10/31. The U.S. Court of Appeals (DCCir) issued its opinion [PDF] in CFA v. FCC. The Consumer Federation of America (CFA) filed an appeal of the Federal Communications Commission's (FCC) order approving the merger of AT&T and Comcast, and a petition for review of an order in the merger proceeding denying a motion brought by the CFA. The Appeals Court dismissed the petition and affirmed the order approving the merger. However, the Appeals Court held that the CFA had standing to challenge the merger order, even though this was a license transfer proceeding to which the CFA was not a party, because it has a member who consumes cable services.

The CFA, a Washington DC based interest group, and others, requested that the FCC place in the record of the merger proceeding (nominally, a license transfer proceeding) an agreement between AT&T and Time Warner, Inc. that established the terms by which Time Warner's AOL subsidiary would provide internet service to customers of the merged firm. The FCC did not place it in the record.

In November of 2002 the FCC conditionally approved the merger of AT&T and Comcast. See, Memorandum Opinion and Order [108 pages in PDF], adopted on November 13, and released on November 14. See also, story titled "FCC Releases AT&T Comcast Order" in TLJ Daily E-Mail Alert No. 550, November 15, 2002.

Just prior to approving the merger, the FCC released an Order [PDF] denying the motion of the CFA and Earthlink to require that AT&T and Comcast file with the FCC copies of several documents, including the AOL ISP agreement. See, story titled "FCC Does Not Require AT&T and Comcast to Publicly Disclose ISP Agreement With AOL" in TLJ Daily E-Mail Alert No. 544, November 7, 2002.

Ruling on Procedural Issues. The CFA asserted standing to challenge the merger order based on the affidavit of its Research Director and member, Mark Cooper. He stated that he subscribed to Comcast cable service, and had contemplated purchasing Comcast's high-speed internet service, but did not because of his inability to choose his ISP and because of restrictions on access to content.

The Appeals Court ruled the CFA has standing to challenge the merger order. Based upon the affidavit of Cooper, there is injury in fact, and that the injury can be traced to the FCC order.

The Court wrote that "This injury to Cooper may also be fairly traced to the Commission’s order. When an agency order permits a third-party to engage in conduct that allegedly injures a person, the person has satisfied the causation aspect of the standing analysis. ... The Consumer Federation had requested the Commission to condition the merger on a commitment from AT&T Comcast to allow unaffiliated ISPs access to its cable system and to refrain from interfering with content. In rejecting these demands, the Commission’s order permitted the practices to exist. This is enough to attribute Comcast’s conduct to the Commission for standing purposes. It follows that the injury is also redressable."

The Appeals Court held that the motion order was not a final order, and therefore not subject to a petition for review. But, this is of little consequence, because the motion order can be reviewed as part of the judicial review of the merger order.

Ruling on the Merits. The Appeals Court summarized the argument of the CFA as follows. The FCC "could not have properly completed its public interest review without first examining the AOL ISP Agreement. Their theory focuses on the allegation that several terms in the Agreement are unfavorable to AOL -- particularly the restriction on streaming video. According to the groups, the fact that AOL agreed to these terms demonstrates that AT&T Comcast would have substantial market power in the residential broadband market and that it is likely to use that power to interfere with users’ access to content. Therefore, the Commission should not have approved the license transfers without taking this danger into account, and it could not fully evaluate the danger without examining the AOL ISP Agreement."

The Court continued that the FCC "has initiated a rulemaking proceeding to deal with these issues on an industry-wide basis" and its "decision not to address them in this particular case is consistent with its broad discretion to choose between rulemaking and adjudication."

The Court concluded that "the consumer groups have the right to try to persuade the Commission to change its policy and condition the merger on open access for unaffiliated ISPs. If they needed the AOL ISP Agreement to make that argument, perhaps the Commission would have erred in excluding it. But the groups’ Petition to Deny fully explicated the case for open access without ever referring to the AOL ISP Agreement, let alone indicating that its exclusion hampered their ability to make their case. In fact, at oral argument, the groups could not point to one argument that the Commission's decision to exclude the Agreement prevented them from making. Similarly, the Commission rejected the groups' arguments without regard to the contents of the AOL ISP Agreement. Thus, the decision to exclude the Agreement from the record could not have affected the outcome of the proceeding. It was at worst harmless error."

This case is Consumer Federation of America v. FCC and USA, respondents/appellees, AT&T Corporation, et al., intervenors, Nos. 02-1337 and 02-1347. The FCC proceeding is titled "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.

10/30. The Department of Commerce's (DOC) Bureau of Economic Analysis (BEA) released gross domestic product and related data for the third quarter of 2003. The data shows that investment in computers and peripheral equipment has been growing at an annual rate of 35% for the past two quarters. In addition, it shows that investment in software has been growing at an annual rate of just over 4% for the past two quarters. See, BEA data release.

The economy as a whole grew at an annual rate of 7.2% in the third quarter. This is the largest quarterly increase in 19 years.

The gross domestic product (GDP) is the the output of goods and services produced by labor and property located in the United States. Table 1 below sets out GDP for the third quarter of 2002 through the third quarter of 2003. These quarterly figures are in billions of dollars, at annual rates, and seasonally adjusted. The final row of Table 1 shows the percent change in the GDP, as measured in constant dollars (that is, adjusted for inflation), at an annual rate.

GDP is broken down into four categories: (1) personal consumption expenditures, which was $7,766.5 Billion in the third quarter (in current dollars, seasonally adjusted, at an annual rate), (2) gross private domestic investment, which was $1,656 Billion, (3) net exports of goods and services, which was -$488.6 Billion, and (4) government consumption expenditures and gross investment, which was $2,104.5 Billion.

Within the second category, investment, there is a subcategory named equipment and software. This, in turn, is made up of (1) information processing equipment & software (IPE&S), (2) industrial equipment, (3) transportation equipment, and (4) other. IPE&S, in turn, is made up of (1) computers & peripheral equipment (C&PE), (2) software, and (3) other. Table 2 below sets out data for certain of these categories for the third quarter of 2002 through the third quarter of 2003. These quarterly figures are in billions of dollars, at annual rates, and seasonally adjusted. These figures are also in constant (1996) dollars.

What the just released data reveals is that investment in software grew modestly in the third quarter (4.5% at a seasonally adjusted annual rate), and has grown modestly in the last year. However, investment in computers and peripheral equipment grew at an astounding rate in the third quarter (35.4% at a seasonally adjusted annual rate), and it grew 35.8% in the second quarter (seasonally adjusted annual rate).

Measured in constant (1996) dollars, the overall economy grew from $9629.4 Billion (seasonally adjusted annual rate in the second quarter) to $9797.2 Billion in the third quarter, or 167.8 Billion. Investment in computer & peripheral equipment grew from $354.9 Billion to $390.3 Billion, or $35.4 Billion, when measured in constant (1996) dollars (seasonally adjusted annual rate). Thus, C&PE made up a large proportion of overall growth, when constant dollars are used. However, this is a statistical oddity.

To obtain more realistic growth rates, the BEA uses constant dollars. This excludes price inflation from the calculation of growth. And specifically, the BEA calculates growth rates, and the dollar amounts of growth in each category by using 1996 dollars. So, for example, the GDP in the third quarter in current dollars, at a seasonally adjusted annual rate, was $11,038.4 Billion, while in 1996 dollars it was less -- $9,797.2 Billion.

However, in the case of computers, prices have not climbed. Technology has advanced, and prices have dropped dramatically. So, for the third quarter, investment in computer & peripheral equipment was $88.3 Billion, at a seasonally adjusted annual rate, when measured in current dollars. This was up from $82.4 Billion in the second quarter, for an increase of $5.9 Billion. But, when the BEA expressed these current dollar figures in 1996 dollars, taking into consideration the measured negative inflation of computer prices, the BEA calculated the third quarter investment in computers and peripheral equipment to be $390.3 Billion at a seasonally adjusted annual rate. This was up from $354.9 Billion in the second quarter, for an increase of $35.4 Billion.

This does not alter the conclusion that the percentage growth in investment in computers and peripheral equipment has been very large. It does, however, provide the argument that the estimate for the percentage growth in GDP in the third quarter is a little overstated.

Secretary of Commerce Donald Evans stated in a release that "We're growing the American economy and soon we'll be growing more jobs. Today's strong performance shows the American economy is headed in the right direction thanks to President Bush's Jobs and Growth Agenda. By creating the conditions for greater economic growth, President Bush is setting our country on the right track towards helping all Americans find work. While we are encouraged by these numbers, the President will not rest until there are enough jobs for every American worker."

10/31. The General Accounting Office (GAO) released a report [PDF] titled "Local TV Act: Progress Made, but Timeliness and Cost Accounting Issues Need to be Addressed". The Congress passed this Act to create a loan guarantee program intended to facilitate access to local television stations' signals. The report states that the program is not being implemented expeditiously.

The Launching Our Communities' Access to Local Television Act of 2000 (or LOCAL TV Act) was originally a stand alone bill -- S 2097 -- in the 106th Congress. However, it was enacted by the passage of HR 4942, which in turn, incorporated HR 5548, the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 2001. And this bill, in turn, included as Title X, the LOCAL TV Act. It is now Public Law No. 106-553.

The LOCAL TV Act created the Local Television Loan Guarantee Program and established the Local Television Loan Guarantee Board to approve guaranteed loans, totaling no more than $1.25 Billion, to finance projects that will provide access to local TV station signals, on a technology neutral basis, to households with limited over-the-air TV broadcast signals or cable service.

While members of Congress might have understood that the program would apply to satellite service providers, it was drafted in a technology neutral manner, thus allowing internet based services to qualify.

The report concludes that "The LOCAL TV Program has not been established in an expeditious fashion as specified by the Act. Given that funds were appropriated in November 2001, thus starting the clock on the 120 days allowed for completing program regulations and underwriting criteria, the Program should have been ready for implementation by March 2002. According to Board and RUS officials, three factors contributed to program delays: (1) initial uncertainties over program funding, (2) inadequate dedicated staff resources for program activities, and (3) the decision to issue a proposed rule. As of the end of August 2003, neither of these key documents, which provide the overall framework for the Program, was ready for implementation, thus delaying lending activities and ultimately, realization of improved television reception in target areas throughout the United States."

The report was written for Sen. Richard Shelby (R-AL), Chairman of the Senate Banking Committee, and Rep. Mike Oxley (R-OH), Chairman of the House Financial Services Committee.

10/31. President Bush announced his intent to nominate Samuel Bodman (at right) to be Deputy Secretary of the Treasury, the number two position at the Department of the Treasury. He had previously nominated Susan Schwab for this position. She withdrew from consideration. Bodman is currently Deputy Secretary of Commerce. See, White House release. Bodman is an former MIT professor turned financier.

10/31. President Bush announced his intent to nominate Brian Roseboro to be Under Secretary of the Treasury for Domestic Finance. He is currently acting Under Secretary of the Treasury for Domestic Finance. Bush had previously nominated Kenneth Leet for this position. See, White House release.

10/31. President Bush nominated Walter Kelley to be a Judge of the U.S. District Court for the Eastern District of Virginia. See, White House release of October 31. Bush announced his intent to nominate Kelley on October 14, 2003. See, White House release of October 14. Kelley is a partner in the Norfolk office of the law firm of Troutman Sanders. He focuses on civil litigation, and has experience with information technology related patent and copyright infringement cases.

The Republican Whip Notice states that "no votes are expected in the House" on Monday. The Congressional Record states that the House is adjourned until Tuesday, November 4.

The Senate will meet at 11:00 AM. It will begin consideration of the Conference Report to accompany HR 3289, the FY2004 Emergency Supplemental Appropriations for Iraq and Afghanistan Bill. It will then begin consideration of the Conference Report to accompany HR 2691, the FY2004 Department of the Interior and Related Agencies Appropriations Bill.

Deadline to submit comments to the Federal Communications Commission (FCC) regarding its Fourth Notice of Proposed Rulemaking [49 pages in PDF] in which it proposes to make spectrum available to federal users that will be displaced from the 1710-1850 MHz band to make it available for advanced wireless services. See, notice in the Federal Register September 2, 2003, Vol. 68, No. 169, at Pages 52156 - 52168. See, also stories titled "FCC Releases NPRM Regarding Allocating Spectrum to DOD to Replace Spectrum Allocated for 3G Services" in TLJ Daily E-Mail Alert No. 694, July 9, 2003, and "FCC Sets Deadlines for Comments Regarding Spectrum Reallocations Relating to 3G Services" in TLJ Daily E-Mail Alert No. 731, September 3, 2003. This is ET Docket No. 00-258 and WT Docket No. 02-8.

Deadline to submit reply comments to the Federal Communications Commission (FCC) regarding the portion of the FCC's triennial review order [576 pages in PDF] that contains a notice of proposed rulemaking [NPRM] regarding modifications to the FCC's rules implementing 47 U.S.C. § 252(i), which requires local exchange carriers (LECs) to make available to other telecommunications carriers interconnection agreements approved under Section 252. See, notice in the Federal Register, September 2, 2003, Vol. 68, No. 169, at Pages 52307 - 52312, and September 2 FCC release [3 pages in PDF]. The Federal Register notice states that the reply comment deadline is October 23. However, the FCC release states that this was in error.

The House will meet at 12:30 PM for morning hour and at 2:00 PM for legislative business. Votes will be postponed until 6:30 PM. The House will consider many items under suspension of the rules, including HR 2898, the "E-911 Implementation Act of 2003". See, Republican Whip Notice.

9:30 AM. The Federal Communications Commission (FCC) host an event titled "Rural Wireless Internet Service Provider (WISP) Showcase and Workshop". For more information, contact Robert Pepper (Chief, Policy Development) at Robert.Pepper@fcc.gov or 202 418-2030. See, agenda [PDF]. Location: FCC, Commission Meeting Room, 445 12th Street, SW. This event was previously scheduled for September 18, but was postponed because of the weather.

9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in U.S. v. Microsoft and State of New York v. Microsoft, Nos. 03-5030 and 02-7155. This will be an en banc argument. Location: Courtroom 20, 333 Constitution Ave. NW.

9:30 AM. The Senate Commerce Committee will hold a hearing on several pending nominations, including that of Michael Gallagher to be head of the National Telecommunications and Information Administration (NTIA). The hearing will be webcast. Location: Room 253, Russell Building.

10:00 AM. The Senate Judiciary Committee's Subcommittee on Terrorism, Technology and Homeland Security on "database security". See, notice. Press contact: Margarita Tapia (Hatch) at 202 224-5225 or David Carle (Leahy) at 202 224-4242. Location: Room 226, Dirksen Building.

POSTPONED. 3:00 PM. The House Ways and Means Committee will hold a hearing titled "IRS Efforts to Modernize its Computer Systems". See, notice. Location: Room 1100, Longworth Building. See, notice of postponement.

The House will meet at 10:00 AM for legislative business. See, Republican Whip Notice.

? TENTATIVE. The Senate Judiciary Committee will hold its second hearing on the USA PATRIOT Act, terrorism and civil liberties. Location: Room 226, Dirksen Building.

9:00 AM - 5:00 PM. The North American Numbering Council (NANC) will meet. Location: Federal Communications Commission (FCC), 445 12th Street, SW, Room TW-C305.

10:00 AM. The Senate Commerce Committee will hold a hearing on aviation security. The witnesses will include Stephen McHale (Deputy Administrator, Transportation Security Administration), Penrose Albright (Assistant Secretary Plans Programs, Budgets, Science and Technology Directorate, Department of Homeland Security), William Parrish (Acting Assistant Secretary Information Analysis, Information Analysis and Infrastructure Protection), and Cathleen Berrick (General Accounting Office). The hearing will be webcast. See, notice. SJC Press contact: Rebecca Hanks (McCain) at 202 224-2670 or Andy Davis (Hollings) at 202 224-6654. The DHS states that there will also be a hearing from 9:30 - 10:00 AM that is closed to the public, and that in addition, James Loy (TSA Administrator) will participate. Location: Room 253, Russell Building.

12:30 PM. The Federal Communications Bar Association (FCBA) will host a lunch. The speaker will be Federal Communications Commission (FCC) Chairman Jonathan Adelstein. RSVP by Friday, October 31. See, registration form. Location: J.W. Marriott Hotel, 1331 Pennsylvania Ave., NW.

6:00 - 8:15 PM. The Intellectual Property and other sections of the D.C. Bar Association will host a CLE course titled "Secrets of the Uniform Trade Secrets Act". Prices vary. For more information, call 202 626-3488. Location: D.C. Bar Conference Center, 1250 H Street NW, B-1 level.

The Trade Policy Staff Committee (TPSC) will hold a hearing on negotiations with Bahrain on a free trade agreement (FTA). The TPSC seeks comments and testimony to assist the Office of the U.S. Trade Representative (USTR) on many topics, including "Relevant trade-related intellectual property rights issues that should be addressed in the negotiations" and "Existing barriers to trade in services between the United States and Bahrain that should be addressed in the negotiations". See, notice in the Federal Register, August 25, 2003, Vol. 68, No. 164, at Pages 51062 - 51064.

TIME? The U.S. Court of Appeals (3rdCir) is scheduled to hear oral argument in Prometheus Radio Project v. FCC, and numerous other consolidated petitions for review of the Federal Communications Commission's (FCC) media ownership order. See, scheduling order [PDF]. Location: Philadelphia, PA.

The House will meet at 10:00 AM for legislative business. See, Republican Whip Notice.

9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in BDPCS v. FCC, No. 02-1369. Judges Randolph, Roberts and Williams will preside. Location: 333 Constitution Ave. NW.

9:30 AM. The House Commerce Committee's Subcommittee on Telecommunications and the Internet will hold a hearing titled "Computer Viruses: The Disease, the Detection and the Prescription for Protection". The hearing will be webcast. Press contact: Ken Johnson or Jon Tripp at 202 225-5735. Location: Room 2123, Rayburn Building.

10:00 - 11:30 AM. The Federal Communications Commission's (FCC) Media Security and Reliability Council (MRSC) will hold a meeting. See, notice in the Federal Register, May 29, 2003, Vol. 68, No. 103, at pages 32038 - 32039. Location: FCC, Commission Meeting Room (TW-C305), 445 12th St., SW.

3:00 - 5:30 PM. The Department of Justice's (DOJ) Antitrust Division (ATR) will host a ceremony and reception commemorating the 100th anniversary of the appointment of the first Assistant Attorney General (AAG) with antitrust responsibilities. AAG Hewitt Pate will speak. In addition, the ATR will give an award to Judge Richard Posner of the U.S. Court of Appeals (7thCir). The DOJ has stated both that the event is open to current and former ATR employees only, and that "Media interested in attending the event should contact, in advance, Luke Macaulay, Office of Public Affairs, 202-514-2007." See, ATR notice, OPA notice, and ATR notice of Posner award. Location: Great Hall, DOJ Main.

4:00 PM. Barton Beebe (Cardozo Law School) will present a draft paper titled "Search and Persuasion in Trademark Law". See, notice. For more information, contact Robert Brauneis at 202 994-6138 or rbraun@law.gwu.edu. Location: George Washington University Law School, Faculty Conference Center, Burns Building, 5th Floor, 716 20th Street, NW.

6:00 - 8:15 PM. The D.C. Bar Association will host a CLE course titled "How to Litigate an Intellectual Property Case Series: Part 1 How to Litigate a Copyright Case". Prices vary. For more information, call 202 626-3488. Location: D.C. Bar Conference Center, 1250 H Street NW, B-1 level.

12:15 - 1:30 PM. The Federal Communications Bar Association's (FCBA) Wireless Committee will host a luncheon panel discussion titled "Debate on Licensed vs. Unlicensed Models for Spectrum Management". The speakers will be Thomas Hazlett (Manhattan Institute), and Michael Calabrese (New America Foundation). The price to attend is $15. For more information, contact lauren.vanwazer@fcc.gov. RSVP to wendy@fcba.org. Location: Sidley Austin, 1501 K Street, NW, 6th Floor.

10/30. The U.S. District Court (DC) issued a Scheduling and Case Management Order [8 pages in PDF] in USA v. First Data and Concord EFS. See also, TLJ story titled "DOJ Sues to Stop Merger of PIN Debit Networks", October 23, 2003, also published in TLJ Daily E-Mail Alert No. 765, October 24, 2003.

10/31. The Department of Commerce's Bureau of Industry and Security (BIS) announced that on November 19, there will be another meeting of the public to private component U.S. India High Technology Cooperation Group (HTCG). This meeting will be held at the Hotel Leela Palace in Bangalore, India. Then, on November 20, there will be a government to government meeting in New Dehli, India. See, invitation letter [PDF] and response form [PDF].

10/31. President Bush signed HJRes 75, which provides FY 2004 appropriations for continuing projects and activities of the federal government through Friday, November 7, 2003. See, White House release.

10/31. The U.S. Bankruptcy Court (SDNY) approved WorldCom's (renamed MCI) plan of reorganization. See, WorldCom release.

10/31. The U.S. District Court (SDNY) issued an order in SEC v. Bear Stearns and related proceedings approving the $1.4 Billion global settlement of the Securities and Exchange Commission's (SEC) enforcement actions against ten investment firms and two individuals alleging undue influence of investment banking interests on securities research at brokerage firms. See, SEC release.

10/31. The Department of the Treasury announced that Pam Olson, the Assistant Secretary for Tax Policy, will be the luncheon speaker on Tuesday, November 4 at the 19th Annual High Technology Tax Institute, at the Crowne Plaza Cabana Hotel in Palo, Alto, California.