIA's Dan O'Connor stated in a release that "DisCo will push back against interests that aim to curtail change and will champion those seeking to disrupt the status quo, whether they be small startups or large enterprises. We want to make sure that tech companies are always free to move fast, to challenge contemporary business models and to provide consumers with cool new products and services. We want to make sure governments and bureaucrats don't get in their way."

Ed Black, head of the CCIA, stated that "we hope to bring more of the Silicon Valley ethos to deliberations in D.C. and other policy centers".

The CCIA identified several policy goals of the DisCo: "robust competition", "balanced intellectual property policy", "privacy policies that encourage transparency and choice", and "the free flow of information worldwide". It also referenced the "SOPA/PIPA battle".

The CCIA did not elaborate upon the economic theory of disruptive competition. However, Clayton Christensen used the term "disruptive" in the context of technological innovation and competition among tech companies in his landmark 1997 book [Amazon] titled "The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail".

The related concept of creative destruction derives in part from Joseph Schumpeter's 1942 book [Amazon] titled "Capitalism, Socialism and Democracy".

It might also be noted that one of the very few, perhaps the only, useful contribution of Karl Marx to economic theory was his observation that in free market economies, incumbent modes of production are periodically destroyed and replaced by new ones that are based upon newer technologies. In Chapter 1 of the Communist Manifesto, he states that under "free competition", "a great part not only of the existing products, but also of the previously created productive forces, are periodically destroyed".

Currently, a significant part of the legislative and regulatory activity in Washington DC of large incumbent ICT companies is directed at obtaining statutory and regulatory relief that inhibits the ability of new market entrants to deploy disruptive technologies that might threaten the established revenue streams of these incumbents. Moreover, the Washington arms of these incumbents are usually better funded and organized than those of these new entrants; consequently, the incumbents are often adept at rent seeking inhibition of disruptive competition, both in the Congress, and before sectoral regulators, such as the FCC.

People and Appointments

6/4. The Department of the Interior (DOI) published a notice in the Federal Register requesting nominations to serve on the National Geospatial Advisory Committee (NGAC). The deadline to submit nominations is July 19, 2012. See, FR, Vol. 77, No. 107, Monday, June 4, 2012, at Pages 32978-32979.

6/4. The Senate confirmed Timothy Hillman to be a Judge of the U.S. District Court (DMass) by a vote of 88-1. See, Roll Call No. 114.

6/4. FCC Commissioner Jessica Rosenworcel announced in a release that she has appointed Priscilla Argeris as Legal Advisor with responsibility for wireline and consumer issues. Argeris previously worked for the law firm of Wiley Rein. Rosenworcel also announced that she has named Valery Galasso as Confidential Assistant and Special Advisor.

TPI Urges FCC to Use Surveys Rather Than Censuses to Obtain Industry Data

6/1. The Technology Policy Institute (TPI) release a short paper titled "Hey, FCC: Stop Counting!" The author is the TPI's Scott Wallsten.

The argument is that the Federal Communications Commission (FCC) engages in empirical analysis based upon an outmoded and difficult methodology. It tries to count every single phone line in the US when it should be using surveys that employ statistical sampling to obtain an estimate.

"Most economic and social policy is based on surveys conducted by agencies such as the Census Bureau and the Bureau of Labor Statistics. We rely on surveys because gathering information on an entire population is typically not feasible."

Wallsten continued that the FCC "attempts to count all lines, connections, and other factors related to telecommunications by requiring companies to provide certain data. Large firms spend significant resources providing these data. Small firms often do not have the resources to provide this information, and the FCC’s skilled data staff then must spend enormous time and effort trying to gather this information from firms who either will not or cannot respond. The result is that the FCC has the least reliable count data in precisely the topical and geographic areas that it needs data for sound decisionmaking."

He argued that "Nearly all other areas of economic policy are informed by surveys, many of which are conducted monthly to provide real-time information to markets and policymakers. Nothing in particular about telecommunications requires a total population count rather than survey data. Additionally, there is no reason why the FCC itself should be responsible for data collection."

Overall Unemployment Rate Steady; Tech Employment Up; Communications Employment Down

6/1. The Department of Labor's (DOL) Bureau of Labor Statistics (BLS) released employment data for the U.S. for the month of May, 2012.

This latest ICT employment data shows that trends, reported in previous TLJ stories, continue. That is, employment in both telecommunications services and equipment manufacturing is declining. Employment in manufacturing of both computers and peripheral equipment and semiconductors and electrical components is increasing. Also, employment in computer systems design and related services continues to grow.

Also, if one examines overall ICT data, employment is increasing. Gains in tech are greater than loses in communications.

See, full story.

House Judiciary Committee to Mark Up RAPID Act

6/1. The House Judiciary Committee (HJC) announced that it will meet to mark up several bills on Wednesday, June 6, 2012, including HR 4377 [LOC | WW], the "Responsibly And Professionally Invigorating Development Act of 2012", or "RAPID Act".

Rep. Dennis Ross (FL), Rep. Lamar Smith (R-TX), Rep. Howard Coble (R-NC), and Rep. Collin Peterson (D-MN) introduced this bill on April 18, 2012. There are now a total of twelve sponsors -- all but one Republican. The bill was also referred to the House Natural Resources Committee (HNRC). One co-sponsor, Rep. Mark Amodei (R-NV), is a member of the HNRC.

The primary purpose of this bill is is to speed up the governmental permitting processes for energy development projects, such as oil, natural gas, and wind. Also, it is primarily directed at the National Environmental Policy Act (NEPA), which was enacted in 1969, and which is now codified at 42 U.S.C. § 4321, et seq.

As a result of a series of court opinions that expansively construed the NEPA, and implementing regulations adopted by the Council on Environmental Quality (CEQ), the NEPA imposes more costs and delays on energy projects than anticipated by the members of the Congress which enacted it. This is likely the main reason that Representatives have introduced the RAPID Act.

However, the RAPID Act would also impact information and communications technology (ICT) in several ways.

Rare Earths. For example, there are the permitting processes for the extraction of rare earth minerals, which are used in a wide range of ICT devices and equipment, including fiber optic cable, disk drives, satellites, and smart phones.

Almost all of the world's supply of rare earth materials (REMs) now comes from the People's Republic of China (PRC). The PRC has in recent years begun to leverage its position. Some members of Congress -- mostly Republicans, but also some Democrats from Western states -- have urged resumption of production in the US, and an easing of the permitting process to encourage and accelerate US projects.

The Obama administration is taking a different approach. In March, the US, Japan and EU filed complaints with the World Trade Organization (WTO) alleging that the PRC is imposing export restraints, export duties, and export quotas on REMs in violation of its WTO commitments. See, stories titled "US, Japan and EU Take Rare Earths Issue to WTO", "OUSTR Explains Rare Earths Request for Consultations" and "Sen. Murkowski Assigns Some Blame for Rare Earths Problem on US Government Regulation" in TLJ Daily E-Mail Alert No. 2,349, March 14, 2012.

Sen. Lisa Murkowski (R-AK) stated back in March that "If the president wants to address China's dominance in critical minerals production, he should support changes to U.S. federal minerals policy to allow domestic mining."

She has introduced legislation that would not lessen environmental standards, but that would, like the RAPID Act, be directed at the length and complexity of obtaining federal permits. She introduced S 1113 [LOC | WW], the "Critical Minerals Policy Act of 2011", on May 26, 2011.

Passage of legislation such as the RAPID Act could have the affect of facilitating the extraction of rare earths from sites in the US, increase the world supply, and thereby benefit the makers and consumers of ICT products that incorporate components made with REMs.

See also, Congressional Research Service (CRS) paper [30 pages in PDF] titled "Rare Earth Elements: The Global Supply Chain", by Marc Humphries, dated September 6, 2011.

FCC, Antenna Towers, and Birds. Second, ICT regulators, such as the Federal Communications Commission (FCC), are tasked with complying with the NEPA.

The FCC noted in an Order on Remand (discussed below) that the "NEPA requires all federal agencies, including the FCC, to identify and take into account environmental effects when deciding whether to authorize or undertake a major federal action."

In particular, the FCC must comply with the NEPA in proceedings pertaining to the effect of communications towers on migratory birds. The FCC opened a proceeding back on August 20, 2003 with a Notice of Inquiry (NOI) [18 pages in PDF]. See, story titled "FCC Release NOI On Communications Towers and Migratory Birds" in TLJ Daily E-Mail Alert No. 723, August 21, 2003. The FCC released a Notice of Proposed Rulemaking (NPRM) [40 pages in PDF] on November 7, 2006.

The U.S. Court of Appeals (DCCir), construing the NEPA, issued an opinion on February 18, 2008, in which it vacated an FCC order that denied a petition for protection of birds. See, American Bird Conservancy v. FCC, which is reported at 516 F.3d 1027.

The FCC adopted an Order on Remand [58 pages in PDF] on December 6, 2011. It released that order on December 9, 2011. It is FCC 11-181 in WT Docket No. 08-61 and WT Docket No. 03-187. That order includes new rules.

Non-NEPA Processes. Third, while the RAPID Act is primarily targeted at the NEPA, its changes to permitting procedure would not be limited to the NEPA. If the RAPID Act were enacted, businesses seeking government permits and licenses in a wide range of industries, many of which have their own regulatory regimes and permitting processes, might invoke the RAPID Act.

The HJC's Subcommittee on Courts, Commercial and Administrative Law held a hearing on April 25, 2012. Dinah Bear wrote in her prepared testimony [14 pages in PDF] for that hearing that "While someone who reads H.R. 4377 quickly may assume that the bill is directed only at environmental laws, principally NEPA, the bill's explicit deadlines for decisionmaking as well as for environmental review and compliance processes implicitly amend dozens of unidentified authorizing statutes for every federal agency in the executive branch."

See also, HJC web page with hyperlinks to all prepared testimony.

People and Appointments

6/1. The Department of Health and Human Services' (DHHS) Office of the National Coordinator for Health Information Technology (ONCHIT) published a notice in the Federal Register requesting nominations to the ONCHIT's Health Information Technology Standards Committee (HITSC) and Health Information Technology Policy Committee (HITPC). The deadline to submit to nominations is June 11, 2012. See, FR, Vol. 77, No. 106, Friday, June 1, 2012, at Pages 32639-32640.

6/1. David Oxenford joined the Washington DC law firm of Wilkinson Barker Knauer as a partner. He represents broadcast and digital media companies.

More News

6/1. The Department of Homeland Security (DHS) published a notice in the Federal Register that announces that the Secretary of Homeland Security has renewed the charter of the Data Privacy and Integrity Advisory Committee. It next expires on May 8, 2014. See, FR, Vol. 77, No. 106, Friday, June 1, 2012, at Pages 32655-32656.

6/1. The House Oversight and Government Reform Committee (HOGRC) reported HR 4607 [LOC | WW], the "Midnight Rule Relief Act of 2012". See, story titled "Republicans Introduce Bills to Prevent Agencies From Adopting Major Rules Under a Lame Duck President" in TLJ Daily E-Mail Alert No. 2,383, May 15, 2012.

Go to News from May 26-31, 2012.