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March 7, 2002, 9:00 AM ET, Alert No. 383.
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Senate Subcommittee Holds Hearing on EchoStar DirecTV Merger
3/6. The Senate Judiciary Committee's Subcommittee on Antitrust, Competition and Business and Consumer Rights held a hearing on the pending merger of Echostar and DirecTV.
The witness panel was stacked with opponents of the merger: Jay Nixon (Attorney General of the State of Missouri), Robert Pitofsky (a former Chairman of the Federal Trade Commission), Gene Kimmelman (Consumers Union), and Edward Fritts (National Association of Broadcasters). See, prepared testimony of Nixon, Pitofsky, Fritts, and Kimmelman.
However, the Subcommittee also heard from the heads of the two merging companies: Charles Ergen (Ch/CEO of Echstar) and Eddy Hartenstein (Ch/CEO of DirecTV). See, prepared testimony of Hartenstein and Ergen.
Much of the testimony of witnesses, statements of Senators, and question and answer session, focused on competition between direct broadcast satellite (DBS) service providers, and between DBS and cable service providers, in the provision of TV type programming. Opponents argued it would harm competition. Ergen and Hartenstein argued it would enhance competition. However, there was also some discussion of the merged entity's plans to provide broadband Internet access services.
Ergen focused on Internet access. He stated that "A very important benefit of the Echostar and Hughes merger is that it will eliminate the so-called ``digital divide´´ that exists in the ``wired´´ world today by making satellite delivered high speed Internet access a viable alternative for all Americans. Today, about 67 million households have access to DSL or cable modem service. These are the digital ``haves´´ who are located primarily in the major metropolitan areas. But in rural America today, there's what I like to call a ``no-opoly.´´ Nobody -- not the cable companies, not the phone companies -- is providing broadband service."
"Initially, the combined company will have the subscriber base and financial means to make our current satellite broadband offerings more affordable. But, we are committed to making next generation satellite broadband service a reality for customers everywhere in the United States by deploying a new generation of satellites utilizing Ka-band spectrum. We will offer a high speed Internet service that is not only price competitive with existing providers in urban and suburban settings, but also a tremendous benefit for rural consumers who have no broadband options."
Sen. Orrin Hatch (R-UT), the ranking Republican on the full Committee, expressed concern about broadband. He stated that "In addition to the traditional antitrust inquiry, I have some concerns about the operation of gatekeeper power over broadband internet services that might limit the options consumers have in accessing the information they want from the internet." See, Sen. Hatch's opening statement.
Sen. Hatch added that "I am concerned for the success of the DBS business as a competitive force for the benefit of television viewers, broadband internet subscribers, and creative content developers who need distribution choices to deliver their goods and services to consumers."
No member of the Subcommittee endorsed the merger. Sen. Sam Brownback (R-KS) stated that "the benefits of this merger, in my view, are murky." Sen. Arlen Specter (R-PA) stated that "it is hard to understand how competition would not be lessened" by this merger.
Sen. Herb Kohl (D-WI), the Chairman of the Subcommittee, stated that antitrust authorities, if they approve this merger, must issue a detailed consent decree that would impose a number of requirements on the merged entity (such as provisions pertaining to a uniform national pricing plan, delivery of local programming in all TV markets, must carry, and broadband deployment).
Sen. Mike DeWine (R-OH), the ranking Republican on the Subcommittee, stated that he is "keeping an open mind about this deal because, frankly, it does offer some tangible benefits." He further stated "The parties also argue that a combined satellite company would be able to offer a less expensive, more price competitive high speed Internet product. As the country continues to move toward greater use of broadband services, consumers certainly would be well serviced by an improved satellite option."
Sen. Wayne Allard (R-CO), who is not a member of the Committee, participated in the hearing, but only to provide a glowing introduction of Charles Ergen, whose company is based in Middleton, Colorado. See also, Sen. Leahy's prepared statement.
David Charles, Chairman of the National Alliance of Medical Researchers and Teaching Physicians, wrote a letter to Sen. Kohl on March 5 expressing support for the merger on the basis that satellite based high speed Internet services would facilitate telemedicine in rural areas.
Senate Committee Holds Hearing on Communications Infrastructure
3/6. The Senate Commerce Committee's Communications Subcommittee held a hearing on the security, resiliency and reliability of the communications infrastructure in light of the terrorist attacks of September 11. The hearing focused on public safety communications.
Sen. Daniel Inouye (D-HI), the Chairman of the Subcommittee, presided. He stated that "we must continue to explore ways to improve the resiliency and reliability of our communications infrastructure. Moreover, because reliable communications are critical to the success of emergency personnel, our efforts should also include a consideration of ways in which new technological tools -- such as location information, peer to peer communications, reverse messaging, and broadband applications -- can be utilized by emergency personnel in order to help save lives."
Agostino Cangemi, of the Department of Information Technology and Telecommunications of the City of New York, testified. He stated that New York City (NYC) is mapping the location, and identifying the ownership, of all broadband fiber in NYC. His office is coordinating with businesses to facilitate their obtaining redundant and resilient communications systems. He stated that NYC is also developing a redundant fiber conduit for its own facilities. He also stated that NYC is allowing property owned by the city to be used for telecom facilities, such as wireless service antennas, to improve coverage.
Steve Souder, of Montgomery County, Maryland, stated that communications between first responders on September 11 functioned well. He elaborated that this was a result on long term planning following an incident on January 13, 1982, when a jet crashed on take off from Reagan National Airport into the Potomac River in downtown Washington DC. First responders, which then operated with radios on divergent portions of the radio spectrum, could not communicate effectively. All but five people on the flight died.
As a result, the FCC allocated the 800 MHz band for public safety personnel. This, said Souder, enabled the first responders on September 11, 2001 to communicate effectively. However, Souder continued that public safety personnel have also become dependent on cellular networks to communicate with other government and private sector entities. These cellular networks gridlocked in New York on September 11. He stated that this needs to be addressed. He also said that public safety authorities need more spectrum.
Sen. Conrad Burns (R-MT), the ranking Republican on the Subcommittee, questioned witnesses about their need for more spectrum. Souder responded that the FCC has allocated spectrum to be vacated by TV broadcasters as they transition to digital television, but that this is not scheduled to become available until 2006. Souder stated that the additional spectrum is needed now.
Sen. Ron Wyden (D-OR) stated that "I am going to be introducing legislation very shortly that is the technology equivalent of the national guard". He further explained that private companies, such as Intel, are interested in providing equipment and personnel. He also questioned witnesses about this. He asked if it would be useful to have a pre existing database listing private sector resources that public safety could call upon in a disaster. Cangemi said that "it would be extraordinarily helpful". Sen. Wyden also advocated the creation of a "strategic technology reserve" containing technology equipment, analogous to the "strategic petroleum reserve". Both Cangemi and Souder praised the concept.
FTC Completes HP Compaq Review
3/6. The Federal Trade Commission (FTC) announced that it has closed its investigation of the proposed merger of Hewlett Packard (HP) and Compaq without taking action. See, FTC release.
The FTC wrote to the parties: "The Commission has conducted an investigation of possible violations of Section 5 of the Federal Trade Commission Act and Section 7 of the Clayton Act by the consummation of a proposed merger of Hewlett Packard Company and Compaq Computer Corporation. Upon further review of this matter, it now appears that no further action is warranted by the Commission at this time. Accordingly, the investigation has been closed." See, for example, letter to HP.
HP Ch/CEO Carly Fiorina stated in a release that "We are gratified by the FTC's decision. It validates our conviction from the outset that the merger can only enhance competition throughout our markets ... Completion of the FTC review marks a major milestone in the approval process, and we are now focused on winning the shareowner vote."
FTC Files Complaint Against Palm for False Advertising
3/6. The Federal Trade Commission (FTC) brought and settled an administrative action against Palm for inaccurate advertising claims regarding its PDAs. See, FTC release.
The FTC filed an administrative complaint [PDF] against Palm alleging violation Section 5(a) of the Federal Trade Commission Act, 15 U.S.C. § 45, in connection with claims in advertising and packaging that Palm's hand held computers, or personal data assistants (PDAs), come with built-in wireless access to the Internet and e-mail.
The complaint alleges that Palm "has represented, expressly or by implication, that ... Palm PDAs, as sold, contain everything that consumers need to access the Internet and their email accounts, wirelessly."
The complaint continues: "In truth and in fact ... Palm PDAs, as sold, other than the Palm VII model line, do not contain everything that consumers need to access the Internet and their email accounts, wirelessly. In order to wirelessly access the Internet and their email accounts using the Palm m100, Palm III, or Palm V model lines, consumers must purchase and carry a separate wireless modem or a device to connect the Palm to certain mobile telephones."
The complaint further alleges that Palm made similarly false claims that "Palm PDAs, as sold, can perform common business functions such as data base management, custom form creation, and viewing Microsoft Word and Excel documents."
The FTC and Palm simultaneously entered into an Agreement Containing Consent Order settling the matter. Without admitting wrongdoing, Palm agreed, for example, that it would not misrepresent that its PDAs are "able to perform any common business function that it cannot perform without additional products or services that consumers must purchase".
The FTC imposed no fine. The Commission voted 5 to 0 to approve the agreement. The agreement becomes final after a 30 day public comment period. See also, Exhibits A-E [7 MB in PDF], and the FTC's Analysis of Proposed Consent Order to Aid Public Comment.
Rep. Sensenbrenner Backs FTC DOJ Agreement
3/5. Rep. James Sensenbrenner (R-WI), the Chairman of the House Judiciary Committee, announced his support for the Memorandum of Agreement between the Federal Trade Commission (FTC) and the Department of Justice's (DOJ) Antitrust Division concerning clearance procedures for merger reviews and other antitrust matters. The Judiciary Committee has jurisdiction over antitrust matters.
Rep. Sensenbrenner stated in a release that "I support this sound plan for how antitrust issues will be handled by the DOJ and FTC. I believe it promotes a more efficient use of DOJ and FTC antitrust resources in addition to reducing unnecessary and duplicative burdens placed upon employees and employers. Furthermore, this plan offers a `win-win´ by assigning antitrust areas based upon the particular agency's experience and expertise."
The agreement defines, by market, which transactions will be reviewed by which agency. For example, the FTC will have responsibility for transactions involving companies that provide computer hardware, professional services, and satellite manufacturing and launch, and launch vehicles. The DOJ will have responsibility for transactions involving media and entertainment, telecommunications services and equipment, and financial services.
So, perhaps, the two antitrust regulatory authorities have colluded to allocate the market, and Rep. Sensenbrenner has justified their collusion on the basis that it will increase efficiency.
People and Appointments
3/6. Monica Desai, Legal Advisor to Federal Communications Commission (FCC) Commissioner Kevin Martin for wireless and international matters, is leaving his office to join the Common Carrier Bureau's Competitive Pricing Division. An FCC release states that she seeks "a flexible work schedule, which will enable her to spend more time with her family". Samuel Feder, who has been Commissioner Martin's Legal Advisor for common carrier matters, will assume responsibility for wireless and international issues. Daniel Gonzalez joined the office as Legal Advisor for common carrier matters. Gonzalez was previously Vice President, External and Regulatory Affairs, for XO Communications. Before that, he was Legal Advisor to former FCC Commissioner Rachelle Chong for common carrier matters.
3/6. Henry Sténson was named Senior Vice President, Corporate Communications, at Ericsson. He will begin during the summer of 2002. He will replace Roland Klein, who is leaving Ericsson. See, Ericsson release.
3/6. Jonathan Lamy was named Director of Communications at the Recording Industry Association of America (RIAA). He replaces Jano Cabrera left to become Communications Director for former Vice President Al Gore's political action committee, Leadership '02. Lamy previously worked in media relations for Sen. Patrick Leahy (D-VT), the current Chairman of the Senate Judiciary Committee, and Rep. Marty Meehan (D-MA), a member of the House Judiciary Committee. The Judiciary Committees have jurisdiction over intellectual property matters.
More News
3/6. The House Commerce Committee's Subcommittee on Telecommunications and the Internet postponed its meeting to mark up HR 3833 [PDF], the "Dot Kids Implementation and Efficiency Act of 2002", to Thursday, March 7. The bill would provide that "The NTIA shall require the registry selected to operate and maintain the United States country code Internet domain to establish, operate, and maintain a second level domain within the United States country code domain that provides access only to material that is suitable for minors and not harmful to minors". The original version of the bill, HR 2417, would have required a top level international domain. The Subcommittee held a hearing on HR 2417 on November 1, 2001. See, TLJ Daily E-Mail Alert No. 300, Nov. 2, 2001.
3/6. The Federal Trade Commission (FTC) published notice in the Federal Register that it will host a two day public workshop on May 16 and 17 to explore issues relating to the security of consumers' computers and the personal information stored in them or in company databases. Requests to participate as a panelist in the workshop must be filed on or before April 1, 2002. See, Federal Register, March 6, 2002, Vol. 67, No. 44, at Pages 10213 - 10215.
3/6. U.S. Trade Representative (USTR) Robert Zoellick met with the Singapore Minister for Trade George Yeo to discuss the status of negotiations on the U.S. Singapore Free Trade Agreement (FTA). Zoellick stated in a release that "The United States and Singapore are making excellent progress in our negotiations for a Free Trade Agreement ... This will be a concrete sign of America's economic and political commitment to Singapore, Southeast Asia, and free trade."
3/4. Federal Communications Commission (FCC) Chairman Michael Powell gave a speech at the Competitive Telecommunications Association's (CompTel) annual convention in Miami, Florida. He provided an overview of some recent actions by the FCC.
3/6. The General Accounting Office (GAO) released a report [PDF] titled "Information Security: Additional Actions Needed to Fully Implement Reform Legislation". The report addresses "efforts by the federal government to implement provisions for Government Information Security Reform ... that were enacted as part of the National Defense Authorization Act for Fiscal Year 2001." This report was written by Robert Dacey, Director of Information Security Issues at the GAO, to submit as prepared testimony to House Government Reform Committee's Subcommittee on Government Efficiency, Financial Management and Intergovernmental Relations.
Thursday, March 7
9:00 AM - 5:00 PM. The National Institute of Standards and Technology's (NIST) Computer System Security And Privacy Advisory Board (CSSPAB) will meet to discuss computer security legislation, privacy issues, critical infrastructure protection, the USPS's electronic postmark products, and other matters. This is the third day of a three day of meeting. See, notice in Federal Register. Location: General Services Administration, 7th and D Streets, SW, Room 5700.
9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in USTA v. FCC. Judges Edwards, Randolph and Williams will preside. Location: 333 Constitution Ave. NW.
10:00 AM. The Senate Appropriations Subcommittee's Subcommittee on Commerce, Justice, State, and the Judiciary (CJS) will hold a hearing on the administration's proposed budget estimates for FY 2003 for the SEC and the FCC. SEC Chairmam Harvey Pitt and FCC Chairman Michael Powell will testify. See, CJS release. Location: Room 253, Russell Building.
10:00 AM. The House Commerce Committee's Subcommittee on Telecommunications and the Internet will mark up HR 3833 [PDF], the "Dot Kids Implementation and Efficiency Act of 2002", sponsored by Rep. John Shimkus (R-IL) and Rep. Ed Markey (D-MA). Rep. Fred Upton (R-MI) will preside. This meeting was rescheduled from March 6. Location: Room 2322, Rayburn Building.
10:00 AM. The Senate Banking Committee will hold a hearing. Federal Reserve Chairman Alan Greenspan will deliver his semi annual report on monetary policy. Location: Room 106, Dirksen Building.
10:00 AM. The Senate Judiciary Committee has scheduled a business meeting. The agenda includes mark up of several bills, including S 1615, the Federal Local Information Sharing Partnership Act of 2001. Location: Room 226, Dirksen Building.

10:30 AM - 12:30 PM. The House Science Committee's Subcommittee on Research will hold a hearing titled "Meeting the Demands of the Knowledge Based Economy: Strengthening Undergraduate Science, Mathematics and Engineering Education". Location: Room 2325, Rayburn Building.

12:00 PM. USPTO Director James Rogan will host an online discussion with USPTO customers and the public regarding the work of the USPTO. To participate, visit the USPTO home page and click on the link titled "Online Chat with the Director of the USPTO". See, USPTO release.
Friday, March 8
12:15 PM. The FCBA's Transactional Practice Committee will host a brown bag lunch on mass media transactions. RSVP to Sue Fischer at 202 776-2491. Location: Dow Lohnes & Albertson, 1200 New Hampshire Ave.
12:30 - 2:00 PM. The New American Foundation will host a panel discussion titled "Unwired Security: Is a National Wireless Emergency Network Necessary?" The speakers will be Reed Hundt (McKinsey & Co.), Thomas Wheeler (P/CEO of the Cellular Telecommunications & Internet Association), and Robert Gurss (Shook Hardy & Bacon). RSVP to Laura Gillespie at gillespie or 202 986-4901. Location: 1630 Connecticut Ave., NW, 7th Floor.
Extended deadline for submitting comments to the FCC in response to its Further Notice of Proposed Rulemaking regarding the current state of the market for local and advanced telecommunications services in multi tenant environments. See, FCC notice of extension of deadline [PDF]. This is WT Docket No. 99-217.
Monday, March 11
8:30 - 10:00 AM. The American Enterprise Institute (AEI) will host a press breakfast on the topic "Taxing Broadband". Harold Furchtgott- Roth and other AEI scholars will speak. RSVP to Veronique Rodman at (202) 862-4871 or vrodman Location: AEI, 1150 17th Street, NW, 11th Floor Conference Room.
8:30 AM - 12:00 NOON. The ITAA and the CSIS will co-host a conference titled "Managing Identity and Authentication on the Internet". For more information, contact Shannon Kellogg at skellogg See, ITAA notice. Location: CSIS, B1 Conference Center, 1800 K Street, NW.
Deadline to submit comments to the Copyright Office in response to its Notice of Proposed Rulemaking on "the requirements for giving copyright owners reasonable notice of the use of their works for sound recordings under statutory license and for how records of such use shall be kept and made available to copyright owners." See, notice in Federal Register.
Tuesday, March 12
9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in USTA v. FCC, No. 01-1085. Judges Ginsburg, Rogers and Garland will preside. Location: 333 Constitution Ave. NW.
10:00 AM. The Senate Appropriations Subcommittee's Subcommittee on Commerce, Justice, State, and the Judiciary will hold a hearing on the administration's proposed budget estimates for FY 2003 for the Department of State. Location: Room 138, Dirksen Building.
1:30 PM. The U.S. International Telecommunication Advisory Committee (ITAC) will hold a meeting. See, notice in Federal Register. Location: State Dept.
Wednesday, March 13
10:00 AM. The Senate Appropriations Subcommittee's Subcommittee on Commerce, Justice, State, and the Judiciary will hold a hearing on the administration's proposed budget estimates for FY 2003 for the Department of Commerce. Location: Room 116, Dirksen Building.
Bush Defends Appeals Court Nominees
3/6. President Bush met with Judge Charles Pickering at the White House. Bush has nominated him to be a judge of the U.S. Court of Appeals (5thCir). Some Democrats oppose his confirmation. Pickering has been a judge for the U.S. District Court (SDMiss) since 1990. Bush stated at a photo opportunity that "I nominated a very good man from Mississippi named Charles Pickering to the appellate bench, and I expect him to be confirmed by the United States Senate. I think the country is tired of people playing politics all the time in Washington. And I believe that they're holding this man's nomination up for political purposes. It's not fair, and it's not right." See, transcript.
3/6. President Bush gave a speech to the Hispanic Chamber of Commerce in Washington DC at which he introduced and defended Miguel Estrada. Estrada is a partner in the Washington DC office of the law firm of Gibson Dunn & Crutcher. President Bush stated, "I want to recognize Miguel Estrada. Miguel. Miguel is a really bright attorney who I've named to the U.S. -- nominated to the U.S. Court of Appeals, D.C. Circuit. They're playing too much politics in the United States Senate on our judge nominees. This man deserves a hearing and he deserves a vote. This is a good, solid jurist who ought to be on that bench. And I'm calling on the United States Senate to move quickly on Miguel's nomination, so that we can have a good, young Latino; smart, brilliant man represent our nation." See, transcript. See also, Estrada's GDC bio.
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