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September 11, 2002, 9:00 AM ET, Alert No. 506.
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10th Circuit Rules in Private Telecom Antitrust Case
9/10. The U.S. Court of Appeals (10thCir) issued its split opinion in Telecor Communications v. Southwestern Bell, a private antitrust case involving definition of the relevant market, application of the Noerr Pennington doctrine, and application of the state action and exclusive jurisdiction doctrines. After several pretrial orders, and a jury trial, plaintiffs were awarded $20 Million. The Appeals Court affirmed.
Background. Telecor Communications and the eight other plaintiffs are independent pay phone service providers. They compete with Southwestern Bell, the incumbent local exchange carrier (ILEC) in the state of Oklahoma, which had a legal monopoly until passage of the Telecommunications Act of 1996. In anticipation of passage of the Act, and competition in pay phone service, Southwestern Bell engaged in a campaign to secure long term, hard to cancel, contracts with the owners of locations for pay phones, to make entry by competitors more difficult. The competitors offered better commissions to location owners, but after two years, Southwestern Bell still held 87 percent.
District Court. Telecor and the others plaintiffs filed a complaint in U.S. District Court (WDOkla) against Southwestern Bell alleging violation of state and federal antitrust law, seeking treble damages. Telecor argued that the relevant market is pay phone service. Southwestern Bell argued that the relevant market included pay phone and cellular services. The District Court ruled on summary judgment that the relevant market was pay phones. The District Court also allowed Telecor to present evidence regarding alleged misleading statements made by Southwestern Bell to the state utilities regulator. The jury then returned a verdict for Telecor. Southwestern Bell appealed.
Appeals Court. The Appeals Court affirmed the District Court's ruling excluding cellular phones from the relevant market definition. It wrote that "Location owners are the relevant customers for purposes of locating Southwestern Bell's pay phone facilities, and from the location owners' perspective, cellular phone services and pay phone services are not interchangeable."
The Appeals Court next rejected Southwestern Bell's argument that the admission of evidence of misleading statements to the state regulator violated the Noerr Pennington doctrine, which provides immunity from antitrust liability under the Sherman Act to private parties who petition the government for redress of grievances, notwithstanding the anti competitive purpose or consequences of their petitions.
The Appeals Court also rejected Southwestern Bell's argument that the state action doctrine barred use of the contracts between Southwestern Bell and location owners that were negotiated before the passage of the Telecom Act of 1996.
Judge David Ebel wrote the opinion. Judge Paul Kelly dissented. He would have reversed on two issues: the definition of the relevant market, and the application of the state action and exclusive jurisdiction doctrines.
Plaintiffs are represented by the law firm of Boies Schiller & Flexner.
People and Appointments
9/10. Rep. John Sununu (R-NH) defeated incumbent Sen. Bob Smith (R-NH) in the New Hampshire Republican Senate primary.
9/10. Elizabeth Dole won the seven way North Carolina Republican Senate primary. She will face Erskine Bowles, who won the Democratic primary. Both seek the seat of retiring Sen. Jesse Helms (R-NC).
9/10. Anne Weismann was named Deputy Chief of the Federal Communications Commission's (FCC) Enforcement Bureau. She will help oversee the common carrier enforcement activities of the Enforcement Bureau's Market Disputes Resolution Division, Telecommunications Consumers Division and Investigations and Hearings Division. She previously worked at the Department of Justice's Federal Programs Branch. See, FCC release.
9/10. Helen Hubbard was named Tax Legislative Counsel in the Treasury Department's Office of Tax Policy. She was previously a partner at Ernst & Young in the Accounting Methods and Inventory group in the National Tax Department. Prior to that, she was a partner with Akin Gump. See, release.
Qwest Withdraws Long Distance Applications
9/10. Qwest Communications withdrew its Section 271 applications to provide in region interLATA services in the states of Colorado, Washington, Utah, Idaho, Iowa, Nebraska, North Dakota, Montana and Wyoming. Qwest stated that it "expects to refile an application for all nine states by the end of September". See, Qwest release.
Federal Communications Commission (FCC) Chairman Michael Powell stated in a release that "The FCC cannot approve such applications by the Bell Companies unless they satisfy the requirements of sections 271 and 272 of the Communications Act."
Powell continued that "In my view, Qwest's application was razor close to approval. Ultimately, the outstanding issues were very narrow, but nonetheless important. Despite extensive examination of the record supporting these applications, questions remain regarding whether Qwest has complied with the safeguards set forth by Congress in section 272 of the Act. Section 272 governs how a Bell Company's long distance separate affiliate operates. In these applications, Qwest did much to otherwise demonstrate that it has complied with the market-opening provisions of the section 271 competitive checklist."
Powell added that "I am confident that Qwest, in consultation with the states, Department of Justice, and this Commission, will expeditiously resolve the outstanding issues that prevented approval."
Steve Davis, Qwest's SVP of Policy and Law, stated that "there have been questions raised regarding our plans to restate our financial statements for prior periods. Our new application will address those concerns and demonstrate our full compliance with the 1996 Act."
PFF Releases Paper on ICANN
9/10. The Progress and Freedom Foundation (PFF) released a paper [23 pages in PDF] titled "Domain Names Services: Let Competition, Not ICANN, Rule". The paper, which was written by the PFF's William Adkinson, argues that the Internet Corporation for Assigned Names and Numbers (ICANN) should end price and service regulation, and terminate its "mission creep."
The current Memorandum of Understanding (MOU) between the Department of Commerce (DOC) and ICANN is scheduled to expire at the end of this month.
The paper states that "In the mold of a traditional economic regulatory agency, ICANN regulates entry into the domain name business and sets the price at which some (but not other) domain name registries can offer services. While such regulation may once have been justified, the domain name marketplace is now competitive." (Parentheses in original.)
It adds that "ICANN appears to be engaging in regulatory ``mission creep, seeking to regulate in detail the nature of service offerings in the domain name marketplace. If not restrained, ICANN thus threatens to morph into an entity that might more appropriately be called the ``Internet Commerce Commission. Such an entity is neither necessary nor desirable. Instead, the Department of Commerce should use this opportunity to end economic regulation of the DNS once and for all."
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Wednesday, September 11
Anniversary of the terrorist attacks of September 11, 2001.
The House will meet at 12:00 NOON for legislative business. No votes are expected before 5:00 PM. The House will consider The Patriot Day Resolution. See, Whip Notice.
Thursday, September 12
The House will meet at 10:00 AM for legislative business. The House is scheduled to consider HR 5193, the Back to School Tax Relief Act of 2002.
8:00 AM - 5:30 PM. Day one of a two day conference hosted by the International Intellectual Property Institute (IIPI) titled "Specialized Intellectual Property Courts". See, IIPI release and online registration form. Location: GWU Law School, Moot Court Room, 2000 H St., NW.
9:30 AM. The FCC will hold a meeting. The FCC will consider a Notice of Proposed Rulemaking (NPRM) concerning its media ownership rules, pursuant to Section 202(h) of the Telecommunications Act of 1996. It will also consider a NPRM and Memorandum Opinion and Order concerning possible revisions to the rules on unsolicited advertising over the telephone and facsimile machine and the possible establishment of a national do not call list. This is CC Docket No. 92-90. Location: FCC, 445 12th Street, SW, Room TW-C05.
10:00 AM. Federal Reserve Board Chairman Alan Greenspan will testify to the House Budget Committee. Location: Room 210, Cannon Building.
10:00 AM. The House Judiciary Committee's Subcommittee on the Constitution will hold an oversight hearing titled "Privacy Concerns Raised by the Collection and Use of Genetic Information by Employers and Insurers". Audio web cast. Location: Room 2237, Rayburn Building.
12:30 - 2:00 PM. The American Society of International Law will host a panel discussion titled "International Cyberspace: Convergence or Conflict?". RSVP by 5:00 PM on September 10 to cborgen @asil.org or by fax to 202 797-7133, attn: Chris Borgen. Lunch will be served. Location: ASIL, 2223 Massachusetts Ave., NW.
2:00 PM. The Senate Banking Committee will hold a hearing on the nomination of Wayne Abernathy to be Assistant Secretary of the Treasury for Financial Institutions. Location: Room 538, Dirksen Building.
2:30 PM. The Senate Commerce Committee's Subcommittee on Science, Technology, and Space Subcommittee will hold a hearing to examine S 2537, the Dot Kids Implementation and Efficiency Act of 2002, and HR 2417, the Dot Kids Domain Name Act of 2001. These bills would facilitate the creation of a new second level Internet domain within the U.S. country code domain that would provide a safe online environment for children. The House has already passed another version -- HR 3833. Location: Room 253, Russell Building.
Deadline to submit comments to the FCC regarding WorldCom's August 8, 2002, petition for a declaratory ruling pursuant to 47 C.F.R. 1.2, that requesting carriers are entitled to access ILEC Line Information Database data at cost based rates when they use such data to provide interexchange and exchange access service. This is CC Docket No. 01-338. See, FCC notice [PDF].
Friday, September 13
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. Day two of a two day conference hosted by the International Intellectual Property Institute titled "Specialized Intellectual Property Courts". See, IIPI release and online registration form. Location: Markey National Courts Bldg., 717 Madison Pl., NW.
10:45 AM. Press conference associated with the International Intellectual Property Institute's conference titled "Specialized Intellectual Property Courts". Location: Court Room 203, Markey National Courts Bldg., 717 Madison Pl., NW.
10:00 AM. The FCC's Network Reliability and Interoperability Council will hold a meeting. Location: FCC, 445 12th Street, SW, Commission Meeting Room.
Deadline to submit comments to the FTC regarding its proposed consent agreement with MSC Software Corporation. See, Agreement Containing Consent Order [22 pages PDF]. See, notice in Federal Register.
Monday, September 16
Yom Kippur.
Deadline to submit comments and notices of intention to participate to the Copyright Office in response to its notice in the Federal Register directing "all claimants to royalty fees collected in 1999, 2000 and 2001 for the distribution of digital audio recording devices and media to submit comments as to whether a controversy exists as to the distribution of the royalty fees in the 1999, 2000 and 2001 Musical Works Funds."
Deadline to register for the FCC's September 18 auction seminar for Auction No. 46. This is for the 1670-1675 MHz band auction, scheduled for October 30, 2002. See, notice with registration form [PDF].
Tuesday, September 17
9:00 AM - 5:00 PM. Day one of a three day meeting of the Computer System Security and Privacy Advisory Board (CSSPAB). The agenda includes (1) discussion of a CSSPAB privacy report, (2) discussion of a CSSPAB baseline standards report, (3) updates on computer security legislation, (4) an update by the OMB on privacy and security issues, (5) an agency briefing on compliance with the Government Paperwork Elimination Act (GPEA), (6) and a discussion of DMCA issues. See, notice in Federal Register, August 30, 2002, Vol. 67, No. 169, at Pages 55817 - 55818. Location: General Services Administration, 7th and D Streets, SW, 5700.
9:00 AM. The Bureau of Industry and Security's (BIS) Regulations and Procedures Technical Advisory Committee (RPTAC) will hold a partially open meeting. The agenda for the open portion of the meeting includes a presentation of papers or comments by the public, an update on pending regulations, a discussion of TSR MTOP limit comments, a discussion of the Unverified List, a review of SNAP 2002 status, a discussion of AES regulations & SED recordkeeping requirements, a discussion on implementation of CCL User Friendliness recommendations, and updates from working groups. See, notice in the Federal Register. Location: Room 3884, Department of Commerce, 14th Street between Constitution and Pennsylvania Avenues, NW.
9:30 AM. The U.S. Court of Appeals (DCCir) will hold an en banc hearing in Ruggiero v. FCC, No. 00-1100. On February 8, a three judge panel issued its split opinion holding unconstitutional the ban on issuance of low power FM radio broadcast licenses to anyone who has previously engaged in an unlicensed operation. The set of people who have engaged in unlicensed broadcasting who may seek low power FM licenses is a very small and insignificant group. However, this case could have a broader impact. The en banc panel may provide an analysis of the application of the First Amendment to broadcast speech that affects a wider range of speakers. Location: Courtroom 20, 333 Constitution Ave., NW.
12:00 NOON - 4:30 PM. The Cato Institute will host an event titled "The Supreme Court: Past and Prologue. A Look at the October 2001 and October 2002 Terms". Location: 1000 Massachusetts Avenue, NW.