Tech Law Journal Daily E-Mail Alert
November 7, 2003, 9:00 AM ET, Alert No. 774.
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FCC to Hold Hearing and Issue NPRM on Regulation of VOIP

11/6. The Federal Communications Commission (FCC) announced that it will hold a forum on Voice over Internet Protocol (VOIP) issues on December 1, 2003, and that it will then issue a Notice of Public Rule Making (NPRM) "to inquire about the migration of voice services to IP-based networks and gather public comment on the appropriate regulatory environment for these services". See, FCC release.

The FCC Chairman Michael Powell wrote a letter [2 pages in PDF] to Sen. Ron Wyden (D-OR) regarding this issue. He wrote that the hearing "will have a wide range of witnesses from the industry and government to focus on a variety of VoIP issues. We will look at how the digital technologies are being used to provide a variety of voice services in the marketplace. We will also explore emerging regulatory issues, such as FCC precedent and the classification issues raised in the recent Minnesota District Court ruling on VoIP services. Finally, we will begin a conversation on how best to achieve important health, safety and welfare policy objectives, such as E911, universal service and securing our homeland."

October 16, 2003, the U.S. District Court (DMinn) issued its Memorandum and Order [PDF] in Vonage v. Minnesota Public Utilities Commission, holding that Vonage is an information service provider, and that the MPUC cannot apply state laws that regulate telecommunications carriers to Vonage. The Court wrote that "State regulation would effectively decimate Congress's mandate that the Internet remain unfettered by regulation." See, story titled "District Court Holds that Vonage's VOIP is an Information Service", also published in TLJ Daily E-Mail Alert No. 760, October 17, 2003.

Powell continued that "This NPRM will, in part, inquire about the migration of voice services to IP-based networks and gather public comment on the appropriate regulatory environment for VoIP services. Over the course of the next year, after full public comment and thoughtful consideration of the record, the FCC plans to follow up the NPRM with a Report and Order on the VoIP issues raised in the proceeding."

He also stated that "As new digital technologies and Internet applications, such as VOIP, challenge the established technological, market and regulatory structures of our analog past, the FCC will continue to stay at the forefront of change. The FCC has been studying VoIP issues for several years, but things have greatly accelerated over the past year and, thus, so have the FCC's actions to address the complex issues that arise. The FCC is currently considering several petitions involving different flavors of VoIP. Last month, the FCC's Technical Advisory Council held a meeting devoted solely to VoIP issues."

1st Circuit Upholds Constitutionality of Electronic Highway Toll Collection System

11/6. The U.S. Court of Appeals (1stCir) issued its opinion in Doran v. Massachusetts Turnpike Authority upholding the constitutionality of Massachusetts' automatic electronic toll road payment system.

The dormant Commerce Clause is frequently asserted to challenge state protectionists laws on the basis that these laws discriminate against interstate commerce. Recently, the dormant Commerce Clause has been raised in many cases where state laws discriminate against electronic commerce, and in favor of face to face transactions.

For example, small wineries in California and elsewhere suffer from protectionists legislation in many states that effectively bars internet wine sales. Some of these wineries have challenged these statutes under the dormant Commerce Clause.

However, in this case, the plaintiffs attempted to turn the Commerce Clause on its head. They asserted that a state law that allows for electronic transactions discriminates against interstate commerce. The District Court rejected the plaintiffs' argument, and the Court of Appeals affirmed.

Electronic commerce remains constitutional in the First Circuit.

The Massachusetts Turnpike Authority (MTA) builds roads. It also collects tolls from drivers who use roads to fund the construction of more roads.

Pursuant to state statutory authority, the MTA established program titled "FAST LANE Discount Program" or "FLDP". The Appeals Court described this program as follows: it "allows vehicles equipped with a transponder to pass through toll plazas without having to stop and pay. Participants must purchase a transponder from MTA for $27.50. The transponder is a small plastic device attached to the windshield. It signals the car's identity to an MTA facility which automatically charges the toll to the driver's account. Drivers generally assign their account to their credit card which is billed $20 at the outset; thereafter, tolls are deducted until $10 remains, at which point an additional $10 is billed to replenish the account. Cars equipped with transponders used in other cities that -- like the E-Z Pass system -- are interoperable, may drive through FAST LANE toll gates without stopping, but do not receive discounts."

Anyone is allowed to participate in the program, regardless of their state of residence.

Peter Doran and Wendy Saunders are two out of state drivers who paid the full toll to the MTA in face to face cash transactions.

Doran and Saunders filed a complaint in U.S. District Court (DMass) against the MTA under 42 U.S.C. § 1983 alleging that their rights under the dormant Commerce Clause were violation by the MTA's FLDP program.

The plaintiffs' argument was that out of state drivers tend to use MTA roads less than Massachusetts drivers, and are therefore less likely to find it advantageous to purchase the transponder, and take advantage of the discounts.  District Court dismissed for failure to state a claim. The Plaintiffs appealed.

The Appeals Court affirmed. It first reviewed the appropriate Commerce Clause analysis. It wrote that "The Commerce Clause of the United States Constitution grants Congress the power to ``regulate Commerce ... among the several States.´´ U.S. Const. art. I, § 8, cl. 3. The Commerce Clause ``not only grants Congress the authority to regulate commerce among the States, but also directly limits the power of the States to discriminate against interstate commerce.´´ New Energy Co. v. Limbach, 486 U.S. 269, 273 (1988). This ``dormant´´ Commerce Clause ``prohibits economic protectionism -- that is, regulatory measures designed to benefit in-state economic interests by burdening out-of-state competitors.´´"

The Appeals Court wrote that "The FLDP is available on identical terms to drivers without regard to their residence; the program incorporates no distinctions or classifications based on residence and participation is open to anyone. The benefits of the discount program accrue simply on account of a driver's frequency of use. The frequent driver will receive a greater amount of discounts than the infrequent driver, but he or she will, of course, also pay a correspondingly greater amount in tolls."

The Court added that "It is true that to participate in the FLDP, a driver must purchase a transponder for $27.50. The right to purchase is not restricted to residents, but is open to all. The decision whether to do so turns on one's anticipated frequency of use. The distance a driver lives from Boston will be a factor, but not the only factor, affecting the frequency with which he or she is likely to drive through the toll plazas or the tunnels. But the frequency calculus creates no resident versus nonresident classification."

Notably, the opinion was written, not by a First Circuit Judge, but rather by Senior Judge William Schwarzer of the U.S. District Court for the Northern District of California. He sat by designation. First Circuit Judges Torruella and Howard joined.

This case is Peter Doran and Wendy Saunders v. Massachusetts Turnpike Authority, et al., U.S. Court of Appeals for the 1st Circuit, No. 03-1312, an appeal from the U.S. District Court for the District of Massachusetts, Judge Nancy Gertner presiding.

FTC Files Complaint Against Company Exploiting Microsoft Messenger to Display Pop Up Ads

11/6. The Federal Trade Commission (FTC) filed a complaint [11 pages in PDF] in U.S. District Court (DMd) against D Squared Solutions LLC and others alleging unfair trade practices in violation of the Federal Trade Commission Act (FTCA) in connection with the exploitation of the Microsoft Windows Messenger Service to send to computers frequent and unwarranted pop up ads that offered for sale software that stops the ads. See also, FTC release.

The complaint, which was filed on October 30, alleges that "Since at least May 2003, defendants, utilizing a network administration feature of Microsoft Windows known as ``Messenger Service´´ have caused a stream of repeated, unwanted ``pop up´´ advertisements to pop up and appear on the computer screens of consumers throughout the United States, including consumers in this District. In numerous instances, defendants have caused a series of their pop ups (also known as ``Messenger Service spam´´ and ``pop up spam´´) to appear on computer screens, popping up at 10-minute to 30-miute intervals during a given computer session. In numerous instances, defendants have caused their repeated, unwanted Messenger Service spam to appear on a consumer's computer' screen for several weeks and/or several months on end. These pop up advertisements appear on consumers' computer screens even when the consumers are not using their Internet browsers (for instance, when consumers are using word processing software), so long as the consumers are logged onto the Internet."

The complaint further states that "Most of the pop up messages instruct consumers to visit one of the defendants' web sites where they can purchase software that will cause the pop ups to stop."

It also alleges that "The Messenger Service is designed to provide computer network administrators with the ability to provide instant information to network users, such as the need to log off of the network due to a system malfunction. Because of its intended purpose, Messenger Service pop up windows appear on a consumer's computer screen so long as the consumer is logged onto the network, no matter what application (e.g., word processing, spreadsheet, financial management) the consumer is using." (Parentheses in original.)

"In essence, defendants bombard an individual consumer with a stream of repeated, unwanted pop up spam in an attempt to induce the consumer to pay defendants to stop the bombardment", the FTC complaint alleges.

The FTC also alleges that "Consumers have suffered and continue to suffer injures from defendants' pop up spam including but not limited to, losing data, losing work productivity, having their computer screens freeze suffering an increasing level of frustration, annoyance, and harassment at receiving the pop ups, and expending money to purchase pop up-blocking or ``firewall´´ software."

The complaint alleges two violations of Section 5(a) of the FTCA, which is codified at 15 U.S.C. § 45(a).

First, the FTC alleges that "defendants interfere with consumers' use of their computers by causing a stream of multiple, unwanted Windows Messenger Service pop ups to appear on consumers' computer screens even when consumers are not using their Internet browsers."

Second, the FTC alleges coercion. It alleges that "by causing a stream of multiple, unwanted Windows Messenger Service pop ups to appear on consumers' computer screens , advertising software that will stop the delivery of the pop ups, defendants attempt to coerce consumers into purchasing or licensing their software."

The FTC seeks preliminary and permanent injunctive relief, as well as rescission of contracts, restitution, refunds, and disgorgement of profits.

The District Court issued a Temporary Restraining Order and Order to Show Cause [12 pages in PDF] on October 30 in which it ordered that the defendants "are temporarily restrained and enjoined from directly or indirectly causing a Windows Messenger Service message, which advertises, promotes, markets, offers for sale or license, or sells or licenses any product or service, to appear on a computer user's computer screen."

The defendants are also restraining from selling or licensing any product that exploits Messenger Service.

The District Court also set a hearing for 9:30 AM on November 10, 2003. It will be held at the Garmatz Federal Courthouse, 101 W. Lombard Street, Baltimore.

The Windows Messenger is only present in Windows 2000, Windows XP and related and subsequent operating systems.

Disbabling Windows Messenger, and hence, stopping the pop ups can be accomplished quickly and easily as follows: Start - Control Panel - Administrative Tools - Services - scroll down to Messenger and disable it.

A properly configured firewall can prevent the pop ups also. The FTC has a web page with more detailed instructions.

FTC Action Creates Uncertainty Regarding Application of FTCA to Internet Communications and Advertising

11/6. The Federal Trade Commission's (FTC) filed a complaint [11 pages in PDF] against D Squared Solutions alleging unfair trade practices in violation of the Federal Trade Commission Act (FTCA) in connection with the exploitation of the Microsoft Windows Messenger Service to send to computers pop up ads. This complaint does not provide clear guidance regarding what other non-fraudulent, but "unfair", internet communications and advertising practices may subject businesses to FTC enforcement actions.

The FTC brought the action against D Squared under Section 5 of the FTCA, which is codified at 5 U.S.C. § 45(a). This is broad and vague statute. The operative language provides only that "Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful."

The statute does not address spam, messaging, or pop up ads. Nor has the FTC promulgated implementing regulations that address spam, messaging or pop up ads.

The FTC has brought many actions under Section 5 for internet related practices. However, while the language is vague, the FTC heretofore has usually, but not always, applied it against internet based activity only in conjunction with precise statements of policy that make it clear to businesses whether their conduct may subject them to an FTC enforcement action.

For example, the FTC has used Section 5 of the FTCA against web site operators in the context of online privacy. However, rather than enforcing some collection of vague and unenumerated privacy practices, the FTC has stated (through speeches, Congressional testimony, and elsewhere) that it will only apply the FTCA when a web site operator violates its own privacy policy. Web site operators can know if they are risking action by the FTC simply by reading their own privacy policies.

As another example, the FTC has brought many actions against e-mail spammers under the Section 5 of the FTCA. But these cases have generally involved fraudulent conduct, such as non-delivery of goods paid for by consumers, or goods that do not perform as promised. Businesses know whether or not they are lying to their customers.

The FTC has not been bringing actions against businesses based on the notion, for example, that they are sending bulk unsolicited e-mail. This would entail application of undefined concepts of what constitutes "bulk" e-mail, and what constitutes "unsolicited".

In the D Squared action, the FTC is not operating under any precise statement of policy that makes it clear to businesses whether or not they too risk an enforcement action by the FTC.

In the D Squared case, fraud is not alleged. D Squared offered for sale a software product. There is no allegation in the complaint that it failed to deliver the product, that it overcharged for the product, or that the product failed to work as promised.

Of course, the FTC can argue, with solid basis, that the conduct of D Squared is unfair, but the notion of what is unfair is fair less clear than the notion of what is fraudulent or deceptive.

On November 6 Howard Beales, Director of the FTC's Bureau of Consumer Protection, and others, held a press conference to announce and discuss the D Squared litigation. Beales explained that the defendants have "a fundamentally unfair business model". However, Beales said little to provide clear guidance as to what is an unfair business model in the context of internet ads and communications. Although, he took several stabs at it.

First, Beales described the conduct of the defendants as "extortion". For example, he said, "'I'll beat you, and I'll stop beating you if you pay. We call that extortion; and it is not any different in the high tech world".

This explanation only confuses the matter. Extortion is a term that has specific legal meaning within the context of criminal law. For example, Title 18, Chapter 41 of the federal criminal code, addresses extortion and threats. However, it uses the term extortion in the context of threats of kidnapping, injury or death of persons. At minimum, extortion entails a threat to commit an illegal act. D Squared did not threaten any person. At most it threatened computers -- that is, until the users turned off Messenger Service. In addition, the FTC has alleged no underlying illegal act in the complaint. Moreover, the FTC has no authority to bring criminal actions.

Hence, Beales use of the term "extortion" is at best a metaphor. And, metaphorically speaking, there is much extortion online. For example, spammers send unsolicited e-mail advertising anti-spam software.

Second, Beales offered the explanation that there is a distinction between the exploitation of e-mail and the exploitation of Messenger Service. He said that "e-mail is a legitimate and widely used method of communication". But, Beales did not go so far as to say either that the FTC considers that all use of Messenger Service for ads is an unfair practice, or that the FTC considers that no use of e-mail for ads is an unfair practice.

Beales was asked, "would they have been on safer ground if they had advertised pormography?" He suggested that it would not, but he did not give a clear cut answer. He added that "we would review the frequency and the nature". So, here again, the explanation offers little guidance to other businesses.

Third, Beales offered the explanation that "they are creating a problem and then trying to charge consumers for the solution". What then, would be the legal meaning of "creating a problem". Does a software company that sells products with defects or vulnerabilities "create a problem"? If these companies then charge for upgrades that eliminate the defect or vulnerability, or charge for telephone help in dealing with the defect or vulnerability, is this "unfair".

Whatever the Court ultimately orders D Squared and its owners to do will be just and deserved. But, until the FTC provides more information as to what sort of internet communications and advertising might constitute "unfair" practices, this cases creates uncertainty for some businesses that make use of the internet.

This case is FTC v. D Squared Solutions LLC, Dinesh Dhingra and Jeffrey Davis, U.S. District Court for the District of Maryland, Baltimore Division, D.C. No. AMD 03 CV 3108.

Washington Tech Calendar
New items are highlighted in red.
Friday, November 7

12:00 NOON - 2:00 PM. The Progress & Freedom Foundation (PFF) will host a Congressional seminar on the Federal Trade Commission (FTC) report titled "To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy". See, story titled "FTC Releases Report on Competition and Patent Law" in TLJ Daily E-Mail Alert No. 768, October 29, 2003. The speakers will be Susan Desanti (FTC), Michael Kirk (American Intellectual Property Law Association), Steven Merrill (National Academies' Board of Science, Technology and Economic Policy), and Gerald Mossinghoff (Oblon Spivak), and William Adkinson (PFF). RSVP to Stefannie Bernstein at 202 289-8928 or Lunch will be served. See, PFF notice. Location: Room 1539, Longworth Building.

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 RSVP to Location: Sidley Austin, 1501 K Street, NW, 6th Floor.

Monday, November 10

The Intellectual Property Owners Association (IPO) will host a one-day conference on corporate IP management. Location: Washington DC.

Oral argument before the U.S. Court of Appeals (10thCir) in FTC v. Mainstream Marketing Service, No. 03-1429. This is the telemarketers' constitutional challenge to the FTC's do not call registry. See, October 8, 2003 order [24 pages in PDF] staying the District Court's opinion, and setting an expedited schedule. Location: Tulsa, Oklahoma.

Tuesday, November 11

Veterans Day. The FCC will be closed.

Wednesday, November 12

10:00 AM. The Senate Judiciary Committee will hold a hearing to examine judicial and executive nominations. Press contact: Margarita Tapia (Hatch) at 202 224-5225 or David Carle (Leahy) at 202 224-4242. Location: Room 226, Dirksen Building.

11:00 AM. The Cato Institute will host a book forum on Black Ice: The Invisible Threat of Cyberterrorism. Author Dan Verton will speak. See, Amazon page and Cato notice. Lunch will follow the program. Location: 1000 Massachusetts Ave., NW.

Deadline to submit comments to the U.S. Patent and Trademark Office (USPTO) regarding proposed changes to its rules of practice to support the implementation of the 21st Century Strategic Plan. The proposed changes include permitting electronic signatures on a number of submissions, streamlining the requirements for incorporation by reference of prior filed applications, and clarifying the qualifications for claiming small entity status for purposes of paying reduced patent fees. See, notice in the Federal Register, September 12, 2003, Vol. 68, No. 177, at Pages 53815 - 53859.

Deadline to submit comments to the Federal Communications Commission (FCC) in response to its Notice of Inquiry (NOI) regarding the impact that communications towers may have on migratory birds. See, notice in the Federal Register, September 12, 2003, Vol. 68, No. 177, at Pages 53696 - 53702. This is Docket No. WT 03-187, and FCC 03-205. The FCC adopted this NOI on August 8, 2003, and released it on August 20, 2003. See also, story titled "FCC Release NOI On Communications Towers and Migratory Birds" in TLJ Daily E-Mail Alert No. 723, August 21, 2003.

Thursday, November 13

9:00 AM - 12:00 NOON. The Telecommunications Service Priority (TSP) System Oversight Committee will meet. See, notice in the Federal Register, October 10, 2003, Vol. 68, No. 197, at Page 58725. Location: 2nd floor conference room, National Communications System (NCS), 701 South Courthouse Road, Arlington, VA.

9:00 AM - 3:45 PM. The National Institute of Standards and Technology's (NIST) Advanced Technology Program Advisory Committee hold a partially closed meeting. See, notice in the Federal Register, October 27, 2003, Vol. 68, No. 207, at Page 61189. Location: NIST, Administration Building, Employees' Lounge, Gaithersburg, MD.

9:30 AM. The Senate Commerce Committee will hold a hearing to examine the General Accounting Office's (GAO) study [94 pages in PDF] titled "Telecommunications: Issues Related to Competition and Subscriber Rates in the Cable Television Industry". See, story titled "GAO Releases Study on Cable Industry", in TLJ Daily E-Mail Alert No. 766, October 27, 2003. Press contact: Rebecca Hanks (McCain) at 202 224-2670 or Andy Davis (Hollings) at 202 224-6654. Location: Room 253, Russell Building.

9:30 AM. The Federal Communications Commission (FCC) will hold a meeting. Location: FCC, 445 12th Street, SW, Room TW-C05 (Commission Meeting Room).

9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in Adams Comm Corp v. FCC, No. 02-1232. Judges Randolph, Roberts and Williams will preside. Location: Courtroom 20, 333 Constitution Ave. NW.

10:00 AM. The Internal Revenue Service (IRS) will hold a hearing regarding its notice of proposed rulemaking (NPRM) regarding computation and allocation of the credit for increasing research activities for members of a controlled group of corporations or a group of trades or businesses under common control. The rules implement the research and development tax credit codified at 26 U.S.C. § 41. Location: IRS Auditorium, 7th Floor, 1111 Constitution Ave., NW. See, notice in the Federal Register, July 29, 2003, Vol. 68, No. 145, at Pages 44499 - 44506.

2:00 - 3:00 PM. The Heritage Foundation will host an event titled "Beyond Do-Not-Call: The FTC Agenda". The speakers will be Timothy Muris, Chairman of the Federal Trade Commission (FTC), and James Gattuso of the Heritage Foundation. See, notice. Location: Heritage Foundation, Lehrman Auditorium, 214 Massachusetts Ave., NE.

6:00 - 9:15 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 Trademark Case". Prices vary. For more information, call 202 626-3488. Location: D.C. Bar Conference Center, 1250 H Street NW, B-1 level.

Friday, November 14

RESCHEDULED FOR NOVEMBER 20. 9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in CA Metro Mobile Comm v. FCC, No. 02-1370. Judges Sentelle, Henderson and Garland will preside. Location: 333 Constitution Ave. NW.

12:30 PM. The Federal Communications Bar Association's (FCBA) Legislation Committee will host a brown bag lunch. The topic will be the "The Northpoint Issue: Will Congress Provide Spectrum Without an Auction? The View From the Hill". For more information, contact Lee Carosi at 202 224-0990 or Location: Wiley Rein & Fielding, 1750 K Street Building, 5th Floor Conference Room.

FRB Governor Says Info Tech Is One Reason for Jobless Recovery

11/6. Federal Reserve Board (FRB) Governor Ben Bernanke gave a speech at Carnegie Mellon University in Pittsburgh, Pennsylvania, titled "The Jobless Recovery". He offered several explanations for why the economy is growing so fast, but the recovery in the labor market is so slow. One of his explanations is that corporate managers are finally figuring out how to put to good use the high tech equipment that they bought in the late 1990s.

Ben Bernanke

Bernanke (at right) stated that "the economic slowdown that began in the United States in late 2000 has been relatively mild" and "lasted only eight months, from March to November of 2001."

"Nevertheless, in one key aspect, namely, the performance of the labor market, the downturn was severe and the recovery has been exceptionally slow", said Bernanke.

He offered several explanations for why this is the case. One explanation is "the remarkable increase in labor productivity we have seen in recent years, not only in manufacturing but in the economy as a whole. Since the trough of the recession in the fourth quarter of 2001, productivity in the nonfarm business sector has risen at an annual average rate of 4-1/2 percent, compared with average annual increases of 2-1/2 percent in the late 1990s, itself a period of strong productivity growth."

He continued that "This surprising productivity performance probably reflects both some increase in the long-run rate of productivity growth as well as unmeasured increases in the work effort of employees. However, in my view, neither of these factors can fully account for the increase in productivity growth, particularly some of the recent quarterly numbers."

He said that "I suspect that some of the recent expansion in productivity is instead the delayed result of firms' heavy investment in high-technology equipment in the latter part of the 1990s. Only over time have managers learned how to reorganize their production and distribution so as to take full advantage of these new technologies and thus enhance the productivity of capital and workers."

He concluded that "Strong productivity growth provides major benefits to the economy in the longer term, including higher real incomes and more efficient and competitive industries. But in the past couple of years, given erratic growth in final demand, it has also enabled firms to meet the demand for their output without hiring new workers."

Commissioner Adelstein and Sen. McCain Address Payola and Pay for Play

11/6. Federal Communications Commission (FCC) Commissioner Jonathan Adelstein gave a speech at a Federal Communications Bar Association (FCBA) luncheon. He spoke almost entirely about broadcast radio and television.

He addressed media consolidation, the radio industry's music promotion practices, allegations of payola, and the consequences for artists, musicians, consumers and others. He also addressed "broadcast news programs that sell segments which appear to be part of their regular news coverage".

Jonathan AdelsteinAdelstein (at right) also quipped about the FCC's out of Washington hearings on localism: "It’s always refreshing to get away from DC lobbyists -- and instead hear directly from people organized by DC lobbyists."

He advocated FCC action to deal with payola. He stated that "It's been 40 years since enactment of the payola statutes. It's time for the FCC to probe whether our rules adequately deter potentially new forms of payola. If the practices are still occurring, we have direct statutory authority, as well as an overall charge to regulate radio communications. So there is a real need for the FCC to review its sponsorship identification rules to make sure we are addressing modern day pay-for-play practices in the most effective way possible given our clear responsibility under the law."

He also said that "That's what Senator Feingold suggested last year." Sen. Russ Feingold (D-WI) introduced S 221, the "Competition in Radio and Concert Industries Act of 2003", on January 28, 2003. He sponsored an earlier version in the 107th Congress, S 2691.

Adelstein also stated that "An FCC review has also been urged by a broad coalition of artists and music industry groups in a joint statement last month. And just this week, Senate Commerce Committee Chairman McCain is questioning payola and paid-for-journalism as a sham on the American public."

Sen. John McCain (R-AZ) wrote a letter to FCC Chairman Michael Powell on November 3, 2003, regarding "alleged ``pay for play´´ on both television and radio broadcasts, which call into question the adequacy of the Federal Communications Commission's (``Commission´´) regulations on broadcast sponsorship and identification."

Sen. John McCainSen. McCain (at left) continued that "Last month, The Washington Post detailed the practices of WFLA-TV in Tampa, Florida. The station airs a local morning show, ``Daytime,´´ with NBC's peacock logo and WFLA-TV's ``News Channel 8´´ insignia at the bottom of the screen. Segments of the program, however, are actually paid advertisements. The program's anchors interview guests who pay $2,500 to appear on the program. According to the article, the only mention of payment is at the end of the program when the words ``the following segments were paid advertisements´´ appear in small type on the screen for about four seconds."

Sen. McCain also asked "whether you believe the Commission's rules on sponsorship identification and ``payola´´ are adequate" and "whether you believe Congressional action is necessary to ensure broadcasters do not continue to deceive viewers through such ``sham´´ television programs as ``Daytime,´´ or to preclude radio stations from demanding performances from musicians as compensation for air time."

People and Appointments

11/6. The Senate Judiciary Committee approved the nomination of California Supreme Court Justice Janice Brown to be a Judge of the U.S. Court of Appeals for the Ninth Circuit. Democrats will oppose confirmation in the full Senate.

11/5. The Senate confirmed Roger Titus to be a Judge of the U.S. District Court for the District of Maryland by a vote of 97-0. See, Roll Call No. 438.

11/6. President Bush nominated Lawrence Stengel to be a Judge of the U.S. District Court for the Eastern District of Pennsylvania. See, White House release.

11/6. The Federal Communications Commission (FCC) announced several appointments, effective November 3, 2003. Jacqueline Ponti was named Associate Bureau Chief for Licensing and Operations in the FCC's International Bureau (IB). The FCC stated in a release that she will "oversee long-term International Bureau licensing and operations activities, and focus on information technology initiatives." She has worked for the IB since 1994.

The FCC announced that Jacquelynn Ruff was named Chief of Staff and Associate Bureau Chief of the IB. She will "oversee short and medium-term strategic planning and development for the Bureau as well as agency-wide coordination of Bureau items and initiatives. She also will continue to oversee Bureau work on international trade issues". She has worked for the IB since 1999.

The FCC announced that John Giusti was named an Assistant Bureau Chief of the IB. He will "oversee Bureau policy and activity regarding international outreach, including International Telecommunication Union matters, regulator-to-regulator dialogues and cross-border issues". He has worked for the IB since 1996.

The FCC announced that Linda Dubroof and Julie Barrie were named Deputy Division Chiefs of the IB's Strategic Analysis & Negotiations Division (SAND).

The FCC announced that Christopher Murphy was named Chief of the SAND's International Telecommunications & Development Branch. He will "oversee the Division's work with the ITU Telecommunications Standardization Sector and the ITU Development Sector, as well as participation in major ITU conferences and meetings. He has worked for the IB since 1996.

More News

11/6. Microsoft announced that it has reached a settlement of the class action lawsuit against Microsoft alleging violation of the state of North Carolina's antitrust and unfair competition laws. See, Microsoft release.

11/6. Counsel for both the government and defendants submitted to the U.S. District Court (DC) a Jointly Proposed Protective Order [15 pages in PDF] in USA v. First Data & Concord EFS, Inc., D.C. No. 03-2169 (RMC). See also, story titled "DOJ Sues to Stop Merger of PIN Debit Networks", also published in TLJ Daily E-Mail Alert No. 765, October 24, 2003.

11/6. The Federal Communications Commission's (FCC) Media Security and Reliability Council (MRSC) held a meeting. See, FCC release [PDF].

11/6. The Federal Election Commission (FEC) assessed a civil money penalty of $1,800 against the Political Action Committee of Focal Communications Corporation for the non filing of a year end 2002 report. Focal Communications Corp. is a voice and data services provider. See, FEC release.

11/6. The Department of the Treasury announced that Treasury Secretary John Snow will tour the Intel Corporation facility in Rio Rancho, New Mexico.

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