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February 28, 2003, 9:00 AM ET, Alert No. 614.
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House Commerce Committee Holds Hearing on FCC Triennial Review Order
2/26. The House Commerce Committee's Telecom and Internet Subcommittee held a lengthy hearing. All five Commissioners of the Federal Communications Commission (FCC) explained and defended their positions in the divided Triennial Review Order which the FCC announced last week. Key members of the Subcommittee condemned the UNE-P portion of the order, and predicted its eventual reversal by the courts.

On February 20, the FCC adopted, but did not release, a report and order regarding the Section 251 unbundling obligations of incumbent local exchange carriers (ILECs). The FCC issued only a short press release [2 pages in PDF] and an attachment [4 pages in PDF]. See, stories in TLJ Daily E-Mail Alert No. 609, February 21, 2003.

The FCC stated that the order provides that there is no unbundling requirement for fiber to the home (FTTH) loops. It also stated that the order provides that there is no unbundling requirement for a transmission path over hybrid loops utilizing the packet switching capabilities of their DLC systems in remote terminals. However, ILECs must still provide unbundled access to a voice grade equivalent channel and high capacity loops utilizing TDM technology, such as DS1s and DS3s. The order provides that ILECs must continue to provide unbundled access to copper loops and copper subloops. Commissioners Powell, Abernathy and Martin formed the majority on these issues.

Also, the order eliminates line sharing as an unbundled network element. However, while the Bell companies obtained much of the broadband regulatory relief which they sought, the FCC declined to provide the UNE-P relief that they sought. Commissioners Martin, Copps and Adelstein formed the majority on these issues, while Powell and Abernathy vociferously dissented.

See, statement [PDF] of Michael Powell at February 20 FCC meeting, statement [PDF] of Kathleen Abernathy, statement of Michael Copps, statement [PDF] of Kevin Martin, and statement [PDF] of Jonathan Adelstein. The Commissioners' prepared statements at the February 26 hearing, which they read or paraphrased in part, mirrored their February 20 statements. See, February 26 hearing statements in PDF of Powell, Abernathy, Martin, Copps, and Adelstein.

Leading members of the Subcommittee, including Rep. Billy Tauzin (R-LA), Rep. John Dingell (D-MI), and Rep. Fred Upton (R-MI), criticized the UNE-P portion of the prospective order, but praised most of the broadband related provisions. However, some members, such as Rep. Ed Markey (D-MA), argued the opposite -- that the UNE-P portion of the order was appropriate, but that broadband regulatory relief was not appropriate.

Rep. Fred UptonRep. Upton (at right), the Chairman of the Subcommittee, read a prepared statement. He said that "Unfortunately, the majority in the Triennial Review failed to follow Chairman Powell's bold vision and leadership. The majority missed a great opportunity. Where they had the chance to provide certainty, they have provided uncertainty. Where they had a chance to provide clarity and stability, they opted for chaos and continued regulatory haggling. In their third attempt to write rules for network unbundling, they have failed and the third time is no charm. They have failed to follow the standards established by Congress, written into the 96 Act, and reinforced by the courts."

Upton quipped, "Sadly, the FCC's model is a form of competition that only French farmers could love."

Rep. Tauzin, the Chairman of the full Commerce Committee, stated that "the telecom sector is in a dangerous state of economic disrepair" and that "excessive regulation limits investment". He added that "regulatory uncertainty is the death knell of the telecommunications sector".

He praised Powell and Abernathy for the positions which they took on the UNE-P portions of the Triennial Review order. "Unfortunately, three of our Commissioners seem to think that you can get the telecom sector back to its peak ... by creating a fog of regulatory uncertainty for years to come". He added that the 51 jurisdictions' implementation will be challenged in 51 different courts, and then in 12 different appeals courts. "What a mess," he said.

He accused the three members of the majority of "giving a sick patient another lethal dose of uncertainly, of extended regulatory confusion, and subsidized phony competition".

He then stated that "I will say that it appears that we have a lot to be exited about with respect to the deregulation of broadband facilities. I will withhold final judgment on that until we have seen the final rules."

"But a deregulated environment for broadband is one thing. You also need an attractive market for investment."

He said the the FCC's UNE-P order will give WorldCom, which he called "this wonderful honest telecom company", the "right to use other companies' facilities at below cost, for at least another three years and nine months".

Rep. Dingell also criticized the FCC's UNE-P order in his statement. He said that "only facilities based competition is sustainable".

Rep. Rick Boucher (D-VA) a senior member of the Subcommittee, supported the views of Reps. Tauzin and Dingell. He also went into the details of how the broadband portions of the order will be drafted. He said that "The benefits of that decision could well be negated by the other decision made by the Commission that would enable the public service commissions of the states to pass on whether or not the old copper networks could then be retired, as those copper networks are overbuilt with modern fiber optic facilities. If the LECs are ultimately required to maintain and operate the old networks, there will be little incentive to invest in the new ones. As the Commission drafts an order incorporating these decisions, I hope that you will provide clarity on this matter by ensuring that the LECs may retire the old copper plant as new and modern facilities are constructed."

On the other hand, several members of the Subcommittee praised the UNE-P, and criticized the broadband, portions of the FCC order. These included Rep. Markey, Rep. Anna Eshoo (D-CA), and Rep. Bart Stupak (D-MI).

Rep. Markey said in his statement [PDF] that the Bells argued that "if you de-regulate their new investments for high speed service, take out pesky competitors in the broadband marketplace, and remove certain regulatory oversight, then they'd really be going gangbusters getting fiber out to people's homes. They wanted a policy of ``new wires, new rules.´´ Last Thursday, three of your agreed to endorse this proposition. And almost immediately afterwards the Bell companies announced that they weren't going to invest. They will not deploy; that the premise of 4 years of legislation and months of your work at the FCC was nothing more than a ``fiber fable.´´"

See also, archived audio of hearing.

Senate Finance Committee Passes Trade Bill
2/27. The Senate Finance Committee approved the Miscellaneous Trade and Technical Corrections Act of 2003, a collection of individual bills organized as a single package. Title III of the bill pertains to intellectual property rights (IPR).

Sen. Charles Grassley (R-IA), Chairman of the Committee, wrote in a summary [5 pages in PDF] of the bill that there are three IPR provisions. First, there is "Harmonizing the intellectual property rights criteria for eligibility in the Andean Trade Preference Act/Andean Trade Promotion and Drug Eradication Act, the Generalized System of Preferences, the Caribbean Basin Economic Recovery Act/Caribbean Basin Trade Partnership Act trade preference programs to that found in other U.S. trade laws, specifically Special 301."

Second, there is "Establishing a more formalized petition process to ``ensure a timely review and disposition´´ of such petitions by the USTR. The change would generally conform the process by which the eligibility of a country can be challenged under our preference programs to that already applicable for similar trade benefit programs such as the Generalized System of Preferences."

Third, the bill affects IPR by "Correcting a technical deficiency in the time frame for bringing and concluding WTO/TRIPS cases against countries subject to trade action under Special 301."

See also, release [2 pages in PDF] of Sen. Max Baucus (D-MT), the ranking Democrat on the Committee.

Sen. Grassley Outlines Tech Agenda for Senate Finance Committee
2/27. Sen. Charles Grassley (R-IA), Chairman of the Senate Finance Committee, gave a speech [2 pages in PDF] to the Tax Council Policy Institute's 4th Annual Tax Policy Symposium in which he identified tax issues that will be addressed by the Committee. This agenda includes several tech related items, such as the FSC/ETI tax regime, state taxation of internet sales, and EU value added taxes.

He stated that one "important issue is the WTO decision on FSC-ETI. Our bipartisan bicameral working group has continued throughout the fall. We are working hard to reach agreement on this issue. We are committed to getting it done this year, but addressing the economy comes first. We will turn to FSC-ETI once we have completed action on a jobs and stimulus package. Yesterday, the EU announced that it has finalized its FSC-ETI sanctions list." See, EU release regarding sanctions.

Sen. Charles GrassleySen. Grassley (at right) continued that "Threats to impose sanctions will not change our timetable for getting this done. The Europeans need to understand that major changes to our tax code do not happen overnight. I am concerned that EU moves on trade sanctions will only inflame passions, delay the legislative process, and lead to slower economic growth in both Europe and the United States."

He also stated that "The federal moratorium on state taxation of Internet transactions expires this year. I know that this conference focuses on the taxation of Internet and catalog sales, which, of course, concerns state business taxes. The Streamlined Sales Tax Project has completed the first part of its work -- adopting an agreement that seeks to bring order and clarity to sales and use tax in multiple jurisdictions. Now begins the hard part of having state legislatures pass into law the agreement that has been forged. I will certainly be monitoring the actions of the states as the Finance Committee revisits the moratorium this year."

There has been a lot of talk of the budget concerns facing the states. Many will argue that taking action here is one possible option the states have to address questions of revenue. With more state and private sector cooperation, federal action in this area will become less and less important."

See also, S 52, the Internet Tax Nondiscrimination Act, a bill to permanently extend the moratorium enacted by the Internet Tax Freedom Act, sponsored by Sen. Ron Wyden (D-OR).

Finally, Sen. Grassley addressed the EU value added tax. He said that "There is an international Internet matter that I want to address. The European Community recently directed that U.S. businesses are subject to EU value-added taxes when a citizen of the EU downloads a digital product from a U.S. business’s Web site. This is a disturbing development. The EU is imposing VAT taxes on U.S. companies that have never stepped foot inside the EU. I recently learned that some U.S. companies have been forced to set up offices and move employees to Europe to comply with the EU VAT directive. This rule also is designed to discriminate against U.S. vendors by possibly forcing them to impose a higher VAT rate than EU vendors may impose. Dragging jobs out of the U.S., subjecting U.S. companies to EU taxes, and discriminating against U.S. vendors is intolerable. This is an unjust rule and I would like to see it challenged."

People and Appointments
2/27. The Senate Judiciary Committee held a business meeting at which it approved the nominations of Deborah Cook (to be a Judge of the U.S. Court of Appeals  for the Sixth Circuit), John Roberts (DC Circuit), and Jay Bybee (Ninth Circuit). Some Democrats on the Committee had sought to further delay consideration of Cook and Roberts. The nominations still require approval by the full Senate. Meanwhile, Senate Democrats have been filibustering the Miguel Estrada nomination (DC Circuit) in the full Senate for three weeks. President Bush, on February 26, gave another speech in which he condemned Senate Democrats for delaying a vote on Estrada. Bush stated that "his nomination is being delayed and stalled by Democratic senators. His nomination has been stalled for two years. They're blocking the vote on this good man for purely political reasons." See also, prepared statement of Sen. Patrick Leahy (D-VT), the ranking Democrat on the Committee.
More News
2/27. The Federal Communications Commission (FCC) held a field hearing in Richmond, Virginia regarding its review of its broadcast ownership rules. FCC Chairman Michael Powell offered this summary in a prepared statement [PDF]: "Every two years, the Commission is required by statute to review the broadcast ownership rules. And when it does, it is legally required to presume each rule is no longer needed unless we find otherwise. Unless we can re-justify each broadcast ownership rule under current market conditions, the rule goes away. Under this new standard of review, courts have become far more skeptical of FCC rationales for imposing limits on broadcast ownership. Five times in the past two years we have defended our ownership rules in court. Five times we have lost." Commissioner Michael Copps said in his prepared statement [9 pages in PDF] that "I'm frankly concerned about consolidation in the media, and particularly concerned that we are on the verge of dramatically altering our nation’s media landscape without the kind debate and analysis that these issues so clearly merit." See, also prepared statement [PDF] of Commissioner Kathleen Abernathy and prepared statment [PDF] of Dane Snowden, Chief of the FCC's Consumer & Governmental Affairs Bureau.

2/14. The Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA) entered into an agreement with Neustar. The agreement [3 pages in PDF], titled "Amendment of Solicitation / Modification of Agreement", modifies the agreement for the management of the .us domain by NeuStar, to provide that Neustar will establish, operate and maintain a second level domain in the .us domain for material that is suitable for minors, pursuant to HR 3833, the "Dot Kids Implementation and Efficiency Act of 2002", which was signed into law on December 4, 2002. See, Public Law No. 107-317.

2/27. The National Aeronautics and Space Administration (NASA) published a notice in the Federal Register stating that Circuit Avenue Netrepreneurs "has applied for a partially exclusive license to practice the invention described and in NASA Case No. ARC-14480-1, entitled ``An Approach to Automating the Manipulation of Information,´´ ..." The deadline to submit written objections to the prospective grant of a license to the Ames Research Center is March 14, 2003. See, Federal Register, February 27, 2003, Vol. 68, No. 39, at Page 9097.

Friday, February 28
9:00 AM - 1:30 PM. The American Enterprise Institute (AEI) will host an conference titled "Prospects and Politics of a U.S.-Taiwan Free Trade Agreement". The scheduled speakers include Rep. Tom DeLay (R-TX), William Kristol, Deanna Okun, and Therese Shaheen.

12:15 PM. The FCBA's Mass Media Practice Committee will host a brown bag lunch. The speaker will be Ken Ferree, Chief of the FCC's Media Bureau. RSVP to Wendy Parish at Location: NAB, Conference Room, 1771 N Street, NW.

2:00 NOON. Deadline to submit comments to the Office of the U.S. Trade Representative's (USTR) interagency Trade Policy Staff Committee (TPSC) regarding the operation and implementation of the World Trade Organization's (WTO) Agreement on Technical Barriers to Trade (TBT). See, notice in the Federal Register, February 3, 2003, Vol. 68, No. 22, at Pages 5327-5328.

Extended deadline to submit reply comments to the Federal Communications Commission's (FCC) regarding the Report [73 pages in PDF] of the FCC Spectrum Policy Task Force (SPTF). The report recommends that "spectrum policy must evolve towards more flexible and market oriented regulatory models." See, original notice [PDF] and notice of extension [PDF].

Day three of a three day conference hosted by the International Association of Privacy Professionals (IAPP) titled "Third Annual Privacy Summit: Implementing and Managing Privacy in a Complex Environment". See, schedule. Location: Washington Hilton Hotel, 1919 Connecticut Avenue, NW.

EXTENDED TO MARCH 11. Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its Further Notice of Proposed Rulemaking, (FNPRM), released last month, regarding whether providers of various services and devices not currently within the scope of the FCC's 911 rules should be required to provide access to emergency services. This is CC Docket No. 94-102 and IB Docket No. 99-67. See, notice in the Federal Register, January 23, 2003, Vol. 68, No. 15, at Pages 3214 - 3220. See also, notice of extension.

Deadline to submit to the Copyright Office (CO) claims to royalty payments for digital audio recording devices and digital audio recording media, collected during 2002. Such claims are made in accordance with Chapter 10 of the U.S. Copyright Law and Part 259 of the Copyright Office regulations. See, CO notice with links to online claim submission forms.

Deadline to submit comments to the Federal Trade Commission (FTC) regarding its Agreement Containing Consent Order with Educational Research Center of America, Inc. (ERCA). On January 29 the FTC announced that it filed an administrative complaint against ERCA alleging violation of the FTC Act. The complaint states that the ERCA "collected personal information from high school and middle and junior high school students through surveys ..." It further states that it "represented, expressly or by implication, that information collected from students through the Surveys is shared only with colleges, universities, and other entities providing education-related services. ... In truth and in fact, information collected from students through the Surveys is shared ... also with commercial entities for marketing purposes." See, FTC release and notice in Federal Register, February 4, 2003, Vol. 68, No. 23, at Pages 5640-5642.

Monday, March 3
The House will meet at 12:00 NOON.

9:00 AM - 4:00 PM. The President's Council of Advisors on Science and Technology (PCAST) will hold a meeting. The agenda includes Presentation of R&D Subcommittee Draft Report on Technology Transfer and Discussion of PCAST’s Nanotechnology Work Plan. Pre-clearance is required to attend. Part of the meeting will be closed. See, PCAST notice and notice in the Federal Register, February 24, 2003, Vol. 68, No. 36, at Page 8608. Location: Indian Treaty Room, Eisenhower Executive Office Building, 17th Street and Pennsylvania Ave., NW.

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Intellectual Property Development v. UA Columbia Cablevision, No. 02-1248, an appeal from the U.S. District Court (SDNY) in a patent case. Location: Courtroom 402, 717 Madison Place, NW.

Deadline to file FCC Form 477 with the Federal Communications Commission (FCC). All providers of local telephone service that serve 10,000 or more voice grade equivalent lines, or wireless channels, in a given state must file this form. Also, facilities based providers that serve at least 250 one-way or two-way broadband (defined here as in excess of 200 kilobits per second) service lines, or wireless channels, in a given state (or have at least 250 customers for such service in a given state) must also file. This form provides the FCC with the data that it uses for its twice per year report on the growth in use of broadband services. See, FCC notice [MS Word].

Deadline to submit comments to the Copyright Office (CO) in response to its Notice of Proposed Rulemaking (NPRM) relating to proposed regulations that set rates and terms for the use of sound recordings by preexisting subscription services for the period January 1, 2002 through December 31, 2007. For more information, contact David Carson (General Counsel) or Tanya Sandros (Senior Attorney, Copyright Arbitration Royalty Panel) at 202 707-8380. See, notice in the Federal Register, January 30, 2003, Vol. 68, No. 20, at Page 4744-4747.

Tuesday, March 4
Day one of a three day conference titled "Securing Your Cyber Frontier Through Awareness, Training and Education" hosted by the National Institute of Standards and Technology (NIST) and the Federal Information Systems Security Educators' Association (FISSEA). See, conference web site. Location: The Hilton Hotel, 8727 Colesville Road, Silver Spring, MD.

9:00 AM. The Bureau of Industry and Security's (BIS) Regulations and Procedures Technical Advisory Committee will hold a partly open and partly closed meeting. The agenda includes a discussion of encryption regulation recommendations. See, notice in the February 18, 2003, Vol. 68, No. 32, at Page 7765. Location: Room 3884, Hoover Building, 14th Street between Constitution and Pennsylvania Avenues, NW.

12:30 PM. The House Homeland Security Committee will hold its organizational meeting. Press contact: Kate Whitman at 202 225-5611. Location: Room 2172, Rayburn Building.

Deadline to submit comments to the General Services Administration (GSA) in response to its notice of proposed rulemaking regarding Section 211 of the E-Government Act of 2002. Section 211 authorizes the Administrator of GSA to provide for the use by States or local governments of its Federal Supply Schedule for "automated data processing equipment (including firmware), software, supplies, support equipment, and services ...'' See, Federal Register, January 23, 2003, Vol. 68, No. 3220, at Pages 3220-3225.

Extended deadline to submit reply comments to the Federal Communications Commission (FCC) regarding SBC's Section 271 application to provide in-region interLATA service in the state of Michigan. This is WC Docket No. 03-16. See, FCC notice.

Wednesday, March 5
10:00 AM. The Senate Finance Committee will hold a hearing on the Bush administration's trade agenda. Location: Room 215, Dirksen Building.

Deadline to submit reply comments to the Copyright Office (CO) in response to its notice of proposed rulemaking (NPRM) regarding the form, content, and manner of service of notices of termination under Section 203 of the Copyright Act. 17 U.S.C. § 203 pertains to the termination of transfers and licenses granted by the author. See, notice in the Federal Register, December 20, 2002 Vol. 67, No. 245, at Pages 77951 - 77955. For more information, contact David Carson, CO General Counsel, at 202 707-8380.

Day two of a three day conference titled "Securing Your Cyber Frontier Through Awareness, Training and Education" hosted by the National Institute of Standards and Technology (NIST) and the Federal Information Systems Security Educators' Association (FISSEA). See, conference web site. Location: The Hilton Hotel, 8727 Colesville Road, Silver Spring, MD.

Thursday, March 6
The Commerce Department's Bureau of Information and Security (BIS), formerly known as the Bureau of Export Administration (BXA), will host a one day seminar in Washington DC titled Essentials of Export Controls. The seminar will cover how to comply with the Export Administration Regulations (EAR). The price to attend is $100. For more information, contact Douglas Bell at 202 482-6031.

9:30 AM - 1:30 PM. The Communitarian Network will host a conference titled "Improving Identification: Enhancing Security, Guarding Privacy". See, agenda. Location: Room 188, Russell Building

10:00 AM - 12:00 PM. The Department of State's International Telecommunication Advisory Committee (ITAC) will meet. A notice in the Federal Register states that the purpose of this meeting is "to begin preparations for the meeting of the ITU Telecommunications Development Advisory Group, which will take place March 19-21, 2003 in Geneva, Switzerland", and/or "to prepare for the 2003 meeting of the Telecommunications Development Advisory Group (TDAG)". The notice also states requirements for admission. See, Federal Register, February 6, 2003, Vol. 68, at Page 6250. Location: State Department.

12:00 NOON. The Congressional Internet Caucus Advisory Committee will host a panel discussion on online privacy issues. The topics will include "whether online and offline collection should be treated the same, federal preemption, private rights of action and the impact of the Fair Credit Reporting Act and Gramm Leach Bliley debates." To attend, RSVP to or 202 638-4370. Lunch will be served. Location: Reserve Officers Association, 1st and Constitution, NE.

3:30 PM. Graeme Dinwoodie (Professor of Law, Chicago Kent College of Law, Illinois Institute of Technology) will give a lecture titled "Internationalizing Intellectual Property Law: Soft Law, Soft Power and Other Mechanisms". For more information, contact Julie Cohen at Location: Georgetown University Law Center, Faculty Lounge, 600 New Jersey Ave., NW.

Day three of a three day conference titled "Securing Your Cyber Frontier Through Awareness, Training and Education" hosted by the National Institute of Standards and Technology (NIST) and the Federal Information Systems Security Educators' Association (FISSEA). See, conference web site. Location: The Hilton Hotel, 8727 Colesville Road, Silver Spring, MD.

Friday, March 7
The Commerce Department's Bureau of Information and Security (BIS), formerly known as the Bureau of Export Administration (BXA), will host a half day seminar in Washington DC titled How Do I Classify My Item?. The seminar will cover export control classification numbers (ECCNs). The price to attend is $50. For more information, contact Douglas Bell at 202 482-6031.
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