AT&T Files Petition to Re-Regulate Special Access Charges
|10/16. AT&T filed a
[118 pages in PDF] with the Federal Communications Commission
(FCC) requesting that it re-regulate special access services. Regional Bell
Operating Companies (RBOCs) criticized the proposal.
AT&T requested that the FCC "initiate a rulemaking
to reform regulation of price cap incumbent local
exchange carrier ("ILEC") rates for interstate special
access services. As detailed below, there is now indisputable proof that: (i)
large ILECs, and particularly the Bell Operating
Companies ("Bells"), retain pervasive market power in the
provision of these services, (ii) the large ILECs are abusing that market
power with patently unjust and unreasonable rates that
impose a multi billion dollar annual overcharge or tax on
American businesses and consumers and also severely harm both local and
long distance competition, (iii) the Commission’s
existing rules are incapable of addressing this worsening
crisis, and, indeed, only exacerbate the problem, and (iv) the Commission
therefore has a clear legal obligation promptly to
reform its regulation to protect the public interest and to put an end
to these monopoly abuses."
AT&T stated in a release
"the premature removal of price regulations on special
access services -- the high capacity local links to buildings that provide
businesses with telephone and high speed Internet
services -- has allowed the Bells to gouge their customers and competitors to
the tune of $5 billion annually, with a resulting deadweight drag on the
SBC stated in a
that "AT&T is clearly thrashing around looking for a way to change the
subject from their cynical exploitation of below cost wholesale rates and the
damage they are doing to the nation's telecommunications industry. To support
its case, AT&T recycles the same losing arguments it raised against pricing
flexibility and ignores the reality that the special access market is highly
SBC continued that "all but nine of the top 100 metropolitan service areas (MSAs)
are served by at least three competing fiber networks and competitive special
access providers have captured nearly 40 percent of the overall market. In
recognition of this robust competition, the Federal Communications Commission
(FCC) has removed special access services from price cap regulation throughout
many competitive areas. The bottom line is that competition in the special
access market is flourishing and has brought numerous benefits to consumers."
BellSouth stated in a release "There is strong competition in special access. AT&T itself offers
special access in most of the top 100 markets in the United States. AT&T and
other non-Bell companies provide 40% of the special access service in the U.S. Regulation is designed to replicate competition. Competition in special
access has long existed. Further regulation is not necessary."
NTIA Director Addresses Wireless Broadband
10/17. National Telecommunications and Information Administration (NTIA) Director
gave a speech at the Global Forum 2002 in Washington DC.
She addressed broadband issues, including rights of way obstacles to deployment,
Bush administration broadband related policies, and spectrum management policies
for promoting wireless broadband.
She did not state a
position on rights of way obstacles. Rather, she said that "all sectors
of the broadband industry -- Bell Operating Companies, CLECs, cable companies,
overbuilders, and wireless providers -- actually share the same point
of view! These
providers are concerned that restrictions by certain municipalities, states and
federal government landowners on accessing public rights
of way and tower sites might be inhibiting or
at least delaying broadband network construction."
She said that actions
taken by the NTIA include meeting "with representatives of localities and
their associations to identify means for improving and simplifying current
processes where needed, while ensuring sufficient flexibility for municipalities
to best serve their citizens." She said that the NTIA has
participated in National Association of
Regulatory Utility Commissioners (NARUC) discussions to "identify
best practices and recommendations to streamline the current process".
Next, she addressed wireless
issues. She said that "wireless broadband seems destined to be a part of the
broadband future". She identified several spectrum management issues. "First,
the U.S. Government agencies involved in spectrum management -- NTIA, FCC and
the State Department -- must work collaboratively as
``one spectrum team´´." She also said that "we
should develop policies that encourage spectrum efficiency."
Third, she said that "we must establish forward
looking policies that enable technological advances and eliminate legacy
regulations that stand in the way of innovation. One such promising reform in
this area is the FCC's proceeding on creating secondary markets that would
permit parties to ``lease´´ their spectrum to others, to put otherwise unused
spectrum to its most efficient use. Another is the accommodation of frequency
flexible wireless systems, such as those under the 802.11 standard, on an
And fourth, she said that "we should ensure that we have
policies that assure the deployment of robust wireless networks that are
prepared for the worst of crises and able to deliver the very best of services
to the American people."
She also briefly
addressed recent efforts related to reallocating spectrum for Third Generation
(3G) wireless services.
Finally, she said that
"We will soon be turning to look at new wireless IP
based architectures that are emerging at the unlicensed and user
driven level. Traveling below the regulatory radar screen, WiFi has grown
from a West Coast coffee shop phenomenon into an emerging mainstream means of
broadband access to the Internet and high speed
wireless connectivity within campus environments, offices and homes."
Commerce Officials Address Role of
Government in Nanotech
|10/11. The Commerce Department's Philip Bond gave a
October 9 in which he affirmed President Bush's committment to fund nanotech
research. The Commerce Department's Bruce Mehlman gave
a speech on
October 11 in which he outlined ten elements of the government's role in
nanotech research, development and commercialization.
Bond is Under Secretary of Commerce for Technology,
and Chief of Staff to Commerce Secretary Donald
Evans. His speech was titled "Nanotechnology;
opportunities for Texas, the US and the world, and demands on education and the
He stated that "nanotechnology is a priority of
President Bush. Even as we struggle to meet funding priorities across government
against the backdrop of our war on terrorism and need to bolster homeland
security, President Bush has proposed a record $111.8 billion Federal investment
in R&D for FY2003, an 8 percent increase over last year’s spending. In
particular, the President has proposed a 17 percent increase in NNI funding in
FY2003 -- to more than $700 million in fiscal year."
He also stated that "these powerful technologies
can be put to inappropriate uses and may create moral and ethical dilemmas
beyond those we struggle with today. In the hands of terrorists, these
technologies could be used to injure or kill millions. They could be used to
pierce our privacy monitoring our communications,
movements and associations. They could render all current encryption
technologies powerless to protect national secrets or our personal privacy."
He added that "These are issues that we cannot afford to wait to deal
with. Our social and governmental institutions do not react quickly to change.
So we have to start thinking about them now."
Bond also discussed recent information technology nanotech
developments. He referenced IBM's transistor made from a carbon nanotube,
Intel's planned TeraHertz transistor, and HP's announcement that "it had
figured out how to use a chemical process to make grids of nanowires a few atoms
thick, how to place molecules at the intersections of the wires, and how to
manipulate the molecules to function like a microprocessor."
Bond concluded that "As a result of developments like these, policymakers
in Washington are beginning to understand what you already know: intelligence
may be embedded everywhere."
Mehlman stated that "The federal government does indeed
have an important and critical role in nanotech. Yet just because VCs aren't
willing or able to fund every would be nano entrepreneur with an idea it does
not mean government should. Nor could it. I would suggest the government's role
in the research, development, and commercialization of nanotechnology includes
10 core elements."
He listed these as "Funding long term basic
research ... Coordinating efforts among federal and
university research, to leverage synergies and avoid redundancies
... Monitoring global developments and competitiveness implications
... Helping everyone maintain realistic expectations
... Helping ensure consideration of the social, legal and ethical
implications ... Aggressively protecting intellectual
property while also ensuring protections do not stifle research
... Supporting academic access to the best and brightest students and
researchers from around the world while protecting national security and
encouraging more American students to pursue careers in technology
... Working to improve nanotech networks ...
Purchasing goods and services where appropriate and needed
... Ensuring reliable information in the markets so efficient investments
can be made."
Mehlman is Assistant Secretary for Technology Policy. He spoke at the Foresight
Conference in Bethesda, Maryland. His speech was
titled "The Federal Government's Role in
Nanotechnology Research, Development & Commercialization".
7th Circuit Upholds Mandatory
Arbitration Clause in AT&T Consumer Contract
|10/18. The U.S. Court of
Appeals (7thCir) issued its
opinion [PDF] in Boomer
upholding the validity of a mandatory arbitration clause in
AT&T's Consumer Service Agreement to prevent an AT&T customer from proceeding
with a lawsuit in federal court alleging overcharging for contributions to
the FCC's universal service subsidy programs.
District Court. Frank Boomer
filed a complaint in U.S. District Court (NDIll) against
AT&T alleging that AT&T overcharged its
customers for contributions to the federal Universal
Services Fund. He sought class action status. AT&T argued
that under the terms of a Consumer Service Agreement (CSA), customer class actions
are prohibited, and arbitration is mandatory. It moved to dismiss, and to compel
arbitration. AT&T also raised the filed rate doctrine. The District Court denied
AT&T's motion. AT&T appealed.
Appeals Court. The Court of Appeals reversed. It concluded
that AT&T made Boomer an offer to provide long distance services.
This included sending him a copy of the CSA which has an arbitration clause, and
a no class action clause, in it. Boomer accepted this
offer by continuing to use AT&T’s services.
Hence, there is a contract, with the CSA providing the terms.
The Appeals Court wrote that "While Boomer contends that
that clause is unconscionable under state law and
violates the Illinois Consumer Fraud Act and the
Deceptive Business Practices Act, the Communications
Act preempts state law challenges to the validity of
contractual provisions because the Communications Act
seeks to promote the uniformity of rates, terms and conditions,
and state law challenges to the legality of contractual
provisions would destroy that objective. Accordingly,
Boomer cannot challenge the validity of the arbitration
clause under state law, and instead must submit to arbitration. "
This case was decided on
October 3, but was not published in the 7th Circuit web site until October 18.
7th Circuit Amends Trademark Metatags Opinion
10/18. The U.S. Court of
Appeals (7thCir) issued an
page in PDF] amending its August 13, 2002
Promatek v. Equitrak, a trademark case involving HTML
metatags, in which the Appeals Court affirmed a District Court injunction.
titled "7th Circuit Rules on Use of Trademarks in HTML Metatags",
August 13, 2002.
The order adds two significant clarifications regarding the
use of trademarks in metatags. The Appeals Court wrote that
"The problem here is not that Equitrac,
which repairs Promatek products, used Promatek’s trademark in its metatag, but
that it used that trademark in a way calculated to deceive consumers into
thinking that Equitrac was Promatek." The Appeals Court added that
"It is not the case that trademarks can never appear in metatags, but
that they may only
do so where a legitimate use of the trademark is being made."
Fed Circuit Rules in Patent Case Involving
10/16. The U.S.
Court of Appeals (FedCir) issued its
opinion in Texas
Digital Systems v. Telegenix,
a patent infringement case that involves controlling the color of pixels in a
LED display. The Appeals Court affirmed in part and reversed
Texas Digital Systems
(TDS) holds the four patents at issue
in this case: U.S. Patent No. 4,845,481,
4,965,561, 4,734,619, and 4,804,890. All are
directed to methods and devices for controlling the color of pixels in a light
emitting diode (LED) display.
Telegenix makes display systems.
TDS filed a complaint in
U.S. District Court (NDTex) against
Telegenix alleging that Telegenix’s Colorgraphix devices infringed
its patents. Following a jury verdict in favor of TDS,
the District Court entered
judgment of infringment. The District Court found that the
claims were not invalid. It also found willful infringement. It awarded damages
of $6 Million, enhanced damages of $6 Million, and interest. It also enjoined
Telegenix from further infringement. This appeal followed.
The Appeals Court affirmed in part, and reversed in part.
The Appeals court held that the District Court
erroneously construed certain disputed claim limitations, but correctly
construed other claim limitations.
SEC Official Addresses Internet Advisor Rule
10/17. Paul Roye, Director of the Securities
and Exchange Commission's (SEC) Division of Investment Management, gave a
speech titled "Priorities
in Investment Management Regulation" in Washington DC. He briefly touched
upon the Internet advisor rule.
He stated that "In the investment adviser area, we also are preparing recommendations to the
Commission for the adoption of both the Internet adviser rule and Part 2 of Form
ADV. The Internet adviser rule would permit those investment advisers that
provide advisory services through interactive websites to register with the
Commission. These ``Internet advisers´´ typically would not otherwise qualify for
Commission registration under the Advisers Act, but instead would be required to
register with state securities authorities. The rule is intended to alleviate
the burden of multiple state registrations for advisers whose business is
unconnected with any particular state."
He added that "Part 2 of Form ADV is the principal disclosure document
investment advisers use to communicate with their clients. As proposed, Part 2
would be a plain English narrative brochure, rather than the current
check-the-box format with additional information provided on schedules. We
expect to present our recommendations for both these rules before the year's
People and Appointments
10/17. Carolyn Williams was named Director of the Federal
Communications Commission's (FCC) Office of
Communications Business Opportunities (OCBO). See,
10/16. June Taylor was named Assistant Bureau Chief
and Chief of Staff of the Federal Communications Commission's (FCC)
Consumer & Governmental Affairs Bureau. She
replaces Barbara Douglas, who was named Director of the FCC's
Office of Workplace Diversity (OWD).
10/15. The Securities and Exchange Commission's (SEC) Division of Corporation
Finance (DCF) announced that Gerald Laporte has been appointed Chief of the
DCF's Office of Small Business Policy. Laporte was previously an attorney with
the law firm of Hogan & Hartson. See, SEC release.
10/18. The Federal
Communications Commission (FCC) released its
hearing designation order [MS Word] in the EchoStar DirecTV merger review.
The document has 299 numbered paragraphs and 5 appendices.
It does not designate a hearing date.
District Court (6thCir) issued its opinion
Broadcasting v. NLRB, a
petition for review of a National Labor Relations Board order pertaining to a
union decertification vote. Heritage is a TV broadcaster in the state of
Michigan. A Heritage employee filed a petition to
decertify a union. The majority of votes cast supported decertification.
However, the NLRB excluded the votes of news producers, thus reversing the
outcome. The NLRB also found that Heritage violated the National Labor Relations
Act for refusing to bargain with the union. The Court of Appeals affirmed.
10/17. The Federal
Communications Commission (FCC) released an
order [20 pages in PDF] in its proceeding titled "In the Matter of:
Implementation of the Satellite Home Viewer
Improvement Act of 1999: Application of Network
Non-Duplication, Syndicated Exclusivity, and Sports
Blackout Rules To Satellite Retransmissions of
Broadcast Signals". This is CS Docket No. 00-2.
10/17. Federal Reserve Board (FRB) Vice Chairman Roger Ferguson gave a
"Should Financial Stability Be an Explicit Central Bank Objective?" He stated that
"Economic developments in the United States
in the late 1990s were quite favorable. Output growth was unusually strong and,
in no small part, that strength seemed attributable to a sizable pickup in the
trend growth of labor productivity spurred by the proliferation of new
technologies, especially in the computing and telecommunications sectors.
Investors read the favorable productivity trends as auguring enhanced profit
growth, prompting a substantial runup in equity prices in 1999 and into 2000
that pushed standard valuation measures -- such as price earnings ratios -- well above
historical benchmarks." Ferguson spoke to an International Monetary Fund conference in
Washington DC titled "Challenges to Central Banking from
Globalized Financial Markets".
10/15. The General Accounting Office (GAO)
released a report [73
pages in PDF] titled "Electronic Transfers: Use by Federal Payment
Recipients Has Increased but Obstacles to Greater Participation Remain".
10/15. The National Institute of Standards and
Technology (NIST) published a notice
in the Federal Register stating that it has "approved changes to Federal
Information Processing Standard (FIPS) 186-2, Digital Signature Standard (DSS).
These changes extend the transition period for the implementation of FIPS 186-2
to December 2002 and clarify that a private sector algorithm (PKCS
1, version 1.5 or higher) may be used during the extended transition
period." These changes are effective October 15, 2002. See, Federal
Register, October 15, 2002, Vol. 67, No. 199, at Pages 63621 - 63622.
|Monday, October 21
|8:00 - 11:00 AM. Equity International is hosting a briefing on
homeland security financing issues. For more information, contact
Carrie Brown at 202 756-2244 or
Location: National Press Club, First Amendment Lounge, 529 14th
Deadline to submit comments to the
FCC regarding its request to refresh its record regarding
customer proprietary network information (CPNI) implications
when a carrier goes out of business, sells all or part of its
customer base, or seeks bankruptcy protection. This is the FCC's
Third Further Notice of Proposed Rulemaking in CC Docket Nos.
96-115, 96-149 and 00-257. See,
notice in the Federal Register.
Deadline to submit reply 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. See
notice in Federal Register.
|Tuesday, October 22
|11:00 - 11:45 AM. The
FCBA's International Communications Committee, and others, will
host a fee based teleconference titled "The ITU Plenipotentiary
2002: What Happened and How it affects You". The scheduled
participants include David Gross (State Department), Clovis Baptista
(Executive Director of CITEL), Andrei Makarof (Russian telecom
consultant), and Valerie d'Costa (Singapore). Susan Ness (former FCC
Commissioner) will moderate. The price is $15 or $20. For more
information, contact Norma Rosado at 202 662-1727 or
|Wednesday, October 23
|12:00 NOON - 1:30 PM. The
Heritage Foundation will host a panel discussion titled "Pirates
and Posses: The Battle Over Digital Copyright". The speakers
will be Bruce Mehlman (Commerce Department's
Gary Shapiro (Consumer Electronics
Association), Alec French (Minority Counsel,
House Judiciary Committee's
Subcommittee on Courts, the Internet and Intellectual Property),
James Delong (Competitive Enterprise Institute), and James Gattuso
Location: 214 Massachusetts Ave NE.
|Thursday, October 24
|12:15 PM. The
FCBA's Cable Practice Committee will hold a brown bag lunch. The
speaker will be Susan Eid, Legal Advisor to
FCC Chairman Michael Powell. RSVP to
Wendy Parish. Location: NCTA,
1724 Mass Ave., NW.
12:15 PM. The
FCBA's Young Lawyers Committee will hold a brown bag lunch. The
topic will be "The Role of Industry Associations in Advocacy at the
FCC and Congress". The speakers will include Mike Altschul (CTIA),
Dan Brenner (NCTA), and others. RSVP to
Location: Willkie Farr & Gallagher, 1875 K St., NW, 2nd Floor.
3:00 PM. Jessica Litman (Wayne State University Law School) will
present a draft of a paper titled "Digital Networks in the Public
Domain". The lecture is sponsored by the George Washington
University (GWU) Law School's Dean Dinwooodey Center for
Intellectual Property Studies. For more information, contact Prof.
Robert Brauneis at 202 994-6138 or by
email. Location: GWU
Law School, Burns Building, 5th Floor, Faculty Conference Center,
720 20th St., NW.
3:30 PM. Gideon Parchomovsky will give a lecture titled "Toward
an Integrated Theory of Intellectual Property". For more
information, contact Prof. Julie Cohen at
Location: Georgetown University Law Center, Faculty Lounge, 600 New
Jersey Ave., NW.
6:00 - 8:00 PM. The
FCBA's will host an Oktoberfest reception featuring the
FCC's Bureau Chiefs.
|Friday, October 25
|8:00 AM - 3:15 PM. The National Science
Foundation's Advisory Committee for Computer and Information Science and
Engineering will hold a meeting. For more information, contact Gwen Blount
at 703 292-8900. See, notice
in Federal Register, October 8, 2002, Vol. 67, No. 195, at Page 62834.
Location: Hilton Arlington and Towers, Master Ballroom, 950 N. Stafford
Street, Arlington, VA.
10:00 AM - 12:30 PM and 2:00 - 4:00 PM. The
FTC and the DOJ's Antitrust
Division will hold the final workshops in their joint series titled
"Competition and Intellectual Property Law and Policy in the Knowledge
Based Economy" on October 25 and 30 and November 6.
The October 25 event is titled "Competition, Economic, and Business
Perspectives on Patent Quality and Institutional Issues: Competitive Concerns,
Prior Art, Post Grant Review, and Litigation".
Location: FTC, Room 432, 600 Pennsylvania Ave., NW.
Deadline for the DOJ's Antitrust
Division to release its evaluation of BellSouth's Section 271 application
with the FCC to provide in region interLATA service in the states of Florida
and Tennessee. This is WC Docket No. 02-307.
Deadline to submit reply comments to the FCC in response to Qwest Communications' Section 271
application to provide in region interLATA service in the states of
Colorado, Idaho, Iowa, Montana, Nebraska, North Dakota, Utah, Washington and
Wyoming. This is WC Docket No. 02-314. See, FCC
USTR Submits Comment to WTO Re Trade Remedy Rules
10/17. The Office of the U.S. Trade
Representative (USTR) submitted a
[5 pages in PDF] to the World Trade Organization
(WTO) titled "Basic Concepts and Principles of the Trade Remedy Rules".
It addresses trade distorting practices, and trade remedies,
such as antidumping and countervailing duty rules.
The USTR also wrote that "A critically important component of
maintaining confidence in a rules based trading system is a fully effective
dispute settlement system capable of settling disputes without adding to or
diminishing the rights and obligations of Members as negotiated in the WTO
The USTR also stated that "it is essential that dispute
settlement panels and the Appellate Body, in interpreting obligations related to
trade remedy laws, follow the appropriate standard of review and do not impose
on national authorities obligations that are not contained in the Agreements."
also, USTR release.
USTR to Hold Hearing on
Central American FTA
10/16. The Office of the U.S. Trade
Representative (USTR) announced that it will hold a hearing, and receive
public comments, to assist it in amplifying and clarifying negotiating
objectives for the proposed free trade agreement
(FTA) with five central American nations. The USTR seeks comment on, among other
things, "trade related intellectual property
rights issues that should be addressed in the
negotiations" and "Existing barriers to trade in
services between the United States and Central America that should be addressed
in the negotiations."
The hearing will be on November 19, 2002 in
Washington DC. Written comments are due by December 2. Persons wishing to
testify at the hearing must provide written notification of their
intention, as well as their testimony, by November 12.
notice in the Federal Register, October 16, 2002, Vol. 67, No. 200, at Pages 63954
More Trade News
10/16. President Bush provided a
to the U.S. Congress, pursuant to section 2104(a)(1) of the Trade Act of 2002
(19 U.S.C. § 3804(a)(1)), of "my intention to enter into negotiations on a Free
Trade Agreement with the five member countries of the Southern African Customs
Union (Botswana, Lesotho, Namibia, South Africa, and Swaziland)". (Parentheses
10/16. The White House Office of the Press Secretary issued a
statement on the Israeli economy. It states that "Since the U.S. Israel Free
Trade Agreement came into effect in 1985, Israel has become one of the top
destinations for U.S. high technology investment ...">
10/15. Deputy Secretary of the Treasury Kenneth Dam gave a speech titled
"Promoting Growth Throughout the Americas".
10/14. U.S. Trade Representative (USTR) Robert Zoellick gave a speech
[11 pages in PDF] titled "Trading in Freedom: The New Endeavor of the Americas"
to the Miami Herald's Sixth Annual Americas Conference.
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