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September 25, 2002, 9:00 AM ET, Alert No. 516.
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FCC Media Ownership NPRM Seeks Comments on Impact of Internet
9/24. The Federal Communications Commission (FCC) finally released its Notice of Proposed Rulemaking (NPRM) [68 pages in PDF] regarding its comprehensive review of the FCC's various media ownership rules. The FCC it announced this NPRM back at its September 12 meeting.

The NPRM states that the FCC "has long regulated media ownership as a means of promoting diversity, competition, and localism" pursuant to "sections 307, 308, 309(a), and 310(d) of the Communications Act, which authorize the Commission to grant and renew broadcast station licenses in the public interest."

The NPRM continues that the Telecom Act of 1996 "fundamentally changed broadcast ownership law. Section 202(h) of the 1996 Act directs the Commission to re-examine its broadcast ownership rules every two years and repeal or modify any regulation it determines to be no longer in the public interest."

The NPRM adds that the "media ownership rules must be reassessed on an ongoing basis to ensure that they are grounded in the current realities of the media marketplace. It is only through this reevaluation that the Commission can be assured that its media ownership rules actually advance, rather than undermine, our policy goals. In this regard, we recognize that the marketplace has changed dramatically over the last few decades, with both greater competition and diversity, and increasing consolidation."

The 68 pages document seeks public comment on hundreds of specific questions. One theme that runs through many of the questions is what impact does the Internet now have on achieving the FCC's goals of promoting diversity, competition, and localism in its various ownership rules.

For example, the NPRM states (at ¶ 60) that "A recent study indicated that Internet users spend approximately 25% less time watching television stations than non-Internet users. This phenomenon suggests that the Internet may compete with television for viewers, which could reduce advertising revenues for both broadcast and nonbroadcast channels. Competitive developments such as these are not reflected in past Commission evaluations of the advertising market, yet they may have a meaningful effect on broadcasters' ability to compete in today's media market. We seek comment on how trends such as these should impact our analysis."

Also, with respect to the goal of diversity, the NRPM states that "Consumers generally have access to news, public affairs, and entertainment programming from a variety of media outlets -- broadcast, cable, satellite, newspapers and the Internet. What has been the effect of this proliferation of new media outlets on the Commission's diversity goals? What effects, if any, do these outlets have on our objective of promoting diversity and the means by which we can best achieve those goals? How should these or other outlets be considered for the purposes of analyzing viewpoint diversity? Are there unique attributes of broadcasting that should lead us to define and measure diversity without reference to other media?"

The NPRM also seeks comment on whether to count the Internet as a voice in its analysis of diversity and competition. It asks (at ¶ 124): "Is the Internet now so widely accessible that it should count as a voice? Are there characteristics of the acquisition of information on the Internet, such as the need to click a hyperlink or key in a website’s Internet address, that make it different from broadcasting such that we should not count it? Or, should these characteristics of the Internet affect the significance we give the Internet? If so, should it count as one voice or many? On the Internet, how much news and how many viewpoints are original; that is, not merely re-purposed content that also is available from local and national media outlets, such as TV stations, networks, and newspapers?"

This line of inquiry continues: "Is there any instance of an Internet service provider (``ISP´´) or other entity acting as an ``Internet gatekeeper´´ by denying a subscriber access to a news source on the World Wide Web? Is the role of a gatekeeper different between the Internet and cable or DBS? We also assume that, unlike cable or DBS, the Internet has unlimited capacity such that there is no limit on the number of news sources that a user can reach. On the other hand, some ISPs feature particular news sources on their home pages. We seek comment on these assumptions and their relevance to our analysis of diversity and competition."

The NPRM also seeks comment on how the FCC's ownership rules may affect innovation. For example, it asks (at ¶ 68), "how do our broadcast ownership rules affect innovation in the form of digital television, digital cable, Internet access, and other new technologies? Do our ownership rules hinder continued innovation? Should the Commission actively seek to promote innovation through its ownership rules, or merely avoid interfering with firms’ ability to innovate?"

PPI Report Advocates Government Action to Boost Broadband Demand
9/24. The Progressive Policy Institute (PPI), a Democratic party think tank, released a report [36 pages in PDF] titled "Unleashing the Potential of the High Speed Internet: Strategies to Boost Broadband Demand".

The report states that "most people who are able to subscribe to a home broadband connection choose not to do so. The reason is simple: Most Americans feel that the current offerings on the Internet do not justify paying two or three times more for a broadband connection than they do for a dial-up connection. Because of the low take-up rate, providers of advanced broadband connections have little economic justification to engage in the large scale rollout that could drive prices down. Likewise, providers of services requiring broadband connections have little incentive to roll these out, given the low take up rate of broadband."

The report calls this a "chicken or egg conundrum"; moreover, it states that solving this conundrum should be a goal of public policy.

The report argues that "governments at all levels should pursue policies that: Encourage greater Internet penetration and more robust use by expanding e-commerce and e-government ... Encourage the availability of digital content ... Encourage the development and deployment of transformative applications".

The Report also offers many specific policy recommendations. It argues that government should "Oppose actions designed to protect the status quo against e-commerce competition and resist efforts to prevent consumers from capturing the savings realized by online transactions."

It also states that government should "Support digital transformation of industries by calling for government agencies to examine how their procurement, regulatory, and other functions can speed the digitization of the sectors they influence ..."

The report also recommends that the Congress should pass the Driver’s License Modernization Act, the E-Government Act of 2002, and "appropriate federal privacy and spam legislation while encouraging technologies that empower users, such as the Platform for Privacy Preferences (P3P) and the Internet Content Rating Association (ICRA) rating system".

In the area of encouraging the availability of digital content, the report recommends that the government "Harmonize the royalties paid by terrestrial broadcasters and webcasters and simplify the process for collecting and distributing royalties", give $50 Million to PBS for webcasting their shows, establish a "National Digital Lending Library", and fund "online museums".

Finally, the report advocates "passing telework incentive legislation; ensure that home offices are not subject to workplace regulations; and develop telework programs for government employees". It also advocates legislation to make it easier for distance learning to qualify for federal support.

The report was written by Robert Atkinson, Shane Ham, and Brian Newkirk.

Congressional Hearings
9/24. The House Commerce Committee's Subcommittee on Commerce, Trade, and Consumer Protection held a hearing on HR 4678, the Consumer Privacy Protection Act of 2002, sponsored by Rep. Cliff Stearns (R-FL). See, opening statement of Rep. Stearns, and opening statement of Rep. Billy Tauzin (R-LA), the Chairman of the full Committee. See also, prepared statements of witnesses: John Palafoutas (AeA), Philip Servidea (NCR, on behalf of the Computer Systems Policy Project), John Schall (National Business Coalition on E-Commerce and Privacy), Rebecca Whitener (EDS Security & Privacy Services), Paul Misener (Amazon), Jennifer Barrett (Acxiom), and Marc Rotenberg (EPIC).

9/24. The House Commerce Committee's Subcommittee on Oversight and Investigations held a hearing titled "Capacity Swaps by Global Crossing and Qwest: Sham Transactions Designed to Boost Revenues?" See, prepared testimony of witnesses: Patrick Joggerst (formerly with Global Crossing), Roy Olofson (formerly with Global Crossing), Robin Szeliga (Qwest Communications), Jackie Armstrong (Global Crossing), Greg Casey (formerly with Qwest), Kym Smiley (formerly with Qwest), and Ken Floyd (FLAG Telecom). 

VOD Over IP Company Files Antitrust Suit Against AOLTW, Sony, Universal
9/23. Intertainer filed a complaint [68 pages in PDF] in U.S. District Court (CDCal) against AOL Time Warner, Sony, Universal, and others alleging violation of federal antitrust law, and other claims, in connection with the provision of video on demand (VOD) services over Internet protocol (IP). See also, Intertainer release.

Intertainer is a Culver City, California based company that has developed and marketed VOD over IP services.

The complaint alleges that AOL Time Warner, Sony and Universal, and various of their companies, have violated antitrust law. Intertainer summarizes the suit in a release by stating that the three content companies have "attempted to control the marketplace for entertainment content on demand, thereby hindering and delaying the emergence of the broadband content industry and Intertainer's video on demand services. Intertainer maintains that the defendants have deliberately caused the delay so that they may have the opportunity to deploy a service called Movielink, owned in material part by the named defendants and other studios, that would monopolize the Internet video on demand market."

The complaint alleges that the VOD services delivered by IP technology to consumers is the relevant market for antitrust purposes. It further alleges that Intertainer's streaming technology is of superior quality to the downloading technology of the defendants. It further alleges that they "have attempted to hinder and delay the emergence and expansion of IP video on demand services provided by businesses independent of Defendants in order to protect and control their revenues."

The complaint alleges violation of §1 of the Sherman Act (15 U.S.C. §1), and violation of §7 of the Clayton Act (15 U.S.C. §18). The complaint prays for damages, treble damages, an order requiring divestiture of MovieLink, and other injunctive relief.

It also pleads, in shotgun fashion, many other causes of action: breach of contract, breach of implied covenant of good faith and fair dealing, breach of fiduciary duty, aiding and abetting and conspiring to breach fiduciary duties, misappropriation of confidential information, intentional interference with contractual relations, unfair competition, and unjust enrichment. 

GAO Releases Report on PR China's Membership in WTO
9/24. The General Accounting Office (GAO) released a report [81 pages in PDF] titled "World Trade Organization: Selected U.S. Company Views about China's Membership".

The GAO conducted a survey of U.S. companies to analyze their view regarding "(1) the importance of WTO related commitments to their business operations in China, (2) the anticipated effects of China’s WTO related reforms on their businesses, and (3) China's prospects for implementing these reforms."

The GAO found that most respondents believe that China's WTO commitments are important to their companies. The GAO reported that "Respondents identified many rule of law related reforms as more important than other reforms. Specifically, three quarters of the respondents selected intellectual property rights; consistent application of laws, regulations, and practices; and transparency of laws, regulations, and practices as the most important commitment areas for their companies. Company representatives that we interviewed also explained the importance of other reforms, including reductions to market access barriers (such as tariffs and product quotas) and investment related measures for their future operations in China."

Out of the thirty WTO related commitments areas listed in the survey, more respondents identified intellectual property rights as important than any other commitment area.

The GAO also reported that "Respondents expected many of China's WTO related commitment areas to be relatively difficult for Chinese officials to implement". In particular, "U.S. companies expected rule of law related commitment areas regarding consistent application of laws, regulations, and practices, and intellectual property rights to be the most difficult areas to carry out."

191 out of 551 companies responded to the GAO's survey. The report does not identify the companies that participated in the survey.

The report was prepared for Sen. Max Baucus (D-MT), the Chairman of the Senate Finance Committee (SFC), Sen. Charles Grassley (R-IA), the ranking Republican on the SFC, Rep. Bill Thomas (R-CA), the Chairman of the House Ways and Means Committee (HWMC), and Rep. Charles Rangel (D-NY), the ranking Democrat on the HWMC.

Tech Bills Signed in California
9/23. California Gov. Gray Davis signed SB 772, sponsored by Senator Debra Bowen (D-Marina del Rey), a bill pertaining to termination of e-mail addresses. The bill provides that "Unless otherwise permitted by law or contract, any provider of electronic mail service shall provide each customer with notice at least 30 days before permanently terminating the customer's electronic mail address." The bill further provides that "No contract for electronic mail service may permit termination of service without cause with less than a 30-day notice. For purposes of this subdivision, ``termination of service without cause´´ means termination of service at the unfettered discretion of the service provider without regard to any conduct of the customer that violates the service provider's terms of service or acceptable use policy." Finally, the bill provides that "For purposes of this section, ``provider´´ shall mean the entity that controls the customer's electronic mail address, and not the entity making the underlying network or access available to the provider or the customer."

9/23. California Gov. Gray Davis signed AB 885, sponsored by Assemblymember Lynn Daucher (R-Brea). The bill allows high school students taking approved Internet based courses to be counted toward a school's average daily attendance. Gov. Davis wrote in a signing statement the bill "establishes a distance learning pilot program for a limited number of California public high schools. This pilot program is a pivotal first step in exploring an important new mode of instruction. The potential benefits to expanding internet based instruction are immense, including more one-on-one communication between teachers and students, increases in technology training to prepare students for the workforce, and improvements in the breadth and quality of curriculum in urban, small, and remote schools."

Important Breaking News
9/24. The Federal Trade Commission (FTC) announced that it will introduce Dewie The Turtle, its "Internet security mascot", at the Privacy 2002 conference on September 26 in Cleveland, Ohio. See, FTC release.

FTC officials have not commented publicly on why McGruff The Crime Dog was passed over for the job.

The appointment does not require Senate confirmation.

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Notices & Disclaimers
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Wednesday, September 25
The House will meet at 10:00 AM for legislative business. The House will consider several non tech related bills. See, Whip Notice.

Day three of a three day conference and exhibit titled "Biometric Consortium Conference (BC2002)". The conference is sponsored by the NIST's Information Technology Laboratory (ITL) and the Advanced Technology Program (ATP), the NSA, the DOD's Biometrics Management Office, the GSA, the Federal Technology Service (FTS) Center for Smart Card Solutions, and the state of West Virginia. The price to attend is $260. See, conference web site and agenda. Location: Hyatt Regency Crystal City, Arlington, VA.

8:30 AM - 12:00 NOON. The FCC's North American Numbering Council will meet. Location: FCC, 445 12th Street, SW, Room TW-C305.

LOCATION CHANGE. 10:00 AM. The House Commerce Committee's Subcommittee on Telecommunications and the Internet will hold a hearing on the transition to digital television. See, draft of proposed bill [16 pages in PDF] and summary of draft bill. The scheduled witnesses include Robert Wright (NBC), Richard Lewis (Zenith Electronics Corp.), Michael Fiorile (Dispatch Broadcast Group), Michael Willner (Insight Communications, for the NCTA), Lana Corbi (Crown Media USA, for the NCTA), Jim Gleason (Cable Direct, for the American Cable Association), Alan McCollough (Circuit City Stores, for the Consumer Electronics Association), Thera Bradshaw (Association of Public Safety Communications Officials), and Gene Kimmelman (Consumers Union). Web cast. Press contact: Ken Johnson or Jon Tripp at 202 225-5735. Location: Room 2322, Rayburn Building.

10:00 AM. The House Financial Services Committee's Subcommittee on Financial Institutions will hold a hearing on HR 5414, the Check Clearing for the 21st Century Act. Location: Room 2128, Rayburn Building.

12:15 PM. The FCBA's Online Communications Committee will host a brown bag lunch. The topic will be the Bush Administration's just released report titled "National Strategy to Secure Cyberspace". The speakers will be John Tritak (Director, Critical Infrastructure Assurance Office) and Tom Orlowski (VP of Information Systems, National Association of Manufacturers). RSVP to bviera Location: Kelley Drye & Warren, 1200 19th St., Suite 500.

12:30 PM. The House Judiciary Committee's Subcommittee on Commercial and Administrative Law will hold a legislative hearing on HR 4869, the "Satellite Radio Freedom Act", and HR __, a bill to provide an exemption from local taxation for direct to subscriber satellite service providers. Location: Room 2141, Rayburn Building.

Thursday, September 26
The House will meet at 10:00 AM for legislative business. The House will consider several non tech related bills. See, Whip Notice.

TIME CHANGE. 9:00 AM. The House Judiciary Committee's Subcommittee on Court, the Internet and Intellectual Property will hold a hearing on HR 5211, sponsored by Rep. Howard Berman (D-CA). The bill is sometimes referred to as the "peer to peer piracy protection act", or as the "Berman bill". The witnesses include Hilary Rosen (RIAA), Randy Saath (Media Defender), Phil Galdston (songwriter), and Gigi Sohn (Public Knowledge). Location: Room 2141, Rayburn Building.

10:00 AM. The House Commerce Committee's Subcommittee on Commerce, Trade and Consumer Protection will hold a hearing titled "State Impediments to E-Commerce: Consumer Protection or Veiled Protectionism?" Rep. Cliff Stearns (R-FL) will preside. Press contact: Ken Johnson or Jon Tripp at 202 225-5735. Location: Room 2322, Rayburn Building.

10:00 AM. The Senate Judiciary Committee will hold a hearing to examine pending judicial nominations. The most important and opposed nominee is Miguel Estrada, who has been nominated to be a Judge of the U.S. Court of Appeals (DCCir). The agenda also includes five District Court nominees. Sen. Charles Schumer (D-NY) will preside. See, notice. Press contact: Mimi Devlin at 202 224-9437. Location: Room 106, Dirksen Building.

10:00 AM. The Senate Health, Education, Labor, and Pensions Committee will hold a hearings on web based education. Location: Room 430, Dirksen Building.

12:00 NOON. The FCBA will host a lunch. The speaker will be Duane Ackerman, CEO of BellSouth. The price to attend is $45 for members, $35 for government persons and law student members, and $55 for non-members. Registrations and cancellations are due by 5:00 PM on September 23. Location: Mayflower Hotel, 1127 Connecticut Ave., State Ballroom.

3:00 PM. Niva Koren (University of Haifa Faculty of Law) will present at paper titled "Seizing Power in the Information Environment: The Comeback of the State", as a part of the George Washington University Law School Intellectual Property Workshop Series. For more information, contact Prof. Robert Brauneis at 202 994-6138. Location: Clinic Moot Court Room H 105, 716 20th Street, NW.

Friday, September 27
The House will not meet.

7:30 - 9:30 AM. The U.S. Chamber of Commerce will host a breakfast and panel discussion for technology professionals titled "Partnering Insights for Challenging Times". The speakers are Patrick Sweeney (Server Vault), Shane Oleson (Axiom Resources Management), Tim Grimes (Siemens Enterprise Networks), and Val Sriban (META Group). See, notice and registration page. The price to attend is $35 for the general public, and $25 for members of Partnerpoint, the U.S. Chamber, and co-sponsoring organizations. Location: U.S. Chamber of Commerce, 1615 H Street, NW.

TIME? The Federal Accounting Standards Advisory Board (FASAB) will meet to discuss issues related inter-entity costs, the Credit Reform Task Force, and other matters. See, notice in Federal Register. Location: Room 2N30, GAO Building.

Deadline to submit reply comments to the FCC regarding WorldCom's August 8, 2002, petition for 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].

Deadline to submit reply comments to the Copyright Office (CO) regarding the motion for stay filed by various broadcasters of the CO's final rule that provides that transmissions of a broadcast signal over a digital communications network are not exempt from copyright liability under 17 U.S.C. § 114(d)(1)(A). See, notice in the Federal Register.

Monday, September 30
9:00 AM - 4:30 PM. The President's Council of Advisors on Science and Technology (PCAST) will hold an open meeting. The agenda includes: the science and technology of combating terrorism, federal investment in science and technology research and development, and "demand issues that can speed the deployment of a 21st Century broadband infrastructure". See, notice in the Federal Register for pre-clearance requirements and other information. Location: Loy Henderson Conference Room, Department of State, 2201 C St., NW. Guests must use the 23rd Street entrance.

Third of three deadlines to submit proposals to the NIST for FY 2002 Advanced Technology Program (ATP) funds. See, notice in Federal Register.

Deadline to submit comments to the FCC in response to it Public Notice [7 pages in PDF] regarding relief for the Auction No. 35 winners. The FCC asks for public comments regarding two possible scenarios for providing relief to the winning bidders in the January 2001 re-auction of spectrum previously auctioned to NextWave: full refund and option to dismiss all pending applications, and selective opt out for pending applications.

Deadline to submit comments and Notices of Intention to Participate to the Copyright Office "royalty fees collected for calendar year 2000 under the section 111 cable statutory license". The CO seeks comments "as to whether a Phase I or Phase II controversy exists as to the distribution of those fees, and a Notice of Intention to Participate in a royalty distribution proceeding." See, notice in the Federal Register.

Deadline to submit comments and proposals to the Copyright Office (CO) regarding data format and delivery for record keeping requirements to be established by the CO for the Section 112 and 114 statutory licenses. See, notice [8 pages in PDF].

Tuesday, October 1
10:00 AM. The House Commerce Committee's Subcommittee on Telecommunications and the Internet will hold a hearing titled "Recording Industry Marketing Practices: A Check-Up". Location: Room 2123, Rayburn Building.