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June 12, 2002, 9:00 AM ET, Alert No. 449.
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Rep. Pickering Predicts No Broadband Bill Will Pass This Year
6/11. Rep. Chip Pickering (R-MS) spoke at an American Enterprise Institute (AEI) conference titled "The Future of Telecom Regulation". He predicted that neither the Tauzin Dingell bill, nor any competing legislation, will pass the Congress this year.
Rep. Pickering is a member of the House Commerce Committee, and its Telecom Subcommittee. Prior to his election in 1996 he worked on the staff of then Senate Majority Leader Trent Lott (R-MS) on the Telecommunications Act of 1996. He also addressed the status of Section 271 applications, Third Generation (3G) wireless services and spectrum management.
Pending Legislation. He stated that "I would like to also talk about the state of legislation. As you all know, we had broadband legislation, the Tauzin Dingell bill, pass in the House. We now have most of the action focused on the Senate. You have competing, conflicting, contradictory efforts in the Senate. You have Senator Hollings who would push for full compliance, full enforcement, of the '96 Act, focusing on the local market. You have incentives, from a number of Senators, to build out, either in tax policy, or in regulatory policy, for broadband deployment, stressing under served and rural areas. You also have efforts to direct the FCC and their regulatory proceedings by Senator Breaux and Nichols. You have Senator McCain, who has taken a market by market approach."
Rep. Pickering continued, "What does all of that mean? The House has taken action. The Senate has multiple conflicting, competing -- in a political, a campaign year. What is the likely outcome? The likely outcome is that nothing happens. The prediction is that no legislation will pass or be signed into law. And what does this all mean? Or, what is the purpose or the focus of all of this debate, all of the churning, all of this action in the House, and now in the Senate? This is all, in my view, or almost all, geared towards a message of communicating to the FCC what their next decision should be as they have teed up, and have prepared, regulatory procedures and processes and decisions that are coming on the UNE platform, on broadband definition, and the triennial review."
Rep. Pickering was one of the leaders of the opposition to passage of the Tauzin Dingell bill by the House Commerce Committee.
3G Wireless and Spectrum Management. Rep. Pickering stated that "we are beginning a task force with Chairman Tauzin, and the Subcommittee Chairman Upton, to begin looking at spectrum reform, and any legislation that we might present, but not this year, which would be difficult to do, but by the first of the next Congress, because it is an issue that was teed up, was prepared, pre September 11. With the events of September 11, national security concerns, DOD objections at that point, made moving forward in a positive political way very difficult. But I do think that we have been to have enough time to step back. NTIA has come forward with some of its recommendations. The industry has continued to make a good case among all of the different policy makers, both on the Hill and in the Administration."
He added that "I do think that the environment will be more favorable as we come back next year. And we need to be able to strike very quickly, with a legislative proposal and recommendations on how to achieve both the procedural changes of how we make spectrum management decisions, but also what we do in the very short term to get more spectrum available, how we can move to 3G, what is the clear process, not only short term, but long term."
Section 271. Rep. Pickering also talked about the Section 271 applications by Regional Bell Operating Companies (RBOCs) to provide in region interLATA (long distance) services. He stated that "We have, over the last six years, regulation, litigation, acquisition, concentration. We are beginning to see emerging competition in multiple platforms -- in cable, and wireless, and wireline on the telephone, and telephony side, Internet telephony. As we look at where we are from the regulatory process, 271s, the process by which Bell companies are given permission and authority to then enter into long distance, all distance, all services, we have currently 13 approved."
He predicted that "By some time this year we expect to have over half of the states granted -- or half of the regional Bell operating companies in their states granted -- the authority and permission to enter into long distance. 65% of all population in the country by the end of this year will be under 271 and the full competition that we envisioned as we enacted the Telecommunications Act of 1996."
"We hope that by the mid of next year, '03, that we will see all states and all RBOCs, ILECs, have their 271s, the full implementation of the competitive checklist, all of the market opening requirements that they will be implemented completely. And I think that is the appropriate time for us to begin looking then at what type of regulatory modification, modernization, that we should undertake at that point. We need to make sure that the first step, the first objective, of opening local markets, or having a competitive climate, and a competitive checklist fully implemented, and full compliance, to then see to where we need to go next," said Rep. Pickering.
FCC Inspector General Reports on E-Rate Fraud
6/11. The Federal Communications Commission (FCC) released the most recent Semiannual Report [32 pages in PDF] to Congress of its Inspector General, covering the period October 1, 2001 through March 31, 2002. This report focuses on fraud, waste and abuse in the FCC's Schools and Libraries program, which is also known as the e-rate.
The e-rate provides subsidies to schools and libraries for telecommunications services, Internet access, and internal connections. The program is administered by the FCC's Universal Service Administration Company (USAC).
The report states that "In calendar year 2000, USAC contracted with a public accounting firm to conduct audits of eighteen (18) beneficiaries of funding from the first year of the Schools and Libraries program. Their audit resulted in a major investigation by the Federal Bureau of Investigation (FBI) and OIG representatives. The matter has been referred as a civil false claims suit to the Department of Justice, where it is under consideration. Additionally, the audit report disclosed weaknesses (ranging from regulatory non-compliances to computation errors) at 14 locations of the 17 beneficiaries reported on and $8 million in inappropriate funding disbursements."
The report states that these matters remain under consideration because, under the structure of the e-rate program, it is not clear that "federal funds" are involved.
The report also states that "Building on the work done last year, USAC has contracted to conduct audits at twenty-two (22) beneficiaries this calendar year. The results of this audit are currently under review by USAC and the Wireline Competition Bureau (WCB) of the FCC. The preliminary results indicate there may be findings at nearly all locations including several millions of dollars in inappropriate disbursements and unsupported costs."
Finally, the report states that "we have been impeded by difficulties in obtaining access to the resources necessary to establish an effective oversight program."
DC Circuit Denies Petition for Review in Echostar v. FCC
6/11. The U.S. Court of Appeals (DCCir) issued its opinion in EchoStar v. FCC. EchoStar is a direct broadcast satellite (DBS) television service provider. Comcast is cable television service provider. Comcast refused to sell to EchoStar the right to carry Comcast SportsNet, a variety of sport programming, including games of several Philadelphia sports teams. EchoStar filed a program access complaint with the Federal Communications Commission (FCC) under to 47 U.S.C. § 548. The FCC denied the complaint. EchoStar filed this petition for review, which the Court of Appeals denied.
9th Circuit Issues Order Supplementing Opinion in Thornton v. McClatchy
6/11. The U.S. Court of Appeals (9thCir) issued its Order Supplementing Opinion [PDF] in Thornton v. McClatchy, affirming its original opinion [PDF] that repetitive stress injuries that limit one's ability to use a computer keyboard do not constitute a disability within the meaning of the Americans with Disabilities Act (ADA).
The Appeals Court had stayed the mandate of this case pending resolution of the Supreme Court's decision in Toyota Motor Mfg., Kentucky, Inc. v. Williams, 122 S. Ct. 681 (2002). The Appeals Court affirmed, but clarified its original opinion, issued on August 15, 2001. See also, 261 F.3d 789 (9th Cir. 2001).
Facts. Thornton worked for the Fresno Bee, a McClatchy newspaper, as a writer. This required her to work with a keyboard. She suffered from work related repetitive stress disorder and could not operate a keyboard or write by hand for more than brief periods. McClatchy concluded that she could not perform her job, and terminated her employment.
District Court. Thornton filed a complaint in the U.S. District Court (EDCal) against McClatchy alleging violation of the ADA and the California Fair Employment and Housing Act for terminating her on the basis of disability. The District Court granted McClatchy summary judgment on the grounds that she was not disabled.
Court of Appeals. The Appeals Court affirmed the summary judgment on the ADA claim. It wrote in its original opinion that "Thornton was able to perform a wide range of manual tasks, including grocery shopping, driving, making beds, doing laundry, and dressing herself. Her inability to type and write for extended periods of time is not sufficient to outweigh the large number of manual tasks that she can perform. The ADA requires a "substantial limitation" in performing manual tasks ..." However, it reversed on the state law claim. Judge Hawkins wrote the opinion of the Court, in which Judge Kozinski joined.
The June 11 order was written by Judge Kozinski. Judge Berzon dissented from the original opinion, and the June 11 order.
Supreme Court Denies Certiorari in Trans Union v. FTC
6/10. The Supreme Court denied certiorari in Trans Union v. FTC, a case regarding the sale of consumer reports by credit reporting agencies for marketing purposes, the Fair Credit Reporting Act (FRCA), and the application of the First Amendment to commercial speech.
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 was 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 was at issue.
The Federal Trade Commission (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 ..."
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 again filed a petition for review with the U.S. Court of Appeals (DCCir). On April 13, 2001, the Appeals Court issued its opinion upholding the FTC's order that 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.
First, TU argued, among other things, 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 Dun & Bradstreet v. Greenmoss, 472 U.S. 749 (1985).
TU filed a petition for writ of certiorari with the Supreme Court. The Court denied certiorari. However, two justices, Kennedy and O'Connor, wrote an opinion [PDF] dissenting from the denial of certiorari. They wrote that "this case meets the standards for review by this Court. The plurality opinion in Dun & Bradstreet concluded that a false statement in a credit report was not speech on a matter of public concern, as that term is used in the context of defamation law. It is questionable, however, whether this precedent has any place in the context of truthful, nondefamatory speech. Indeed, Dun & Bradstreet rejected in specific terms the view that its holding ``eaves all credit reporting subject to reduced First Amendment protection.´´ ... The Court of Appeals, nonetheless, relied on Dun & Bradstreet to denigrate the importance of this speech. A grant of certiorari is warranted to weigh the validity of this new principle."
FTC Chairman Muris Addresses Privacy
6/11. Federal Trade Commission (FTC) Chairman Timothy Muris gave a speech titled "Protecting Consumers' Privacy: Goals and Accomplishments" in Reston, Virginia. He reviewed efforts by the FTC to protect consumer privacy. He also discussed legislative proposals.
He stated that "The question is: do we know enough now to fashion workable general privacy legislation that will provide cost efficient protection for consumer privacy? Our experience shows we do not."
He continued that "I am also troubled that many current legislative proposals would apply only to online information collection. Legislation subjecting one set of competitors to different rules, simply based on the medium used to collect the information, is likely to distort the market. Indeed the sources of information that lead to our number one privacy complaint -- ID Theft -- are frequently offline."
North Dakota Voters Approve Financial Privacy Ballot Measure
6/11. The state of North Dakota held a primary election on June 11. The voters approved Ballot Item No. 2 [PDF], which pertains to the disclosure of customer information by financial institutions, by a vote of 69,802 to 25,737. See, elections results.
The ballot measure reads, in part, as follows: "Senate Bill No. 2191, approved by the 2001 Legislative Assembly, became law on July 1, 2001. The law pertains to the disclosure of customer information by financial institutions, including banks and credit unions, and notification of privacy policies by financial institutions. The law changes the definitions of a ``customer´´ of a financial institution and ``customer information´´ to be similar to that provided in federal law. It permits financial institutions to disclose nonpublic personal information to third parties unless the customer does not agree to the disclosure and so notifies the financial institution, a process described as ``opting out.´´ The law also requires financial institutions to notify their agricultural and commercial customers about the financial institution's privacy policies and to notify those customers annually of their right to ``opt out´´ of having their nonpublic information disclosed."
See also, N.D. Senate Bill 2191 [PDF], providing for this ballot measure.
Magistrate Judge Issues Recommendations Re Personal Jurisdiction in Baan Case
6/11. A Magistrate Judge of the U.S. District Court (DC) issued his Report and Recommendation [PDF] in In Re Baan Company Securities Litigation on the FRCP 12(b)(2) motions to dismiss for lack of personal jurisdiction over defendants Paul Baan and Vanenberg Group.
This is a class action against the Baan Company and certain of its officers and directors alleging securities fraud. This recommendation is a rather standard 12(b)(2) determination, except for the Court's characterization of the arguments made by plaintiffs' counsel regarding Baan's deposition. The Court wrote: "I have never seen and I hope that I will never see again such utter mischaracterizations of what a witness actually said or such bold assertions based on absolutely nothing the witness said." The Magistrate Judge recommended granting the motions to dismiss.
People and Appointments
6/10. Elias Cortez resigned from his position as Director of the California Department of Information Technology (DOIT). See, resignation letter [Word].
6/11. The Consumer Electronics Association (CEA) named Tara Dunion to be a director in its communications department. See, release.
More News
6/11. The New Hampshire Public Utilities Commission voted to support Verizon's Section 271 application to the Federal Communications Commission (FCC) to provide in region interLATA services. Verizon stated in a release that it "expects to file its application with the Federal Communications Commission later this month".
6/11. BellSouth Ch/CEO Duane Ackerman gave a speech in Hilton Head Island, South Carolina. He stated that "While technology is getting smaller and faster, the gulf between technology and the Southern workforce is threatening to get bigger. We have come far in developing the microchip, but somehow we have left too many Mables and Mikes behind, stranded with neither the skills to compete nor the tools to learn. We've moved on to the digital age of networks and connectivity, but our workforce system is stuck in the old machine age of smokestacks and assembly lines." He concluded that "we must invest in a Southern workforce for the digital age".
6/10. Federal Trade Commission (FTC) Chairman Timothy Muris gave a speech titled "On the Occasion of the Celebration of the Twentieth Anniversary of the 1982 Merger Guidelines" at the Department of Justice in Washington DC.
Wednesday, June 12
The House will likely consider a motion to go to conference on HR 3005, the Bipartisan Trade Promotion Authority Act of 2002.
The Supreme Court is on recess until Monday, June 17.
7:00 AM - 3:30 PM. Day two of a two day conference titled Current and Emerging Solutions to Public Safety Communications Interoperability hosted by the NTIA and the Public Safety Wireless Network Program. Audio webcast. See, agenda. See also, notice in the Federal Register. Location: Ronald Reagan International Trade Center, 1300 Pennsylvania Avenue, NW.
8:30 AM - 4:00 PM. Day two of a three day meeting of the NIST's Computer System Security and Privacy Advisory Board. See, notice in Federal Register. Location: National Security Agency's National Cryptologic Museum, Colony 7 Road, Annapolis Junction, MD.
9:00 AM - 1:00 PM. The President's Council of Advisors on Science and Technology will hold a public meeting. The agenda includes four items: (1) the science and technology of combating terrorism, (2) policies and technologies to improve energy efficiency, (3) the federal investment in science and technology research and development, and (4) demand issues that can speed the deployment of a 21st Century broadband infrastructure. See, notice in Federal Register. Location: Colonial Room, Renaissance Mayflower Hotel, 1127 Connecticut Ave., NW.
10:00 AM. The FCC's Technological Advisory Council will hold a meeting. See, FCC notice [PDF]. Location: FCC, Commission Meeting Room, 445 12th St., SW.
11:00 AM. The Cato Institute will host a panel discussion titled Digital Copy Protection: Mandate It? Ban It? Or Let the Market Decide?. The speakers will be Rick Lane (News Corporation), Jonathan Potter (DiMA), Sarah Deutsch (Verizon), Stewart Verdery (Vivendi Universal), and Jonathan Zuck (ACT). Lunch will follow. Webcast. See, online registration page. Location: Cato, 1000 Massachusetts Avenue, NW.
12:30 PM. The FCBA's Global Telecommunications Development Committee and the International Practice Committee will host a luncheon seminar titled Three Principles for the Liberalization of Telecommunications in Latin America: Competition, Competition and Competition. The speakers will be Henoch Aguiar, a former Secretary of Telecommunications of Argentina. This program is free and lunch will be provided. RSVP by faxing or e-mailing your name, affiliation, and contact information to Javier Miguel Tizado at 202 639-9355 or jtizado by Monday, June 10th. Location: White & Case, 601 13th St., NW, Suite 600.
1:00 PM. USPTO Director James Rogan will deliver the keynote address at the 8th USPTO University Awards Ceremony. See, notice. Location: Marriott Crystal Forum, 1999 Jefferson Davis Highway, Arlington, VA.
POSTPONED. 2:30 PM. The Senate Judiciary Committee's Subcommittee on Technology, Terrorism, and Government Information Subcommittee will hold a hearing on S 2541, the Identity Theft Penalty Enhancement Act.
2:30 PM. The Senate Commerce Committee's Subcommittee on Science, Technology, and Space Subcommittee will hold a hearings to examine the ICANN. The scheduled witnesses are Nancy Victory (Director of the NTIA), Peter Guerrero (GAO), Stuart Lynn (President of the ICANN), Karl Auerbach (Member of the ICANN Board of Directors), Roger Cochetti (VeriSign), Alan Davidson (CDT), and Cameron Powell (SnapNames). Press contact: Andy Davis at 202 224-6654. Location: Room 253, Russell Building.
7:00 PM. Commerce Secretary Don Evans will give the keynote address at the10th annual U.S. ASEAN Business Council Ambassadors Tour Dinner. Location: Four Seasons Hotel, 2800 Pennsylvania Ave., NW.
Thursday, June 13
The House will meet at 10:00 AM for legislative business. No votes are expected after 6:00 PM. The House will likely consider HR 4019, the Permanent Marriage Penalty Relief Act of 2002.
8:30 AM - 3:00 PM. Day three of a three day meeting of the NIST's Computer System Security and Privacy Advisory Board. See, notice in Federal Register.
9:30 AM. The FCC will hold a meeting. See, agenda. Location: FCC, 445 12th Street, SW, Room TW-C05 (Commission Meeting Room).
10:00 AM. The House Ways and Means Committee will hold a hearing on the extraterritorial income regime. Location: Room 1100, Longworth Building.
10:00 AM. The House Judiciary Committee has scheduled a meeting to mark up several bills, including HR 4598, the Homeland Security Information Sharing Act, HR 3215, the Combatting Illegal Gambling Reform and Modernization Act (Goodlatte Internet gambling bill), and HR 4623, the Child Obscenity and Pormography Prevention Act of 2002. Audio webcast. Location: Room 2141, Rayburn Building.
10:00 AM. The Senate Judiciary Committee will hold a business meeting. See, notice. Press contact: Mimi Devlin at 202 224-9437. Location: Room 226, Dirksen Building.
2:00 - 4:00 PM. The American Enterprise Institute (AEI) will host a panel discussion titled The Future of the Distribution of Video Programming. The speakers will be Harold Furchtgott Roth (AEI), James Ramo (Movielink), Jerald Fritz (Albritton Communications), Michael Kupinski (A.G. Edwards), Jonathan Potter (DiMA), and Donald Whiteside (Intel). See, agenda and registration page. Location: AEI, 12th floor, 1150 17th St., NW.
2:00 PM. The Senate Judiciary Committee will hold a hearing on pending judicial nominations. See, notice. Press contact: Mimi Devlin at 202 224-9437. Location: Room 226, Dirksen Building.
2:30 PM. The House Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property will hold an oversight hearing on titled Copyright Arbitration Royalty Panel Structure and Process. Location: Room 2141, Rayburn Building.
Friday, June 14
Flag Day.
CANCELLED. The FCC's Network Reliability and Interoperability Council (NRIC) will hold a meeting. Location: FCC, 445 12th Street, SW, Commission Meeting Room. The next meeting of the NRIC will be on Friday, September 13. See, cancellation notice [PDF].
Saturday, June 15
Deadline for the FCC to submit its annual report to Congress regarding progress made in achieving the objectives of the Open Market Reorganization for the Betterment of International Telecommunications Act (ORBIT Act), 47 U.S.C. § 646. See, FCC notice [PDF].
Monday, June 17
The Supreme Court will return from recess.
2:00 - 3:30 PM. The FCC's International Bureau will hold a public forum to discuss issues and policies pertaining to the international satellite network coordination process and the domestic regulatory aspects of the International Telecommunication Union's satellite network filing process. Location: FCC, 445 12th Street, SW, Room TW-C305.
Deadline to submit comments to the FCC regarding its Notice of Proposed Rulemaking regarding the consequences of the FCC's classification of cable modem service as an information service. This is CS Docket No. 02-52. See, FCC release [PDF] and notice in Federal Register.
Tuesday, June 18
8:30 - 10:00 AM. The American Enterprise Institute (AEI) will host a press breakfast titled "Telecommunications and Media Issues" with former FCC Commissioner Harold Furchtgott Roth and other AEI scholars. RSVP to Veronique Rodman at telephone 202 862-4871 or vrodman Location: AEI, 1150 17th Street, NW, 11th Floor Conference Room.
12:00 NOON. The FTC will host an event titled Workshop on Merger Remedies. See, FTC release. Location: Room 332, FTC, 600 Pennsylvania Ave., NW.
9:00 AM - 4:00 PM. The Global Internet Project will host a conference titled Spam: Can It Be Stopped? FTC Commissioner Orson Swindle will give the opening keynote address at 9:20 AM. See, agenda. Location: Crystal Gateway Marriott, Arlington, VA.
Day one of a four day conference titled "INET 2002: Internet Crossroads: Where Technology and Policy Intersect". See, conference information page. Location: Crystal Gateway Marriott, Arlington, VA. 
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