TLJ News from July 21-25, 2012

Sen. Snowe and Sen. Warner Again Introduce Radio Spectrum Inventory Act of 2012

7/25. Sen. Olympia Snowe (R-ME) and Sen. Mark Warner (D-VA) introduced S 3433 [LOC | WW], the "Radio Spectrum Inventory Act of 2012 ". This bill would require the Federal Communications Commission (FCC) and National Telecommunications and Information Administration (NTIA) to conduct a spectrum inventory. Similar bills have been introduced in the House and Senate for years.

This bill provides that within one year of enactment, and biennially thereafter, the FCC, in consultation with the NTIA and the Executive Office of the President's (EOP) Office of Science and Technology Policy (OSTP), shall prepare "a report that includes an inventory of each radio spectrum band, from 300 Megahertz to 6.5 Gigahertz, at a minimum, managed by each such agency".

These report "shall include ... the licensee or Federal Government user authorized in the band", "the total spectrum authorized for each licensee or Federal Government user ... in the band", and "the approximate number of transmitters, end-user terminals, or receivers, excluding unintended radiators, that have been deployed or authorized, for each licensee or Federal Government user, in the band".

Then, the FCC shall create "a centralized portal or website utilizing data from the Commission and the NTIA to make a centralized inventory of the bands of each agency available to the public via an Internet-accessible and searchable website".

The bill also provides for the withholding of information for national security or law enforcement reasons.

The bill was referred to the Senate Commerce Committee (SCC).

Sen. Olympia SnoweSen. Snowe (at right) stated that "A comprehensive inventory is a critical step in reforming our spectrum policy and management. The FCC manages over 2 million active licenses and NTIA administers more than 450,000 frequency assignments. And while I appreciate the FCC's effort in conducting a ``baseline´´ inventory and NTIA's evaluation -- both the fast track and ten year plan -- I do not believe they are sufficient substitutes to conducting a full inventory since those efforts were limited in scope and seemingly didn't capture or make available more detailed data on spectrum use." See, Congressional Record, July 25, 2012, at Page S5385.

She added that "if we are to examine Federal use, we must also look at non-Federal use in order to gain a truly comprehensive picture and understanding of the heterogeneous spectrum ecosystem."

She concluded that "The ultimate goals this legislation sets the path towards achieving are to implement more efficient use of spectrum and to locate additional spectrum to meet the future demands of all spectrum users--commercial, Federal, and military. A comprehensive inventory would yield a significant amount more of data that would be extremely useful for conducting measurements, implementing more robust management, and developing greater strategic planning of spectrum resources."

112th Congress. This proposal has been introduced in many stand alone bills, and as a component of larger spectrum bills.

For example, Sen. Snowe and Sen. John Kerry (D-MA) introduced S 455 [LOC | WW] the "Reforming Airwaves by Developing Incentives and Opportunistic Sharing Act" or "RADIOS Act", on March 2, 2011. The substantive language of the just introduced bill is similar, but not identical, to Section 3 of the RADIOS Act.

HR 2482 [LOC | WW], the "Public Safety Spectrum and Wireless Innovation Act " is a huge bill introduced by Rep. John Dingell (D-MI) on July 11, 2011. The language in Section 501 is similar, but not identical, to the just introduced bill.

HR 911 [LOC | WW], the "Spectrum Inventory and Auction Act of 2011", introduced by Rep. John Barrow (D-GA) on March 3, 2011, contains different inventory language.

111th Congress. In the 111th Congress, Rep. Henry Waxman (D-CA) introduced HR 3125 [LOC | WW] and Sen. Kerry introduced S 649 [LOC | WW], both titled the "Radio Spectrum Inventory Act".

The SCC amended and approved one version on July 8, 2009. The SCC approved another version on March 9, 2010. See, story titled "Senate Commerce Committee Reports Radio Spectrum Inventory Act" in TLJ Daily E-Mail Alert No. 2,059, March 19, 2010. However, the full Senate did not pass a bill.

Rep. Waxman and others introduced the House bill on July 8, 2009. See, story titled "Representatives Introduce Spectrum Inventory Bill" in TLJ Daily E-Mail Alert No. 1,968, July 9, 2009. The House Commerce Committee's (HCC) Subcommittee on Communications, Technology and the Internet amended and approved HR 3125 on January 21, 2010. See, story titled "House Communications Subcommittee Approves Spectrum Bills" in TLJ Daily E-Mail Alert No. 2,038, January 25, 2010. The full HCC amended and approved the bill on March 10, 2010. See, story titled "House Commerce Committee Approves Radio Spectrum Inventory Act" in TLJ Daily E-Mail Alert No. 2,059, March 19, 2010. The House passed the bill on April 14, 2010. See, story titled "House Passes Radio Spectrum Inventory Act" in TLJ Daily E-Mail Alert No. 2,078, April 15, 2010. The Senate did not pass the House bill.

GAO Releases Report on Universal Service High Cost Subsidies

7/25. The Government Accountability Office (GAO) released a report [45 pages in PDF] titled "Telecommunications: FCC Has Reformed the High-Cost Program, but Oversight and Management Could be Improved".

In concept, the Federal Communications Commission (FCC) provides subsidies to telecommunications carriers that serve rural, remote, and other areas where the costs of providing telephone service are high.

Recently, the FCC adopted a huge order that, among other things, expanded the scope of the program to include broadband internet access service. See, Report and Order and Further Notice of Proposed Rulemaking [752 pages in PDF], adopted on October 27, 2011, and released on November 17, 2011. It is FCC 11-161 in WC Docket No. 10-90, GN Docket No. 09-51, WC Docket No. 07-135, WC Docket No. 05-337, CC Docket No. 01-92, CC Docket No. 96-45, WC Docket No. 03-109, and WT Docket No. 10-208.

The GAO report states that there are "concerns about what the program is accomplishing, whether the fund can be sustained over the long term, and the cost burden it imposes on consumers". It also states that subsidization of "broadband deployment could cause the size of the fund to greatly expand unless policymakers reexamined its purpose, design, and management, and unless FCC improved its management and oversight processes to ensure the program's cost-effectiveness".

This report offers the modest conclusion that "As FCC looks to broaden the scope of the high-cost program by providing support for broadband capable networks, it is therefore important for FCC to ensure that the limited program funds are used as effectively and efficiently as possible to stem further growth in the fund."

This report only recommends that the FCC "establish a specific data-analysis plan for the carrier data and make the information publicly available" It also states that "To help minimize the universal service contribution burden on consumers and businesses, as FCC examines and revises the manner in which carrier support payments are calculated, consult with the Joint Board and/or make appropriate referrals to determine what factors, such as carrier revenues, should be considered in the calculation."

The GAO wrote this report at the request of House Commerce Committee (HCC) Democrats.

More News

7/25. The National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) released its draft SP 800-94 Rev. 1 [111 pages in PDF] titled "Guide to Intrusion Detection and Prevention Systems (IDPS)". The deadline to submit comments is August 31, 2012.

7/25. The National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) released its draft SP 800-83 Rev. 1 [45 pages in PDF] titled "Guide to Malware Incident Prevention and Handling for Desktops and Laptops".  The deadline to submit comments is August 31, 2012.

7/25. The Cato Institute published a paper [20 pages in PDF] titled "Corporate Welfare in the Federal Budget". The author is the Cato's Tad Dehaven. It begins, "Rising federal spending and huge deficits are pushing the nation toward a financial and economic crisis. Policymakers should find and eliminate wasteful, damaging, and unneeded programs in the federal budget." Moreover, "Corporate welfare doesn't aid economic growth and it is an affront to America’s constitutional principles of limited government and equality under the law." It identifies as one of the large examples of corporate welfare the Broadband Technology Opportunities Program (BTOP), administered by the Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA) and the Department of Agriculture's Rural Utilities Service. This paper states that BTOP "subsidies provide coverage in areas where the majority of households already have access to service. As a result, the benefit of providing broadband services to the relatively small number of unserved households is dramatically outweighed by the exorbitant cost to taxpayers." It adds that by subsidizing a competitor, these subsidies disincent private broadband investment, and reduce the incentive to develop even more advanced technologies. This Cato paper cites an April 13, 2011 paper [46 pages in PDF] titled "Evaluating the Cost-Effectiveness of RUS Broadband Subsidies: Three Case Studies", by Jeffrey Eisenach and Kevin Caves.

House Judiciary Committee Holds Hearing on Internet Sales Tax Bill

7/24. The House Judiciary Committee (HJC) held a hearing on HR 3179 [LOC | WW], a bill to authorize states to collect taxes on out of state remote sellers, including internet sellers.

This event mainly featured witnesses and HJC members who advocated giving states power to tax distant internet sellers. Most of the HJC members who participated advocated giving states this taxing authority. While several members raised questions about the bill, there was no group of HJC members who argued against the bill.

Rep. John Conyers (D-MI), the ranking Democrat on the HJC, and a cosponsor of a similar bill, HR 2710 [LOC | WW], the "Main Street Fairness Act", stated that "tax free sales on the internet may be coming to an end".

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. While that case involved catalogue sales, the same principle applies to online sales.

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, HR 2710, and S 1452 [LOC | WW] would extend to the states such authority.

HR 3179 provides that "a State electing, individually or through an agreement with one or more of the several States, ... is authorized to require all sellers ... 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 event began with opening statements by Rep. Lamar Smith (R-TX), the Chairman of the HJC, and Rep. Conyers. The event continued with statements by Rep. Steve Womack (R-AR) and Rep. Jackie Speier (D-CA), the lead sponsors of the bill. See, statement and statement.

Next, two elected state officials spoke in favor of the bill. See, prepared statement of Gov. Bill Haslam (R-TN), who spoke on behalf of the National Governors Association, and prepared statement of Wayne Harper, of the Utah House of Representatives, on spoke on behalf of the Streamlined Sales Tax Governing Board.

The panel also included Hanns Kuttner of the Hudson Institute, and Joseph Henchman  of the Tax Foundation. See, prepared statement and prepared statement.

The witness panel was packed with proponents. Steve DelBianco of NetChoice was the only clear critic of the bill on the panel. See, prepared statement.

The panel included no law professors, economists, or other experts who have conducted or published treatises or research on the subject.

Rep. Smith argued that online sellers "enjoy a competitive advantage over traditional retailers". He argued also that the states need more revenue, and that the Quill rule is "unfair". See, prepared statement.

The proponents of this bill may have the votes in committee to pass a bill in the HJC. However, few members expressed views on likely amendments at the July 24 event.

Other HJC members who are also sponsors of this bill include Rep. Ted Poe (R-TX), Rep. Dennis Ross (R-FL), Rep. Tim Griffin (R-AR), Rep. Mark Amodei (R-NV), 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), Rep. Mike Quigley (D-IL), and Rep. Ted Deutsh (D-FL).

One often debated point was whether HR 3179 would create a "new tax". Proponents mostly argued that it does not, and that it merely enables collection of an existing taxes. Rep. Elton Gallegly (R-CA) argued that "when you have to pass a law to tax somebody", it is a new tax.

All members face elections in just over four months. Rep. Johnson stated that while he supports the bill, "I feel the specter of Grover Norquist in the room". Norquist is the head of Americans for Tax Reform (ATR).

Representatives of states with no sales tax have little incentive to support HR 3179. These states would gain no revenue, but their online businesses would pay money to other states.

Montana, Oregon, Delaware, New Hampshire have no state sales tax, and no local sales taxes. Alaska has no state sales tax, but allows local sales taxes. The only city, Anchorage, has no general sales tax. No Representative from any of these states sits on the HJC. These five states have a total of only 10 members in the House.

However, these five states have 10 Senators, one of whom is a member of the Senate Judiciary Committee (SJC). While this is a tax issue, it falls within the jurisdiction of the judiciary committees, and not the House Ways and Means Committee (HWMC) and Senate Finance Committee (SFC).

States with no income tax, and that rely upon high sales taxes, including Tennessee and Texas, have the most to gain from passage of HR 3179.

Most states have both state and local sales taxes. Most state sales tax rates range from 4% to 7%. Although, what goods are covered, as well as how they are defined, are also key. Some states impose taxes on services as well as goods, with wide variation as to what is covered. Texas has a 6.25% rate. Tennessee has a 7% rate. Colorado has a state sales tax, but of the states that have such a tax, it is the lowest rate, 2.9%. See, Sales Tax Institute web page titled "State Sales Tax Rates -- Sales Tax Rates by State".

One matter that has featured in other debates, but not at this July 24 event, is that out of state internet sellers with no Quill nexus to the taxing state place few burdens on that state. Police and fire departments in the taxing jurisdiction do not protect any of the facilities of these distant sellers. School districts do not educate the children of these distant sellers.

One argument that was frequently advanced was that this bill is necessary because in the current economic situation, states need more revenue. Although, some Republicans disclosed that increased revenue from sales taxes on distant internet sellers should be used to reduce other taxes.

Numerous anecdotes, but no comprehensive studies, were cited regarding the nature and consequences of internet sales. Proponents of the bill stated that consumers buy things online because it is cheaper, due to the absence of a sales tax. Critics cited the reviews and additional product information available online, and the larger inventory maintained cy many online sellers as reasons for shopping online. They also argued that shipping and handling charges can more than offset sales taxes.

Much of the debate focused on the complexity of complying with the sales tax regimes of a multitude of different taxing jurisdictions. Some proponents argued that it would be cheap and easy, because of free software.

Critics argued that the software will be expensive, and much of the complexity and cost will lie elsewhere. For example, witnesses stated that the way software would identify the location and taxing jurisdiction of an online purchaser would be the zip code provided by that purchaser. But, they pointed out, zip code boundaries do not coincide with the boundaries of taxing jurisdictions. Critics argued too that different jurisdictions tax different items, and then provide different definitions.

There is no requirement in the bill that requires that states that tax distant online sellers adopt a uniform set of definitions.

One proposal discussed at the July 24 event was having states compensate online sellers for the cost collecting sales taxes. This is not in the bill.

Another proposal discussed on July 24, to provide simplicity to sellers, was to allow internet sellers to collect sales taxes for the tax imposing states under their local rules and rates. Under such a system, sellers would only have to know one set of rules and rates. One response was that this might cause many internet sellers to move to places with no state or local sales taxes.

Also, the small seller exemption was the focus of much discussion. Critics pointed out that many mom and pop businesses have over $1 Million in sales, the exemption in HR 3179, but make little profit. Hence, they argued that the exemption is too small. Some proponents of the bill suggested that any exemption would be unfair to those small brick and mortar sellers who have no exemption.

Finally, "jobs" was often cited by both proponents and critics of HR 3179. Although, there was no discussion of studies based upon statistics or economic theory, and no one offered any reasoned analysis to bolster the claims that either enactment or rejection of HR 3179 would have a predictable impact upon employment.

Commentary: Sales Taxes and Electoral Politics

7/24. The House Judiciary Committee (HJC) held a hearing on HR 3179 [LOC | WW], a bill to authorize states to collect taxes on out of state remote sellers, including internet sellers. Much of the testimony and debate of witnesses and members focused on "fairness", "leveling the playing field", "jobs", "the economy", and the need for more state revenue.

The gist of this piece is that support for this bill has much more to do with the motivations of voters, the self-interest of impacted industry sectors, and electoral politics.

State and local governments provide services to persons within their jurisdictions. These cost money. The officials who make decisions regarding services, and raising money to pay for them, are elected, and tend to want to be re-elected. People tend to want more government services, but not higher taxes. Elected officials therefore have incentives to provide more services, but tax their citizens and voters less.

Moreover, industry sectors and organized political factions, in addition to their concerns about services and aggregate taxation, tend to seek government taxation and regulation of others, especially their competitors.

1. Raise revenues from people who are not voters. A common trait of elected state and local officials is that they tend to seek raise revenues by taxing non-voters.

Many states pursue this strategy via business activity taxes (BATs). This is also the essence of HR 3179. It would enable states to collect taxes from businesses located out of state, to increase tax revenues, while at the same time putting no increased burden on state services. These out of state businesses can contribute to state revenues, but cannot vote in the next election in the tax imposing state.

As a corollary to this, even when state or local governments do not impose a general sales tax, they tend to impose special taxes on those goods and services most consumed by non-residents. So, for example, Oregon and Alaska have no state sales tax, and their largest cities, Portland and Anchorage, have no sales tax either. But both heavily tax hotel rooms, a high proportion of which are paid for by out of state individuals and companies.

If HR 3179 were enacted, most states would collect more in sales tax revenues. Legislators in those states, and in the Congress, would likely claim credit for raising revenues, while maintaining or expanding services, but not raising taxes.

For example, Texas would collect more in sales taxes from internet sellers located in California that sell to Texas consumers. Texas legislators would likely also expect that Texas voters would hold the California retailers accountable, rather than Texas Congressional legislators who voted for HR 3179, or the state legislators who voted to collect sales taxes on remote sellers.

2. Raise revenues from people who are not politically organized. A second common trait of elected officials is that they tend to favor collecting revenues from the less well organized blocks of voters over the well organized voters. The well organized groups can do more to assist elected officials in getting elected, or to unseat them when they have displeased these groups.

For example, some states tax both goods and services. But, of those states that tax services, only a few tax legal services. There are lots of lawyers. They live in all election districts. They are political active, and skilled at organizing to advance their interests.

In contrast, communications services are taxed exorbitantly at all levels of government -- local, state, federal, and for the Federal Communications Commission's (FCC) universal service tax and subsidy programs. Communications companies tend to be well capitalized and capable of employing the finest lobbyists and lawyers. But, they do not have the same number of politically active voters, spread across every electoral district, joining community groups, and playing golf, as does the bar.

Hence, it should not be unforeseeable that legislators at all levels of government tax communications services but not legal services. The consequence is highly regressive taxation that cannot be justified by any fairness argument, but which is nevertheless a predictable consequence of electoral politics.

Currently, at the Congressional level, it is hard to identify a strong lobby, well organized in Congressional districts across the country, that is fighting bills such as HR 3179. And if HR 3179 were enacted, and states could decide to collect sales taxes from distant sellers, the one class of persons in state who would be impacted by that decision would be consumers who buy things online. But, there is no association of online consumers that has the organization and political sway to mount a campaign to stop such a decision.

3. Tax to protect politically organized groups. A third common trait of elected officials is that they often seek to impose tax burdens for the purpose of providing a competitive advantage to politically organized groups.

First, compare brick and mortar (BAM) stores located in the taxing jurisdiction, with their out of state online competitors. These BAM sellers are clearly the better organized and more influential in their home states. They have employees in state. The BAM and online stores each have their competitive advantages and disadvantages. BAMs can display products, but onlines can publish product descriptions, photos and customer reviews. BAMs may charge a sales tax, but onlines may charge shipping and handling. BAM customers carry products out the door, while online customers wait days for delivery, but online stores may have larger inventories. And so forth.

If HR 3179 were to become law, the online stores would be saddled with new competitive disadvantages. First, there is the cost of collecting taxes. The BAM must collect taxes, but it only needs to know the local tax rules. The online store would need to know the tax rules of every state and local taxing jurisdiction around the country. Moreover, the BAM does not need to know anything about the purchaser. Who the customer is, or where he or she lives is of no concern. In contrast, the online would need to know the location of every customer: not only the shipping address, but also which taxing jurisdictions. The cost of complying, and dealing with audits, and demands for underpaid taxes, will raise the cost of doing business for the online stores. The in-state BAMs would benefit from this.

Second, compare big box chain stores which also have internet arms, with very small businesses. Even before the advent of online sales, big box stores were driving small main street stores out of business. Today, these big boxes already have a nexus to every jurisdiction in which they have a store, warehouse or other facility. Enactment of HR 3179 would thus have a limited impact on their sales tax collection obligations for online sales.

Many small stores turned to the internet to remain viable. But, they may only have a Quill nexus in a single location. HR 3179 would greatly increase their tax collection obligations. Moreover, the big boxes will be more able to bear the cost of compliance than the small businesses.

Competitors compete in the marketplace by trying to offer better products and lower prices. Some also compete in the government arena by seeking to impose taxes and regulatory burdens on their marketplace competitors. Some of the advocacy of HR 3179 might be viewed in this light.

FCC Asserts Broad MVPD Program Carriage Authority

7/24. The Federal Communications Commission (FCC) released a redacted copy  [47 pages in PDF] of its Memorandum Opinion and Order (MOO) in the matter of the Tennis Channel's complaint against Comcast.

This MOO affirms the conclusion of an administrative law judge (ALJ) that Comcast violated the FCC's program carriage rules, and must provide equal carriage to Tennis Channel (TC).

The MOO discloses that the majority of the FCC Commissioners assert that the FCC has broad authority to make decisions for cable companies, and other multichannel video programming distributor (MVPD), regarding what programming to distribute, and at what tier to distribute them.

The applicable statute borrows terms from competition law. However, the majority concludes that the FCC, in enforcing this statute, is constrained neither by principles of competition law, nor reasoned economic analysis.

FCC Commissioners Robert McDowell and Ajit Pai wrote a lengthy joint dissent. The Commission divided on party lines, with Democrats Julius Genachowski, Mignon Clyburn, and Jessica Rosenworcel supporting the MOO, and Republicans McDowell and Pai dissenting.

Also, 34 mostly Republican Representatives sent a letter to the FCC criticizing the MOO. See, related story in this issue titled "Representatives Write FCC Regarding Program Carriage".

See, full story.

Court Holds State Not Required Under FOIA to Produce Records Already Published by WikiLeaks

7/23. The U.S. District Court (DC) issued its Memorandum Opinion [PDF] in ACLU v. DOS holding that the ACLU is not entitled to records under the FOIA already published by WikiLeaks.

The American Civil Liberties Union (ACLU) submitted a request to the Department of State (DOS), pursuant to the federal Freedom of Information Act (FOIA), which is codified at 5 U.S.C. § 552, for certain DOS embassy cables. The DOS did not produce 23 cables.

The ACLU filed a complaint in the District Court against the DOS alleging violation of the FOIA for failure to produce these 23 embassy cables. Both sides filed motions for summary judgment.

The District Court held that these records fall within the FOIA national security exemption. However, these records had already been published by WikiLeaks. Hence, the ACLU also argued that since they are publicly available, they do not fall within the exemption.

The District Court wrote that "when the specific information sought by a plaintiff is already in the public domain by an official disclosure, an agency cannot be heard to complain about further disclosure".

However, it continued that "public disclosure alone is insufficient; the information in the public domain must also be ``officially acknowledged.´´" (The District Court cited DC Circuit's 1990 opinion in Fitzgibbon v. CIA, 911 F.2d 755.)

The District Court elaborated that "there can be a critical difference between official and unofficial disclosures". Just because the records exist in some form in the public domain does not mean that official disclosure will not cause harm.

The District Court wrote, "No matter how extensive, the WikiLeaks disclosure is no substitute for an official acknowledgement and the ACLU has not shown that the Executive has officially acknowledged that the specific information at issue was a part of the WikiLeaks disclosure."

This case is ACLU v. DOS, U.S. District Court for the District of Columbia, D.C. No. 1:11-cv-01072-CKK, Judge Colleen Kotelly presiding.

Sen. McCain Criticizes S 3414

7/23. Sen. John McCain (R-AZ) spoke in the Senate on July 23 regarding the "Fiscal Year 2013 National Defense Authorization Act" or "NDAA", and S 3414 [LOC | WW | PDF], the "Cybersecurity Act of 2012", or "CSA".

He said that the CSA is a "controversial and flawed bill on cybersecurity" that has "languished for over five months at the Homeland Security and Government Affairs Committee, with no committee markup or normal committee process". See, transcript.

Sen. John McCainSen. McCain (at right) continued that "Based on the procedures the Senate has been following over the past few years -- with little or no opportunity for debate and amendments -- the Majority Leader apparently intends to rush through the Senate a flawed piece of legislation. The cybersecurity bill that he intends to call up later this week is greatly in need of improvement, both in the area of information-sharing among all Federal agencies and the appropriate approach to ensuring critical infrastructure protection."

He added that "Without significant amendment, the current bill the Majority Leader intends to push through the Senate has zero chance of passing in the House or ever being signed into law."

The House passed HR 3523 [LOC | WW], the "Cyber Intelligence Sharing and Protection Act of 2011" or "CISPA", in April. It is an information sharing bill, but not a standards bill. It passed by a vote of 248-168. Voting correlated with party affiliation. Republicans voted 206-28. Democrats voted 42-140.

In contrast, S 3414 is a standards bill. It also has information sharing provisions, but the incentives are not as strong as in the House bill.

Sen. McCain concluded that "When there are less than 27 days of possible legislative session before the election recess, I find it difficult to understand why the Majority Leader would be willing to tie up the Senate's time on this flawed bill."

He argued that the Senate should instead take up the NDAA.

Sen. McCain also has his own cyber security bill, S 2151 [LOC | WW, the "Secure IT Act", introduced on March 1, 2012. It provides for more information sharing, and greater incentives to share information, than S 3414. It also has provisions pertaining to cyber security research and development. It would not impose standards.

Groups File Amicus Brief Opposing FCC Net Neutrality Rules

7/23. The Cato Institute, Competitive Enterprise Institute (CEI), Free State Foundation (FSF), and Tech Freedom filed an amicus curiae brief with the U.S. Court of Appeals (DCCir) in Verizon v. FCC, a challenge to the FCC's order that adopted rules for the regulation of the network management practices of broadband internet access service providers. They ask the Court to vacate the FCC order.

They wrote that the FCC's "network-neutrality regulation ... benefits content providers at the expense of broadband providers' constitutional rights."

Specifically, "By denying Internet service providers their editorial discretion and by compelling them to convey content providers’ messages with which they may disagree, the Order violates broadband providers' First Amendment rights."

"It is particularly pernicious because it applies only to some speakers. ... The Order therefore requires strict-scrutiny review, ... which it cannot survive."

These amici also argue that the FCC order "violates the Fifth Amendment's prohibition on takings without just compensation: it works a per se taking by giving content providers a permanent easement for nearly unfettered use of network owners' physical property (the cables and wires constituting their networks)." (Parentheses in original.)

The FCC rules under review are contained in the Report and Order (R&O) [194 pages in PDF] adopted on December 21, 2010, and released on December 23, 2010. This R&O is FCC 10-201 in GN Docket No. 09-191 and WC Docket No. 07-52. See also, stories in TLJ Daily E-Mail Alert No. 2,186, December 22, 2010, and TLJ Daily E-Mail Alert No. 2,188, December 24, 2010.

This case is Verizon v. FCC, U.S. Court of Appeals for the District of Columbia, D.C. No. 11-1356.

Representatives Write FCC Regarding Program Carriage

7/23. Rep. Fred Upton (R-MI), Rep. Greg Walden (R-OR) and 32 other mostly Republican Representatives sent a letter to Julius Genachowski, Chairman of the Federal Communications Commission (FCC), regarding the "FCC's recent expansive interpretation" of its program carriage rules.

However, the letter does not reference the Tennis Channel's (TC) complaint against Comcast, or the FCC's Memorandum Opinion and Order (MOO) released on July 24. See, related story in this issue titled "FCC Asserts Broad MVPD Program Carriage Authority".

The Representatives wrote that "In today's video market, cable operators compete with satellite operators, telecommunications providers offering video, over-the-air broadcasters, online streaming video and online video distributors such as Netflix, Hulu and Roku. Cable operators must make reasonable business decisions about which programming services offer the right price and value for their subscribers. Like any business operating in a competitive market, they need flexibility to select programming that is of interest to their consumers and to package that programming in a way that enhances consumer choice and reduces cost."

"The FCC's recent interpretation of the program carriage rules, however, could be read to enable programmers effectively to force their way on to a cable operator's system merely alleging that their programming is similar enough to the operator's affiliated programming, rather than showing that there has been anticompetitive discrimination."

They concluded that "This is a broad expansion of the FCC's program carriage rules and procedures."

This letter predates the public release of the MOO by one day. However, the FCC adopted the MOO a week before the letter.

People and Appointments

7/23. FCC Commissioner Jessica Rosenworcel hired David Goldman as Senior Legal Advisor with responsibility for wireless, international, and public safety issues. See, FCC release. He previously worked for the Senate Commerce Committee (SCC). Before that, he worked for the FCC's Wireless Telecommunications Bureau (WTB).

7/23. Ben Scott will go to work for the New America Foundation (NAF). He will be a part of the NAF's Open Technology Institute (OTI), which is headed by Sacha Meinrath. Scott previously worked at the Department of State (DOS). See, NAF release.

More News

7/23. Federal Reserve Board (FRB) Governor Sarah Raskin gave a speech in Boulder, Colorado. She stated that "technology is revolutionizing banking". She added that "Going back to the automated teller machine and continuing through telephone banking, internet banking, and now mobile banking, the banking industry has strived to deploy technology to be more cost-efficient while meeting customer needs."

7/23. The Department of Justice's (DOJ) Antitrust Division filed with the U.S. District Court (DC) comments that it received in response to its Tunney Act notice regarding settlements in its e-books antitrust action against Apple and e-book publishers. See, DOJ web page with hyperlinks to comments. The DOJ also filed with the District Court its response [66 pages in PDF]. This pertains to the proposed final judgment as to the settling defendants, Hachette, Harper Collins, and Simon & Schuster. Apple and other e-book publishers continue to contest the action. See, story titled "DOJ Sues Apple and Book Publishers Alleging E-Book Price Collusion" and related stories in TLJ Daily E-Mail Alert No. 2,368, April 11, 2012.

7/23. The Office of the U.S. Trade Representative (OUSTR) published a notice in the Federal Register that announces that it will a hearing on September 24, 2012 regarding Canada's participation in the negotiation of a Trans Pacific Partnership (TPP) trade agreement. The OUSTR also seeks written comments on numerous issues, including "electronic commerce issues" and "trade-related intellectual property rights issues". The deadline to submit written requests to present oral testimony is September 4. The deadline to submit written comments is 12:00 NOON on September 4. See, FR, Vol. 77, No. 141, July 23, 2012, at Pages 43131-43133.

7/23. The Office of the U.S. Trade Representative (OUSTR) published a notice in the Federal Register (FR) that announces that it will a hearing on September 21, 2012 regarding Mexico's participation in the negotiation of a Trans Pacific Partnership (TPP) trade agreement. The OUSTR also seeks written comments on numerous issues, including "electronic commerce issues" and "trade-related intellectual property rights issues". The deadline to submit written requests to present oral testimony is September 4. The deadline to submit written comments is 12:00 NOON on September 4. See, FR, Vol. 77, No. 141, July 23, 2012, at Pages 43133-43135.

Go to News from July 16-20, 2012.