TLJ News from July 16-20, 2012

PCAST Releases Report on Spectrum Policy

7/20. The Executive Office of the President's (EOP) President's Council of Advisors on Science and Technology (PCAST) release a report [192 pages in PDF] titled "Realizing the Full Potential of Government-Held Spectrum to Spur Economic Growth".

This report states that "clearing and reallocation of Federal spectrum is not a sustainable basis for spectrum policy due to the high cost, lengthy time to implement, and disruption to the Federal mission. Further, although some have proclaimed that clearing and reallocation will result in significant net revenue to the government, we do not anticipate that will be the case for Federal spectrum."

"Historically, spectrum was managed by assigning exclusive rights to use a specific frequency in a specific location." The report continues that "Since the mid-1990s, long term commercial licenses have generally been assigned through competitive auctions. Winning bidders typically receive spectrum access in the form of exclusive assignments of frequencies to chosen services (i.e., licenses), ensuring that no other services infringe on that assignment (i.e., no interference)." (Parentheses in original.)

This report states that "today's apparent shortage of spectrum is in fact an illusion brought about because of the way spectrum is managed." It asserts that by changing the way spectrum is managed, scarcity can be transformed to abundance.

Moreover, "This expansion can be done in such a way that it will not result in a loss of revenue to the Federal Government and may result in new revenue either from enhanced economic growth and innovation or from modest leasing fees. But in either case, the value to the Federal Government will be greater if the spectrum is available for reuse or relicensing more often than it is today. The new system for Federal spectrum management that this report calls for -- a new spectrum architecture and a corresponding shift in the architecture of future radio systems that use it -- can multiply the effective capacity of spectrum by a factor of 1,000." (Footnote omitted.)

"The essential element of this new Federal spectrum architecture is that the norm for spectrum use should be sharing, not exclusivity." And, "spectrum should be managed not by fragmenting it into ever more finely divided exclusive frequency assignments, but by specifying large frequency bands that can accommodate a wide variety of compatible uses and new technologies that are more efficient with larger blocks of spectrum."

Lawrence Strickling, head of the National Telecommunications and Information Administration (NTIA), stated in a release that "I am particularly pleased that this panel of experts has validated what we at NTIA have been saying for the past year: We need to find a new way of making spectrum available for commercial broadband, and that new way has to embrace the sharing of spectrum between federal agencies and industry."

In contrast, AT&T's Joan Marsh stated in a release that "we are concerned with the report's primary conclusion that the norm for spectrum use should be sharing, not exclusivity.’ The report fails to recognize the benefits of exclusive use licenses, which are well known. Those licenses enabled the creation of the mobile Internet and all of the ensuing innovation, investment and job creation that followed."

She continued that "While we should be considering all options to meet the country's spectrum goals, including the sharing of federal spectrum with government users, it is imperative that we clear and reallocate government spectrum where practical. We fully support the NTIA effort of determining which government bands can be cleared for commercial use, and we look forward to continuing to work with NTIA and other stakeholders to make more spectrum available for American consumers and businesses."

Gigi Sohn, head of the Public Knowledge (PK) stated in a release that "The path to sustainaible spectrum growth must take advantage of our power to innovate and our leadership in open spectrum technologies such as Wi-Fi and Super Wi-Fi."

She wrote that government and industry have quarreled "over whether to embrace more exclusive licensing or spectrum sharing as if a gain for one means a loss for the other. We are happy the PCAST report rejects this false choice that has deadlocked our spectrum policy for too long. By embracing sharing while continuing to find clearable spectrum for auction, we can not only ensure an endless supply of cat videos for our smart phones, but also provide enough open spectrum for technological innovation, job creation, and lower connection prices for consumers."

FCC Releases Video Competition Report

7/20. The Federal Communications Commission (FCC) belatedly released a report [204 pages in PDF] on the status of competition in the market for the delivery of video programming.

FCC Commissioner Robert McDowell wrote in his statement accompanying the report that "I would have preferred for this report to affirmatively conclude that the video programming market is competitive. It provides ample evidence for such a conclusion."

FCC Commissioner Ajit Pai wrote in his statement that "Over the four years covered by the report, the range of MVPD options expanded, broadcasters increased their number of multicast streams, distribution of video content over the Internet exploded, and the variety of devices capable of displaying video programming grew dramatically. This is all good news, because competition within and among market segments (broadcasters, MVPDs, and online video distributors) benefits consumers." (Parentheses in original.)

Report Findings. This report contains sections on multichannel video programming distributors (MVPDs), broadcast television stations, and online video distributors (OVDs).

The MVPD findings of the report states that "Cable MVPDs accounted for almost 60 percent of all MVPD subscribers at the end of 2010." Also, "The two DBS MVPDs, DIRECTV and DISH Network, accounted for over 33 percent of MVPD subscribers in 2010."

"In the MVPD group, the most significant change in the status of competition has been the entry of AT&T and Verizon. These two telephone companies have upgraded their networks to provide video services that compete directly with cable and DBS. At the end of 2010, the video services of Verizon FiOS and AT&T U-verse were available to one-third of U.S. homes and accounted for approximately seven percent of all MVPD subscribers."

The report adds that "Another significant development within the MVPD category has been the ``TV Everywhere´´ initiative, which allows subscribers of certain MVPD services to access MVPD video programming on stationary and mobile Internet-connected devices including: televisions, computers, tablets, and smartphones." (Footnote Omitted.)

With respect to broadcast television stations, the report states that "Several major patterns of consumer behavior have emerged which impact broadcast stations. The first is the dramatic increase in the number of households with HD television sets, from 25 percent during the 2007-2008 television seasons to 64 percent during the 2010-2011 television season. The second is the doubling of penetration of digital video recorders (DVRs), from 19 percent during the 2007-2008 television season to 38 percent during the 2010-2011 television season. The availability of DVRs and of broadband and mobile devices has spurred consumers’ desire to watch video on a time-shifted basis either on television sets or on other screens. In recent years, broadcast networks have started to explore and develop a variety of alternative outlets and business models for the distribution of their programming, including video-on-demand (“VOD”), online video distribution, and electronic sell-through." (Footnote omitted.)

With respect to online video distributors (OVDs), the report states that "OVDs have emerged as significant providers of video content. The OVD marketplace has expanded considerably, with all of the major providers either entering the market over the last few years or dramatically retooling their approach during that time. Today’s growing list of OVD providers includes programmers, content owners/producers, and affiliates of online services, manufacturers, retailers, and other businesses."

It states that "online video reaches consumers via multiple devices, including computers, smartphones, tablets, gaming consoles, television sets, and other equipment connected to the Internet."

Administrative History. This report is required by 47 U.S.C. § 548(g). The 1992 Cable Act, Public Law No. 102-385, imposed the requirement upon the FCC to prepare an annual report on the state of video competition.

In recent years, the FCC has not released these reports in a timely manner, or on an annual basis. In particularly, the FCC has pursued regulatory policies not supported by the data disclosed in these delayed and withheld reports.

This is the 14th report in the 20 years since passage of the Cable Act.

The statute requires that "The Commission shall ... annually report to Congress on the status of competition in the market for the delivery of video programming."

The FCC roughly complied with the statute through its adoption of the 12th Annual Report [161 pages in PDF] on February 10, 2006, which it released on March 3, 2006. See, story titled "FCC Describes Annual Report on Video Competition" in TLJ Daily E-Mail Alert No. 1,308, February 13, 2006.

The Commission claimed that it adopted its 13th report at its event of November 27, 2007, titled "Open Meeting". That report is FCC 07-206 in MB Docket No. 06-189. See, story titled "FCC Commissioners Withhold Support for Martin's 70/70 Conclusion" in TLJ Daily E-Mail Alert No. 1,680, November 30, 2007.

The FCC did not release that 13th report until January 16, 2009. It addressed the year 2006, and hence was long out of date upon release. And, the FCC stopped writing video competition reports for several years. See, story titled "FCC Resumes Its Statutory Obligation to Study Video Competition" in TLJ Daily E-Mail Alert No. 1,886, January 21, 2009.

The FCC released a Notice of Inquiry (NOI) for its 14th report on January 16, 2009 (purportedly adopted in November of 2007), and a Supplemental NOI on April 9, 2009. See, story titled "FCC Releases Amended NOI on Annual Video Competition Reports" in TLJ Daily E-Mail Alert No. 1924, April 11, 2009.

It has taken the FCC over three years since the issuance of those NOIs to complete and release the present report, the FCC's 14th.

The just released report states that it covers the four years of 2007, 2008, 2009, and 2010. Hence, it is already out of date. Although, the report notes developments are recent at early 2012, for example, in the launch of OVD services by YouTube and others.

This report is titled "Fourteenth Report". It FCC 12-81 in MB Docket No. 07-269. The FCC adopted it on July 18, and released it on July 20.

NOI for 15th Report. The FCC also released a Notice of Inquiry [29 pages in PDF] that requests comments that will assist it in writing its 15th report. This NOI states that it will cover the years 2011 and 2012.

Commissioner Pai wrote that "Given the fast pace of change within the industry, it is vital that the Commission comply with its statutory mandate to ``annually report to Congress on the status of competition in the market for the delivery of video programming.´´ 47 U.S.C. § 548(g). Our record on this score is a matter of public record and need not be repeated here. I am hopeful, however, that we are back on track and that we will release our next report in 2013."

Initial comments are due by September 10, 2012. Reply comments are due by October 10, 2012. This NOI is FCC 12-80 in MB Docket No. 12-203.

More News

7/20. The Copyright Royalty Board (CRB) notice in the Federal Register (FR) that announces a proceeding to determine the distribution of the digital audio recording technology royalty fees in the 2005, 2006, 2007 and 2008 Musical Works Funds. This notice also states that the deadline to submit Petitions to Participate in, and filing fees for, this CRB proceeding is August 20, 2012. See, FR, Vol. 77, No. 140, July 20, 2012, at Pages 42764-42765.

People and Appointments

7/19. The Senate Judiciary Committee (SJC) held an executive business meeting at which it approved in one en banc voice vote the nominations of Fernando Olguin (to be a Judge of the USDC/CDCal), Malachy Mannion (USDC/MDPenn), Matthew Brann (USDC/MDPenn), and Frank Geraci (USDC/WDNY). Sen. Mike Lee (R-UT), who has often voted against judicial nominees in the SJC, and on the Senate floor, stated that he opposes these nominees. There were no other votes against.

7/19. The Senate Judiciary Committee (SJC) announced that it will hold a hearing at 1:00 PM on July 26 on the nomination of William Baer (Arnold & Porter) to be Assistant Attorney General (AAG) in charge of the Department of Justice's (DOJ) Antitrust Division. See, SJC notice. President Obama nominated him in February. See, White House news office release. The current acting AAG is Joseph Wayland. The Antitrust Divsion has been without an AAG since the departure of Christine Varney (Cravath Swain), almost one year ago. See, story titled "Varney to Leave Antitrust Division" in TLJ Daily E-Mail Alert No. 2,255, July 11, 2011.

Wikileaks Is Running Out of Money

7/18. Wikileaks released a statement regarding its fundraising efforts and financial status. It disclosed that its "cash reserves ... have diminished from EUR 800,000 at the end of December 2010, to less than EUR 100,000 at the end of June 2012".

Wikileaks states in its web site that it receives documents primarily via "anonymous electronic drop box", and then publishes certain documents online, in order to bring "important news and information to the public". It describes itself as a "not-for-profit media organisation". It has been funded by donations, and primarily via online financial transactions.

Wikileaks was founded by Julian Assange in 2006. However, its fundraising problems began in late 2010 just after it published classified U.S. Department of State (DOS) cables in its web site.

The Department of Justice (DOJ) has not charged Wikileaks or any of its employees with any crimes arising out of the publication of classified government documents. Although, the DOJ has charged persons with violation of 18 U.S.C. § 1030, and conspiracy, in connection with retaliatory distributed denial of service (DDOS) attacks directed at PayPal servers. See, story titled "Grand Jury Indicts 14 for WikiLeaks Related DDOS Attacks" in TLJ Daily E-Mail Alert No. 2,264, July 20, 2011.

The U.S. government has been successful in persuading financial service providers to limit WikiLeaks ability to receive donations. Numerous companies terminated their relationships with Wikileaks, beginning shortly after publication of the classified DOS cables. For example, PayPal suspended WikiLeaks' accounts, citing violations of the PayPal terms of service. MasterCard and Visa also stopped processing payments to WikiLeaks.

WikiLeaks complained in its July 18 release about the "unlawful banking blockade by US financial giants VISA and MasterCard". It added that "For the year 2011, the blockade resulted in WikiLeaks' income falling to just 21% of its operating costs."

The release also identifies methods for making donations via financial service providers in France and Iceland, and solicits donations, "immediately before VISA/MasterCard attempts to shut it down".

Assange is currently in the United Kingdom. He is fighting efforts by Sweden to extradite him pursuant to a warrant issued in connection an investigation of sexual assault allegations against him.

He railed in the July 18 release: "We beat them in Iceland and, by God, we'll beat them in France as well. Let them shut it down. Let them demonstrate to the world once again their corrupt pandering to Washington. We're waiting. Our lawyers are waiting. The whole world is waiting. Do it."

ACLU Files Complaint Alleging that Drone Strikes Violate Constitutional Rights

7/18. The American Civil Liberties Union (ACLU) filed a complaint [17 pages in PDF] in the U.S. District Court (DC) against Leon Panetta (Secretary of Defense), David Petraeus (Director of the Central Intelligence Agency), Admiral William McRaven (Commander of the Special Operations Command) and Lt. Gen. Joseph Votel (Commander of the Joint Special Operations Command) alleging that drone strikes against terrorists in Yemen violate the Constitutional rights of U.S. citizens who are killed.

The complaint states that it is brought on behalf of the estates of three U.S. citizens alleged to have been killed by drone strikes in Yemen. The complaint alleges violation of the 5th Amendment due process clause, the 4th Amendment ban on unreasonable seizures, and the Bill of Attainder Clause. The only remedy sought by the complaint is damages.

However, the ACLU disclosed in a release that its motive is to obtain a judicial ruling that such drone strikes violate Constitutional rights. The ACLU's Pardiss Kebriaei stated in this release that "The U.S. program of sending drones into countries in and against which it is not at war and eliminating so-called enemies on the basis of executive memos and conference calls is illegal, out of control, and must end."

Killing terrorists is not an information or communications technology (ICT) related matter. However, legal issues that might be decided in this case might also serve as precedent in legal actions that do involve ICT.

For example, a complaint might allege that US cyber attacks violate the Constitutional rights of U.S. citizens. The Fifth amendment provides that "No person shall be ... deprived of life, liberty, or property, without due process of law ...". In the present case, the ACLU asserts deprivation of "life". In another case, a U.S. plaintiff might allege that a cyber attack, such as the U.S. cyber attacks on Iran's nuclear weapons development program, constitutes a deprivation of "property".

The 4th amendment protects against "unreasonable searches and seizures". In the present case, the ACLU asserts that killing is an unreasonable "seizure". In another case, a U.S. plaintiff who has been subjected to warrantless wiretaps might argue violation of the unreasonable "search" prong of the 4th Amendment.

Of course, the present complaint might be dismissed on any of several grounds before reaching the 4th or 5th amendment issues. For example, there is standing to sue, and the political question doctrine. Also, since the factual allegations are based upon news stories that cite anonymous sources, and the state secrets privilege may be invoked to bar testimony by persons with personal knowledge of relevant facts, the plaintiffs may be unable to meet their burden of proof.

FCC Releases Report on Broadband Performance

7/19. The Federal Communications Commission's (FCC) Office of Engineering and Technology (OET) and Consumer and Governmental Affairs Bureau (CGAB) released a report titled "A Report on Consumer Wireline Broadband Performance in the U.S."

This report is based on tests conducted in April of 2012. The FCC released a similar report on August 2, 2011, that was based upon tests conducted in March of 2011. See, story titled "FCC Releases Performance Report on the 13 Largest Wireline BIAS Providers" in TLJ Daily E-Mail Alert No. 2,277, August 2, 2011.

The just released report reveals "striking across-the-board-improvements on key metrics underlying user performance".

This report finds that "accurate delivery of advertised performance by ISPs has improved overall", that "differences among ISPs in their ability to deliver advertised speeds are now smaller", and that "customers subscribed to faster speed tiers in 2012 than in 2011". This is third finding is "a result of both upgrades by ISPs to their network as well as some migration of consumers to higher speed services".

FCC Commissioner Jessica Rosenworcel summed up the report: "Testing reveals that over the course of the last year, the average Internet service provider delivered 96 percent of advertised speeds. This is an improvement over just a year ago, when the average provider delivered 87 percent of such speeds. In addition, the average subscribed tier has improved, from 11.1 Mbps last year to 14.3 Mbps this year." See, statement.

FCC Chairman Julius Genachowski claimed that "our report last year fueled competition in the marketplace". See, statement.

Comcast's Cathy Avgiris wrote in a short piece that "The FCC's report validates our efforts and investments to date, but we're not stopping here: we plan to introduce additional, faster speed tiers in the near future, and we continue to invest in our network to make sure we're giving our customers more options to meet their Internet needs."

AT&T stated a release that this report "demonstrates that consumers continue to get the broadband Internet access speeds they are paying for, that the speeds offered to consumers are increasing and that consumers are moving to these faster broadband speed tiers. Overall, it is abundantly clear that American consumers are getting high-quality broadband services from their Internet Service Providers (ISPs). This success is driven by policies that enable the Internet’s consumer driven growth with minimal government intervention, allowing private investment to build broadband IP infrastructure necessary for America’s economy, innovation and global competitiveness."

Obama Calls for Cyber Security Standards Bill

7/19. The Wall Street Journal (WSJ) published a vaguely worded opinion piece by President Obama titled "Taking the Cyberattack Threat Seriously".

Obama stated that "Congress must pass comprehensive cybersecurity legislation". He did not specifically reference S 3414 [LOC | WW | PDF], the "Cybersecurity Act of 2012", or "CSA", which the Senate may take up before the August recess.

He said that "We need to make it easier for the government to share threat information so critical-infrastructure companies are better prepared. We need to make it easier for these companies—with reasonable liability protection -- to share data and information with government when they're attacked. And we need to make it easier for government, if asked, to help these companies prevent and recover from attacks."

"Yet simply sharing more information is not enough", wrote the President. There also need to be "cybersecurity standards".

He continued that "Cybersecurity standards would be developed in partnership between government and industry. For the majority of critical infrastructure companies already meeting these standards, nothing more would be expected. Companies needing to upgrade their security would have the flexibility to decide how best to do so using the wide range of innovative products and services available in the marketplace. Moreover, our approach protects the privacy and civil liberties of the American people. Indeed, I will veto any bill that lacks strong privacy and civil-liberties protections."

He concluded, "I urge the Senate to pass the Cybersecurity Act of 2012 and Congress to send me comprehensive legislation so I can sign it into law."

Senate Judiciary Committee Approves Outside the US Surveillance Bill

7/19. The Senate Judiciary Committee (SJC) held an executive business meeting at which it amended and approved S 3276 [LOC | WW], a bill to extend the sunset on government authority to conduct surveillance related to persons "outside" the US, without individualized court approval. A 2008 Act created this authority, with a sunset at the end of this year.

Surveillance of persons "outside of the United States" is a term of art that also enables surveillance of persons inside of the US who fall within the protection of the 4th Amendment.

The Senate Intelligence Committee (SIC), House Judiciary Committee (HJC) and House Intelligence Committee (HIC) have approved brief bills that merely provide for an approximate five year extension, although not the same new sunset date. The bill just approved by the SJC provides for a three year extension, and adds a provision for an Intelligence Community Inspector General (IC/IG) review.

The SJC first accepted an amendment in the nature of a substitute offered by Sen. Patrick Leahy (D-VT), the Chairman of the SJC, without a vote. It then either rejected or tabled a series of secondary amendments. All related to crime or terrorism. But, only one related to the 2008 Act. The SJC rejected on a vote of 3-15 an amendment offered by Sen. Mike Lee (R-UT) and Sen. Richard Durbin (D-IL) that would have imposed limitations upon warrantless surveillance of US persons under the authority created by the 2008 Act.

See, full story.

House Judiciary Committee to Hold Hearing on Bill to Authorize State Sales Taxes on Distant Internet Sellers

7/17. The House Judiciary Committee (HJC) announced that it will hold a hearing on Tuesday, July 24 on HR 3179 [LOC | WW], a bill to authorize states to collect taxes on out of state remote sellers, including internet sales. See, notice.

This bill has a title that does not describe its content, "Marketplace Equity Act of 2011".

Sponsorship of HR 3179 is bipartisan. The sponsor is Rep. Steve Womack (R-AR). The lead cosponsor is Rep. Jackie Speier (D-CA). There are now 48 cosponsors. It was introduced on October 13, 2011.

Several cosponsors are members of the HJC, including Rep. Ted Poe (R-TX), Rep. Dennis Ross (R-FL), Rep. Tim Griffin (R-AR), Rep. Bobby Scott (D-VA), Rep. Hank Johnson (R-GA), Rep. Judy Chu (D-CA), Rep. Maxine Waters (D-CA), Rep. Linda Sanchez (D-CA), Rep. Steve Cohen (D-TN), and Rep. Mike Quigley (D-IL).

However, opposition is also bipartisan. Since internet related tax issues first arose in the 1990s, members of the House and Senate have not divided along partisan lines.

There are also resolutions pending in the House and Senate against granting state taxing authorities the power to impose taxes on distant internet sellers. The lead sponsors of the House resolution are members of the HJC. See, related story in this issue titled "The Anti Internet Sales Tax Resolutions".

The Supreme Court ruled in its 1992 opinion in Quill v. North Dakota, 504 U.S. 298, that state and local taxing authorities are barred under the Commerce Clause from requiring remote sellers without a substantial nexus to the taxing jurisdiction to collect sales taxes for sales to persons within the jurisdiction.

However, the Supreme Court added that Congress may extend such authority. It wrote that "Congress is now free to decide whether, when, and to what extent the States may burden interstate mail order concerns with a duty to collect use taxes." (At 504 U.S. 318.)

HR 3179 would extend to the states such authority.

It provides that "a State electing, individually or through an agreement with one or more of the several States, ... is authorized to require all sellers not qualifying for the small seller exception to collect and remit sales and use taxes with respect to remote sales into the State without regard to the location of the seller".

The bill's "small seller exception" applies "for remote sellers with gross annual receipts in the preceding calendar year from remote sales of items, services, and other products in the United States not exceeding $1,000,000 (or such greater amount as determined by the State involved) or in the State not exceeding $100,000 (or such greater amount as determined by the State)." (Parentheses in original.)

Numerous state and local tax collectors have long sought such authority from Congress. Bills have long been introduced in the House and Senate. However, none have been enacted. These state and local governments have found allies in some groups representing brick and mortar retailers, who seek to impose burdens on their online competitors.

Some groups that represent online retailers, and other remote retailers, as well as some technology groups, have opposed these bills.

There is a different but related bill pending in the Senate, S 1452 [LOC | WW], nondescriptively titled the "Main Street Fairness Act". Its sponsor is Sen. Dick Durbin (D-IL). The House version of that bill, HR 2710 [LOC | WW], also titled "Main Street Fairness Act", is sponsored by Rep. John Conyers (D-MI). See, story titled "Durbin and Conyers Introduce Bills to Permit States to Tax Out of State Internet Retailers" in TLJ Daily E-Mail Alert No. 2,275, July 31, 2011.

During full Senate consideration of S 2327 [LOC | WW], the "Small Business Jobs and Tax Relief Act", a tax bill, on July 11 and 12, Sen. Durbin and others sought to have S 2327 amended with the text of S 1452. However, the amendment was not considered, and the Senate did not pass S 2327.

The Computer and Communications Industry Association's (CCIA) Ed Black stated in a release on July 11 that "Such a burden for small online businesses certainly does not belong in a bill called the Small Business Jobs and Tax Relief Act. It has never been and should not be the job of small businesses to collect taxes for state and local governments outside where they live and do business. This is not relief and not fairness -- it is government expanding tax collection in ways that would require online businesses to suddenly learn tax laws for hundreds of state and local jurisdictions outside where they operate. This proposal, and other online sales tax collection proposals like it, would allow states to penalize the innovative e-commerce business model by targeting small online businesses as convenient sources (and collectors) of revenue.”

The Retail Industry Leaders Association (RILA) represents brick and mortar retailers. Its members include Target, Walmart, JCPenny, Sears, BestBuy, and other large companies. It supports giving the states power to tax distant internet sellers. See, July 11, 2012, release.

The Electronic Retailing Association (ERA) opposes granting states internet taxing authority. See, piece by Julie Coons, head of the ERA.

The Direct Marketing Association (DMA) has also long opposed Congressional legislation that would authorize states to collect sales and use taxes from remote sellers.

NetChoice (Steve DelBianco's group) released a short piece on July 18 titled "For online sales taxes, just follow the money".

eBay supports Congressional resolutions that oppose giving the states internet sales tax authority. See, statement.

The Anti Internet Sales Tax Resolutions

7/17. On February 16, 2011, Rep. Dan Lungren (R-CA) and others introduced HRes 95 a resolution against granting state and local taxing authorities the power to impose taxes on distant internet sellers.

Sen. Ron Wyden (D-OR), Sen. Kelly Ayotte (R-NH), and others introduced the substantially identical resolution in the Senate, SRes 309, on November 2, 2011.

There are now 31 cosponsors of HRes 95. Rep. Lungren is a senior member of the House Judiciary Committee (HJC). Other cosponsors who are members of the HJC include Rep. Zoe Lofgren (D-CA), Rep. Jim Sensenbrenner (R-WI), Rep. Howard Coble (R-NC), Rep. Steve Chabot (R-OH), Rep. Tom Marino (R-PA).

These resolutions states that "it is the sense of the House of Representatives that Congress should not enact any legislation that would grant State governments the authority to impose any new burdensome or unfair tax collecting requirements on small online businesses and entrepreneurs, which would ultimately hurt the economy and consumers in the United States."

They recite in the findings that "the open online marketplace has enabled a large number of small retailers and entrepreneurs across the Nation to establish and strengthen their businesses on various e-commerce platforms and therefore protect and create jobs, increase consumer choice, create competition in the retail industry, and provide quality goods and services at reasonable and often discounted prices".

These resolutions also find that "any Federal legislation that would upset this open and fair environment and allow State governments to impose new onerous and burdensome sales tax collecting schemes on Internet-enabled small businesses that do not even reside in their State would adversely impact hundreds of thousands of jobs, reduce consumer choice, and impede the growth and development of interstate commerce".

Rep. Lungren issued a release in 2011 that states that ">Hundreds of thousands of small business owners use the internet to advertise and sell their products and services. These men and women create most of the new jobs in this country, yet they are constantly being challenged by both the states and the federal government with new regulations, new mandates and new taxes. Our Resolution will send the message that Congress understands the challenges of growing a business in today’s economic climate and will protect small business owners from unfair and burdensome new taxes.

Sen. Schumer Urges DOJ to Drop Antitrust Action Against Apple and Book Publishers

7/17. The Wall Street Journal published a piece by Sen. Charles Schumer (D-NY) titled "Memo to DOJ: Drop the Apple E-Books Suit" in which he urged the Department of Justice (DOJ) not to proceed with the civil antitrust action that it filed in April against Apple and five large book publishers.

Sen. Schumer is a senior member of the Senate Judiciary Committee (SJC), which oversees the DOJ. Sen. Schumer also represents the state of New York, which includes New York City (NYC). Apple is not based in New York, but several of the publisher defendants, including Simon & Shuster, Macmillan and Penguin, are based in NYC. Also, many leading book authors reside in New York.

On April 11, 2012, the DOJ's Antitrust Division filed a complaint [36 pages in PDF] in the U.S. District Court (SDNY) against Apple and five book publishers alleging violation of Section 1 of the Sherman Act in connection their alleged conspiring to increase the prices that consumers pay for e-books.

Sen. Schumer wrote that "The suit will restore Amazon to the dominant position atop the e-books market it occupied for years before competition arrived in the form of Apple. If that happens, consumers will be forced to accept whatever prices Amazon sets."

However, Sen. Schumer wrote that Amazon "can set rock-bottom prices", and "Because of its large product catalog, Amazon could afford to sell e-books below cost".

Amazon's business practices "put publishers and authors at a distinct disadvantage", wrote Sen. Schumer. "These losses will be particularly felt in New York, which is home not only to many publishers, but also to a burgeoning digital innovation industry."

Sen. Schumer's piece argues in the interests of publishers and authors. In contrast, the interpretation of the Sherman Act usually applied by the Antitrust Division and the federal courts is that the purpose of the statute is to protect consumer welfare, and particularly their interest in lower prices. The consumers in this case are people who buy and read e-books.

The Antitrust Division's complaint alleges that "Apple and Publisher Defendants reached an agreement whereby retail price competition would cease (which all the conspirators desired), retail e-book prices would increase significantly (which the Publisher Defendants desired), and Apple would be guaranteed a 30 percent ``commission´´ on each e-book it sold (which Apple desired)." (Parentheses in original.)

For more on the federal action, see stories in TLJ Daily E-Mail Alert No. 2,368, April 11, 2012.

 • DOJ Sues Apple and Book Publishers Alleging E-Book Price Collusion
 • Analysis of DOJ's Sherman Act Claim Against Apple and E-Book Publishers
 • Outside Reaction to DOJ E-Books Antitrust Action
 • States Sues Apple and E-Book Publishers
 • Commentary: Forum Selection in Antitrust Cases

See also, stories in TLJ Daily E-Mail Alert No. 2,371, April 14, 2012.

 • Scott Turow Criticizes DOJ E-Books Action
 • Google's Larry Page Is Excited About Tablets
 • NAF Writer Condemns Amazon and DOJ E-Books Antitrust Action

This case is U.S.A. v. Apple, Inc., et al., U.S. District Court for the Southern District of New York, D.C. No. 1:12-cv-02826-UA.

More News

7/17. The White House news office issued a release regarding a "Science, Technology, Engineering and Math (STEM) Master Teacher Corps".

Rep. Upton Releases Second Quarter Report on House Commerce Committee Activity

7/16. Rep. Fred Upton (R-MI), Chairman of the House Commerce Committee (HCC), released a second quarter report [14 pages in PDF] to the Speaker of the House, Rep. John Boehner (R-OH), on HCC activity.

This report addresses many information and communications technology (ICT) related topics, including making more spectrum available for broadband, reform of the Federal Communications Commission (FCC), cyber security, and export regulation reform.

Spectrum. This report states that "First on our list of job-creating policies is spectrum reform." This report states that while the Congress enacted a bill in the first quarter that gives the FCC authority to conduct voluntary incentive auctions, "our work on spectrum is not done yet".

That bill was HR 3630, [LOC | WW]. See, stories titled "House and Senate Negotiators Reach Agreement on Spectrum Legislation", "Summary of Spectrum Bill", and "Reaction to Spectrum Bill" in TLJ Daily E-Mail Alert No. 2,339, February 17, 2012, story titled "House and Senate Pass Spectrum Bill" in TLJ Daily E-Mail Alert No. 2,340, February 18, 2012, and story titled "Obama Signs Spectrum Bill into Law" in TLJ Daily E-Mail Alert No. 2,345, February 23, 2012.

This report states that in the second quarter by Rep. Greg Walden (R-OR) and Rep. Anna Eshoo (D-CA), the Chairman and ranking Democrat on the HCC's Subcommittee on Communications and Technology, "established a bipartisan Federal Spectrum Working Group to examine how the federal government can use the nation’s airwaves more efficiently".

FCC Reform. The report also states that a "committee priority that falls under our efforts to protect taxpayers and reduce the size and scope of government is our ongoing push for FCC process reform."

That bill was HR 3309 [LOC | WW], the "Federal Communications Commission Process Reform Act of 2012". The House, but not the Senate, has passed this bill. It is not likely to become law in the 112th Congress. See, story titled "House Passes FCC Process Reform Act", "Summary of Amendments to HR 3309 Approved or Rejected by the House", and related stories in TLJ Daily E-Mail Alert No. 2,361, March 30, 2012.

The just released report states that "the bill promotes job creation by ensuring regulatory benefits outweigh the costs and improves FCC operations with sensible process reforms, such as requiring the commission to establish and disclose internal procedures for certain matters, establish shot clocks for predictability in its decision making, and improving efficiency with reform to sunshine rules."

The report also praises HR 3310 [LOC | WW], the "Federal Communications Commission Consolidated Reporting Act of 2012", which the House passed on May 30, 2012. See, story titled "House Passes FCC Consolidated Reporting Act" in TLJ Daily E-Mail Alert No. 2,388, June 1, 2012.

The report states that the bill "consolidates eight separate, congressionally mandated reports on the communications industry into a single comprehensive report with a focus on intermodal competition, deploying communications capabilities to un-served communities, eliminating regulatory barriers, and empowering small businesses".

While the Senate has not yet passed this bill, it is not divisive or controversial, like HR 3309.

Cyber Security. The just released report also states that in the second quarter, "several of our subcommittees have engaged in the effort to assess cybersecurity threats and responses. The foremost goal is to ensure that any eventual government response to cyber-threats will help, rather than hinder, the effort to secure our critical infrastructure and other mechanisms that could be vulnerable to cyber-attack."

"To that end, three of our members were appointed to serve on the House Cybersecurity Task Force, and Communications and Technology Subcommittee Chairman Walden established an internal, bipartisan cybersecurity working group to scrutinize these issues more carefully. We have much more work ahead to understand and respond to this ever-changing frontier of modern infrastructure threats. But given our broad-based expertise over the range of critical infrastructure elements, our committee is well suited to take on this challenge."

Export Regulation Reform. The report also states that "Another example in which spools of federal red tape are stifling American economic opportunity is in the area of exports. Export promotion streamlining is a tall task, but one that I know we are committed to accomplishing. Today, too many federal agencies imposing layers of federal rules are involved when a U.S. company wants to export its goods for sale overseas. Particularly with our emphasis on an American manufacturing resurgence, delving more deeply into the obstacles standing in the way of American exports is an important economic priority for our team."

House Commerce Committee Democrats Seek Hearing on Law Enforcement Cell Phone Tracking

7/16. Democratic leaders on the House Commerce Committee (HCC) sent a letter to their Republican counterparts requesting "a hearing on consumer privacy concerns arising from recent reports that cell phone tracking is being widely used by law enforcement officials".

The signers of the letter are Rep. Henry Waxman (D-CA), the ranking Democrat on the House Commerce Committee (HCC), Rep. Diana DeGette (D-CO), the ranking Democrat on the HCC's Subcommittee on Oversight and Investigations, Rep. Anna Eshoo (D-CA) ranking Democrat on the HCC's Subcommittee on Communications and Technology, and Rep. Ed Markey (D-MA).

Previously, Rep. Markey sent letters to mobile phone companies requesting information. See, for example, Rep. Markey's May 2 letter to AT&T, and AT&T's May 29 letter in response. See also, Rep. Markey's web page with hyperlinks to all of these letters and responses.

The HCC Democrats' letter states that the "information provided by the wireless carriers raises concerns about law enforcement’s use of cell phone tracking and what is being done to protect the privacy of consumers. In response to this newly released information, we ask that the Committee hold a hearing to examine whether consumer privacy is being adequately protected by law enforcement officials and wireless carriers."

Rep. Markey also sent a letter to the Department of Justice (DOJ) on July 11, 2012, asking for information about DOJ requests for mobile phone records. He asked for a breakdown, for the last five years, of the number and types of requests, the legal standard that the DOJ believes applies to each type of request, how many individuals were affected, and how much the DOJ paid companies.

He also asked about DOJ use, handling, storage, and safeguarding of the records it obtained.

He requested a response from the DOJ by August 1, 2012.

People and Appointments

7/16. The Senate confirmed Kevin McNulty to be a Judge of the U.S. District Court (DNJ) by a vote of 91-3-1. See, Roll Call No. 178.

7/16. Marissa Mayer was named President, CEO, and a member of the Board of Directors of Yahoo, effective July 17, 2012. She was previously head of Google's Local, Maps, and Location Services. See, Yahoo release.

7/16. Thomas Wlodkowski joined Comcast as Vice President of Accessibility, a new position. He previously worked for AOL in a similar capacity. Comcast stated in a release that he will "develop a strategic plan focused on the usability of Comcast's products and services by people with disabilities and pursue opportunities to further enrich the customer experience for the disability community." He is blind. He testified before the Senate Commerce Committee's (SCC) hearing on May 26, 2010, titled "Innovation and Inclusion: the Americans With Disabilities Act at 20". Wlodkowski addressed accessibility of web sites and information technology products. See, prepared testimony [6 pages in PDF]. This was the SCC's only hearing in preparation for drafting and passing the Twenty-First Century Communications and Video Accessibility Act of 2010", or "CVAA". See, S 3828 [LOC | WW], an untitled bill that amends S 3304 [LOC | WW]. They are Public Law Nos. 111-260 and 111-265

Go to News from July 11-15, 2012.