| Rep. Goodlatte Introduces
Gambling Bill |
11/1. Rep. Bob
Goodlatte (R-VA) and others introduced the Combatting
Illegal Gambling Reform and Modernization Act [PDF].
The bill would amend 18 U.S.C. §§ 1081 and 1084, which
contain the definitions and prohibition, respectively, of the
Wire Act. The Wire Act currently criminalizes the use of
"wire communications facilities" in interstate
commerce for gambling. The Wire Act does not ban gambling.
This is a matter of state law. The Goodlatte bill expands the
prohibition to cover all communications between states or with
other foreign countries. It maintains the principle that
gambling is otherwise a matter of state law. Hence, under the
Goodlatte bill, use of the Internet for gambling purposes
would become illegal (if interstate or foreign).
Rep. Goodlatte held a press conference to announce the
introduction of the bill. He was joined by several cosponsors
of the bill, including Rep.
Mike Oxley (R-OH) and Rep. John LaFalce
(D-NY), who are the Chairman and ranking Democrat on the House Financial
Services Committee. On October 31, this Committee
amended and approved HR 556,
the Unlawful Internet Gambling Funding Prohibition Act,
by vote of 34 to 18. HR 556 would attempt to stem illegal
Internet gambling by preventing the use of credit cards, wire
transfers, and other financial instruments in connection with
illegal Internet gambling. Rep. Oxley stated that the two
bills are complimentary.
Rep. Lamar Smith
(R-TX), Chairman of the House Judiciary
Committee's Crime Subcommittee, stated his support for the
bill. He said that he expected to hold a hearing, and maybe a
mark up, before the end of the year. Rep. Jim Gibbons
(R-NV) stated that legalized gambling, such as in Nevada, is
heavily regulated and taxed, while Internet gambling is
illegal, unregulated and untaxed. He also said that the
Goodlatte bill does not conflict with, or preempt Nevada state
law.
Rep. Frank Wolf
(R-VA) also attended the press conference. Rep. Rick Boucher
(D-VA), who is a Co-Chairman of the Internet Caucus, along
with Rep. Goodlatte, did not attend; however, Rep. Goodlatte
said that he supports the bill.
All Communications. The criminal prohibition of the
Wire Act, 18
U.S.C. §§ 1084 currently provides 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 ... shall be
fined under this title or imprisoned not more than two years,
or both." Since the current statute affects only wire
communication facilities, and some Internet communications do
not involve wires, it leaves open the possibility that some
Internet gambling may not be illegal under the Wire Act.
The Goodlatte bill provides that "whoever, being engaged
in a gambling business, knowingly (1) for the transmission in
interstate or foreign commerce ..." or between the U.S.
and abroad "... of bets or wagers ... shall be fined
under this title or imprisoned not more than five years, or
both." Hence, it pertains to all communications, not just
wire communications. Moreover, the maximum penalty for
violation is increased from 2 to 5 years.
Also, the Goodlatte bill would amend 18
U.S.C. § 1081, which currently defines ''wire
communication facility'' as "any and all
instrumentalities, personnel, and services (among other
things, the receipt, forwarding, or delivery of
communications) used or useful in the transmission of
writings, signs, pictures, and sounds of all kinds by aid of
wire, cable, or other like connection between the points of
origin and reception of such transmission." As amended,
it would provide that "communications facility"
means "any and all instrumentalities, personnel, and
services (among other things, the receipt, forwarding, or
delivery of communications) used or useful in the transmission
of writings, signs, pictures, and sounds of all kinds by aid
of wire, cable, satellite, microwave, or other like connection
(whether fixed or mobile) between the points of origin and
reception of such transmission."
Illegal Gambling Funding. The Goodlatte bill also
criminalizes "the transmission of a communication in
interstate or foreign commerce ... 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". Also, like HR 556,
the bill prohibits the use of credit, electronic funds
transfers, and checks in connection with illegal gambling.
Exclusion of Fantasy Sports Leagues. The Goodlatte bill
also contains a detailed definition of "bets or
wagers". This definition excludes "participation in
any game or contest in which participants do not stake or risk
anything of value other than (I) personal efforts of the
participants in playing the game or contest or obtaining
access to the Internet". This definition also excludes
certain "participation in any simulation sports game or
educational game or contest in which (if the game or contest
involves a team or teams) all teams are fictional and no team
is a member of an amateur or professional sports organization
..." and the distribution of winnings conforms to the
requirements of the bill.
Exclusion of Intrastate Online Gambling. The bill also
excludes certain intrastate Internet gambling activities. It
provides that "Nothing in this section prohibits the use
of a communication facility for the transmission of bets or
wagers or information assisting in the placing of bets or
wagers, if (1) at the time the transmission occurs, the
individual or entity placing the bets or wagers or information
assisting in the placing of bets or wagers, the gambling
business, and any facility or support service processing those
bets or wagers is physically located in the same State, and
the State has a secure and effective customer verification and
age verification system to assure compliance with age and
residence requirements ..." Nevada has enacted a relevant
statute, but not licensed any such operations.
Exclusion of Internet Advertising. The Goodlatte bill
also excludes advertising from its definition of
"information assisting in the placing of bets or
wagers". Hence, legal gambling operations could still
advertise on the Internet.
Enforcement. In addition to criminal penalties, the
bill would allow federal, state, local, and tribal law
enforcement agencies to obtain injunctions against violation
of the act. It also provides that "any common carrier,
subject to the jurisdiction of the Federal Communications Commission"
may enjoined from providing service to entities in violation
of the act, and gives such carriers immunity from suit for
discontinuing such service.
ISP Exception. Finally, the bill provides that "No
relief requiring the blocking of websites may be granted under
paragraph (1) against an interactive computer service (as
defined in section 230(f) of the Communications Act of 1934),
unless the service is acting in concert with a person who is
violating the law and the service receives actual notice of
the relief." |
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| Colin Powell Addresses
Trade and Technology |
10/31. Secretary of State Colin Powell gave a speech
in Washington in which he praised the benefits of trade, trade
promotion authority, and technology.
He stated that "in this new century, we have the
potential to lift tens of millions of people out of poverty,
to help them give voice to their aspirations for a better
life, and to free the human spirit within them. I believe in
the power of trade and technology, because I have seen it here
in America, I have seen how it works. Our country has the
world's highest standard of living and the largest and most
innovative economy, in large part thanks to you, the
manufacturers of America, willing to take advantage of
technology and the new open trading opportunities that
exist."
Benefits of World Trade. Powell stated that trade and
investment "lift people out of poverty and expand the
global middle class", "create conditions for
expanded personal freedom", "support rule by law,
not by political whim", "promotes international
responsibility", and "are the keys to open and
vibrant societies that are receptive to new ideas".
Trade Promotion Authority. Powell also argued that
"most important of all, we need Trade Promotion
Authority, TPA. Because for the United States to be credible
at the negotiating table, our trading partners need to know
that there will be no further negotiation on an agreement once
we have reached an agreement with them. And that is what TPA
does. It gives us credibility in the negotiating process and
paves the way for US leadership."
Technology at the State Department. Powell stated that
"We are all on the same web page, so to speak. For I
believe that trade and technology -- my children are trying to
make me literate in all this stuff -- I've gotten pretty good.
In fact, I scare the devil out of the guys at the State
Department. Because I say, we're all going to be on the Web at
State, all 30,000 computers that we have around the world, I
want everyone to have Internet access immediately. And that's
costing us a bunch of money, and it's causing people to change
the way we think about doing things." |
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| Powell Forms Merger Review
Team for EchoStar DirecTV |
11/1. FCC Chairman Michael Powell announced the formation of
an FCC merger review group for EchoStar's proposed
acquisition of DirecTV. The group will be headed by Kenneth
Ferree. The other members will be Jim Bird, David Sappington,
Barbara Esbin, Julius Knapp, JoAnn Lucanik, Royce Sherlock,
Donald Stockdale, and Doug Webbink.
Ferree is Chief of the FCC's Cable
Services Bureau. Another member of the group, Royce
Sherlock, is the Deputy Chief of the Policy Division of the
Cable Services Bureau. Esbin also works in this bureau.
However, neither EchoStar nor DirecTV are cable companies;
they are satellite broadcasters. Also, Knapp is Deputy Bureau
Chief of the Office of Engineering & Technology. Moreover,
three of the eight are economists. Sappington is the FCC's
Chief Economist. Stockdale is an Economist in the FCC's Office
of Plans and Policy. Webbink is an Economist in the FCC's
International Bureau.
If regulators at the DOJ, FTC and FCC were to focus on the
market for multi channel video programming via satellite
broadcast as the relevant market for antitrust analysis
purposes, then the merger would be objectionable on the basis
of concentration. However, if regulators were to view the
relevant market as all providers of multi channel video
programming, including DBS, cable, and technologies still in
development, then the merger may be good for competition.
Hence, it may be significant that Chairman Powell has selected
a team that includes cable regulators as well as satellite
regulators, and technologists and economists as well as
lawyers.
Jim Bird, who has also been picked for the team, holds the
titles of Senior Counsel in the FCC's Office of General Counsel,
and head of its Transaction
Team. Former FCC Chairman William Kennard brought Bird to
the FCC in January of 2000 to head of the FCC's de facto
antitrust merger review process. He previously worked for the
law firm of Shea &
Gardner. See, FCC release
of January 12, 2000.
JoAnn Lucanik is with the Satellite Division of the FCC's International Bureau.
Finally, Esbin is an Associate Bureau Chief in the Cable
Services Bureau. She is the author of the FCC's 1998 study, OPP
Working Paper No. 30 [PDF], titled "Internet Over
Cable: Defining the Future in Terms of the Past." This is
a tome -- 129 pages and 497 footnotes. See, TLJ
News Analysis from 1998 regarding this report. Esbin
recently returned to the FCC following a short stay at the law
firm of Dow Lohnes.
Chairman Powell stated in a release
that "The team I have assembled includes experts from
different FCC offices and bureaus that deal with areas and
issues relevant to these companies and I am confident that the
review will be thorough, fair and timely. Given the
significant concentration that would result from this
transaction, it will be rigorously scrutinized by this team
and the Commission."
On October 28, EchoStar Communications, which provides
satellite broadcasting under the name Dish Network, and
General Motors (GM), which owns Hughes Electronics, which
provides satellite broadcasting under the name DirecTV,
announced the signing of definitive agreements that provide
for the spin off of Hughes from GM and the merger of Hughes
with EchoStar. See, EchoStar release
announcing the merger.
The FCC has no statutory authority to conduct antitrust merger
reviews; the DOJ and FTC do. The FCC does, however, have
authority to determine whether the transfer of licenses issued
by the FCC are in the public interest. It often conducts
proceedings on license transfer applications that are
duplicative of the DOJ's or FTC's antitrust merger reviews.
Also, while Powell has appointed a team to review this
transaction, no license transfer application has been
submitted to the FCC for its review. |
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| House Subcommittee Holds
Hearing on Kids Domain |
11/1. The House
Commerce Committee's Subcommittee on Telecommunications
and the Internet held a legislative hearing on HR
2417, the Dot Kids Domain Name Act of 2001. The
bill, as introduced, would attempt to require the ICANN
to create a top level domain for content suitable for minors.
However, an amendment would merely require the NTIA to ensure
that a second level domain -- .kids.us -- is created for this
purpose. Members of the subcommittee lauded these proposals.
Nancy Victory, head of the NTIA,
offered her criticism.
Rep. Fred Upton
(R-MI), the Chairman of the Subcommittee, stated that
"just like dot com, or dot gov, or dot org -- a dot kids
should be created, which would be a safe place devoted solely
to material which is appropriate for kids -- where parents
could choose to send their kids."
Rep. Ed Markey
(D-MA), the ranking Democrat, said that this arrangement would
be distinguishable from prior legislation that has been held
unconstitutional by the courts. He said that only speech in
the .kids.us space would be affected. Speech elsewhere on the
Internet would remain unaffected. He added that "there is
no requirement that anyone use this space." Rep. John Shimkus
(R-IL), the lead sponsor of the bill, predicted that the bill
has a good chance of moving in the House.
Nancy Victory said in her opening testimony
that "The bill as introduced seeks to mandate the
creation of a top level ".kids" domain by requiring
the Internet Corporation for Assigned Names and Numbers (ICANN)
to select a .kids domain operator. Such regulation of the
management of the Internet domain name system is inconsistent
with the established policy goal of privatization of that
system, and particularly, private sector leadership with
respect to the introduction of new top level domains."
She continued that "Among other things, unilateral action
by the United States to create an "international"
.kids domain is at odds with the global nature of the Internet
and its domain name system. International reaction to U.S.
efforts to legislate in the area of domain name management
could hamper the United States' abilities to advance its
foreign policy objectives, particularly critical
telecommunications and information policy goals. Our
international allies have a strongly held aversion to United
States' efforts to assert its national will on the Internet, a
global resource."
Victory added that the amendment providing for the creation of
a .kids.us domain space eliminates some of these objections,
but "still raises some policy and legal grounds.
Particularly, I note that the amendment continues to require
content standards and enforcement by the Department of
Commerce. It also alters the existing contractual obligations
between the Department of Commerce and NeuStar that were
established through the government procurement process and it
changes the company's expectations with respect to its
opportunities under the award."
The Subcommittee also heard testimony from David Hernand (CEO
of Neu.Net), Page Howe (P/CEO of KidsDomain), Bruce Taylor
(President and Chief Counsel of the National Law Center for
Children and Families), and Donna Hughes (former COPA
Commissioner).
No one from the Center for
Democracy and Technology (CDT) testified at the hearing.
However, on October 31 the group wrote a letter
to Rep. Upton and Rep. Markey that is critical of HR 2417, the
.kids Domain Name Act. |
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| DOJ Files Amicus Brief in
NARM v. Sony |
10/31. The U.S. Department
of Justice filed an amicus
curiae brief in NARM
v. Sony, a case involving antitrust law. The National Association of Recording
Merchandisers (NARM) filed an eleven count complaint
[PDF] in U.S. District
Court (DDC) against Sony alleging violation of Sherman Act
(illegal tying, reciprocal dealing, and exclusive dealing),
the Robinson Patman Act, the Lanham Act, and other laws. NARM
complained about Sony's bundling of products and services on
digital sound recordings sold to NARM members.
The DOJ brief addresses only the antitrust and Robinson Patman
Act issues. The DOJ wrote that "it is our view that the
complaint fails to provide an adequate factual predicate for
NARM's claims that Sony has violated the federal antitrust
laws through its inclusion of hyperlinks and related products
and services in the music CDs that it sells to NARM retailers
or through its relationships with record clubs such as
Columbia House." The DOJ also wrote that "the
Robinson Patman Act does not apply to the transactions
alleged."
The brief was prepared by David Seidman of the DOJ's Antitrust Division. |
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| Cal App Overturns
Injunction in DeCSS Case |
11/1. The California
Court of Appeal (6th) issued its opinion
[PDF] in DVD
Copy Control Association v. Bunner, reversing a
trial court preliminary injunction against publishing copies
of the DeCSS program in web sites. The injunction had been
based upon California trade secret law.
Plaintiff. DVD is sometimes known as Digital Versatile
Disc. CSS is a Content Scrambling System for DVD to protect
intellectual property rights by means of encryption. The DVD
Copy Control Association (DVDCCA) is a trade association of
businesses in the movie industry. It controls the rights to
CSS. DVDCCA licenses the CSS decryption technology to
manufacturers of hardware and software for playing DVDs.
Defendant. DeCSS is a decryption tool that facilitates
piracy. DeCSS consists of computer source code which describes
a method for playing an encrypted DVD on a non CSS equipped
DVD player or drive. It was written by Jon Johansen, a 15 year
old Norwegian. Andrew Bunner published a copy of DeCSS on a
web site.
Complaint. The DVDCCA filed a complaint in 1999 in
California Superior Court against Andrew Brunner and others
alleging violation of the California Uniform Trade Secrets Act
in connection with their publishing copies of DeCSS in web
sites, or linking to copies of DeCSS.
Preliminary Injunction. The Superior Court issued an
order granting a preliminary injunction in January 2000 which
enjoined defendants from "[p]osting or otherwise
disclosing or distributing, on their web sites or elsewhere,
the DeCSS program, the master keys or algorithms of the
Content Scrambling system (‘CSS’), or any other
information derived from this proprietary information."
The Court of Appeal. It reasoned that the DeCSS source
code is speech entitled to First Amendment protection. It also
noted that unlike copyright, trade secret protection is not
secured by the Constitution. The Court of Appeal further
reasoned that the Superior Court order constituted a prior
restraint of pure speech. It reversed. |
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| Friday, Nov 2 |
The House will meet at 9:00 AM for legislative business; no
votes are expected past 2:00 PM.
9:00 AM - 5:00 PM. National
Institute of Standards and Technology (NIST) will hold
second session of a two day workshop to discuss the
development of cryptographic key management guidance for
federal government applications. Location: Administration
Building (Bldg. 101), Lecture Room A, National Institute of
Standards and Technology, Gaithersburg, MD. See, notice
in Federal Register, June 27, 2001, Vol. 66, No. 124, at Page
34155.
9:30 AM. The U.S.
Court of Appeals for the District of Columbia Circuit will
hear oral argument in COMSAT v. FCC, No. 00-1458.
Judges Edwards, Williams and Randolph will preside. Location:
333 Constitution Ave., NW, Washington DC.
9:30 AM. The Center for
Digital Democracy will hold a press conference titled
"The Future of the Internet". For more information,
contact Jeffrey Chester at 202 232-2234. Location: First
Amendment Room, National Press Club.
12:15 PM. The Federal
Communications Bar Association's (FCBA) Wireless
Telecommunications Practice Committee will host a luncheon
titled "Secondary Markets: FCC Initiatives on Promoting
the Lease of Spectrum." The speaker will be William Kunze,
Chief of the Commercial Wireless Division. The price to attend
is $15. RSVP to Wendy Parish
no later than Tuesday, October 30. Location: Sidley & Austin, 1501 K
Street, NW, Rm 6-E, Washington DC. |
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| Monday, Nov 5 |
9:30 AM. The U.S.
Court of Appeals for the District of Columbia Circuit will
hear oral argument in Teledesic v. FCC, No. 00-1466.
Judges Edwards, Williams and Randolph will preside. Location:
333 Constitution Ave., NW, Washington DC.
10:00 AM. The FCC's
Technological Advisory Council will hold a meeting. See, notice
in Federal Federal Register, October 5, 2001, Vol. 66, No.
194, at pages 51046 - 51047. Location: FCC, 445 12th St., SW.,
Room TW-C305, Washington DC.
Status conference in USA v. Microsoft.
9:30 AM - 5:30 PM. Day one of a three day conference and
exhibition hosted by the NIST
and NISO titled "4th
annual Electronic Book Conference". See, Nov.
5 agenda. The price to attend is $400. See, registration
page. Location: Ronald Reagan Building, 1300 Pennsylvania
Ave., NW, Washington DC. |
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| Tuesday, Nov 6 |
9:30 AM - 5:30 PM. Day two of a three day conference and
exhibition hosted by the NIST
and NISO titled "4th
annual Electronic Book Conference". The price to attend
is $400. See, registration
page. Location: Ronald Reagan Building, 1300 Pennsylvania
Ave., NW, Washington DC. See, Nov.
6 agenda.
12:30 PM. The Federal
Communications Bar Association's (FCBA) State and Local
Practice Committee will host a brown bag luncheon on "OTARD"
and status of BOMA v. FCC. The speakers will be Matthew Ames
(Miller & Van Eaton), James Barker (Latham & Watkins),
and Jeffrey Steinberg (Wireless Telecommunications Bureau).
RSVP to Mitsi
Herrera. Location: Wiley
Rein & Fielding, 1750 K Street, NW, Washington DC. |
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| Wednesday, Nov 7 |
9:30 AM - 5:30 PM. Day three of a three day conference and
exhibition hosted by the NIST
and NISO titled "4th
annual Electronic Book Conference". The price to attend
is $400. See, registration
page. Location: Ronald Reagan Building, 1300 Pennsylvania
Ave., NW, Washington DC. See, Nov.
6 agenda.
10:00 AM. The House
Commerce Committee's Subcommittee on Commerce, Trade and
Consumer Protection will hold a hearing titled
"Challenges Facing the Federal Trade Commission".
FTC Chairman Timothy Muris will be the only witness.
Location: Room 2123, Rayburn Building.
10:00 AM. The Senate
Judiciary Committee has scheduled a hearing on pending
nominations. Location: Room 226, Dirksen Building.
12:15 PM. The Federal
Communications Bar Association's (FCBA) Online
Communications Committee will host a brown bag lunch titled
"Broadband, When? -- the View from Earthlink". The
speaker will be Dave Baker, VP of Law & Public Policy at
Earthlink. RSVP to Scott
Blake Harris at sharris@
harriswiltshire.com. Location: Lampert & O'Connor, 5th
Floor, 1750 K Street, NW, Washington DC. |
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| 3rd Circuit Dismisses
Interconnection Appeal |
| 11/1. The U.S.
Court of Appeals (3rdCir) issued its opinion
in AT&T
v. Verizon, a case regarding interconnection
agreements. The New Jersey Division of the Ratepayer Advocate
appealed an order of the U.S. District Court (DNJ) affirming
the New Jersey Board of Public Utilities' determination with
respect to interconnection rates for AT&T's and Verizon's
New Jersey corporations. The Appeals Court did not reach the
merits; rather, it dismissed the appeal on the grounds that
appellant lacked constitutional standing to bring this appeal. |
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