| Powell Outlines FCC's
Agenda |
10/23. Federal Communications
Commission (FCC) Chairman Michael Powell
gave a major address
in the FCC's Commission Meeting Room titled "Digital
Broadband Migration Part II". It was a follow up to his
December 8, 2000, speech
titled "The Great Digital Broadband Migration". He
stated that "breakthroughs in technology would drive an
exodus from existing analog optimized architecture to digital
optimized architecture" and that "the notion of
migration was that the transition would be long, and perhaps
arduous, but was nonetheless essential for survival."
He stated that the purpose of his speech was "to
articulate the next installment of this vision and outline the
five specific areas that will guide the Commission’s
agenda." The five areas which he covered in the speech
were broadband deployment, competition policy, spectrum
allocation policy, re-examination of the foundations of media
regulation, and homeland security. For each of these five
areas, he listed a set of policy objectives, and a list of
actions to be taken by the FCC, such as studies, reviews, and
rule making proceedings.
He stated that he wants to achieve universal availability of
broadband services, move towards a market oriented spectrum
allocation policy, and extend universal service goals to
advanced services. He also stated that facilities based
competition is the ultimate objective of the FCC's competition
policy. He was asked about the status of the NextWave
negotiations. However, he declined to provide details, but
stated that he wants to maintain "auction
integrity".
Several telecom entities released statements commending
Powell's address. See, statement
by Walter McCormack (USTA P/CEO), statement
by Russell Frisby (CompTel
President), and statement
by Herschel Abbott (BellSouth
VP for Governmental Affairs). |
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| Powell Outlines Competition
Policy |
| 10/23. FCC Chairman Powell stated his four competition
policy objectives for the FCC. First, he said that
"Facilities based competition is the ultimate
objective." He elaborated that "I believe that other
methods of entry are useful interim steps to competing for
local service, but Commission policy should provide incentives
for competitors to ultimately offer more of their own
facilities." Second, he stated that "Competition in
the digital broadband world should come from many
platforms." Third, he said that he favored
"Simplified, Enforceable Interconnection Rules."
Finally, he stated that "Universal service should be
preserved in a manner that provides meaningful opportunities
for competition." |
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| Powell Addresses Universal
Service and Internet Services |
10/23. Powell stated that the goals of universal service
remain to make service "as widely available as
possible" and "as affordable as possible". He
said that subsidization in the telephony context "was an
extraordinarily successful policy." However, he added
that it "was a policy optimized for the monopoly
environment. And when Congress choose to change the directions
in a competitive environment, some of its objectives there
were frustrated, not by the goal of universal service, but the
method in which it was applied."
He continued that "there is a bigger set of questions
about the next chapter of advanced services. There are going
to be many different characteristics of that service. There
are going to many different cost dynamics. And, I want to be a
voice that says, 'Take a deep breath before we rush into this,
and really think about achieving universal service goals in a
way that is not nearly as heavily regulated, or it requires
less intervention, or will be more consistent with economic
principals, so that we don't get to the end of it, and we are
having this same discussion about, 'Oh gosh, where is all the
broadband competition, and why didn't it occur. And, we all
sit around and saying, 'It is because we put the cart before
the horse in terms of the way we regulated." He made
these comments during the question and answer portion of his
address. |
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| Powell Outlines FCC
Broadband Policy |
10/23. Chairman Powell outlined five principal broadband
policy objectives for the FCC. First, "The Nation should
commit to achieving universal availability of broadband."
He stressed that the goal should be "availability"
rather than "adoption". Second, "Broadband
service should exist in a minimally regulated space." He
elaborated that "Substantial investment is required to
build out these networks and we should limit regulatory costs
and regulatory uncertainty. We should guard against regulatory
creep in order to encourage investment by avoiding the
threatening overhang of future regulation." However, he
did not state which existing rules or proposals he opposes.
Third, "There should be multiple broadband
platforms." Fourth, "Promote universal service
objectives in economically sound ways." And fifth,
"Do not let definitional battles define regulatory
treatment."
Powell also discussed actions to be taken by the FCC. He said
that the FCC will continue to study broadband issues in its
annual Section
706 reports. He also stated that the FCC "needs to
consider expeditiously how to classify the various forms in
which these services are provisioned and consider what the
access obligations will be for them." He also referenced
three proceedings that "will be used as a vehicle for
clarifying regulatory treatment of broadband infrastructure
and service". These are "The New Networks
Proceeding", "The Cable Open Access
Proceeding", and "The 3G Spectrum Proceedings". |
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| Appeals Court Denies
Rehearing for Trans Union |
10/23. The U.S.
Court of Appeals (DCCir) issued its opinion
in Trans
Union v. FTC, denying Trans Union's petition
for rehearing. On April 13 the Appeals Court issued its
original opinion
in favor of the FTC. This proceeding is a petition for review
of an FTC cease and desist order
regarding the sale of consumer reports by credit reporting
agencies for marketing purposes. On April 13 the Appeals
Court upheld the FTC's order that Trans Union (TU) must stop
selling target marketing lists for purposes not listed in the Fair Credit Reporting Act
(FRCA). The Appeals Court also upheld the constitutionality of
the FRCA.
Petitition for Rehearing. TU argued in its petition for
rehearing that the Appeals Court incorrectly applied the
opinion of the Supreme Court in Dun & Bradstreet v. Greenmoss
when it applied only intermediate scrutiny to TU's target
marketing lists. In denying this petition for rehearing the
Appeals Court stated that these lists comprise speech of
purely private concern, read by only TU and a few of its
customers.
Trans Union. TU is one of the three large credit
reporting agencies. It compiles credit reports about
individuals from credit information that it collects from
banks, credit card companies, and other lenders. Its databases
contain information on 190 Million people. It then sells these
credit reports to lenders, employers, and insurance companies.
This practice is not at issue. However, TU also sells target
marketing products to direct marketers. These consist of lists
of names and addresses of individuals who meet specific
criteria, such as possession of an auto loan, a department
store credit card, or two or more mortgages. This practice at
issue.
Fair Credit Reporting Act. The FTC
has responsibility for enforcing the FCRA. This statute
protects the privacy of credit information by prohibiting
credit reporting agencies from selling "consumer
reports", except under the circumstances enumerated in
the Act. The FRCA lists whether to approve an application for
credit, employment, or insurance -- but not direct marketing.
The FRCA defines a "consumer report" as any
information provided "by a consumer reporting agency
bearing on a consumer's credit worthiness, credit standing,
credit capacity, character, general reputation, personal
characteristics, or mode of living which is used or expected
to be used or collected in whole or in part for the purpose of
serving as a factor in establishing the consumer's eligibility
for (A) credit ..."
Earlier Proceedings. The FTC has been trying to stop
this practice for a decade. The FTC instituted a proceeding
against TU in 1992. The FTC first issued a cease and desist order
in 1994. However, the Court of Appeals granted TU's petition
for review, on the grounds that the FTC had failed to provide
evidence that TU's target marketing products were used by
marketers in the issuance of credit. See, Trans Union Corp. v.
FTC, 81 F.3d 228 (DCCir 1996). So, the FTC conducted extensive
discovery, held a month long administrative trial, and
documented this contention. It again ordered TU to stop. TU
then filed this petition for review.
April 13 Opinion. The Court of Appeals denied the
petition for review in its April 13 order. First, TU argued
that the FTC again failed to provide substantial evidence in
support of its findings. The Appeals Court this time held that
the FTC had provided substantial evidence that the target
marketing lists being sold by TU to marketers were being used
as a factor in granting credit, and hence, are "consumer
reports" within the meaning of the FRCA. Second, TU
argued that the FRCA is unconstitutionally vague under the due
process clause of the Fifth Amendment, and that it is an
unconstitutional restraint on free speech. TU sought
application of the strict scrutiny standard. The Appeals Court
upheld the FRCA's constitutionality, applying the reduced
constitutional protection standard for commercial speech
articulated by the Supreme Court in the Dun & Bradstreet
case. |
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| Powell Discusses Spectrum
Policy and 3G |
10/23. FCC Chairman Michael Powell stated in his October 23 address
that "our Nation's approach to spectrum allocation is
seriously fractured. There have been dramatic changes in
spectrum requirements and technology and services that use
spectrum since 1934. Yet, while we have made some major
strides in how we assign spectrum (principally through
auctions), allocation policy is not keeping pace with the
relentless spectrum demands. The spectrum allocation system is
not effectively moving spectrum to its highest and best use in
a timely manner."
"With new emerging uses, the Commission must not only
evaluate and react to the new services, it must also deal with
the conflicting set of legacy allocation decisions. New
services are forced to demonstrate demand for the service to
justify modification of the allocation table. Lack of proof,
however, makes it hard to do so and unleashes a highly
politicized process. Existing users move to block new uses and
line up support for their position, and the new providers are
forced to do the same. The ultimate decision is reached as a
result of a politicized reactive process."
While Chairman Powell was bluntly critical of existing methods
of allocation, he was vague on what changes he favors. He said
that there should be a move towards "a paradigm of market
oriented allocation policy", but did not provide
specifics. Moreover, he reiterated that spectrum is a
"public resource". And, he did not comment on the
role of the NTIA, other
than to mention that he will work with Nancy Victory, its
chief. The NTIA manages spectrum allocated for military and
government users.
He outlined four broad spectrum policy objectives for the FCC:
"market oriented allocation policy",
"interference protection", "aggressively
promote spectral efficiency", and "reserve and
protect spectrum for public safety." As for planned
actions, he said that the FCC would study existing spectrum
use, map current use of spectrum, and strengthen the FCC's
technical capability.
During the question and answer session he elaborated somewhat
about market oriented spectrum allocation. He stated that
"a lot of, particularly economists, argue that you can't
completely achieve this, but you would increase efficiency and
optimization of spectrum, if the license had, were like a
drivers license ... that you could not preordain what it could
be used for. ... Why is that more efficient? Because if I am
an incumbent that has spectrum, right now I have really no
cost, no ability to truly measure the cost of just using it,
or using it inefficiently, or not using it at all, because I
am not really able to make the transfer to someone who might
value it more highly.
Powell continued: "So, if a broadcaster had spectrum
which he doesn't value highly, but there is a new innovative
data application that values it very highly, a market would
say, facilitate the mission to let that person buy it from
that person. And, much of allocation policy kind of impedes
and restricts the ability to do that. That would allow
spectrum to have more liquidity, and move more efficiently to
new and innovative uses, as opposed to what has to happen
now."
He concluded: "Here is what happens now. The wireless
industry comes to the government and says, 'We need 3G
spectrum. So, get it for us.' We have to then go through an
extraordinary exercise about who to take it away from.
Surprise. They never want to do so. Not only do you have to
take it away, you usually have to find a place to put them,
and you have to pay to put them there. It would be a very
different environment -- if a private participant could come
to them and say, 'we will buy you out', as opposed to
extraordinary government projects." |
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| NCTA Chairman Addresses
State of Cable Industry |
10/23. Michael Willner, Chairman of the NCTA,
gave a speech
regarding the state of the cable industry. He stated that
"the result of the Telecommunications Act of 1996 Act is
impressive but not perfect. In our core business, satellite
provides service to 23% of the multichannel video market -- up
from nearly nothing when the Act was passed. Consumers have
choices in Internet connectivity, deciding between dial-up,
broadband, DSL and satellite options, all competing in the
marketplace. And the deployment of broadband is now
widespread. Nearly two thirds of Americans today have access
to broadband connectivity to the Internet."
He added that "There remains one challenge in bringing
competition to all telecommunications services. The entrenched
local Bell monopolies continue to enjoy near universal market
share. But that too is changing."
Willner is the P/CEO of Insight
Communications, the 8th largest cable operator in the
U.S., with about 1.4 Million subscribers. He spoke in
Washington DC to the Washington Metropolitan Cable Club. |
|
|
| EPIC Restates Complaint
Against Microsoft Windows XP |
10/23. A group of interest groups, led by the Electronic Privacy Information
Center (EPIC), sent a letter
to Federal Trade Commission
(FTC) Chairman Timothy Muris, and to the Chairmen and Ranking
Members of the House and Senate Commerce Committees, restating
their complaint that the soon to be released Windows XP
operating system will adversely affect the privacy of users,
and violate the Federal Trade Commission Act ban on unfair and
deceptive trade practices.
On July 26, 2001, these groups submitted a complaint
[PDF] to the FTC. The complaint states that "Microsoft
has engaged, and is engaging, in unfair and deceptive trade
practices intended to profile, track, and monitor millions of
Internet users. Central to the scheme is a system of services,
known collectively as ".NET," which incorporate
"Passport," "Wallet," and "HailStorm"
that are designed to obtain personal information from
consumers in the United States unfairly and deceptively."
The complainants asked the FTC to investigate Microsoft, and
then order Microsoft to "revise the XP registration
..." However, the FTC has taken no action against
Microsoft.
The signatories to the latest letter are the Center for
Digital Democracy, Center for Media Education, Computer
Professionals for Social Responsibility, Consumer Action,
Consumers Union, EPIC, Electronic Frontier Foundation,
Junkbusters Corp., Media Access Project, NetAction, Privacy
Rights Clearinghouse, and U.S. PIRG.
The Association for
Competitive Technology (ACT) responded to the letter. It
stated that "While claiming to defend consumers, EPIC
seems more concerned with taking away their choices. As
Microsoft improves Passport based on consumer feedback, EPIC's
continued ranting demonstrates that they just don't like the
idea of a 'single logon.' Rather than voicing those concerns
in the marketplace of ideas, however, they are trying to
manipulate government into taking the choice away from
consumers. Contrary to EPIC's continued misstatements,
Passport is a choice and anyone who has concerns can use a
different 'single logon' solution or none at all." |
|
|
| Antitrust News: Newport
News Shipbuilding |
10/23. The Department of
Justice filed a complaint in U.S. District Court (DDC)
to block the proposed acquisition of Newport News Shipbuilding (NNS)
by General Dynamics.
NNS makes nuclear powered aircraft carriers and submarines for
the U.S. Navy, and services ships for the U.S. Navy.
"This merger would give General Dynamics a permanent
monopoly in nuclear submarines and would substantially lessen
competition in surface combatants," said Charles James,
Assistant Attorney General in charge of the Antitrust
Division. "Our armed forces need the most innovative and
highest quality products to protect our county. This merger to
monopoly would reduce innovation and, ultimately, the quality
of the products supplied to the military, while raising prices
to the U.S. military and to U.S. taxpayers." See, DOJ
release.
NNS stated that it "was notified by the Department of
Defense (DOD) of its decision to recommend to the Department
of Justice (DOJ) approval of the Northrop Grumman ... offer to
acquire Newport News Shipbuilding and its decision to
recommend not approving the merger agreement between Newport
News Shipbuilding and General Dynamics ...". See, NNS release. |
|
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| Antitrust News: Pillsbury |
| 10/23. The Federal Trade
Commission (FTC) stated that it "met today in closed
session to consider an enforcement action against the proposed
acquisition by General Mills, Inc. of The Pillsbury Company
from Diageo plc. The Commission considered whether to direct
staff to formulate a proposed consent agreement incorporating
the latest settlement terms offered by the parties. The
Commission's 2-2 vote resulted in no action being taken at
this time. The Commission also considered whether to authorize
staff to seek a preliminary injunction. Again, the
Commission's 2-2 vote resulted in no action being taken at
this time." See also, statement
of Commissioner Anthony, statement
of Commissioner Thompson, and statement
of Commissioners Swindle and Leary. See also, FTC
release. |
|
|
| Antitrust News: Rum |
| 10/23. The Federal Trade
Commission (FTC) announced that it authorized its staff to
seek a preliminary injunction to block Diageo plc's and Pernod
Ricard S.A.'s joint acquisition of Vivendi Universal S.A.'s
Seagram Wine and Spirits business." See, FTC release. |
|
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|
| House Debates Anti
Terrorism Bill |
| 10/23. The U.S. House debated, but did not vote on, HR 3162,
late on Tuesday, October 23. This bill is the conference
report on the anti terrorism bill. The bill was considered
under suspension of rules, meaning that it can not be amended,
and requires a two thirds majority to pass. The vote is
scheduled for Wednesday, October 24. The House passed an
earlier version of the antiterrorism bill, HR 2975,
the PATRIOT Act, by a vote of 337 to 79 on Friday, October 12. |
|
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| Wednesday, Oct 24 |
House. The House is scheduled to meet at 10:00 AM for
legislative business. The House may vote on HR
3162, the anti terrorism bill, and take up HR
3090, Economic Security and Recovery Act of 2001. The
Cannon, Longworth and Rayburn offices remained closed.
Senate. The Russell Building is scheduled to reopen at
9:00 AM. The Hart and Dirksen Buildings "will reopen as
soon as environmental remediation to remove the evidence of
anthrax spores is completed, or until those areas that have
tested positive have been sealed to allow for remediation
without exposing other areas to contamination," according
to Majority Leader Daschle's office.
POSTPONED. 10:00
AM. The House
Commerce Committee's Subcommittee on Commerce, Trade, and
Consumer Protection is scheduled to hold a hearing titled
"Challenges Facing the Federal Trade Commission."
FTC Chairman Timothy Muris will be the only witness.
10:00 AM - 12:00 NOON. The FCC will hold a public forum on the
Commission Registration System (CORES) and FCC Registration
Number. Location: FCC, 445 12th Street, SW, Commission Meeting
Room, Washington DC.
?? 2:00 PM. The Senate Judiciary
Committee's Subcommittee on Technology, Terrorism and
Government Information is scheduled to hold a hearing titled
"The World's Most Wanted Terrorists - Who Are They and
What Do They Want?" Sen. Diane Feinstein
(D-CA) will preside. Location: Room 226, Dirksen Building.
2:30 - 4:30 PM. Roe Hemenway, Manager of Optical Network
Equipment Research at Corning's Sullivan Park research
facility, will give a presentation on optical fiber
communications. See, FCC
release. Location: TW-C305 (Commission Meeting Room), FCC,
445 12th Street, SW, Washington DC.
Deadline for submitting public comments to the FTC's
Bureau of Competition regarding AOL Time Warner's requests for
approval of two alternative cable broadband ISPs. On September
26 and 24, AOLTW submitted two motions to the FTC titled
"Motion for Approval of Non Affiliated ISP and
Alternative Cable Broadband ISP Service Agreement". AOLTW
is required, pursuant to ¶ II.A.2 of the FTC's Decision and
Order [PDF] approving the merger of AOL and Time Warner,
dated April 17, 2001, to enter into such agreements, and
obtain FTC approval. The FTC published a redacted
version of the motion [PDF] regarding AOLTW's agreement
with Internet Junction Corp.
and a redacted
version of the motion [PDF] regarding AOLTW's agreement
with New York Connect.Net, Ltd. |
|
|
| Thursday, Oct 25 |
8:30 - 10:00 AM. Harold Furchtgott-Roth
and others will hold an informal discussion titled "The
Telecommunications Sector in a Slowing Economy". RSVP to
Veronique Rodman at 202-862-4871 or vrodman@ aei.org. Location:
American Enterprise Institute, 1150 17th Street, NW, 11th
Floor Conference Room, Washington DC.
9:30 AM. The Senate
Commerce Committee is scheduled to hold a hearing to
examine promoting broadband, focusing on securing content and
accelerating transition to digital television. Location: Room
253, Russell Building.
POSTPONED. 9:30
AM. The House
Commerce Committee's Subcommittee on Telecommunications
and the Internet is scheduled to hold a legislative hearing on
HR
2417, the Dot Kids Domain Name Act of 2001.
10:00 AM. The Senate
Judiciary Committee might hold an executive business
meeting. Room 226, Dirksen Building.
12:15 PM. The Federal
Communications Bar Association's (FCBA) Common Carrier
Committee will host a brown bag lunch. The speakers will be
Tamara Preiss, Blair Levin, and Jonathan Askin. The topic will
be "Perspectives on Local Competition and Local
Competitors". RSVP to Naja
Wheeler. Location: Wiley
Rein & Fielding, 1750 K Street, 10th Floor, Washington
DC.
Deadline to reply submit comments to the FCC in its rule making
proceeding regarding locating spectrum bands below 3 Ghz for
possible reallocation for Third Generation (3G)
wireless services, and for other purposes. (ET Docket Nos.
00-258 and 95-18 and IB Docket No. 99-81.) See, notice
in Federal Register, September 13, 2001, Vol. 66, No. 178, at
Pages 47618 - 47621.
Deadline to submit reply comments to the FCC in its rule making
proceeding regarding permitting Mobile Satellite Service (MSS)
operators flexibility to use their spectrum for land based
transmitters. (IB Docket No. 01-185, ET Docket No. 95-18.)
See, notice
in Federal Register, September 13, 2001, Vol. 66, No. 178, at
Pages 47621 - 47625. |
|
|
| Friday, Oct 26 |
9:30 AM - 12:00 NOON. The American
Enterprise Institute (AEI) will host a panel discussion
titled "What Should the Government Do about the
Transition to Digital Television?" The participants will
be Harold Furchtgott-Roth (AEI), Stanley Besen (Charles River Associates),
Thomas Hazlett (AEI), Bruce Owen (Economists
Incorporated), Edward Fritts (National Association of
Broadcasters), Robert Sachs (National Cable Television
Association), Gary Shapiro (Consumer
Electronics Association), Richard Wiley (Wiley Rein & Fielding), and
Gregory Sidak (AEI). The price to attend is $5 (waived for AEI
supporters, government employees, and media). Location:
Wohlstetter Conference Center, Twelfth Floor, 1150 17th
Street, NW, Washington DC.
11:00 AM. The Heritage
Foundation will host a panel discussion titled "How
Internet Based School Report Cards are Revolutionizing
Educational Accountability." The speakers will be Bill
Owens (Governor of Colorado), Eugene Hickok (Undersecretary of
Education), and Tom Hinton (Heritage). Location: Heritage
Foundation, 214 Massachusetts Ave NE, Washington DC. |
|
|
| People and Appointments |
10/23. The Senate confirmed by unanimous votes four persons
to be U.S. District Court Judges: James Payne (Northern
Eastern and Western Districts of Oklahoma), Karen Caldwell
(Kentucky), Laurie Camp (Nebraska), Claire Eagan
(Oklahoma).
10/23. President Bush nominated Arden
Bement to be Director of the National Institute of Standards
and Technology (NIST). See, release.
10/23. The Business Software
Alliance (BSA) named Mario Correa to be its
Director of Internet and Network Security Policy. This is a
new position, responsible for managing BSA's global policies
for Internet and IT security related issues, including cyber
crime and cyber terrorism, computer privacy and encryption.
Prior to joining the BSA in 1998, Correa was an assistant to Rep. Connie Morella
(R-MD).
10/23. The Intellectual Property
Owners Association (IPO) named John Maxin of National Semiconductor to
be Chairman of the IPO Insurance Committee. It also named Anthony
Chavez of Exxon Mobil to be Chairman of the IPO Standards
Setting Committee.
10/23. AT&T appointed William
Schleyer to be P/CEO of its broadband services unit,
AT&T Broadband. He
replaces Daniel Somers, who retired. See, AT&T
release. |
|
|
| Fed Circuit Rules in Patent
Infringement Case |
| 10/23. The U.S.
Court of Appeals (FedCir) issued its opinion in Scaltech
v. Retec/Tetra, a patent infringement case
involving waste recycling technology. Scaltech is the holder
of U.S.
Patent No. 5,443,717, titled "Recycle of Waste
Streams". It filed a complaint in U.S. District Court (SDTex)
against Retec alleging infringement. The present appeal, from
judgment on remand, involves the issue of whether the claims
of this patent are invalid under 35 U.S.C.
§ 102(b) because the claimed invention was offered for
sale more than one year before the filing of the patent
application. The Appeals Court affirmed the District Court's
summary judgment of invalidity. |
|
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