|Powell Predicts Imminent Release of
Triennial Review Order
8/20. Federal Communications Commission
(FCC) Chairman Michael Powell
held a news conference at the FCC at which he was asked when the FCC would
release its triennial review order.
He responded, "I really think that this week. I have said that before. I really do. So,
stayed tuned. Hopefully, we will get it out of here in the next couple of days.
So, I would be looking for it towards the end of the week."
The FCC announced, but did not release, it triennial review order on February
20, 2003. See, stories titled "FCC Announces UNE Report and Order", "FCC Order
Offers Broadband Regulatory Relief", "FCC Announces Decision on Switching",
"Commentary: Republicans Split On FCC UNE Order", and "Congressional Reaction To
FCC UNE Order" in TLJ Daily E-Mail
Alert No. 609, February 21, 2003.
|Powell Announces Localism in Broadcasting
8/20. Federal Communications Commission
(FCC) Chairman Michael Powell
held a news conference at the FCC to announce a "localism in broadcasting
initiative". The initiative includes creating a localism task force, creating a
blue ribbon panel on diversity, issuing a Notice of Inquiry on localism, and
speeding the issuance of LPFM licenses.
(at right) stated that the FCC will create a localism task force, to be chaired
by Michelle Ellison and Robert Radcliffe of the FCC. It will conduct empirical
studies on localism, organize a series of public hearings, advise the FCC on
steps that it might take, and advise the Congress on possible legislation.
Powell stated that he has directed the staff of the FCC's
Media Bureau to
prepare a Notice of Inquiry (NOI) on localism. He added that it will work "in
parallel" with the localism task force. It will inquire, among other things,
whether "localism rules continue to operate effectively".
Powell also announced a "blue ribbon panel" on diversity, to be chaired by
former Florida Public Service Commission Chairman Julia Johnson. Powell also
reiterated his support for Sen. John McCain's
(R-AZ) diversity bill. See,
S 267, the
"Telecommunications Ownership Diversification Act of 2003 ". See also, TLJ story
titled "Sen. McCain Introduces Telecom Diversity Bill" in
TLJ Daily E-Mail
Alert No. 595, January 31, 2003.
Powell also stated that the FCC will speed its issuance of low power FM
licenses. He stated that LPFM broadcasters are non-commercial, educational, who
provide a community service. He added that "adding stations will dilute
concentration". He also pointed out that the LPFM licensees are not counted for
the purpose of statistically calculating concentration, so that granting more
LPRM licenses will not result in allowing further consolidation among commercial
Powell explained that the changes to the media ownership rules announced in
June were required by statute and court opinions. He added that
the changes were "accurate and well balanced". However, he said that the FCC has
heard "public concerns", and this initiative is a response to those concerns.
He also said that the FCC will not stay its rules changes. Also, he said that
"the ownership caps are not on the table", unless the FCC receives direction
On June 2, 2003, the FCC announced its
Report and Order and Notice of Proposed Rulemaking [257 pages in PDF]
amending its media ownership rules. See, story titled "FCC Announces
Revisions to Media Ownership Rules" in
Daily E-Mail Alert No. 672, June 3, 2003.
|FTC Chairman Explains Role of FTC
8/19. Federal Trade Commission (FTC )
Chairman Timothy Muris gave a luncheon speech at a conference in Aspen, Colorado
hosted by the Progress and Freedom Foundation.
The FTC also released an
extended written version.
He addressed the philosophy underlying a government consumer protection
program. Then, he addressed how this philosophy is employed by the FTC in
specific areas, such as fraud, spam, privacy, deceptive advertising, and the
FTC's e-commerce initiative. Finally, he addressed the FTC's policy research and
(at right) stated that the American economic system is "a three-legged stool".
The first leg is "competition based on free enterprise". The second leg is "the
legal structure of contract, property, and other private law that largely
focuses on the relative rights of particular parties". The third leg is "Public
agencies -- entrusted to promote consumer welfare by preserving competition and
protecting consumers". He elaborated that one must first understand that nature
of, and limitations of the first two legs, competition and the private law of
contract, property and tort, to understand how the third leg, which involves the
FTC, can best be performed.
"Competition presses producers to offer the most
attractive array of price and quality options possible. In competitive
industries, the imperative to gain new sales by satisfying consumer needs
increases the choices available. In competitive markets, when consumers
dislike the offerings of one seller, they can turn to others. This ability to
shift expenditures imposes a rigorous discipline on each seller to satisfy
consumer preferences. Competition does more than simply increase choices for
consumers, however. It motivates sellers to provide truthful, useful
information about their products and drives them to fulfill promises
concerning price, quality, and other terms of sale. Consumers can punish a
seller's deceit or failure to fulfill a promise by voting with their feet --
and their pocketbooks."
He added that for "products purchased infrequently, for which an individual
consumer cannot usually rely on personal experience to evaluate a seller's
truthfulness, private institutions can help provide the information that
augments or substitutes for such experience." He cited the publication of
Consumer Reports as an example.
However, he said that competition in the market sometimes fails to protect
consumer welfare, because "some sellers are unconcerned about repeat business
and reputation or because deception is difficult to detect because of
But here, the second leg, the private law of property, contract and tort can
be employed to overcome deficiencies in the first leg, market based competition.
Muris stated that here the government provides "default rules -- terms that
apply when the parties do not explicitly specify otherwise. The more efficient
these rules, the greater the scope for exchange and thus the greater the gain in
consumer welfare. When contracts are formed, even in the most complex
transactions, parties do not find it useful to define the terms for every
contingency possible. Instead, courts, legislatures, and agencies have developed
default rules that are like buying off-the-rack clothing rather than specially
tailored clothes. Rather than writing your own contract, you get it ``off the rack,创
as it has come down in the judicial and legislative pronouncements. Many of
these rules of exchange are so basic -- for example, rules against fraud, breach
of contract, and deceptive advertising -- that we do not even think about them
as rules at all."
However, sometimes neither market based competition, nor private enforcement
for contract, property and tort rights, is sufficient to protect consumers.
Muris stated that "One can easily imagine sellers unconcerned about repeat
customers or reputation, or who make product claims that are difficult to
verify, and who rely on the fact that few injured consumers will undertake the
often difficult task of suing to vindicate their rights."
This then creates the need for the third leg of the American economic system,
the public agencies, such as the FTC, that are authorized to promote consumer
welfare by preserving competition and protecting consumers. The FTC fulfills
these two functions by enforcing the antitrust statutes, and by enforcing the
ban on unfair or deceptive acts or practices contained in the FTC Act. However,
Muris's address focused almost exclusively in consumer protection, as opposed to
Muris reviewed in detail the FTC's activities in the areas of fraud,
advertising, health claims, privacy, spam, international cooperation, and the
FTC's e-commerce initiative
On the subject of e-commerce, Muris stated that "While many states are
regulating e-commerce to promote important public interest objectives, such as
protecting consumers from deception and fraud, some of these actions also shield
local businesses from out-of-state competition."
He cited some examples: "some states require that online vendors maintain a
physical office in the state, others completely prohibit online sales or
shipments of certain products. Many states also require that out-of-state
sellers obtain an in-state license before selling particular goods, such as
caskets or contact lenses, or services, such as medical or legal advice. Some
observers question whether the attendant higher prices and loss of variety
outweigh the consumer protection benefits."
On the subject of privacy, he stated that "Fair Information Practices or
``FIPs创 appears to be an appealing model because
it is seemingly based on consumer consent, on contracts between consumers and
businesses. In practice, however, consent is illusory. For most consumers, the
costs of exercising choice -- although not high -- are not worth the perceived
benefits. Consider the billions of privacy notices sent to consumers under Gramm
Leach Bliley. Very few have exercised their right to opt-out of information
sharing. Part of the problem, no doubt, is the difficulty of understanding some
of the notices."
"Nor is opt-in the solution", said Muris. "Because most consumers will
not expend the time and effort to consider the choice, opt-in is only the
correct default if most fully-informed consumers would refuse to share
information. Explaining the benefits and costs of information sharing is
beyond the competence of even the best drafted short notices. We cannot
make people focus on this, or any other, issue."
|Muris States Spam Debate on Capitol Hill is
Veering Off On the Wrong Track
8/19. Federal Trade Commission (FTC ) Chairman Timothy Muris
addressed government efforts to deal with spam in his speech at
the Progress and Freedom Foundation conference in Aspen, Colorado.
written version. He stated that spam is a problem that should be addressed
by government action, but that current legislative proposals are veering off on
the wrong track. He stated, for example, that a "Do Not Spam Registry" would be
unenforceable, and do little to reduce spam. Similarly, many bills go into
detail on non-deceptive spam, which Muris argues is not the real problem.
He began by stating that "It is not apparent, however, that any regulatory
solution exists for spam. Spam is one of the most daunting consumer protection
problems that the Commission has ever faced." He added that "Despite the
concerted efforts of government regulators, legislators, Internet service
providers, and other interested parties, the problem continues to worsen."
He analyzed how spam differs from other forms of marketing. "First, unlike
telemarketers or direct mail users, spammers can easily hide their identity and
cross international borders. Email can be sent from anywhere to anyone in the
world, without the recipient knowing who sent it. Spammers are technologically
adept at hiding their identities, using false header information, and routing
their emails across borders and through open relays, making it extremely
difficult even for experienced government investigators with subpoena power to
Moreover, "Because of the anonymity the technology affords, spammers are
often exceptionally bold fraud artists", said Muris.
"Second, there are fundamental differences between the
costs of email and other forms of marketing. Unlike phone calls or mail
solicitations, sending additional spam is essentially costless. Instead,
recipients and Internet Service Providers bear most of the costs. Because
email technology allows spammers to shift the costs almost entirely to third
parties, there is no incentive for the spammers to reduce the volume," said
Muris. "If spammers had to pay the actual costs of spam, normal market forces
would eliminate much of the spam problem."
Hence, Muris concluded that "spam is a major problem that normal market
forces will not solve and is therefore a prime candidate for governmental
intervention. The very technology that makes email such a powerful and
revolutionary tool for business, however, makes spam a problem that the
application of the Commission's law enforcement and regulatory tools cannot
solve. There is no quick or simple ``silver bullet.创"
He also commented that "In our haste to reduce spam, we must avoid
over-regulation that could impede the flow of useful information to consumers.
It is important to include legitimate marketers in this discussion because they
have a strong interest in solving the spam problem -- the sheer volume of spam
and its impact on consumer confidence is eroding a valuable form of marketing."
Muris then turned to the spam related legislation that is currently pending
in the House and Senate. See, stories titled "House Judiciary Committee Holds
Hearing on Spam Bill", "House Commerce Committee Holds Hearing on Spam Bills",
and "Spam Bills Pending in the House and Senate" in
TLJ Daily E-Mail
Alert No. 696, July 11, 2003.
He stated that "Parts of these proposals can help, but no one should expect
any new law to make a substantial difference by itself. Unfortunately, the
legislative debate seems to be veering off on the wrong track, exploring largely
ineffective solutions. For example, a ``Do
Not Spam创 list is an intriguing idea, but
it is unclear how we can make it work. Most spam is already so clearly
illegitimate that the senders are no more likely to comply than with the
``ADV创 laws they now ignore."
He added that "We are sure the National Do Not Call Registry will reduce
calls significantly. There is no basis to conclude that a Do Not Spam list would
be enforceable or produce any noticeable reduction in spam. If it were
established, my advice to consumers would be: Don't waste the time and effort to
Muris then offered his own assessments. (This speech contains his
personal views, and not those of the FTC.) He argued that "There are
three issues that any spam legislation must confront to be effective: First,
legislation must enhance the ability to find the person sending the spam
messages. Although technological changes will most effectively deal with this
issue, we have proposed five procedural legislative changes that can provide
some assistance in our law enforcement investigations. Thus far, proposed spam
legislation has not included these additional changes that would make it easier
for us to find and prosecute spammers, although some of them are included in
other legislative proposals."
He elaborated on this point. He said that " proposals in both the House and
the Senate require us to prove knowledge to bring an action against a seller
that hires a spammer. Under one of the Senate bills, it would be extremely
difficult successfully to sue a seller that hires a third-party to send email
that is deceptive or otherwise violates the act, such as by not providing a
working "opt-out." The FTC would have to prove that the seller knew, or
consciously avoided knowing, that the third-party emailer it hired intended to
violate the law. This standard requires proof of both the seller's and spammer's
level of knowledge."
Second, spam legislation "must deal with how to punish the person sending the
spam messages. Most spam we see already violate the FTC Act. Outside the spam
context, when we find a fraudulent seller, we often can freeze assets and seek
restitution of ill gotten gains for consumers. Unfortunately, most of our spam
enforcement targets to date have very limited assets."
Finally, said Muris, "legislation can determine what standards will govern
non-deceptive, unsolicited commercial email. This is the least important issue
for dealing with the current spam problem, which involves few legitimate
marketers. Ironically, because the legislation will do little to solve the
current spam plague, this is the issue to which the proposals are most clearly
He concluded that "In the end, legislation cannot do much to solve the spam
problem, because it can only make a limited contribution to the crucial problems
of anonymity and cost shifting. Some of the proposed legislation, unfortunately,
could be harmful or, at best, useless."
|Wednesday, August 20
The House is in recess until September 3. Senate is in recess until
September 2. The Supreme Court is in recess until October 6.
10:00 AM. Federal Communications Commission
(FCC) Chairman Michael
Powell will hold a news conference to "discuss issues that the FCC
will be taking up in the Fall". Location: FCC, Commission Meeting Room, 445
12th Street, SW.
12:00 NOON. Gordon England, Deputy Secretary of the
Department of Homeland Security (DHS), will
give a speech titled "Leading the Department of Homeland Security: Progress
and Challenges of Transition during the War on Terrorism". See,
Location: Lehrman Auditorium: Heritage
Foundation, 214 Massachusetts Ave NE.
|Thursday, August 21
9:30 AM. The U.S. District Court (DC)
will hold an initial conference in EPIC v. DHS, D.C. No. 1:2003cv1255.
The Electronic Privacy Information Center (EPIC)
filed suit against the Department of Homeland
Security (DHS) under the Freedom of Information Act (FOIA). Location: Courtroom
11, 333 Constitution Ave. NW.
10:00 AM. Ed Thomas, Chief of the Federal
Communications Commission's (FCC) Office
of Engineering and Technology (OET) will hold a press briefing and tour at
the FCC's Columbia, Maryland laboratory facility. For more information,
contact Lauren Van Wazer at 202 418-0030 or
7435 Oakland Mills Road, Columbia, MD.
2:00 PM. The U.S. District Court (DC)
will hold an status conference in Communications Workers of America v.
Verizon, D.C. No. 1:2001cv2633. Location: Courtroom 11, 333 Constitution
|Friday, August 22
Deadline to submit comments to the
Department of Homeland Security's (DHS) Bureau of Customs and Border
Protection (CBP) regarding its proposed rule to require that CBP must receive,
by electronic data interchange system, information pertaining to cargo before
the cargo is either brought into or sent from the U.S. by any mode of
commercial transportation. See,
notice in the Federal Register, July 23, 2003, Vol. 68, No. 141, at Pages
43573 - 43606.
|Monday, August 25
10:00 AM - 4:00 PM. The Commerce Department's National Medal of Technology
Nomination Evaluation Committee will hold a closed meeting to discuss the
relative merits of persons and companies nominated for the medal. See,
notice in the Federal Register, July 24, 2003, Vol. 68, No. 142, at Page
43716. Location: Room 4813, U.S. Department of Commerce, 1401 Constitution
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