Tech Law Journal Daily E-Mail Alert
August 1, 2001, 9:00 AM ET, Alert No. 239.
TLJ Home Page | News from the Web | Calendar | Search | Back Issues
Senate Holds Hearing on 3G and Spectrum Management
7/31. The Senate Commerce Committee's Communications Subcommittee held a hearing on spectrum management and third generation wireless systems. This next generation of wireless communications technology is intended, among other things, to bring broadband Internet access to portable devices. However, a significant amount of spectrum will have to be allocated for use by 3G systems. There is not enough suitable unused spectrum. Hence, spectrum allocated to other users would have to be shared or reallocated.
Several bands have been identified for possible use by 3G systems. The incumbent users of this spectrum, including the Department of Defense (DOD) and ITFS users, such as schools and churches, have adamantly opposed reallocation of spectrum that they use. As a result, in the year since former President Clinton made reallocation of spectrum for 3G use a major policy goal, the agencies responsible for spectrum management, the NTIA and FCC, have held meetings, issued reports, and received comments, but made very little progress towards making any spectrum available for 3G uses. Now, the Congress has stepped in.
The Subcommittee heard testimony that paralleled a similar hearing before the House Telecom Subcommittee last week, and numerous other events in the last year. The spectrum managers testify that spectrum is a nationalized resource; they license its use in the public interest; and, they are working with interested parties to locate spectrum for possible sharing or reallocation. And, they testified to the Senate Communications Subcommittee, they are still looking. The incumbent licensees testify that the spectrum licensed to them cannot be reassigned without causing grievous harm to national security, education, rural communications, or other sacred services. Finally, the communications companies that wish to develop 3G ask for spectrum to be reallocated.
Several Senators suggested that one problem is that incumbent users have no incentive to more efficiently use spectrum licensed to them, or to relocate to other bands. Sen. Ted Stevens (R-AK) used the hearing to explore a possible solution that is specific to incumbent use by the DOD in the 1755 to 1850 MHz band. He suggested that proceeds from the reauction of this spectrum might go directly to the DOD.
Sen. Ron Wyden (D-OR) suggested broader reform of the spectrum regime. He stated in opening that "It seems to me that the central problem ... is that we have got a Jurassic system. It is virtually unchanged since the 1920s when spectrum was used for radio and radio only, and it is creating all of the wrong incentives. There is incumbent license holders who want to keep licenses scarce, so they occupy as much spectrum as possible. They fight tooth and nail against giving any out -- in effect, sort of, collect ransom for holding the spectrum hostage. And if you have got a bright new idea that needs spectrum, you better have a lot of patience for a lot of red tape. It seems to me that we have got a variety of reforms that we ought to be looking at. To me, one of the centerpieces of that effort ought to be to make sure that licensees in the future need to have some flexibility incentives to sell or lease excess spectrum, instead of hoarding it."
Sen. Wyden later added that "we have insufficient financial incentives for the development of creative technologies that improve efficiency". He continued that the way things are going, "we are going to have a proceeding. We will have another proceeding. Have another proceeding. And a motion for a proceeding. And my sense is that at the end of three or five years, if we don't speed this up, and inject some real marketplace forces, the world isn't going to look all that much different on the civilian side." He concluded that we need "to retool the system ... the system is the problem ... a dinosaur ... it is a system skewed away from innovation."
Sen. Conrad Burns (R-MT) suggested that reforming spectrum management would be more complicated than passing the Telecom Act of 1996.
See, prepared testimony in PDF of government spectrum managers: William Hatch (National Telecommunications and Information Administration) and Julius Knapp (FCC's Office of Engineering and Technology). See also, prepared testimony of incumbent users of spectrum identified for possible reallocation for 3G systems: Linton Wells (DOD) and Carroll McHenry (Nucentrix Broadband Networks). See also, prepared testimony by prospective 3G service providers: Denny Strigl (Verizon Wireless), Mark Kelly (Leap Wireless), Martin Cooper (ArrayComm), and Thomas Wheeler (CTIA).
Technology, Privacy, and Red Light Cameras
7/31. The House Transportation Committee's Highways and Transit Subcommittee held a hearing on red light cameras. See, prepared testimony of Rep. Dick Armey (R-TX). He stated that "Technology can be a tool of freedom. Communication advances like the Internet, for instance, have broken down barriers and spread the message of democracy around the globe. Unfortunately, technology can sometimes serve the opposite effect. New technologies can actually undermine our freedoms and create problems far greater than those they are meant to solve. For years the federal government has spent millions of dollars promoting photo enforcement systems and helping local jurisdictions install them."
2nd Circuit Affirms Net Gambling Conviction
7/31. The U.S. Court of Appeals (2ndCir) issued its opinion in USA v. Cohen, a criminal case involving Internet gambling. Jay Cohen was charged by indictment with eight counts of violation of the Wire Wager Act in connection with his operation of an Antigua based gambling business that advertised in, and took bets from, the U.S. over the Internet. A trial jury of the U.S. District Court (SDNY) convicted him on all eight counts. The Court of Appeals affirmed.
18 U.S.C. § 1084 provides, in part, that "Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both."
People and Appointments
7/31. The Senate Judiciary Committee completed two days of hearings on the nomination of Robert Mueller to be Director of the Federal Bureau of Investigation.
7/31. The Senate Finance Committee held a hearing on several pending nominations, including Rosario Marin to be Treasurer of the United States and Jon Huntsman to be a Deputy U.S. Trade Representative.
House Delays Votes on Trade Promotion Authority and Bell Relief
7/31. The House, which will likely break for its traditional summer recess at the end of this week, has delayed consideration of several major bills. The House will not vote on either trade promotion authority (also known as fast track) or the Tauzin Dingell bill, at least until September.
The Tauzin Dingell bill, which would provide regulatory relief to the Bell companies, was reported by the House Commerce Committee on May 9. It was reported unfavorably by the House Judiciary Committee on June 13. Supporters had sought to move it quickly to the House floor. The U.S. Telecommunications Association, which represents the Bell companies, issued a release praising this latest development.
Meanwhile, the Information Technology Association of America (ITAA) issued a release condemning a bill in the Senate that would provide regulatory relief to the Bells.
House Passes Jordan FTA Bill
7/31.The House passed HR 2603, a bill to implement the U.S. Jordan Free Trade Agreement. There is little trade between the U.S. and Jordan. However, the FTA includes language pertaining to labor and the environment, as well as e-commerce and intellectual property, that may serve as a precedents for future free trade agreements. The labor and environmental provisions were controversial.
Colin Powell Wants China to Take Advantage of Information Technology
7/28. Secretary of State Colin Powell was interviewed on CCTV, the PR China's state television. He stated that "We need no enemies, we want no enemies, we want to help people. We want to help China and we want to help China take advantage of the new 21st Century world of information technology, access to international markets. Trade with us, let American products come here -- Chinese products come to the United States." See, transcript.
House Holds Hearing on FASB Rules for Combinations of Businesses
7/31. The House Commerce Committee's Subcommittee on Commerce, Trade, and Consumer Protection held a hearing titled Current Issues Before the Financial Accounting Standards Board. During the last Congress the FASB and some Members of Congress clashed over accounting standards for combinations of businesses. Some members argued that FASB proposals to eliminate the pooling of interests method would have treated mergers of high tech companies unfairly and unrealistically. The FASB revised its position on July 20, 2001. Members of the Subcommittee expressed satisfaction at the July 31 hearing.
The FASB had proposed requiring that all mergers be viewed, not as the melding of separate entities, but as a direct purchase, requiring companies to accept the purchase method of accounting. The rules at the time permitted a pooling system of accounting favored by many high tech companies that own considerable intangible assets. Many high tech companies to took advantage of this pooling system of accounting when merging. This method allows companies to merge without attaching a goodwill accounting charge.
The House Commerce Committee held a hearing last year. Then, Rep. Cal Dooley (D-CA) and Rep. Chris Cox (R-CA) introduced a bill that would have placed a moratorium on FASB's ability to eliminate the pooling method of accounting. The FASB is an independent body that has been charged by the SEC with writing accounting rules. Congressional actions were a shot across its bow.
On July 20, 2001, the FASB revised its rules to accommodate the new economy. It issued two Statements. Statement 141 requires that all business combinations be accounted for under a single method - the purchase method. Use of the pooling of interests method is no longer permitted. Statement 142 requires that goodwill no longer be amortized to earnings, but instead be reviewed for impairment. This change provides investors with greater transparency regarding the economic value of goodwill and its impact on earnings.
Rep. Cliff Stearns, the Chairman of the Subcommittee, presided throughout the hearing. He praised the FASB in his opening statement. He said that "I find that the results of the FASB’s business combinations project and the related accounting treatment for intangible assets, as outlined in Statements’ 141 and 142, speak well for having an private independent standard setting board. The FASB should be commended for an open process that included several public hearings and working with all parties to understand their concerns regarding business combinations." He also focused on international accounting standards and on pro forma reporting. He stated that "some level of standardization should be applied to pro forma reporting."
Several members addressed the role of the Congress in the setting of accounting standards. Rep. Billy Tauzin (R-LA), the Chairman of the full Committee said in his prepared statement that "this Committee asserts its jurisdiction over the [FASB] precisely because this organization's role in accounting standards setting is extremely important to commerce in general and to the evolving new economy, characterized by the high tech sector, in particular." He praised the FASB for "modernizing appraisals of intangible assets to reflect the realities of many information based companies." He also said the the Committee "will play a strong oversight role in the adoption of any international standards by the United States." Similarly, Rep. Anna Eshoo (D-CA), who represents a Silicon Valley district, stated that "there are tensions of values between the FASB and the Congress," but this is "healthy".
See also, prepared testimony of witnesses: Edmund Jenkins (FASB), James Leisenring (International Accounting Standards Board), and Barry Rogstad American Business Conference).
More News
7/31. The House Science Committee's Research Subcommittee held a hearing titled "Innovation in Information Technology: Beyond Faster Computers and Higher Bandwidth." The hearing examined the effect of federal research and development spending on promoting innovation in information technology.
7/31. The USPTO published the online version of USPTO Today [PTO] for July/August.
7/31. The USPTO published a final rule in the Federal Register adjusting certain patent fees. See, Federal Register, July 31, 2001, Vol. 66, No. 147, at Pages 39447 - 39450.
Intergraph Files Patent Infringement Suit Against Intel
7/30. Intergraph filed a complaint [PDF] in U.S. District Court (EDTex) against Intel alleging patent infringement. Intergraph alleges that Intel infringed two Intergraph patent pertaining to parallel instruction computing, through the manufacture and sale of processors and computing systems based on Intel's IA-64 EPIC (explicitly parallel instruction computing) architecture. IA-64 EPIC is included in Intel's new Itanium chips.
Patents in Suit. Intergraph alleges infringement of U.S. Patent Nos. 5,794,003. and 5,560,028, of which it is the assignee. The '003 patent is titled "Instruction cache associative crossbar switch system". It discloses a "computing system as described in which individual instructions are executable in parallel by processing pipelines, and instructions to be executed in parallel by different pipelines are supplied to the pipelines simultaneously. The system includes storage for storing an arbitrary number of the instructions to be executed. The instructions to be executed are tagged with pipeline identification tags indicative of the pipeline to which they should be dispatched. The pipeline identification tags are supplied to a system which controls a crossbar switch, enabling the tags to be used to control the switch and supply the appropriate instructions simultaneously to the differing pipelines."
The '028 patent is titled "Software scheduled superscalar computer architecture." It discloses a "computing system is described in which groups of individual instructions are executable in parallel by processing pipelines, and instructions to be executed in parallel by different pipelines are supplied to the pipelines simultaneously. During compilation of the instructions those which can be executed in parallel are identified. The system includes a register for storing an arbitrary number of the instructions to be executed. The instructions to be executed are tagged with pipeline identification tags and group identification tags indicative of the pipeline to which they should be dispatched, and the group of instructions which may be dispatched during the same operation. The pipeline and group identification tags are used to dispatch the appropriate groups of instructions simultaneously to the differing pipelines."
Request for Relief. Intergraph asks for a declaration that the patents in suit have been infringed, preliminary and permanent injunctive relief, actual damages, and enhanced damages.
Forum Shopping. Intergraph is a Delaware Corporation based in Huntsville, Alabama. Intel is a Delaware Corporation based in Santa Clara, California. The inventors are residents of California. Intergraph filed its complaint in Marshall, Texas, a town of 25,000 located at the intersection of U.S. Routes 59 and 80.
Wednesday, August 1
9:30 AM. The Senate Commerce Committee will hold a hearing on trade issues. Location: Room 253, Russell Building.
10:00 AM. The Senate Finance Committee will hold a hearing on whether to extend the existing Internet tax moratorium, and whether to allow state and local governments to impose sales taxes on remote sellers, including Internet retailers. The scheduled witnesses are: Tom Woodward (Congressional Budget Office), Frank Shafroth (National Governors Association), David Bullington (Wal-Mart), Frank Julian (Federated Department Stores), Michael Grieve (American Enterprise Institute), Steven Rauschenberger (Nat. Conf. of State Leg.), Jeff Friedman (KPMG). Location: Room 215, Dirksen Building.
10:00 AM. The Senate Banking Committee will hold a meeting to mark up legislation and to vote on nominations. The agenda includes the nominations of Michael Garcia to be Assistant Secretary of Commerce for Export Enforcement and Henrietta Fore to be Director of the Mint. Location: Room 538, Dirksen Building.
10:00 AM - 12:00 NOON. The U.S. International Telecommunication Advisory Committee Telecommunication Development Sector (ITAC-D) will hold a public meeting. 48 hour pre-clearance is required. See, notice in Federal Register, July 16, 2001, Vol. 66, No. 136, at Pages 37086 - 37087. Location: Room 2533A, Department of State, 2201 C Street, NW, Washington DC.
10:15 AM. The House International Relations Committee will meet to mark up several bills, including HR 2581, the Export Administration Act of 2001, sponsored by Rep. Benjamin Gilman (R-NY). Location: Room 2172, Rayburn Building.
10:30 AM. The House Education Committee will meet to mark up several bills, including HR 1992, the Internet Equity and Education Act of 2001, sponsored by Rep. Johnny Isakson (R-GA). The bill would make it easier to obtain federal financial aid for web based education programs. Location: Room 2175, Rayburn Building.
12:30 PM. Carl Yankowski, CEO of Palm will speak at an NPC Luncheon. For more information, call 202-662-7501 or e-mail Location: National Press Club, 529 14th St. NW, 13th Floor, Washington DC.
2:30 PM. The Senate Commerce Committee will hold a hearing on several pending nominations, including Nancy Victory to be Assistant Secretary of Commerce for Communications and Information. Location: Room 253, Russell Building.
Thursday, August 2
10:30 AM. Reps. Richard Neal (D-MA), Tom Davis (R-VA), Zoe Lofgren (D-CA), and Jerry Weller (R-IL) will hold a press conference to announce the introduction of legislation to reform the Alternative Minimum Tax (AMT) treatment of Incentive Stock Options (ISOs). Location: House Triangle.
Yesterday's edition of the TLJ Daily E-Mail Alert reported on the decision of the U.S. Court of Appeals (8thCir) in Steele v. Bemidji. The hyperlink to the opinion in most copies of the Alert was incorrect. See, correct hyperlink.
About Tech Law Journal
Tech Law Journal is a free access web site and e-mail alert that provides news, records, and analysis of legislation, litigation, and regulation affecting the computer and Internet industry. This e-mail service is offered free of charge to anyone who requests it. Just provide TLJ an e-mail address.

Number of subscribers: 1,913.
Contact: 202-364-8882; E-mail.
P.O. Box 15186, Washington DC, 20003.
Privacy Policy
Notices & Disclaimers
Copyright 1998 - 2001 David Carney, dba Tech Law Journal. All rights reserved.