Tech Law Journal Daily E-Mail Alert
July 2, 2002, 9:00 AM ET, Alert No. 463.
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USTR Proposes Reducing Barriers to Trade in Services
7/1. The Office of the U.S. Trade Representative (USTR) announced that it has proposed liberalizing global trade in services, including information technology, telecommunications, financial, and legal services. The proposal is made in the World Trade Organization (WTO) negotiating round recently launched at a meeting in Doha. See, USTR release.
IT Services. The USTR published a summary of its proposal, but not the proposal, in its web site. The summary states that "The United States is requesting increased access for data processing services, software and hardware related services, and other computer related services."
Communications Services. The USTR summary also states that the U.S. "is requesting increased access for telecommunications services, including basic and value added services. In addition, the United States requests that WTO members adopt commitments in the WTO Basic Telecommunications Reference Paper, which sets out a number of key pro-competitive regulatory obligations. In addition, the United States may urge members who have not fully privatized their incumbent telecommunications carrier to do so in the near future. The United States also is requesting commitments in cable network services, defined as owning or leasing cable facilities for the distribution of video programming services."
Legal Services. The USTR summary also states that "With the acceleration of world economic integration, law firms have become increasingly important in advising clients on a variety of business matters, including mergers and acquisitions with foreign companies and business contracts involving multiple jurisdictions. ... The United States is requesting increased access to make it easier for these professionals to serve clients internationally as foreign legal consultants or fully licensed legal professionals (for example, remove citizenship requirements for licensing and remove restrictions on foreign ownership, form of organization and association with local professionals)."
Transparency. The USTR summary also proposes "transparent regulatory regimes", including establishing "clear, publicly available domestic procedures for application for licenses or authorizations, and their renewal or extension" and "domestic procedures providing for a standard formal process of informing the public of regulations, or changes to existing regulations, prior to their final consideration by the relevant authority and entry into effect. Procedures should also provide meaningful opportunities for comments and questions by interested parties."
The Information Technology Association of America (ITAA) praised the proposal. ITAA President Harris Miller stated in a release that "Services are a major contributor to the global $2.4 trillion information and communications technology marketplace ... We are gratified that the U.S. Trade Representative has included services sectors critical to both the delivery and the consumption of information technology products and services in these deliberations."
The Competitive Telecommunications Association (CompTel) also praised the USTR's proposal. It stated in a release that "CompTel's members are harmed by the trade barriers maintained by our trading partners. This round of trade talks is especially important to the U.S. economy in light of the difficult market conditions currently faced by telecommunications providers in the U.S. CompTel hopes that international recognition of problems exacerbated by closed telecommunications markets will spur negotiators and regulators in the WTO member countries to expand or live up to their market opening obligations and create an environment where competition can succeed."
8th Circuit Rules in PSLRA Pleading Standards Case
7/1. The U.S. Court of Appeals (8thCir) issued its opinion [PDF] in In Re Navarre Securities Litigation, a class action securities case involving the pleading standards of the PSLRA.
Navarre Corporation provides distribution and related services to developers and retailers of home entertainment content, including PC software, audio and video titles, and interactive games. Plaintiffs filed a complaint in U.S. District Court (DMinn) against Navarre and certain of its officers and directors alleging violation of Sections 10b and 20 of the Securities Exchange Act of 1934. The District Court held that the plaintiffs' complaint failed to satisfy the heightened pleading requirements of the Private Securities Litigation Reform Act of 1995 (PSLRA), 15 U.S.C. § 78u-4(b)(1)-(2).
The Court of Appeals affirmed. The Court followed the reasoning of the First Circuit in Greebel v. FTP Software, 194 F.3d 185 (1999).
9th Circuit Affirms in Broderbund TLC Securities Litigation
6/28. The U.S. Court of Appeals (9thCir) issued its opinion [PDF] in In Re Broderbund / Learning Company Securities Litigation, a class action securities case involving the issue of damages. The District Court concluded that plaintiff suffered no damages, and dismissed. The Appeals Court affirmed.
Background. Plaintiff was a shareholder of Broderbund Software. Broderbund was acquired by The Learning Company (TLC) in 1998. He acquired stock in TLC at $17.6875 per share. TLC filed registration statements with the SEC that plaintiff alleges contained misstatements. TLC was acquired by Mattel in 1999. Plaintiff received $33.45 worth of Mattel stock for each share of TLC stock. Mattel stock subsequently fell to under $14 per share.
District Court. Plaintiff filed a complaint in U.S. District Court (CDCal) against TLC and Mattel alleging violation of federal securities laws in connection with alleged misstatements by TLC. The District Court dismissed on the grounds that plaintiff had not suffered damages within the meaning of §§ 11 and 12 of the Securities Act of 1933, 15 U.S.C. §§ 77k and 77l. Plaintiff appealed.
Appeals Court. The Appeals Court affirmed. It reasoned that he acquired TLC stock at $17.69 per share, and disposed of his TLC stock in a merger at $33.45 per share. The Court concluded that the plaintiff "sues Mattel and TLC's officers and directors because of alleged improprieties at and before the date of his acquisition of the TLC stock. By use of rather vermiculate logic, he now attempts to change his $15.7625 per share gain into a loss. The perspicacious district judge was not persuaded that gain is loss. Nor are we."
GAO Reports on IT in Executive Office of the President
7/1. The General Accounting Office (GAO) released a report [PDF] dated June 28 regarding the use of information technology by the Executive Office of the President (EOP).
The GAO found that "the office is in the process of developing an officewide blueprint for modernizing its operations and supporting technology, commonly referred to as an enterprise architecture. Thus far, it has developed parts of the architecture, most notably the rules and definitions governing the technical characteristics of IT investments and explaining EOP-wide technical service categories (e.g., network services, security services, etc.). Moreover, the steps it has taken to complete the architecture are consistent with recognized best practices."
It further found that the "EOP has taken steps toward defining an officewide IT capital planning and investment control process that is to be used to implement the enterprise architecture".
The report was prepared for Sen. Byron Dorgan (D-ND), Sen. Ben Campbell (R-CO), Rep. Ernest Istook (R-OK), and Rep. Steny Hoyer (D-MD), the Chairmen and ranking members of the Senate and House appropriations subcommittees that handle appropriations for the EOP.
FCC Receives Comments on Broadband Internet Access
7/1. Monday, July 1, was the extended deadline to submit reply comments to the FCC in response to its Notice of Proposed Rulemaking (NPRM) titled "In the Matter of Appropriate Framework for Broadband Access to the Internet over Wireline Facilities".
BellSouth submitted a comment [65 pages in PDF] in which it argued that the FCC "should (1) adopt its tentative conclusion in the Notice that broadband Internet access service is an information service with the transmission offered via telecommunications and not a telecommunications service; (2) find that to the extent an ILEC offers a stand alone transmission service for broadband services that it does so as private carriage and not common carriage; and (3) eliminate the Computer Inquiry requirements from BOCs for their provision of broadband information services." It added the the FCC "must act in the UNE Triennial Review to eliminate existing unbundled network elements related to broadband."
Similarly, SBC submitted a comment [71 pages in PDF]. It wrote that "Contrary to the apocalyptic proclamations of some commenters, the deregulatory initiatives that the Commission is considering in this proceeding are neither extreme nor revolutionary. Classification of wireline broadband Internet access services as information services does not represent a departure from the Commission's prior conclusions." See also, SBC release.
In contrast, the Information Technology Association of America (ITAA) submitted a comment [PDF] in which it argued that the FCC "should decline the Bell Operating Companies' invitation to completely dismantle the pro-competitive regulatory regime governing their participation in the broadband telecommunications and information services markets."
The ITAA continued that "The foundation of the BOC's proposals to eliminate the Commission's existing regulatory regime is thier assertion that -- given the growth of cable and other broadband transmission ``platforms´´ ILECs no longer have either the incentive or the ability to discriminate in the provision of broadband telecommunications services to non-affiliated ISPs. This simply is not true."
The ITAA elaborated that "While some retail customers may have their choice of broadband Internet access providers, ISPs remain critically dependent on the ILECs for wholesale broadband telecommunications service necessary to serve their subscribers. Cable systems are not yeat a viable alternative source of local broadband transmissiono service for most ISPs.
The ITAA also argued that the FCC cannot permit the ILECs to offer stand alone broadband telecommunications services on a private carrier basis. The ITAA further argued that the FCC cannot eliminate unbundling obligations imposed upon ILECs.
Sprint submitted a comment [PDF] in which it asserted that the FCC "has for the first time ... instituted a rulemaking proceeding in which the ultimate issue is whether to eliminate Title II regulation of bottleneck "last-mile" common carrier facilities." This, wrote Sprint, is "contrary to fact, law and the public interest".
Sprint stated that it has "no quarrel with the Commission's tentative conclusion that the provision of wireline broadband Internet access service is an information service." However, it argued that ILECs "must unbundle their basic common carrier wireline broadband transmission facilities from their  information services and offer the transmission capacity on a standalone basis to other information service providers ..."
Time Warner Telecom Corporation submitted a comment [PDF] in which it stated that "There is little question that broadband Internet access provided by ILECs is currently classified as an information service with a telecommunications service transmission component and that there is no basis for pursuing further the wholesale reclassification of broadband transmission as ``telecommunications´´ or ``private carriage.´´ All commenters, including the ILECs, agree that the regulatory treatment of broadband should be determined based on a market power analysis. That analysis must be performed in the Non-Dominanceand Triennial Review proceedings. The Commission should conclude in those proceedings that ILECs continue to exercise market power in the provision of broadband transmission for all relevant product markets, but most especially for the high capacity end user circuits needed to provide frame relay, ATM, and similar services demanded by medium sized and large businesses. Given this market power, reclassification of broadband transport would give ILECs the opportunity to harm competition by denying inputs needed by competitors."
The National Association of Broadcasters (NAB) submitted a comment [PDF] in which it stated that the "NAB emphasizes that the Commission's failure to adopt access and nondiscrimination requirements will inevitably produce a broadband marketplace characterized by minimal competition, a lack of innovation, and severely restricted consumer choice."
The NAB continued that however the FCC categorizes broadband Internet access over wireline facilities, it must "insure that consumers have meaningful choices among competing service and content providers in the broadband environment." Specifically, the FCC "should therefore retain the access and nondiscrimination policies that have been consistently applied in the narrowband Internet marketplace, and continue to apply them to high speed Internet access services provided over wireline facilities."
The Alliance of Local Organizations Against Preemption (ALOAP) submitted a comment [PDF] in which it argued that the FCC "should leave to Congress the major questions of how to classify wireline broadband internet access for purposes of Communications Act oversight."
The State of New York submitted a comment [PDF] in which it argued that the FCC "recognized long ago that the underlying transmission facilities used to carry and connect so-called enhanced services or information services, when bundled by the incumbent local exchange carrier (``ILEC´´), must be offered by their monopoly owners on an unbundled and nondiscriminatory basis, as common carriage under Title II of the Communications Act." New York continued that "This NPRM threatens to unravel the FCC's longstanding policy success, and to do so at the very moment when unbundled nondiscriminatory access to monopoly owned transmission facilities is necessary to the continued growth and availability of high speed Internet services using wireline facilities.
Universal Service Subsidies. The American Library Association (ALA) submitted a comment in which it argued that the FCC should include "broadband providers among the entities that support universal service". The FCC's e-rate program subsidizes both schools and libraries, under the rubric of universal service. The ALA wrote that "In order to effectively fulfill their educational roles, libraries need to offer their patrons broadband Internet access."
The National Cable and Telecommunications Association (NCTA) submitted a comment on the issue of contributions to the Universal Service Fund (USF). It wrote that "Before the Commission extends the universal service contribution requirement to all providers of facilities based broadband Internet access services, it must first determine whether such an extension is in the public interest. In doing so, the Commission should evaluate the current size of the USF, all potential contributors to the USF, the effect that requiring USF contributions from all facilities based broadband Internet access services would have on the Commmission's goal of promoting broadband deployment, whether potential contributors offer public switched service or the functional equivalent, and the special circumstances facing providers of cable modem services."
The ITAA also commented on universal service subsidies. It wrote that the FCC cannot require ISPs to make payments to the USF.
This is CC Docket No. 02-33. See, May 29 notice [PDF] extending deadline from June 3 to July 1. See also, Order [PDF] extending deadline from May 14 to June 3, and original notice in Federal Register, February 28, 2002, Vol. 67, No. 40, at Pages 9232 - 9242.
FCC Seeks Comments on Strategic Plan
7/1. The Federal Communications Commission (FCC) announced that "the public is welcome to review and comment on a draft of its revised strategic plan for 2003-2008." See, FCC notice [PDF].
The draft strategic plan [19 pages in PDF], which is prepared pursuant to the Government Performance and Results Act (GPRA), states that the FCC has core goals in six areas: broadband, spectrum, media, homeland security, competition and modernizing the FCC.
The plan states that the FCC's goal regarding broadband is to "Establish regulatory policies that promote competition, innovation, and investment in broadband services and facilities while monitoring progress toward the deployment of broadband services in the United States and abroad." The plan further states that it is an FCC goal to "Harmonize regulation of competing broadband services that are provided via different technologies and network architectures."
The plan states that the FCC's goal regarding broadband spectrum management is to "Encourage the highest and best use of spectrum domestically and internationally in order to encourage the growth and rapid adoption of new technologies." The plan also states that it is a goal to "Develop and implement market oriented allocation and assignment policies, where consistent with law."
The plan states that the FCC's goal regarding media is to "Revise media regulations so that timely development and delivery of new technologies is encouraged, media ownership rules promote competition and diversity in a comprehensive, legally sustainable manner, and the migration to digital modes of delivery is facilitated."
The plan states that the FCC's goal regarding homeland security is to "Provide leadership in evaluating and strengthening the Nation's communications infrastructure, in ensuring rapid restoration of that infrastructure in the event of disruption, and in ensuring that essential public health and safety personnel have effective communications services available to them in emergency situations."
The plan states that the FCC's goal regarding competition is to "Support the Nation's economy by ensuring there is a comprehensive and competitive framework within which the communications revolution can continue so that all consumers can make meaningful choices among and have equal access to communications services."
The plan states that the FCC's goal regarding modernization is to "Emphasize performance and results through excellent management, develop and retain independent mission critical expertise, and align the FCC with dynamic and converging communications markets."
Publication Schedule
The Tech Law Journal Daily E-Mail Alert will not be published on July 3, 4, or 5.
Tuesday, July 2
Neither the House nor the Senate will meet Monday July 1 through Friday July 5, due to the Independence Day work period.
President's Homeland Security Advisory Council (PHSAC) will meet. The meeting is closed to the public. However, written comments may be submitted Fred Butterfield at fred.butterfield See, notice in the Federal Register. See also, order establishing the PHSAC. Location: undisclosed.
Wednesday, July 3
Neither the House nor the Senate will meet Monday July 1 through Friday July 5, due to the Independence Day work period.
Thursday, July 4
Independence Day. The FCC and other government offices will be closed. The National Press Club will be closed.
Neither the House nor the Senate will meet Monday July 1 through Friday July 5, due to the Independence Day work period.
Friday, July 5
Neither the House nor the Senate will meet Monday July 1 through Friday July 5, due to the Independence Day work period.
Monday, July 8
10:00 AM. The House Financial Services Committee will hold a hearing titled "Wrong Numbers: The Accounting Problems at WorldCom". Location: Room 2128, Rayburn Building.
10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Optical Disc v. Del Mar Avionics, a patent infringement case involving CD technology, No. 01-1606. Location: Courtroom 402, 717 Madison Place, NW.
10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Texas Digital Systems v. Telegenix, No. 02-1032. Location: Courtroom 402, 717 Madison Place, NW.
10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in HM Electronics v. 3M, a patent infringement case involving wireless communications technology, No. 02-1037. Location: Courtroom 201, 717 Madison Place, NW.
Deadline to file comments with the Federal Communications Commission's (FCC) Spectrum Policy Task Force in response to its request for comments on spectrum policy, including taking steps toward market oriented allocation and assignment policies, interference, efficient use of spectrum, public safety communications, and international issues. See, Public Notice [PDF].
People and Appointments
7/1. Rep. J.C. Watts (R-OK) announced that he will not run for re-election. See also, statement by President Bush.
7/1. Federal Communications Commission (FCC) Chairman Michael Powell commenced his second term as FCC Commissioner for a term expiring June 30, 2007.
More News
7/1. The Information Technology Association of America (ITAA) stated that it wrote a letter to Tom Ridge, Director of the Office of Homeland Security, urging the creation of separate physical and cyber security reporting structures in the new Department of Homeland Security. See, ITAA release.
7/1. The Washington Utilities and Transportation Commission (WUTC) recommended that Qwest's Section 271 application to provide in region interLATA services in the state of Washington be approved. See, WUTC release and Qwest release.
6/28. The U.S. Court of Appeals (DCCir) issued its opinion in Costa de Oro Television v. FCC, a petition for review of two Federal Communications Commission (FCC) orders pertaining to local television market designations pursuant to the cable television mandatory carriage rules. The Appeals Court denied the petition.
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