The Order is a victory for AT&T and Comcast, whose proposed merger is pending before the FCC. It means that they will not have to publicly disclose the terms under which AOL broadband Internet access service would be made available on AT&T Comcast cable systems. It also avoids one source of delay of the FCC's merger proceeding.

The Order is also notable for its comparison and contrasting of the FCC's and Antitrust Division's parallel merger review proceedings.

This Order was issued in the FCC's license transfer proceeding associated with the merger of AT&T and Comcast. The name of this proceeding is "In the Matter of Applications for Consent to the Transfer of Control of Licenses From Comcast Corporation and AT&T Corp., Transferors, To AT&T Comcast Corporation, Transferee". It is MB Docket No. 02-70.

The FCC explained the nature of the records at issue in this Motion and Order. It wrote that AT&T and Comcast (aka Applicants) "proposed a means of insulating and ultimately divesting AT&T’s interest in Time Warner Entertainment, L.P. (``TWE´´). After filing the TWE Proposal, the Applicants reached an agreement with AOL Time Warner, Inc. (``AOLTW´´), to restructure TWE (the ``TWE Restructuring Agreement´´). In connection with the TWE Restructuring Agreement, the Applicants and AOLTW reached a ``three-year non-exclusive agreement´´ under which AOL broadband Internet access service would be made available on AT&T Comcast cable systems (the ``AOL ISP Agreement´´). If the proposed merger has not closed by March 1, 2003, and all other conditions to closing the TWE restructuring have been met or waived, AT&T and AOLTW have agreed to enter into an ISP agreement, ``substantially identical to the AOL ISP Agreement, that would govern the provision of AOLTW's high-speed Internet services on AT&T's cable systems´´ (the AOL-AT&T ISP Agreement´´). A copy of the TWE Restructuring Agreement was filed with the Commission on August 23, 2002. The exhibits and certain other documents referenced in the agreement (collectively, the ``Exhibits´´), including the AOL ISP Agreement, were not filed with TWE Restructuring Agreement." (All parentheses in original. Footnotes omitted.)

AT&T and Comcast have filed the TWE Restructuring Agreement with the FCC, but not certain other documents, including the AOL ISP Agreement. AT&T and Comcast argued that these are irrelevant to the FCC's review, and are commercially sensitive. FCC staff, which has had access to the documents, agreed. That is, AT&T and Comcast provided the documents at issue to the Department of Justice's (DOJ) Antitrust Division pursuant to its request for records in its Hart Scott Rodino (HSR) review of the AT&T Comcast merger. FCC staff reviewed the documents at the DOJ.

The CFA and Earthlink then filed a motion with the FCC to compel AT&T and Comcast to make the documents a part of the record in the FCC's license transfer proceeding. This would allow the CFA, Earthlink, and the public to learn the contents.

The FCC Order denies this motion. The Order concludes that the documents at issue are not relevant to the FCC's public interest review.

In reaching this conclusion, the Order illustrates the differences between the merger related reviews conducted simultaneously by the DOJ and the FCC. The DOJ's is a closed proceeding, while the FCC is open and subject to public comment. The DOJ handles records confidentially, while the FCC's record is public. The Order also addresses different laws and standards that are applied, and how these affect which records are relevant in each proceeding.

FCC Commissioner Michael Copps (at right) dissented. He wrote that "I believe it would have been better as a matter of procedure to put the requested material into the record pursuant to a protective order and allow Petitioners an opportunity to comment on it."

Copps continued that AT&T and Comcast "have pointed to the accelerated deployment of facilities-based high-speed internet service, digital video, and other broadband services, particularly to residential customers, as one of the major public interest benefits of the proposed merger. [They] have also pointed to their existing agreements with unaffiliated Internet service providers as evidence of their willingness to offer consumers choices with respect to the Internet service they receive over Applicants’ systems. [CFA and Earthlink] thus contend that [AT&T and Comcast] have placed matters pertaining to Internet access into issue in this proceeding." (Brackets inserted by TLJ.)

Copps continued that the Communications Act "contemplates that interested members of the public will have a full opportunity to challenge license transfer applications. In addition, the Commission has recognized, in its policy governing the treatment of confidential information, that petitioners to deny generally must be afforded access to ``all information submitted by licensees that bear upon their applications.´´ Under this policy, even confidential information must be produced, pursuant to a protective order, with an opportunity for petitioners to comment."

The letter was written in response to a letter [4 pages in PDF] written on October 3 by the Recording Industry Association of America (RIAA), and other entertainment content groups, to university presidents stating that "students are using university networks to engage in online piracy of copyrighted creative works".

The RIAA letter states that "The educational purpose for which these networks were built is demeaned by such illegal behavior and is inconsistent with the ethical principles underlying the university community."

The RIAA letter continues that "The students and other users of your school's network who upload and download infringing copyrighted works without permission of the owners are violating Federal copyright law. ``Theft´´ is a harsh word, but that it is, pure and simple. As Deputy Assistant Attorney General John Malcolm recently stated, ``Stealing is stealing is stealing, whether it's done with sleight of hand by sticking something in a pocket or it’s done with the click of a mouse.´´ It is no different from walking into the campus bookstore and in a clandestine manner walking out with a textbook without paying for it." (See, Malcolm speech of August 20, 2002.)

Finally, the RIAA letter asks that universities "Inform students of their moral and legal responsibilities to respect the rights of copyright owners", "Specify what practices are, and are not, acceptable on your school’s network", "Monitor compliance", and "Impose effective remedies against violators".

The EPIC rebuttal focuses on two words in the RIAA letter -- "Monitor compliance". EPIC argues that "Network monitoring can have a chilling effect on the marketplace of ideas".

EPIC elaborates that "Monitoring the content of communications is fundamentally incompatible with the mission of educational institutions to foster critical thinking and exploration. Monitoring chills behavior, and can squelch creativity that must thrive in educational settings. Furthermore, in order to monitor at the level desired by the copyright industry -- to detect file transfers ``without authorization´´ -- institutions would have to delve into the content and intended uses of almost every communication. Such a level of monitoring is not only impracticable; it is incompatible with intellectual freedom."

EPIC also argues that network monitoring "can become systems of surveillance. Once installed on an institution's network, they could be used for copyright control today, and the control of ideas tomorrow."

The EPIC letter was signed by Marc Rotenberg, Chris Hoofnagle, Adam Kessel, and Ruchika Agrawal.

The RIAA letter was signed by Hillary Rosen of the RIAA, Jack Valenti of the Motion Picture Association of America (MPAA), Edward Murphy of the National Music Publishers' Association (NMPA), and Rick Carnes of the The Songwriters Guild of America.

See also, letters [3 pages in PDF] of October 8 to colleges and universities from David Ward of the American Council on Education, Nils Hasselmo of the Association of American Universities, David Warren of the National Association Independent Colleges and Universities, George Boggs of the American Association of Community Colleges, Constantine Curris of the American Association of State Colleges and Universities, and Peter Magrath of the National Association of State Universities and Land Grant Colleges.

Sen. Grassley and Sen. Max Baucus (D-MT), the current Chairman, who just won re-election, have not diverged on this issue. See, for example, joint letter [PDF] of August 12 of Sen. Baucus and Sen. Grassley to U.S. Trade Representative (USTR) Robert Zoellick.

The World Trade Organization (WTO) held that the Foreign Sales Corporation (FSC) tax regime constitutes an illegal export subsidy. So, Congress passed replacement legislation, the Extraterritorial Income Exclusion Act (ETI), which the WTO also held to constitute an illegal export subsidy. On August 30, the WTO issued a Decision of the Arbitrator [46 pages in PDF] which authorizes the EU to impose $4 Billion in countermeasures, or retaliatory tariffs.

On September 13, the European Union published a document that identified a list of products which could be subject to retaliatory tariffs. The list includes many electronics products.

The U.S. can avoid the imposition of EU retaliatory tariffs by repealing the ETI. Rep. Bill Thomas (R-CA), the Chairman of the House Ways and Means Committee, introduced HR 5095, the American Competitiveness and Corporate Accountability Act of 2002, on July 11, 2002, to address the WTO's rulings regarding the FSC and ETI. See also, Rep. Thomas' summary of HR 5095. However, no action has been taken on the bill. There is no replacement legislation pending in the Senate.

Sen. Grassley also stated that "I'll push to make last year's tax cuts permanent."

Commissioner Swindle, Thomas Niles (President of the USCIB), Joseph Alhadeff (VP/CPO of Oracle), and others spoke with reporters after the meeting.

They announced no new developments. Instead, they advocated the development of a culture of security; they promoted the Organization of Economic Co-operation and Development's (OECD) July 2002 guidelines [30 pages in PDF] titled "OECD Guidelines for the Security of Information Systems and Networks: Towards a Culture of Security"; and, they promoted Dewie (at right), the FTC's spokes-turtle on security issues. Said Swindle, "I hope he will become as famous as Smokey the Bear".

Reporters asked questions about the role of accountability, regulation, and legal liability in promoting information and network security. In particular, the OECD guidelines state, without elaboration, that "All participants are responsible for the security of information systems and networks. Participants depend upon interconnected local and global information systems and networks and should understand their responsibility for the security of those information systems and networks. They should be accountable in a manner appropriate to their individual roles."

Niles said only that "I think the market will decide liability there in a sense. If you produce a product that is vulnerable, then your customer base will probably disappear."

Swindle stated that "I think to assign liability in a frivolous way would do a lot to deter the development of new innovative products." He added that "I think it is going to be a combination of government oversight. We have a couple of laws that enable us to correct things that are wrong, in violation of the law. Industry, as we said, the market place is going to react. You don't want a lousy product out there."

He concluded that, "Probably the worst solution, we would come up with some sort of regulatory regime that would be punitive, when it is almost impossible to get all this stuff right all of the time."

Niles also stated that "a partnership between government, for example, the FCC, and business, and users around the world, is essential. It is the only way this is going to work. And finally, we are dealing here with a technology that is changing with blinding speed on a daily basis. And as consequence, we really don't see the possibility here for regulating security on the Internet, the same way for example you can regulate automobile security, or security in buildings. The moment you write your regulations the Internet has changed in ways that you hadn't anticipated. Your regulations become a burden, rather than a benefit." He added that what is needed is a flexible set of guidelines, such as those provided by the OECD.

It offers the following legislative recommendations to the new Congress:
(1) "improve education, especially in math, science and engineering".
(2) "use tax incentives and other policies to encourage investment in research and development".
(3) "strengthening penalties for cyber-crime. We hope the Senate will approve the Cyber Security Enhancement Act".
(4) "consider expansion in the funding and tools available for the FBI and other law-enforcement agencies to fight theft of intellectual property".
(5) "consider establishing civil and criminal penalties for trafficking in counterfeit certificates of product authenticity".

9:30 AM. The FCC will hold a meeting. The agenda includes a number of spectrum related items. The Spectrum Policy Task Force will report on its findings and recommendations. The FCC's International Bureau will report on the outcome of the International Telecommunication Union Plenipotentiary Conference. The FCC will consider a Second Report and Order that would allocate spectrum in the 1.7 and 2.1 GHz bands that can be used to provide advanced wireless services (AWS), such as 3G or IMT-2000. The FCC will consider a Notice of Proposed Rulemaking (NPRM) concerning service rules for (AWS) in the 1.7 GHz and 2.1 GHz bands. And, the FCC will consider a NPRM and Order concerning allocation and service rules for the Dedicated Short Range Communication Services in the 5.850-5.925 GHz band. Location: FCC, 445 12th Street, SW, Room TW-C05 (Commission Meeting Room).

Day one of a two day conference hosted by the American Bar Association's Section of Antitrust Law. See, program. The basic price to attend is $875. Location: National Press Club, 529 14th St NW.

RESCHEDULED FOR DECEMBER 2. 10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Altiris v. Symantec, No. 02-1137. This is a patent infringement case involving technology for remotely controlling the boot process of a computer. Location: 717 Madison Place, NW.

Day two of a two day conference hosted by the American Bar Association's Section of Antitrust Law. See, program. The basic price to attend is $875. Location: National Press Club, 529 14th St NW.

8:30 - 10:00 AM. The American Enterprise Institute (AEI) will host an event titled "Post Election Review of Telecommunications Policy". The speakers will be former FCC Commissioner Harold Furchtgott Roth and Greg Sidak. RSVP to Veronique Rodman at 202 862-4871 or vrodman@aei.org. Location: AEI, 11th Floor, Conference Room, 1150 17th Street, NW.

9:00 AM - 4:45 PM. The FCC's Consumer / Disability Telecommunications Advisory Committee will meet. See, agenda [PDF]. Location: FCC, 445 12th Street, SW, Room TW-C305 (Commission Meeting Room).

9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in AT&T v. FCC, No. 01-1511. Judges Ginsburg, Edwards and Garland will preside. Location: 333 Constitution Ave., NW.

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Cygnus Telecommunications Technology v. Totalaxcess.com, No. 02-1325. This is a consolidated patent case appealed from the U.S. District Court (NDCal). Location: 717 Madison Place, NW.

Deadline to submit comments to the National Institute of Standards and Technology (NIST) regarding its draft publication [62 pages in PDF] titled "Guide to Selecting Information Technology Security Products". This is NIST Special Publication 800-36 (draft). It was written by Timothy Grance, Marissa Myers and Marc Stevens in the NIST's Information Technology Laboratory's Computer Security Division. Send comments to sp800-36@nist.gov.

Deadline to submit comments to the National Institute of Standards and Technology (NIST) regarding its draft publication [78 pages in PDF] titled "Guide to IT Security Services". This is NIST Special Publication 800-35 (draft). It was written by Tim Grance, Joan Hash, Marc Stevens, Kristofor O’Neal, Nadya Bartol and Robert Young  in the NIST's Information Technology Laboratory's Computer Security Division. Send comments to sp800-35@nist.gov.

Deadline to submit comments to the National Institute of Standards and Technology (NIST) regarding its draft publication [66 pages in PDF] titled "Security Considerations in Federal Information Technology Procurements A Guide for Procurement Initiators, Contracting Officers, and IT Security Officials". This is NIST Special Publication 800-4A (draft). It was written by Tim Grance, Joan Hash and Marc Stevens in the NIST's Information Technology Laboratory's Computer Security Division. Send comments to sp800-4@nist.gov.

CANCELLED? 9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in Z Tel Communications v. FCC, No. 01-1461. This is a challenge to the FCC's order approving Verizon's Section 271 application to provide in region interLATA service in the state of Pennsylvania. Judges Ginsburg, Edwards and Garland will preside. Location: 333 Constitution Ave., NW.

3:30 - 4:30 PM. The Heritage Foundation will host an address by Rep. Jim Ryun (R-KS) titled "Reforming Congress for a Safer Homeland: The Need for Congressional Committee Reorganization". Location: 214 Massachusetts Ave., NE.

6:00 - 8:00 PM. The FCBA will host a CLE seminar titled "FCC Winter Preview". The panelists will include Donald Abelson (Chief of the FCC's International Bureau), Thomas Sugrue (Chief of the FCC's Wireless Telecommunications Bureau), Kenneth Feree (Chief of the FCC's Media Bureau), and William Maher (Chief of the FCC's Wireline Competition Bureau), and Bryan Tramont (Senior Legal Advisor to FCC Chairman Michael Powell). Location: Sidley Austin Brown & Wood, Conference room 6-E.

9:00 AM. Day one of a two day meeting of Information Systems Technical Advisory Committee (ISTAC) of the Commerce Department's Bureau of Industry and Security (formerly known as the Bureau of Export Administration). The ISTAC advises the BIS on technical questions that affect the level of export controls applicable to information systems equipment and technology. The meeting will be partly open, and partly closed. The agenda for the open portion of the meeting includes a presentation on China's high performance computing market and a presentation on semiconductor manufacturing trends. The agenda for the closed portion of the meeting is secret. See, notice in the Federal Register, October 22, 2002, Vol. 67, No. 204, at Page 64868. Location:  Room 3884, Hoover Building, 14th Street between Pennsylvania and Constitution Avenues, NW.

12:15 PM. The FCBA's Mass Media Practice Committee will host a brown bag lunch. The topic will be radio issues. The speakers will be Peter Doyle (Chief of the FCC's Audio Division) and other FCC staff. RSVP to Barry Umansky at 202 263-4128 or barry.umansky @thompsonhine.com. Location: National Association of Broadcasters, 1771 N St., NW, 1st floor conference room.

6:00 PM. The Center for Democracy and Technology (CDT), Truste, and Privastaff will host a book signing and wine and cheese reception for Ann Cavoukian, Information and Privacy Commissioner of Ontario and co-author of The Privacy Payoff: How Successful Business Build Customer Trust. For more information, contact LuJuan Brooks 202 637-9800 or lbrooks @cdt.org. Location: National Press Club, 529 14th St. NW, 13th Floor.

The Cato Institute will host a day long conference titled "Telecom and Broadband Policy After the Market Meltdown". See, notice. Webcast. Location: Cato, 1000 Massachusetts Ave., NW.

TIME? Day one of a two day conference hosted by Cellular Telecommunications and Internet Association (CTIA) titled "Homeland Security Critical Issues Forum". Its subject matter will include network security and reliability, physical and cyber security, network vulnerabilities, and how other critical infrastructures may impact CMRS networks. The event is closed to the public. At 12:30 PM Dick Clarke, Special Advisor to the President for Cyberspace Security and Chairman of the President’s Critical Infrastructure Protection Board, will speak. A CTIA release states that "Only lunch sessions are open to the media. Credentials required for admittance." For more information, contact Kimberly Kuo at 202 736-3202 or Kkuo@ctia.org. Location: Omni Shoreham Hotel, Empire Ball Room, 2500 Calvert Street, NW.

9:00 AM. Day two of a two day meeting of Information Systems Technical Advisory Committee (ISTAC) of the Commerce Department's Bureau of Industry and Security (formerly known as the Bureau of Export Administration). The ISTAC advises the BIS on technical questions that affect the level of export controls applicable to information systems equipment and technology. The meeting will be partly open, and partly closed. The agenda for the open portion of the meeting includes a presentation on China's high performance computing market and a presentation on semiconductor manufacturing trends. The agenda for the closed portion of the meeting is secret. See, notice in the Federal Register, October 22, 2002, Vol. 67, No. 204, at Page 64868. Location: Room 3884, Hoover Building, 14th Street between Pennsylvania and Constitution Ave., NW.

11/6. The Securities and Exchange Commission (SEC) voted to propose rules implementing provisions of the Sarbanes Oxley Act that prescribe "minimum standards of professional conduct for attorneys appearing and practicing before the Commission in any way in the representation of issuers." See, SEC release.

11/6. Securities and Exchange Commission (SEC) Commissioner Cynthia Glassman stated in a release that "I am sad and disappointed that Chairman Pitt has resigned. His departure will be a loss for the investing public, the SEC, and me personally. Despite the controversies during his tenure, under Harvey's leadership, the Commission did outstanding work on behalf of American investors."