Tech Law Journal Daily E-Mail Alert
December 12, 2001, 9:00 AM ET, Alert No. 326.
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House Committee Holds Hearing on NextWave Settlement
12/11. The House Commerce Committee's Subcommittee on Telecommunications and the Internet held a hearing on the proposed settlement agreement involving NextWave and disputed spectrum licenses. Key members of the Committee, including Chairman Billy Tauzin (R-LA), argued that the Congress should swiftly approve legislation implementing the settlement.
Rep. Tauzin stated that "this settlement ought to be approved as rapidly as we can do it." He stated that "this gets the spectrum out", and that "it respects the property rights" of auction winners. FCC Chairman Michael Powell testified at the hearing in defense of the settlement. He urged the Congress to "consider what posture the Government actually is in, as opposed to where we all wish it stood." He argued that the settlement is the best alternative available. See, Powell statement.
On November 27 the FCC released the proposed settlement agreement [PDF] between the Federal Communications Commission (FCC), NextWave, the Department of Justice (DOJ), and the Auction 35 winners. The agreement requires approval by the bankruptcy court, and passage of legislation by Congress by December 31, 2001. The Congress is currently on the verge of recessing for the year.
The proposed settlement has encountered opposition in Congress. On December 6, Sen. Ernest Hollings (D-SC) and Sen. John McCain (R-AZ), the Chairman and ranking Republican on the Senate Commerce Committee, announced their opposition to the proposed settlement. See, transcript [PDF] of press conference.
Rep. Fred Upton (R-MI), the Chairman of the Subcommittee, argued that "there is probably not a better alternative than what is on the table before us." Rep. Rick Boucher (D-VA), a senior Democrat, argued that the settlement is in the public interest for several reasons. He argued that there is currently an acute shortage of spectrum, and the deal would allow immediate use of the disputed spectrum; he argued that the federal government would derive $10 Billion in revenue from the deal; he argued that it would provide an economic stimulus; and, he argued that it would facilitate the deployment of Third Generation (3G) wireless services.
Several members of the Committee stated that the House should take more time to examine the settlement before passing any legislation. Rep. Ed Markey (D-MA), the ranking member of the Telecom Subcommittee, criticized the settlement, and concluded that "Congress would do well to further examine this settlement with more time next year." See, Markey statement. Similarly, Rep. John Dingell (D-MI), the ranking Democrat on the full Committee, stated that "I think that there are many questions to be asked and answered before we legislate."
See also, prepared testimony of witnesses: Joseph Hunt (U.S. Department of Justice), Denny Strigl (Verizon Wireless), Frank Cassou (NextWave Telecom), and Jim Winston (Urban Communicators).
NextWave obtained spectrum licenses at FCC C Block auctions in 1996. The FCC permitted NextWave to obtain the licenses, and make payments under an installment plan, thus creating a debtor creditor relationship between NextWave and the FCC. NextWave did not make payments required by the plan, and filed a Chapter 11 bankruptcy petition. The FCC cancelled the licenses. However, the FCC was blocked by the bankruptcy court, citing § 525 of the Bankruptcy Code. The U.S. District Court (SNDY) affirmed. However, the U.S. Court of Appeals (2ndCir) issued its order and opinion of reversal in May 2000. The FCC then proceeding to re-auction the disputed spectrum in Auction 35. NextWave next petitioned the FCC to reconsider its cancellation of its licenses. The FCC refused, and NextWave petitioned for review in the District of Columbia. The U.S. Court of Appeals (DCCir) ruled in its June 22, 2001, opinion that the FCC is prevented from canceling the spectrum licenses by § 525 of the Bankruptcy Code. The FCC has petitioned the Supreme Court for writ of certiorari. The Supreme Court has not yet announced a decision on this petition. The terms of the settlement agreement require that implementing legislation be passed by the Congress by December 31.
NextWave Spectrum Licenses and Wireless Internet Services
12/11. Under the terms of the proposed NextWave settlement agreement [PDF], the disputed spectrum would immediately be made available to the Auction 35 winning bidders, including Verizon Wireless, Cingular, and others.
Rep. Rick Boucher (D-VA) and Verizon Wireless CEO Denny Strigl argued at the hearing of the House Telecom Subcommittee on December 11 that the proposed settlement would facilitate the deployment of Third Generation (3G) wireless services. 3G is a technology that is intended to bring broadband Internet access to portable devices.
Strigl testified that "most European countries are way ahead of us" on both the licensing of 3G spectrum, and in the development of related software and hardware. He added that "without the spectrum out there, that you are licensing, we are not only behind -- we are desperately behind."
In response to a question from Rep. Boucher, Strigl said that "it is difficult to say exactly any amount of spectrum that will be devoted to 3G services as opposed to voice services. Our intention is to meet our capacity demands, and at the same time roll out 3G services over the entirety of our spectrum. Here is what I know for certain: that without this spectrum, we cannot devote any of the spectrum we have to anything other than voice and short messaging services. Data -- particularly high speed data -- is not a possibility in our major cities with the limited spectrum that we have today."
Rep. Boucher stated that "in the event that Congress does not approve this settlement, and for various reasons, the companies that successfully bid for this spectrum in the re-auctions, decide to take their investment dollars elsewhere, because the complexities that arise out of the absence of Congress approval, you would see an effect, then, on the ability of the United States to have the near term deployment of Third Generation services." Strigl agreed with this statement.
Rep. Boucher also asked: "And you would say that this spectrum is essential to carriers to have to deploy Third Generation services?" Strigl agreed.
DOJ Executes Search Warrants in Software Piracy Investigations
12/11. The Department of Justice (DOJ) announced that "in three separate federal law enforcement actions federal agents executed approximately 100 search warrants worldwide against virtually every level of criminal organizations engaged in illegal software piracy over the Internet." See, DOJ release.
One action, titled "Operation Buccaneer" by the DOJ, is targeting "organizations engaged in the illegal distribution of copyrighted software, games and movies over the Internet". It involves the "execution of 58 search warrants ... within the United States and abroad."
A second action, titled "Operation Bandwidth" by the DOJ, is an undercover investigation of "entities and individuals involved with illegal access to computer systems and the piracy of proprietary software utilizing ... storage sites on the Internet." The DOJ also stated that it resulted in the "execution of over 30 search warrants across the United States and Canada."
A third action, titled "Operation Digital Piratez" by the DOJ, is another undercover investigation which resulted in the execution of 8 search warrants. The DOJ stated that it in addition to software piracy "sites and those who operated them, it also targeted the ``cracking groups´´ specifically created for the purpose of pirating software so that it may be distributed over the Internet in violation old U.S. copyright laws."
The DOJ announcement did not reference any arrests, indictments, or other charges.
FEC to Request Public Comments on Computer Based Voting Systems
12/11. The Federal Election Commission (FEC) announced that it will adopt and release at its Thursday, December 13, meeting a request for public comment on two volumes of voluntary standards for states and voting system vendors for computer based voting systems. Public comments will be due by February 1, 2002.
The FEC also stated in a release that the proposed standards will include the "Conclusion that controls cannot be developed at the present time to make remote Internet voting sufficiently risk resistant to be confidently used by election officials and the voting public, therefore standards cannot be written for the testing and qualification of these systems."
EU Commission Releases Paper on Merger Regulation
12/11. The Commission of European Communities released a document [PDF] titled "Green Paper on the Review of Council Regulation (EEC) No 4064/89". See also, Annexe I  and Annexe II [both PDF]. This paper proposes revisions to the Commission regulation regarding mergers, No. 4064/89. In particular, it addresses increasing the Commission's jurisdiction over merger reviews (at the expense of member states), other procedural issues, and the "respective merits of the ``dominance test´´ as laid down in the Merger Regulation and of the ``significant lessening of competition test´´ used in certain other jurisdictions." See also, EU release.
Theft of Trade Secrets
12/11. The U.S. District Court (NDCal) sentenced Say Lye Ow to 24 months of imprisonment on a felony charge of copying a trade secret in violation of the Economic Espionage Act of 1996, 18 U.S.C. § 1832. He stated in his Plea Agreement [PDF] of September 14, 2001, that he copied without authorization computer files relating to the design and testing of the Merced microprocessor, now known as Itanium. He further stated that he knew that the materials contained trade secrets belonging to Intel, and that he copied them for use at his then new employment at Sun Microsystems. See, USAO release.
12/4. The U.S. District Court (NDCal) sentenced Mikahel Chang to one year of imprisonment on a felony charge of copying a trade secret in 18 U.S.C. § 1832. Chang stated in his Plea Agreement that he received, possessed and appropriated without authorization stolen trade secret information belonging to his former employer, Semi Supply, Inc., of Livermore, California. The trade secrets were customer and order information in sales databases. See, USAO release and CCIPS release.
PR China Now a WTO Member
12/11. The People's Republic of China became the 143rd member of the World Trade Organization (WTO). December 11, 2001, was 30 days after the PR China notified the WTO that it had completed its domestic ratification of its accession package.
Commerce Secretary Donald Evans released a statement in which he said that its "accession to the WTO will open China's market to American exports of industrial goods, services, and agriculture to an unprecedented degree, and strengthen the world economy. For the first time, American firms have unprecedented freedom to trade in China by buying and selling their own products there."
12/12. Chuck Dziedzic will retire from the FCC at the end of the year after a long carreer. In 1995, he joined the Video Services Division as Assistant Chief. His responsibilities have included the transition of the MDS/ ITFS spectrum from analog to two way services in a digital environment and 3G use of the spectrum. See, FCC release.
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Wednesday, Dec 12
9:00 AM. - 2:30 PM. The American Enterprise Institute (AEI) will host a program titled "Telecommunications Policy as Trade Policy: Negotiations with Japan over Interconnection Pricing". See, online information and registration page. Location: Wohlstetter Conference Center, AEI, 1150 17th Street, NW.
9:00 AM. FTC Commissioner Mozelle Thompson will participate in a private forum titled, "From Principles to Performance," sponsored by the American Advertising Federation. Location: Ronald Reagan Building and International Trade Center, Pennsylvania Avenue and 13˝ Street, NW.
Day two of a two day conference hosted by the Information Technology Association of America (ITAA) titled Developing Cyber Security Solutions in the e-Gov Era. This is an invitation only event. For information, contact Shannon Kellogg at skellogg The press contact is See, agenda. Location: Executive Briefing Center, Computer Sciences Corporation, 3170 Fairview Park Drive, Falls Church, VA.
9:30 AM. The FCC will hold a meeting. The agenda includes the following: (1) a Notice of Proposed Rule Making (NPRM) initiating a comprehensive examination of the appropriate regulatory framework for incumbent local exchange carriers' (ILECs') provision of broadband services; (2) a NPRM to initiate the FCC's triennial review of the definitions of and rules concerning access to ILEC unbundled network elements; (3) an order in regarding the FCC's plans for nationwide thousands block number pooling (CC Docket No. 96-98 and CC Docket No. 99-200); (4) a second NPRM concerning new equal employment opportunity rules for broadcast licensees and cable entities; (5) a Report and Order concerning allocation and service rules to reallocate television channels 52-59; and (6) a First Report and Order to provide for new ultra wideband (UWB) devices (ET Docket No. 98-153). Location: Commission Meeting Room, FCC, 445 12th Street, SW, Room TWC305.
Location Change. 10:00 AM. The Senate Judiciary Committee will hold a hearing on the future of the Microsoft settlement. The scheduled witnesses include Charles James (Antitrust Division), Jay Himes (NY Office of the Attorney General), Charles Rule (counsel to Microsoft), Lawrence Lessig (Stanford), Mark Cooper (Consumer Federation of America), Jonathan Zuck (Association of Competitive Technology), Matthew Szulik (Red Hat, Inc.), and Mitchell Kertzman (Liberate Technologies). Location: Room 106, Dirksen Building.
10:00 AM. The Senate Finance Committee will hold a business meeting. The agenda includes mark up HR 3005, the Bipartisan Trade Promotion Authority Act of 2001. Location: Room 215, Dirksen Building.
2:00 PM. The House Judiciary Committee's Subcommittee on Courts, the Internet and Intellectual Property will hold the first part of a two part hearing titled "The Digital Millenium Copyright Act: Section 104 Report." The witnesses will be Marybeth Peters (Register of Copyrights), Carey Ramos (NMPA), Cary Sherman (RIAA), and Emery Simon (Business Software Alliance). Location: Room 2141, Rayburn Building.
Thursday, Dec 13
Day one of a two day conference titled the "19th Annual Institute on Telecommunications Policy & Regulation". Location: International Trade Center.
9:15 AM - 4:30 PM. The International Trademark Association will host a CLE program titled "Trademark Trial and Appeal Board (TTAB) Practice for Advanced Practitioners Forum." The price to attend is $395. See, brochure and agenda. Location: Crystal Gateway Marriott, 1700 Jefferson Davis Highway, Arlington, VA.
10:00 AM. The Senate Judiciary Committee will hold a business meeting. Location: Room 226, Dirksen Building.
10:00 AM. The House Judiciary Committee's Subcommittee on Courts, the Internet and Intellectual Property will hold the second part of a two part hearing titled "The Digital Millenium Copyright Act: Section 104 Report." The witnesses will be Marybeth Peters (Register of Copyrights), Marvin Berenson (Broadcast Music Inc.), Jonathan Potter (Digital Media Association), and Gary Klein (Consumer Electronics Association). Location: Room 2141, Rayburn Building.
10:00 AM. The Federal Election Commission (FEC) will meet. The agenda includes adoption of a request for public comments on proposed voluntary guidelines for computer based voting systems. Location: FEC, Commission Meeting Room, 999 E. St., NW, 9th floor.
2:00 PM. The Progressive Policy Institute (PPI) and the NanoBusiness Alliance will jointly host a panel discussion on the public policy implications of emerging science and business of nanotechnology. The panelists will be Rob Atkinson (PPI), Mark Modzelewski (NanoBusiness Alliance), Mike Roco (National Nanotechnology Initiative), Steve Johns (Ardesta Capital), Meyya Meyyapan (NASA Ames Center for Nanotechnology), Steve Wilson (NYU Center for Advanced Materials and Nanotechnology), Stephan Maebius (Foley and Lardner Law), and Josh Wolfe (Lux Capital). Location: Capitol Building, Room SC4.
2:00 PM. House Science Committee Chairman Sherwood Boehlert (R-NY) will hold a year end on the record question and answer session on Committee business, accomplishments, and plans for next year. Location: Room 2318, Rayburn Building.
6:00 PM. The FCBA will hold its 15th Annual FCBA Chairman's Dinner. The reception begins at 6:00 PM; dinner begins at 7:30 PM. Location: Washington Hilton & Towers, 1919 Connecticut Avenue, NW.
Friday, Dec 14
8:30 - 10:00 AM. The American Enterprise Institute (AEI) will host a press breakfast on "The Role of the FCC in Restricting the Ownership of Licenses". Harold Furchtgott Roth and other AEI scholars will speak. RSVP to Veronique Rodman at 202 862-4871 or Location: AEI, 1150 17th Street, NW, 11th Floor Conference Room.
Day two of a two day conference titled the "19th Annual Institute on Telecommunications Policy & Regulation". Location: International Trade Center.