Tech Law Journal Daily E-Mail Alert
May 18, 2001, 8:00 AM ET, Alert No. 190.
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Powell Confirmation Hearing
5/17. The Senate Commerce Committee held a hearing on the nomination of Michael Powell to be Chairman of the FCC. Members of the Committee uniformly praised Powell. They used the occasion to press their views, and to question Powell about his views, on various issues that fall within the jurisdiction or activity of the FCC. Sen. John McCain (R-AZ), the Chairman of the Committee, stated that the Committee would likely vote on the nomination on May 24. See also, opening statement [PDF] of Sen. McCain.
3G Wireless. Sen. McCain discussed the future of Third Generation (3G) wireless services with Powell. McCain asked if the U.S. is falling behind Europe. Powell stated that the U.S. is "strained and constrained" by having spectrum management divided between the FCC (for commercial users) and the Commerce Department (for federal government and military users). He stated that "trying to coordinate coherently spectrum policy across those realms has proven difficult. It has proven difficult within our own agency." He elaborated that spectrum at the FCC is managed by the mass media, wireless, and satellite "realms." He said that he "has reached out to Secretary Evans and the Commerce Department to look for ways to harmonize our decision ..." Powell then turned to the Europeans. "I believe that Europe may be ahead, but it depends on what they are heading to. This stuff, in my mind, is a lot like a marathon race; sometimes the best place to be is in 3rd slot on the 20th mile, not the first. And we are looking now at European environments that went very fast on Third Generation spectrum. The amount of money paid at auctions is breath taking. And, by some estimates, there are venerable companies that may be facing collapse purely as a consequence of getting ahead of themselves on Third Generation wireless spectrum. British Telecom may face a grim reaper ..." Sen. McCain concurred: "I think the Europeans have gotten too far ahead of themselves."
Spectrum Markets. Sen. Ron Wyden (D-OR) made the case for shifting from the FCC's current system of permanently licensing of spectrum, to a system of trading rights. He stated that "incumbents cling to these licenses like fleas to a dog." Powell stated that the FCC has been moving towards secondary markets for spectrum, and that the FCC has become more aggressive about the return of spectrum. Powell also stated that a spectrum license "ought to be more like a drivers license." That is, once it is issued, the government should only tell the driver what not do with it. Powell concluded that markets should determine what use is made of licensed spectrum.
E-Rate. Several Senators, including Jay Rockefeller (D-WV), Jean Carnahan (D-MO), and Max Cleland (D-GA) expressed their support for the FCC's e-rate program, which subsidizes telecommunications, Internet access, and internal connections for schools and libraries. Powell stated that "the program has been a tremendous success." He added that "my responsibilities are to administer the program as written by the Congress."
Location Privacy. Sen. John Edwards (D-SC) advocated protecting data on individuals' location that is generated by mobile devices with GPS capacity. "My belief is that is information that consumers' should have control over," said Edwards. He added that he and Sen. Byron Dorgan (D-ND) will introduce a bill to protect location privacy. Powell stated that he is not familiar with the bill, and that the FCC now has limited jurisdiction over location privacy issues.
Rural Broadband. Several Senators, including Jay Rockefeller (D-WV), Sam Brownback (R-KS), and Ted Stevens (R-AK) pressed Powell on the importance of deploying broadband Internet access services in rural and underserved areas at prices comparable to urban areas. Powell reviewed proceedings at the FCC relevant to these topics. He also suggested that policies should incent new technologies, such as satellite and terrestrial wireless, for which there will not be a large cost difference between urban and rural areas.
Antitrust Merger Reviews. Sen. Max Cleland (D-GA) questioned Powell about the role of the FCC on mergers. Powell said that the FCC "plays the role that is articulated in the statute, which is, if a merging party owns a license ... and that license will have to be transferred to the new entity ... then that license transfer has to be examined by the Commission, and the Commission has to affirmatively approve, as, in the public interest, the transfer of that license. That is a different standard than that employed by antitrust authorities which administer the standards of the Clayton Act, principally, and the Sherman Antitrust Act. But as a practical matter, more often than not, it also involves, on the part of the Commission, a review of traditional horizontal and vertical merger concentration analysis, in the examination of that merger." He also stated that there have been delays at the FCC in the past. He also suggested that the FCC should ask itself "whether we are value adding as to that ... concentration analysis, or are we simply duplicating the activities of the Federal Trade Commission or the Antitrust Division." He then commented that the FCC can add two requirements based on its public interest analysis that the FTC and DOJ cannot -- diversity, and compliance with FCC rules.
Media Ownership Rules. Sen. Ron Wyden (D-OR) argued against continued concentration of ownership of media companies. Powell stated that he is aware of the antitrust issues involved in concentration of ownership; he added that diversity is an issue in media ownership. He also stated the markets have changed since many of the FCC's media ownership rules were written, and that the First Amendment limits the FCC's power to impose restrictions on media. He also suggested that the greatest threat to limits on media ownership comes from the judiciary, not regulatory agencies.
Interactive TV. Sen. Conrad Burns (R-MT) asked Powell if he supports "continued rule making" in the area of interactive television. Powell responded by noting that he had voted for the FCC's notice of inquiry.
Structural Separation for Bells. Sen. Ernest Hollings (D-SC) asked Powell for his views on structural separation. Hollings stated that "we have got to have some kind of structural separation ... wholesale and retail." Powell stated that "doing it now would be possible", but would also be "complex" and "disrupting to the market." He added that "it would be a very difficult thing to do."
FCC Enforcement Authority. Sen Hollings also raised the issue of the FCC's authority to fine ILECs for violation of the local competition provisions of the Telecom Act of 1996. Powell restated his request for legislation that would give the FCC authority to impose fines of up to $10 Million. He stated that "my best judgment is that we don't have enough to provide the deterrent value."
Abernathy, Martin and Copps Have Smooth Confirmation Hearing
5/17. The Senate Commerce Committee also held a hearing on the nominations Kathleen Abernathy, Kevin Martin, and Michael Copps to be FCC Commissioners. The hearing was quick and without controversy or opposition. They will likely be approved by the Committee at its May 24 mark up meeting, and by the full Senate shortly thereafter.
Sen. Jay Rockefeller (D-WV) sought commitments from all three that they will support (1) the e-rate subsidy program, (2) continued operation of the e-rate as a Section 254 universal service program, (2) continued coverage of telecommunications, Internet access, and internal connections, and (3) continued coverage of private and parochial schools and libraries. All three, like Powell before them, made these commitments. Sen. John Edwards (D-NC) praised the nomination of Kevin Martin, a Republican from North Carolina, who previously was a legal advisor to outgoing Commissioner Harold Furchtgott-Roth. Sen. Ted Stevens (R-AK) praised Abernathy. Sen. Fritz Hollings (D-SC) talked about the importance of the public interest standard. Sen. Conrad Burns (R-MT) said that spectrum management would be a major issue for the three.
NTCA Requests Rural Commissioner
5/17. Michael Brunner, CEO of the National Telephone Cooperative Association (NTCA), wrote a letter to Senate Minority Leader Tom Daschle (D-SD) stating that the "fifth and final commissioner needs to be someone who will ensure the FCC's implementation of sound rural telecommunications policy ..." The NTCA is a group that represents rural telecommunications companies. The FCC will shortly have another opening, which must be filed by a Democrat to maintain the 3-2 partisan balance required by law.
New Bills
5/16. Rep. Vernon Ehlers (R-MI) and Rep. James Barcia (D-MI) introduced HR 1860, a bill to reauthorize the Small Business Technology Transfer Program. It was referred to the House Small Business Committee and the House Science Committee.
5/16. Rep. Nancy Johnson (R-CT) and others introduced HR 1877, a bill to amend Title 18 to provide that certain sexual crimes against children are predicate crimes for the interception of communications. The bill would amend 18 U.S.C. 2516 regarding authorization for interception of wire, oral, or electronic communications. The bill was referred to the House Judiciary Committee. Former Rep. Bill McCollum (R-FL) sponsored a similar bill, HR 3484, in the 106th Congress; it was passed in the House by a voice vote.
5/15. Rep. John Dingell (D-MI) wrote a letter to Commerce Secretary Donald Evans regarding the new agreement negotiated by the ICANN and VeriSign. Dingell stated that "The agreement incorporates a most unusual technique for encouraging competition. It awards VeriSign, the current $500-million, monopoly registry and holder of the most popular dot-com domain name, advantages in the registry renewal process and in terms, pricing, dispute resolution and many other contract provisions that the newer, much smaller registries will not have." On May 14, Ted Kassinger, General Counsel of the Commerce Department, which must approve the agreement, released a statement in which he said that "The Department of Commerce has been reviewing the VeriSign-ICANN (Internet Corporation for Assigned Names and Numbers) proposal. We have communicated our general thinking, are pleased with the progress, and are confident an agreement can be reached in the near term."
More News
5/17. The Senate Appropriations Committee's Subcommittee on Commerce, Justice, State, and the Judiciary held a hearing on proposed budget estimates for FY 2002 for the Federal Bureau of Investigation, Drug Enforcement Administration, and Immigration and Naturalization Service.
5/17. The Senate Governmental Affairs Committee held a hearing on several nominations, including that of John Graham to be Administrator of the Office of Information and Regulatory Affairs, Office of Management and Budget.
5/17. The Senate Judiciary Committee voted 9 to 9 on the nomination of Ted Olson to be Solicitor General. It was a straight party line vote. Senator Majority Leader Trent Lott may now bring the matter to a vote in the full Senate.
5/17.  The House Judiciary Committee's Subcommittee on the Courts, the Internet, and Intellectual Property held a hearing titled Music On The Internet. TLJ will write about this hearing in the Monday, May 21 issue.
New Documents
Johnson: HR 1848, a bill to amend the Internal Revenue Code regarding the depreciable life of semiconductor manufacturing equipment, 5/15 (HTML, LibCong).
Ehlers: HR 1860, a bill to reauthorize the Small Business Technology Transfer Program, 5/16 (HTML, LibCong).
Dingell: letter to Commerce Dept. re ICANN VeriSign agreement, 5/15 (HTML, Dingell).
Quote of the Day
"The FCC has become, and will be, the center of the economic engine in this country for the next 25 or 30 years."

Sen. Conrad Burns (R-MT), at confirmation hearing for FCC Chairman Michael Powell, May 17.
RIM Files Blackberry Patent Suit
5/16. On April 17 the USPTO issued U.S. Patent No. 6,219,694 to Research in Motion (RIM). The patent discloses a system and method for pushing information from a host system to a mobile data communication device upon sensing a triggering event is disclosed. RIM produces the Blackberry wireless, always on, e-mail devices. See, RIM release.
On May 16 RIM filed a complaint in U.S. District Court (DDel) against Glenayre alleging patent infringement. The complaint alleges patent infringement, trademark infringement, dilution, unfair competition and false advertising, violation of the Lanham Act, and violation of the Delaware Deceptive Trade Practices Act. Glenayre, based in Charlotte, North Carolina, makes wireless messaging products. RIM seeks injunctive relief and damages. See, RIM release.
HP Settles Patent Proceeding
5/17. Hewlett Packard (HP) announced that it settled patent proceedings pending before the U.S. International Trade Commission (USITC) regarding the importation of printer cartidges which infringe HP patents. HP filed complaints with the USITC against Printer Essentials, Microjet Technology, and four other companies, alleging that the companies infringed six HP patents by importing or selling inkjet cartridges manufactured by Microjet, including one model intended to replace the HP 51626A cartridge and another model intended to replace the HP 51629A cartridge. Under the settlement, Printer Essentials agreed to enter into a consent order through which it agrees to stop importing and selling the disputed cartridges. Printer Essentials also acknowledged that the Microjet cartridges infringe HP's patents and that the patents are valid. See, HP release.
ILEC Enforcement
5/17. The House Commerce Committee's Subcommittee on Telecommunications and the Internet held a hearing on HR 1765, a bill to increase penalties for common carrier violations that is sponsored by Rep. Fred Upton (R-MI). The bill is related to HR 1542, a bill to give regulatory relief to the Baby Bells, which the House Commerce Committee approved last week. FCC Chairman Michael Powell has requested that Congress enact legislation giving the FCC more enforcement authority to deal with ILECs that violate the local competition provisions of the Telecom Act of 1996.
David Solomon, who testified on behalf of the FCC, said in his prepared statement that "Given the vast resources of the nation's large common carriers, including incumbent local exchange carriers and long distance carriers, the existing caps on common carrier forfeitures of $120,000 per violation or per day of a continuing violation, up to $1.2 million overall for a continuing violation, are an insufficient sanction or deterrent in many instances. The proposed 10-fold statutory increases -- to $1 million and $10 million -- would significantly strengthen our enforcement authority against incumbent local exchange carriers and other common carriers."
See, prepared testimony of witnesses: David Solomon (FCC Enforcement Bureau), Albert Halprin (Halprin Temple), Lawrence Sarjeant (USTA), Royce Holland (Allegiance Telecom), and Leon Jacobs (Florida PSC).
See also, statement of Rep. Tauzin.
HR 1542 is sponsored by Rep. Tauzin and Rep. John Dingell (D-MI). Reps. Tauzin and Dingell did not make the language of HR 1765 a part of HR 1542, citing lack of germaneness. Instead, it will be submitted to the House Rules Committee for permission to offer it as an amendment to HR 1542 on the House floor.
Defense Spectrum Management
5/17. The GAO released a report [PDF] titled "Defense Spectrum Management: New Procedures Could Help Reduce Interference Problems." The report, which was prepared for members of the House and Senate Armed Services Committees, addresses new Department of Defense procedures for spectrum management, including electromagnetic environmental effects, when acquiring and implementing new weapon systems. It concludes that "the new procedures established by DOD are reasonable and, if successfully implemented, could help prevent problems related to radio frequency interference."
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