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June 11, 2003, 9:00 AM ET, Alert No. 678.
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House Passes Internet Gambling Bill

6/10. The House amended and passed HR 2143, the "Unlawful Internet Gambling Funding Prohibition Act", by a vote of 319-104. See, Roll Call No. 255.

This bill does not ban or regulate internet gambling. This remains a matter of state law. However, offshore internet based gambling operations are largely beyond the reach of prosecutors.

Rather, this bill seeks to stop internet gambling by prohibiting the use of bank instruments to conduct gambling transactions that are already illegal. This bill, which was reported by the House Financial Services Committee, attempts to bar internet gambling operations access to the financial services system by banning the use of credit cards, wire transfers, or any other bank instrument to fund illegal gambling transactions.

The House approved by voice vote an amendment [2 pages in PDF], offered by Rep. Sue Kelly (R-NY). It provides that "No provision of this Act shall be construed as altering, limiting, extending, changing the status of, or otherwise affecting any law relating to, affecting, or regulating gambling within the United States."

The House rejected an amendment [2 pages in PDF] offered by Rep. James Sensenbrenner (R-WI) by a vote of 186-237. See, Roll Call No. 254. The bill provides that the term "bets or wagers" does not include "any lawful transaction with a business licensed or authorized by a State." This amendment would strike this exception. This amendment would have remove from the bill the exception that creates a carve out for state approved gambling on horse racing, dog racing, and jai alai.

Another version of this bill, HR 21, also titled the "Unlawful Internet Gambling Funding Prohibition Act of 2003", was reported by the House Judiciary Committee. On May 14, the Judiciary Committee narrowly approved this same amendment. However, the full House took up the Financial Services Committee bill instead.

The House also rejected by voice vote an amendment [2 pages in PDF] offered by Rep. Sheila Lee (D-TX), a member of the House Judiciary Committee. It would have removed credit cards, as well as "credit, or the proceeds of credit", from the list of items that may not be used to fund illegal gambling operations. This would have essentially gutted the bill.

The companion bill in the Senate is S 627. This bill has not yet passed the Senate, or the Senate Banking Committee, which has jurisdiction. However, the Senate has in the past approved legislation pertaining to internet gambling.

Background. See, story titled "Rep. Leach Introduces Internet Gambling Bill" in TLJ Daily E-Mail Alert No. 579, January 9, 2003, and story titled "House Committee Approves Internet Gambling Bill" in TLJ Daily E-Mail Alert No. 623, March 14, 2003. See also, TLJ story titled "Senate Committee Holds Hearing on Internet Gambling Bill", March 18, 2003. See also, stories titled "House Subcommittee Holds Hearing on Internet Gambling Bills" in TLJ Daily E-Mail Alert No. 652, May 2, 2003; "House Crime Subcommittee Approves Internet Gambling Bill" in TLJ Daily E-Mail Alert No. 656, May 7, 2003; "House Judiciary Committee Approves Internet Gambling Bill" in TLJ Daily E-Mail Alert No. 662, May 15, 2003; "House Financial Services Committee Approves Revised Internet Gambling Bill" in TLJ Daily E-Mail Alert No. 666, May 21, 2003; and "House To Take Up Internet Gambling Bill" in TLJ Daily E-Mail Alert No. 677, June 10, 2003.

DC Circuit Addresses Standing to Challenge FCC Orders

6/10. The U.S. Court of Appeals (DCCir) issued its opinion [PDF] in Rainbow/PUSH Coalition v. FCC, a petition for review of an FCC order approving TV license transfers. The issue on appeal was whether an interest group has standing to challenge a final order of the FCC approving a broadcast license transfer. The Appeals Court dismissed for lack of standing. It held that there is no "automatic audience standing" to challenge broadcast license transfers. Notably, to reach this conclusion, the Court critiqued the theory that underlies the FCC's duopoly rule.

Sullivan Broadcast Holdings applied to the Federal Communications Commission (FCC) for approval to transfer licenses in connection with the sale of five television stations, pursuant to 47 U.S.C. § 310(d). The Rainbow/PUSH Coalition (RPC) petitioned the FCC to deny the original, and revised, applications to transfer licenses. The RPC stated that it had members who reside in the broadcast markets affected by these transactions. The RPC raised the FCC's duopoly rule. The FCC approved license transfers, without holding a hearing.

The RPC filed a petition for review with the Court of Appeals. The Court did not reach the merits of the RPC's petition. It dismissed for lack of standing. However, in analyzing the issue of standing, the Court addressed the FCC's duopoly rule.

The Court applied the three part test (injury-in-fact, causation, and redressability) stated in Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992). It found that the RPC failed to produce evidence that either the RPC or any of its members suffered the injury-in-fact required for standing.

The Court wrote that the RPC "seems to argue that our cases establish a per se rule that a person has standing to protect the ``public interest´´ by challenging any decision of the Commission regulating (or, as in this case, declining to regulate) a broadcaster in whose listening or viewing area the person lives." (Parentheses in original.) The Court rejected this argument.

The Court reasoned that the RPC's claim of injury, namely, deprivation of program service in the public interest, is not sufficiently concrete and particularized to pass constitutional muster.

The Court noted that one of RPC's arguments was that "increased concentration in the ownership of broadcast stations results in fewer voices being heard and therefore in decreased diversity in content; ergo, the public interest automatically suffers when two formerly independent stations come under common ownership."

The Court wrote that this "theory has an intuitive appeal, and indeed something very like it underpins the Commission's duopoly rule." It continued that "While it is reasonable for the Commission, however, to assume that a greater concentration of ownership may decrease the diversity of voices on the airwaves, and to erect a prophylactic regulation in order to avert that possibility, ... it does not follow that common control of two licenses in the same market necessarily or even probably affects their programming. Absent a showing that Sinclair's assumption of control of KOKH or KRRT resulted in some actual effect upon the programming of those or of the commonly controlled stations in their markets, Rainbow's fears of decreased diversity remain purely speculative."

On June 2, 2003, the FCC announced a Report and Order revising its media ownership rules. This order maintains, but relaxes, the FCC's local TV broadcast ownership rules. See, story titled "FCC Announces Revisions to Media Ownership Rules" in TLJ Daily E-Mail Alert No. 672, June 3, 2003.

Commissioner Abernathy Addresses FCC Spectrum Policy

6/3. Federal Communications Commission (FCC) Commissioner Kathleen Abernathy gave a speech [12 pages in PDF] in Washington DC titled "If You Build It, They Will Come", in which she addressed FCC regulatory policies pertaining to use of spectrum.

Kathleen Abernathy

Abernathy (at right) stated that "I happen to agree strongly with the voice in the movie, ``Field of Dreams´´ that said, ``if you build it, they will come´´. Except in this case, it is not baseball players and fields that are issue, but the ability of the FCC to adopt regulations that are market-based and provide sufficient flexibility to service providers to respond to market needs. If the FCC can craft this type of playing field, I believe that industry will have the ability and incentive to provide innovative technologies and services to consumers. You will build it and consumers will come."

She stated that there are "four areas in the wireless arena where I believe that the FCC has worked to craft a regulatory environment that permits this type of innovation to occur: 1) the adoption of regulations to facilitate the deployment of new technologies; 2) the creation of secondary markets for spectrum-based services; 3) the allocation of additional spectrum for unlicensed uses; and 4) the provision of additional flexibility in our rules for licensees."

Spectrum Markets. She spoke in detail about the FCC's recent Order allowing some secondary leasing of spectrum. On May 15, the FCC adopted a Report and Order (R&O) and a Further Notice of Proposed Rulemaking (FNPRM) which allows certain FCC spectrum licensees to enter into leasing arrangements with third parties. The FCC issued a press release [4 pages in PDF] announcing the R&O and FNPRM. It states that this item "(1) authorizes spectrum leasing in a broad array of wireless radio services, (2) adopts streamlined processing for certain categories of license transfer and assignment applications, and (3) seeks comment on additional steps to improve the functioning of secondary markets." See, TLJ story titled "FCC Adopts Order Allowing Some Secondary Leasing of Spectrum" May 15, 2003.

Abernathy stated that "I believe that this order will lead to increased efficiency in the use of the spectrum. For example, a general wireless service licensee who may not need all of its spectrum in a certain geographic area may lease the spectrum to a third party who needs access to that spectrum. Once that lease is either notified or approved by the FCC, as required under our rules, that lessee will now be in a position to actually build facilities and provide service in that spectrum. In such a case, spectrum that may have been wasted is now being utilized. This approach also provides opportunities for lessees to gain access to spectrum to provide new and innovative services, again, as long as such use is consistent with the terms of the license."

She added that "Over the long term, I believe that our creation of a secondary spectrum markets will dramatically increase the efficiency of the use of the spectrum and lead to the creation of new technologies and services."

Unlicensed Spectrum. She also spoke about unlicensed spectrum. On May 15, 2003, the FCC adopted a Notice of Proposed Rulemaking (NPRM) proposing to make available an additional 255 MHz of spectrum for unlicensed use. The proposal, which would nearly double the amount of spectrum for unlicensed use, would not be for any exclusive use. However, the main use will likely be 802.11 (Wi-Fi) and Bluetooth devices.

See also, stories titled "FCC Adopts NPRM to Increase Unlicensed Spectrum" and "FCC Unlicensed Spectrum NPRM and the Jumpstart Broadband Act" in TLJ Daily E-Mail Alert No. 663, May 16, 2003; see also, "FCC Releases NPRM Regarding Increasing Amount of Unlicensed Spectrum" in TLJ Daily E-Mail Alert No. 674, June 5, 2003.

Abernathy stated that "with the development of wi-fi, blue tooth, ultra-wideband and other technologies, there has been a dramatic increase in demand for the availability of and access to unlicensed spectrum."

She continued that "The success of the unlicensed approach to spectrum regulation has been due in large part to the Commission's willingness and ability to clearly define the rules that govern the common use of the resource, while resisting the urge to impose heavy-handed regulation. Our unlicensed bands, unlike our licensed bands, do not create property rights, but rather focus on communal use. Accordingly, like drivers on the highway, access to the unlicensed bands is available to all users, but these users must comprehend and obey the rules of the road and the FCC, as the regulator, must ensure its rules are clear. The benefit is that entrepreneurs can introduce new products to the market without the initial upfront costs associated with a spectrum auction."

She added that "The FCC is continuing to examine its current spectrum allocations to see if additional spectrum can be made available for unlicensed use. Just last month, the FCC adopted an item that proposes to allow access to an additional 255 MHz of unlicensed spectrum in the 5 GHz band. This was done in anticipation of the upcoming ITU global conference on spectrum allocation."

She concluded that "the increased capacity gained from access to this added spectrum, on a global basis, coupled with the ease of deployment and operational flexibility provided by our rules, will foster the development of a wide range of new and innovative unlicensed devices and lead to further wireless broadband access and investment."

More News

6/10. The House passed HR 1086, the "Standards Development Organization Advancement Act", by voice vote. This is bill to encourage the development and promulgation of voluntary consensus standards by providing relief under the antitrust laws to standards development organizations.

6/10. The National Telecommunications and Information Administration (NTIA) filed a reply comment with the Federal Communications Commission (FCC) in its proceeding regarding the international emergency distress frequency of 406.025 MHz. The NTIA wrote that it "supports extending interference protection to the emergency distress frequency of 406.025 MHz. ... The proposed extension of the frequency limits for interference protection to 405.925 - 406.176 MHz should not impact cable television service operations since the nearest video carriers are at 403.25 MHz and 409.25 MHz, and the nearest aural carrier is at 407.75 MHz." This proceeding is titled "In the Matter of Amendment of Part 76 of the Commission's Rules To Extend Interference Protection to the Marine and Aeronautical Distress and Safety Frequency 406.025 MHz. This is MB Docket No. 03-50.

Wednesday, June 11

The House will meet at 10:00 AM for legislative business. It may consider HR 1320, the "Commercial Spectrum Enhancement Act", under suspension of the rules, and HR 1115, the "Class Action Fairness Act of 2003", subject to a rule. See, Republican Whip Notice.

9:00 AM - 12:00 NOON. The Center for Strategic and International Studies (CSIS) will host a conference titled "Cyber Security and Defense: Government Coordination". The speakers will include Sen. Bob Bennett (R-UT), Rep. Jim Turner (D-TX), and John Hamre (P/CEO of CSIS). For more information, contact Mark Schoeff at 202 775-3242 or Location: CSIS, 1800 K Street, NW, B-1 Conference Level.

9:30 AM. The Senate Judiciary Committee will hold a hearing on several pending nominations, including that of William Pryor to be a Judge of the U.S. Court of Appeals for the 11th Circuit. Press contact: Margarita Tapia at 202 224-5225. See, notice. Location: Room 226, Dirksen Building.

10:00 AM. The House Commerce Committee's Subcommittee on Commerce, Trade and Consumer Protection will hold a hearing titled "Reauthorization of the Federal Trade Commission: Positioning the Commission for the Twenty-First Century". The Commissions of the FTC will testify. See, notice. Press contact: Ken Johnson or Jon Tripp at 202 225-5735. Location: Room 2123, Rayburn Building.

10:00 AM. Jane Mago, Chief of the Federal Communications Commission's (FCC) Office of Strategic Planning and Policy Analysis, will hold a press briefing to discuss the upcoming projects, goals, mission and recent activities of the Office. Location: FCC, 445 12th St., SW, South Conference Room, third floor.

10:00 - 11:30 AM. The Cato Institute will host a program titled "Taxing the Internet: Questions for Governors and Legislators". Lunch will follow the program. Bill Owens, Governor of Colorado, will speak. See, Cato notice. Location: 1000 Massachusetts Avenue, NW.

TIME CHANGE. 11:00 AM. The House Commerce Committee's Subcommittee on Telecommunications and the Internet will hold a hearing titled "The Spectrum Needs of Our Nation's First Responders". The hearing will be webcast. The witnesses will include Rep. Jane Harman (D-CA), Rep. Curt Weldon (R-PA), Ed Thomas (FCC Office of Engineering & Technology), James Tamlyn (Charlevoix Cheboygan Emmet Central Dispatch Authority, Michigan), Norman Jacknis (Westchester County), Gene Adamczyk (Michigan State Police), Gregory Brown (Motorola), Jim Haynie (American Radio Relay League), Vincent Stile (Association of Public Safety Communications Officials International), Timothy Donahue (Nextel), and Stephen Carrico (Wisconsin Public Service Corporation). See, notice. Press contact: Ken Johnson or Jon Tripp at 202 225-5735. Location: Room 2322, Rayburn Building.

2:00 PM. The Senate Judiciary Committee will hold a hearing on "P2P file sharing networks, focusing on personal and national security risks". Press contact: Margarita Tapia at 202 224-5225. Location: Room 226, Dirksen Building.

2:00 PM. The House Rules Committee will meet to adopt a rule for consideration of HR 1115, the "Class Action Fairness Act".

2:30 PM. The Senate Commerce Committee's Subcommittee of Competition, Foreign Commerce, and Infrastructure will hold a hearing on reauthorization of the Federal Trade Commission (FTC). The first panel of witnesses will include Commissioners of the FTC. The second panel will include Marc Rotenberg (Electronic Privacy Information Center), Susan Grant (National Consumers League), Sarah Deutsch (Verizon), Larry Sarjeant (U.S. Telecom Association), Scott Cooper, Ari Schwartz (Center for Democracy and Technology). Location: Room 253, Russell Building.

2:30 PM. The House International Relations Committee's Subcommittee on the Western Hemisphere will hold a hearing on Radio and Television Marti. Location: Room 2200, Rayburn Building.

Thursday, June 12

The House will meet at 10:00 AM for legislative business. It may consider HR 1320, the "Commercial Spectrum Enhancement Act", under suspension of the rules, and HR 1115, the "Class Action Fairness Act of 2003", subject to a rule. See, Republican Whip Notice.

9:30 AM. The Senate Judiciary Committee will hold an executive business meeting. Press contact: Margarita Tapia at 202 224-5225. See, notice. Location: Room 226, Dirksen Building.

12:15 PM. The Federal Communications Bar Association's (FCBA) Online Communications Practice Committee will host a brown bag lunch. The speaker will be Vinton Cerf. RSVP to Christine Peyton at Location: Wiley Rein & Fielding, 1750 K St., NW, 10th Floor, Room 10E.

2:00 PM. The Department of Commerce (DOC) and the Department of Education (DOE) will hold a media teleconference to announce the formation of an "Interagency Working Group on Advanced Technologies for Education and Training". In addition, the Business and Higher Education Forum (BHEF) will release a report titled "Building a Nation of Learners: The Need for Changes in Teaching and Learning to Meet Global Challenges". The participants will include Phillip Bond, Under Secretary of Commerce for Technology, and John Bailey, DOE Director of Technology. See, notice. For more information, contact Connie Correll of the DOC's Technology Administration at 202 482-1065 or To obtain the conference call phone number, contact 202 939-9365 or

Friday, June 13

10:00 AM. The Senate Banking Committee will hold a hearing on several pending nominations, including that of Greg Mankiw to be a member of the President's Council of Economic Advisors. Location: Room 538, Dirksen Building.

12:00 NOON. The Cato Institute will host a panel discussion titled "Canning Spam: Can We Shift the Cost of Unsolicited E-mail Back to Spammers?". The speakers will be Orson Swindle (Commissioner of the Federal Trade Commission), Wayne Crews (Cato), and Dave Baker (Earthlink). See, notice and online registration page. Lunch will be served. Location: Room B-369, Rayburn Building.

2:00 - 3:00 PM. The Information Technology Association of America (ITAA) will host a webcast program titled "The Do's and Don'ts of Workplace Email and Web Monitoring". The presenters will be Cathy Bissoon, (Reed Smith) and Susan Getgood (Surf Control). See, notice and registration information.

CANCELLED. The Federal Communications Commission's (FCC) Network Reliability and Interoperability Council (NRIC) will hold a meeting. The NRIC will next meet on September 15, 2003 from 1:00 - 4:00 PM. See, notice of cancellation [PDF].

Monday, June 16

The Supreme Court will return from a one week recess.

Deadline to submit comments to the Federal Communications Commission (FCC) regarding News Corp.' proposed acquisition of an interest in DirecTV. See, FCC notice [7 pages in PDF], and story titled "FCC Sets Deadlines for Comments on News Corp.'s DirecTV Deal" in TLJ Daily E-Mail Alert No. 664, May 19, 2003. This is MB Docket No. 03-124. For more information, contact Marcia Glauberman at or 202 418-7046 or Linda Senecal at or 202 418-7044.

Deadline to submit comments to the Bureau of Industry and Security (aka Bureau of Export Administration) regarding its proposal titled "Best Practices for Exporters/Re-exporters and Trade Facilitation/Freight Forwarding Companies Regarding the Transit, Transshipment, and Reexport of Dual-Use Items".For more information, contact Rick Cupitt at or 202 482-1459. See, notice in Federal Register, May 16, 2003, Vol. 68, No. 95, at Pages 26567 - 26569.

Tuesday, June 17

RESCHEDULED FOR JUNE 24. 12:15 PM. The Federal Communications Bar Association's (FCBA) Cable Practice Committee will host a brown bag lunch. The speaker will be Kyle Dixon, Deputy Bureau Chief of the Federal Communications Commission's (FCC) Media Bureau, and Special Counsel to the Chairman for Broadband. RSVP to Wendy Parish at Location: National Cable & Telecommunications Association (NCTA), 1724 Massachusetts Ave., NW, 2nd Floor Conference Room.

12:15 PM. The Federal Communications Bar Association's (FCBA) Mass Media Practice Committee will host a brown bag lunch on "current issues". RSVP to moconnell Location: NAB, 1771 N Street, NW.

Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its notice of proposed rulemaking (NPRM) regarding its slamming rules. Slamming is the unauthorized changing of subscriber's selection of a provider of telephone exchange service or telephone toll service. The FCC adopted this NPRM on February 28, 2003, and released it on March 17. See, Third Order on Reconsideration and Second Further Notice of Proposed Rulemaking [63 pages in PDF]. This is FCC Docket No. 94-129. See also, FCC release [PDF]. For more information, contact Kelli Farmer at 202 418-7057.

Ways and Means Committee Holds Hearing on Chile and Singapore FTAs

6/10. The House Ways and Means Committee's Trade Subcommittee held a hearing titled "Implementation of U.S. Bilateral Free Trade Agreements with Chile and Singapore".

Rep. Earl Blumenauer (D-OR) testified in favor of the FTAs. He stated that "Technology remains a mainstay of West Coast economies. In Oregon, the leading industry is high-tech, much of it destined for export. The agreement with Chile represents an opportunity to improve markets at a time of great economic stress." See, prepared testimony.

Rep. Pete Sessions (R-TX) testified in favor also. He stated that the U.S. Singapore FTA is "a modern, forward looking agreement that updates Singapore's intellectual property law and brings it in line with American standards.  It updates Singapore’s copyright and patent law to prevent circumvention and to ensure that the creators of new technologies and inventions reap the rewards of their innovation. It updates the country’s trademark regime to reflect the new market realities of branding and product identity building, while enhancing protection for well-known trademarks. All of these enhanced protections will be complimented by a robust enforcement regime that criminalizes the willful infringement of copyrights and imposes tough punishments on piracy." See, prepared testimony.

Jeff Jacobs of Qualcomm testified that "QUALCOMM strongly supports free trade, and the results of the U.S.-Singapore and U.S.-Chile free trade negotiations.  Open markets and strong trade rules are critical to QUALCOMM.  More than half of QUALCOMM’s revenues are generated outside of North America, with most of our growth resulting from demand in Latin America, East Asia (especially China, Japan and Korea) and India.  These trends are not unique to QUALCOMM; the American high-tech sector collectively is the largest source of U.S. merchandise exports, as well as the largest cumulative source of U.S. direct investment overseas." See, prepared testimony.

Joseph Papovich of the Recording Industry Association of America (RIAA) testified that "Growing levels of physical piracy, online piracy and inadequate enforcement of copyright laws internationally are challenging the competitiveness of our industries worldwide. These two FTAs succeed in addressing these challenges in ways that bode well for high levels of protection in Singapore and Chile and for setting critical, essential precedents for future Free Trade Agreements. These agreements provide high standards of copyright protection for the modern digital age, and ensure that protection is meaningful in practice through strong enforcement. Piracy of our works represents the single largest trade barrier we face in markets outside the United States." See, prepared testimony.

See also, prepared testimony of Peter Allgeier (Deputy U.S. Trade Representative), Leon Trammell (on behalf of the U.S. Chamber of Commerce), Keith Gottfried (Borland Software), Bob Haines (Exxon Mobil), David Spence (Air Courier Conference of America), Gawain Kripke (Oxfam America), Thea Lee (AFL-CIO), and John Audley (Carnegie Endowment for International Peace).

Sen. Charles Grassley (R-IA), the Chairman of the Senate Finance Committee, has stated that he intends to hold a hearing on these FTA's later this month.

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