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April 2, 2004, 9:00 AM ET, Alert No. 868.
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9th Circuit Denies Rehearing in BrandX v. FCC

4/1. The U.S. Court of Appeals (9thCir) denied petitions for rehearing en banc in BrandX Internet Services v. FCC. The Court of Appeals previously vacated the FCC's Declaratory Ruling regarding the regulatory classification of cable modem service. FCC Chairman Powell expressed disappointment, but has not yet stated what the FCC's next action will be.

Background. On March 14, 2002, the FCC adopted a Declaratory Ruling and Notice of Proposed Rulemaking [75 pages in PDF]. The Declaratory Ruling (DR) component of this item states that "we conclude that cable modem service, as it is currently offered, is properly classified as an interstate information service, not as a cable service, and that there is no separate offering of telecommunications service." This item is FCC 02-77 in Docket No. 00-185 and Docket No. 02-52. See also, March 14 FCC release.

Brand X, EarthLink, the State of California, and the Consumer Federation of America filed petitions for review in which they argued that cable modem service is both an information service and a telecommunications service, and is therefore subject to regulation on a common carriage basis. That is, they argue that cable broadband providers must be required to let other internet service providers (ISPs) use their facilities.

On October 6, 2003, a three judge panel of the Court of Appeals issued its opinion [39 pages in PDF] (which is also published at 345 F.3d 1120) vacating the FCC's declaratory ruling that cable modem service is an information service, and that there is no separate offering as a telecommunications service.

The Court of Appeals wrote that its opinion was solely a matter of stare decisis. That is, it wrote that it was bound by its previous opinion in AT&T v. City of Portland, 216 F.3d 871 (2000).

See, story titled "9th Circuit Vacates FCC Declaratory Ruling That Cable Modem Service is an Information Service Without a Separate Offering of a Telecommunications Service" in TLJ Daily E-Mail Alert No. 754, October 7, 2003; and story titled "Reaction to 9th Circuit Opinion in Brand X Internet Services v. FCC" in TLJ Daily E-Mail Alert No. 756, October 9, 2003.

On December 3, 2004, the FCC filed a Petition for Rehearing En Banc [19 pages in PDF] arguing, among other things, that the three judge panel of the Court of Appeals erred by not applying the Chevron doctrine. See, Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984). See also, story titled "FCC Files Petition for Rehearing En Banc in Brand X Case" in TLJ Daily E-Mail Alert No. 793, December 5, 2003.

Reaction. FCC Commissioner Michael Powell released a statement [PDF]. "I am disappointed that the Court declined to address the merits of the Commission's policy that was carefully developed over the past several years."

Michael Powell"The Commission has worked tirelessly to advance economic growth and investment in high-speed Internet networks. By standing on a prior decision, this court, as Judge O'Scannlain noted in October, ``effectively stops a vitally important policy debate in its tracks.´´" Powell (at right) added that "This decision also prolongs uncertainty to the detriment of consumers. That is why we will study our options and explore how to continue to advance broadband deployment for all Americans."

In contrast, FCC Commissioner Michael Copps stated in a release that "This is a good day for consumers and Internet entrepreneurs. I look forward to the start of a fresh dialogue on broadband service at the FCC."

Dave Baker, EarthLink VP of Law and Public Policy, stated in a release that "Yesterday’s decision by the Ninth Circuit confirms what EarthLink has been saying for over five years now, that cable modem service contains a telecommunications service. As the Court noted in its decision last October, ‘The practical result of such a classification is that cable broadband providers would be required to open their lines to competing ISPs.' Cable modem users deserve choice in high-speed Internet providers. Yesterday's ruling is another step towards finally affording them that choice."

FCC Alternatives. The FCC could seek review by the U.S. Supreme Court. The 9th Circuit has the highest reversal rate of all of the circuits.

Alternatively, the FCC might simply ignore the 9th Circuit. Judge Diarmuid O'Scannlain, who was a member of the three judge panel, wrote in a concurring opinion that "Given the importance of the regulatory classification of broadband internet service, one wonders whether our decision today will prompt the FCC to follow the example of the Social Security Administration, the National Labor Relations Board, and the Internal Revenue Service, among other federal agencies, in adopting a policy of ``nonacquiescence´´ in the face of court rulings with which the agency disagrees."

Ignoring the 9th Circuit is made easier by the 9th Circuit's own frequent disregard of federal statutes, other circuits, and even the Supreme Court.

FCC Commissioner Copps Addresses Broadband Network Neutrality

3/26. Federal Communications Commission (FCC) Commissioner Michael Copps gave a speech on Capitol Hill in which he advocated FCC involvement in assuring broadband network neutrality.

He stated that "End to end openness has always been at the heart of what the internet community and its creators celebrate. The internet has become a fountain of innovation, a well of opportunity for consumers, and for entrepreneurs. It may just be the most democratic public forum that has ever existed."

Michael CoppsCopps (at right) continued that "this internet may not be the one that we know in the future. There are threats to it out there, and I think that we have better begin to understand them before they derail the promise of this technology, not after the damage has been inflicted. Entrenched interests are already jockeying to constrain the openness that has been the internet's defining hallmark. They are lobbying the FCC to aide and abet them. They claim all they are advocating is a deregulated environment, where the market can reign supreme. But, in reality, they are seeking government help to allow a few companies to turn the internet from a place of competition and innovation, into an oligopoly."

He explained that "Power over the internet would reside with the network owners, with a huge choke point, constrain consumer choices, limit sources of news and information and entertainment, undermine competitors, and quash disruptive new technologies. They may talk in terms of Schumpeter and creative destruction, but in reality, what they are asking is for the Commission to pick winners and losers, and to choose existing technologies and businesses over new technologies and entrepreneurs. They can talk competition all they want, but the race to combine distribution and content spell economic constraint here, just as clearly as they did when John D. Rockefeller married distribution to his product."

Copps argued that "We cannot afford to buy into this vision."

He also speculated on the possible consequences of the absence of network neutrality. "Consider what might happen if your broadband internet provider could discriminate. It might, for example, choose prevent you from using a spam jamming service that blocks its own spam, or a filtering technology to keep you from cruising the back alleys of the internet. Maybe, it is not mere fantasy that someday, somebody might want to decide which news sources, or political sites, you can visit. We ought to at least be thinking about this matter, and maybe even taking some steps to ensure that it doesn't happen.

He also praised FCC Chairman Powell's speech [PDF] titled "Preserving Internet Freedom: Guiding Principles for the Industry" at the Silicon Flatirons Symposium at the University of Colorado School of Law in Boulder, Colorado on February 8, 2004. Powell argued for a concept that he called "Net Freedom" -- the concept that consumers should be able to use their broadband connections to "use the content, applications and devices they want", without restrictions imposed by their broadband service providers.

Powell argued that at this time "the case for government imposed regulations regarding the use or provision of broadband content, applications and devices is unconvincing and speculative". However, he outlined a voluntary "road map" of rules to be followed by broadband service providers. He stated that this "Net Freedom" should include the principles that "consumers should have access to their choice of legal content", "consumers should be able to run applications of their choice", and "consumers should be permitted to attach any devices they choose to the connection in their homes".

See, story titled "Powell Opposes Regulations to Impose Broadband Network Neutrality" in TLJ Daily E-Mail Alert No. 833, February 10, 2004.

Commission Copps stated that "I was pleased to read that recent speech by Chairman Powell, setting out some key principles of internet freedom, the freedom to access content, use applications, attach personal devices, and obtain service client information. It is, I hope, a sign that a deeper discussion may finally be starting, and that we may be developing consensus around the idea that there may just be some problems here after all. I saw his comments as a call to action for the broadband industry."

Copps added that the FCC must insure that broadband networks "are accessible, neutral and open, just as they are in the dial up world."

The concepts of network neutrality and nondiscrimination have been developed in more detail in several written comments submitted to the FCC. For example, the Coalition of Broadband Users and Innovators (CBUI) has filed numerous comments with the FCC urging that it write a nondiscrimination rule. See especially, comment [3 pages in PDF] filed on November 18, 2002, and comment [23 pages in PDF] filed on July 17, 2003. See also comment [17 pages in PDF] submitted by law professors Lawrence Lessig (Stanford) and Timothy Wu (University of Virginia) on August 22, 2003 urging that the FCC adopt a network neutrality rule.

See also, story on this subject titled "Cato Study Opposes FCC Imposition of Network Neutrality", January 12, 2004, also published in TLJ Daily E-Mail Alert No. 816, January 15, 2004.

Commission Copps was the opening speaker at an event on Capitol organized for the purpose of advocating the principles of network neutrality to Congressional staff and others. Professors Lessig and Wu were among the other speakers, as were Vint Cerf of MCI WorldCom and Earl Comstock, who represents Earthlink.

California Court Rules on Recording of Phone Conversations

4/1. The California Court of Appeal (1/2) issued its opinion [20 pages in PDF] in Kearney v. Solomon Smith Barney, a class action lawsuit alleging illegal recording of telephone conversations by an out of state stock brokerage.

California residents Kelly Kearney and others filed a complaint in Superior Court for San Francisco County, California against an Atlanta, Georgia based stock broker, Solomon Smith Barney (SSB), alleging violation of California state law in connection with SSB's recording of conversations in telephone calls made by the plaintiffs in California to agents of SSB in Georgia.

California Penal Code section 632 (section 632) and Business and Professions Code section 17200 (section 17200) would require the plaintiffs' consent. Georgia state law requires consent of only one party to the conversation. The defendant consented. The recordings were made in Georgia. The trial court sustained the defendant's demurer (that is, SSB prevailed). The Court of Appeal affirmed.

This case is Kelly Kearney, et al. v. Solomon Smith Barney, California Court of Appeal, First Appellate District, Division Two, App. Ct. No. A101477, an appeal from the San Francisco County Superior Court, Sup. Ct. No. 412197.

Rep. Cox Addresses Cyber Security

3/31. Rep. Chris Cox (R-CA), the Chairman of the House Homeland Security Committee, gave a speech in which he addressed, among other topics, cyber security.

Rep. Chris Cox

Rep. Cox (at right) stated that "private sector cooperation is indispensable to our effort to reduce infrastructure vulnerabilities. The private sector not only owns most of our critical infrastructure, but it also has both vital information and the expertise we need to fix our problems. The corporate world must stand ready to cooperate. But, the Federal Government must commit itself to building trust and confidence, not to threatening regulation before a constructive dialogue is engaged."

He continued that "The Government can foster, it can enable. But the lesson of the 20th century is that it cannot supplant the role of private industry, or of the entrepreneurial urge that brings to market a multiplicity of potential solutions to each once-intractable problem."

Rep. Cox added that "cybersecurity is today the most significant challenge and the most promising opportunity for our Government and private sector to reduce a major and growing national vulnerability."

He elaborated, "Simply put, we depend on it. You own it. Our financial institutions, power plants, nuclear facilities, government agencies, borders, and other critical infrastructure rely upon internet-based technologies. Our reliance on Cyber in fact reflects the exponential net gain of knowledge over the past decade. Our pervasive dependence on information and communication systems affects every aspect of our lives."

"The good news is the potential that technology represents to improve the quality of life around the world. But there is also bad news; this growing reliance makes our cyberspace a viable, high-gain target for terrorists. Right now, we are not where we need to be. As we all know, we need to do more and the responsibility for this is shared. By harnessing the technical resources of the private industry and the intelligence capability of the federal government, we begin a partnership that can prevent, protect, and respond to cyber attacks", Rep. Cox concluded.

Washington Tech Calendar
New items are highlighted in red.
Friday, April 2

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

8:30 AM - 3:45 PM. There will be an event titled "The 19th Annual Intellectual Property Law Conference". The speakers will include Rep. Lamar Smith (R-TX), Chairman of the House Judiciary Committee's Subcommittee on Courts, the Internet and Intellectual Property. Prices vary. For more information, call 312-988-5598. Location: Ronald Reagan Building and International Trade Center, 1300 Pennsylvania Ave., NW.

9:30 AM. The U.S. Court Appeals (DCCir) will hear oral argument in Communications & Control Inc. v. FCC, No. 03-1213. Judges Henderson, Randolph and Roberts will preside. Location: Prettyman Courthouse, 333 Constitution Ave.

10:00 AM - 12:00 NOON. The American Enterprise Institute (AEI) will host a panel discussion titled "Preemption in the Rehnquist Court". See, notice. Location: AEI, 12th floor, 1150 17th St., NW.

12:00 NOON. The Cato Institute will host a panel discussion and luncheon titled "The Truth about Job Losses and Free Trade". See, notice and registration page. Location: Room B-339, Rayburn Building, Capitol Hill.

12:15 PM. The Federal Communications Bar Association (FCBA) will host a lunch. The speakers will be legal advisors on wireless issues to Federal Communications Commission (FCC) Commissioners. The price to attend is $15. RSVP to Wendy Parish at by 5:00 PM on Wednesday, March 31. Location: Sidley Austin, 1501 K Street, NW, 6th Floor.

Sunday, April 4

Daylight Saving Time begins.

Monday, April 5

The House will be in recess from April 5 through April 16 for the Spring recess. It will next meet on Monday, April 19.

The Supreme Court will begin a recess. (It will return on April 19, 2004.)

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Typeright v. Microsoft, No. O3-1197. Location: Courtroom 203, 717 Madison Place, NW.

Deadline to submit comments to the Federal Communications Commission (FCC) in response to its Notice of Inquiry and Notice of Proposed Rulemaking (NOI & NPRM) [31 pages in PDF] regarding the interference temperature method of quantifying and managing interference among different services. See, notice in the Federal Register, January 21, 2004, Vol. 69, No. 13, at Pages 2863 - 2870. This NOI/NPRM is FCC 03-289 in ET Docket No. 03-237. See also, stories titled "FCC Announces NOI/NPRM on Interference Temperature Model" in TLJ Daily E-Mail Alert No. 779, November 14, 2003, and "FCC Releases NOI/NPRM on Interference Temperature Approach" in TLJ Daily E-Mail Alert No. 789, December 1, 2003.

Deadline to submit comments to the National Archives and Records Administration's Electronic Records Policy Working Group regarding implementation of Section 207(e)(1)(A) of the E-Government Act of 2002, regarding "Public Access to Electronic Information". This section provides for "the adoption by agencies of policies and procedures to ensure that chapters 21, 25, 27, 29, and 31 of title 44, United States Code, are applied effectively and comprehensively to Government information on the Internet and to other electronic records.'' See, notice in the Federal Register, March 8, 2004, Vol. 69, No. 45, at Page 10764.

Tuesday, April 6


Wednesday, April 7

9:30 AM. The Senate Commerce Committee will hold a business meeting. Location: Room 253, Russell Building.

9:30 AM. The U.S. Court Appeals (DCCir) will hear oral argument in AT&T v. FCC, No. 03-1035. Judges Edwards, Tatel and Silberman will preside. Location: Prettyman Courthouse, 333 Constitution Ave.

10:00 AM. The Senate Judiciary Committee Subcommittee on Administrative Oversight and the Courts will hold a hearing on a proposal to split the Ninth Circuit. Location: Room 226, Dirksen Building.

12:30 - 1:30 PM. The Center Strategic and International Studies (CSIS) will host a program on cybersecurity. The speakers will be Steve Ballmer (CEO of  Microsoft), John Hamre (P/CEO of the CSIS), Robert Holleyman (P/CEO of the Business Software Alliance). Press contact: Mark Schoeff at 202-775-3242 or or Gina Maffei at 202-775-3167 Location: CSIS, 1800 K Street, NW, B-1 conference level.

12:30 PM - 2:00 PM. The DC Bar Association's Section on Criminal Law and Individual Rights will host a brown bag lunch (with admission charge) titled "Federal Practice Series: Handling Electronic Evidence: From Authentication to Admissibility to Minimizing that Damaging E-mail". The speaker will be Adam Rosman (Zuckerman Spaeder). Prices vary. For more information, call 202 626-3463. Location: D.C. Bar Conference Center, 1250 H Street NW, B-1 Level.

Deadline to submit reply comments to the Federal Communications Commission (FCC) regarding its proposed rules regarding universal service subsidies for rural health clinics. Comments are due by February 23, 2004. Reply comments are due by April 7, 2004. See, notice in the Federal Register, December 24, 2003, Vol. 68, No. 247, at Pages 74538 - 74541.

Thursday, April 8

1:30 - 3:00 PM. Federal Communications Commission (FCC) World RadioCommunication 2007 (WRC-07) Advisory Committee's Informal Working Group on Satellite Services and HAPS will meet. See, FCC notice [PDF]. Location: Leventhal Senter & Lerman, 2000 K Street, NW, 7th Floor Conference Room.

6:00 - 8:00 PM. The Federal Communications Bar Association (FCBA) will host a continuing legal education (CLE) seminar titled "FCC's Environmental and Historic Preservation Action Plan - One Year Later". Prices vary. To register, contact Wendy Parish at Location: Wiley Rein & Fielding, 1750 K Street, NW, 10th Floor.

Sunday, April 11


Monday, April 12

The Senate will not meet from April 12 through April 16.

10:00 AM - 12:00 NOON. The American Enterprise Institute (AEI) will host a panel discussion titled "The Development of European Regulatory Agencies: What the European Union Should (or Shouldn’t) Learn from the American Experience". The speakers will be Judge Stephen Williams (U.S. Court of Appeals) and Greg Sidak (AEI). Location: AEI, 12th floor, 1150 17th St., NW.

Day one of a three day conference hosted by the National Institute of Standards and Technology (NIST), National Institutes of Health (NIH), Internet2, USENIX, and OASIS titled "Public Key Technology R&D Workshop". See, notice and conference website. The price to attend is $105. Location: NIST, Gaithersburg, MD.

Deadline to submit reply comments to the Federal Communications Commission (FCC) regarding its Third Report and Order and Second Further Notice of Proposed Rulemaking pertaining to the administration of the FCC's e-rate subsidy program for schools and libraries. See, notice in the Federal Register, February 10, 2004, Vol. 69, No. 27, at Pages 6229 - 6238. This item is FCC 03-323 in Docket No. 02-6. The FCC adopted this item at its December 17, 2003 meeting. See, FCC release [PDF] describing this item. The FCC released the text of this item on December 23, 2003.

Deadline to submit comments to the Federal Trade Commission (FTC) in response to its notice in the Federal Register requesting comments regarding various regulations and reports required by the CAN-SPAM Act. Several provisions in the "Controlling the Assault of Non-Solicited Pormography and Marketing Act of 2003" (CAN-SPAM Act) instruct the FTC to write regulations implementing the Act. Other provisions require the FTC to prepare reports for the Congress. See, S 877, which is now Public Law No. 108-187. See also, story titled "FTC Announces CAN-SPAM Act Rulemaking" in TLJ Daily E-Mail Alert No. 855, March 15, 2004. The notice is published in the Federal Register, March 11, 2004, Vol. 69, No. 48, at Pages 11775-11782. See also, FTC release summarizing the notice.

Deadline to submit comments to the Copyright Office regarding its rule making proceeding "to amend its regulations governing the content and service of certain notices on the copyright owner of a musical work. The notice is served or filed by a person who intends to use a musical work to make and distribute phonorecords, including by means of digital phonorecord deliveries, under a compulsory license." See, notice in the Federal Register, March 11, 2004, Vol. 69, No. 48, at Pages 11566-11577.

The Copyright Office's interim regulations, announced on March 11, specifying notice and recordkeeping requirements for use of sound recordings under two statutory licenses under the Copyright Act, take effect. See, notice in the Federal Register, March 11, 2004, Vol. 69, No. 48, at Page 11515-11531.

Tech Crimes

4/1. A trial jury of a trial court in Erie County, in the state of New York, returned a verdict of guilty against Howard Carmack on charges of identity theft and falsifying business records in connection with sending hundreds of millions of spam e-mail messages with forged header information. The NY Attorney General's office stated in a release that this case is the first prosecuted by the Attorney General's office under New York's identity theft statute.

3/23. A grand jury of the U.S. District Court (CDCal) returned an indictment of Larry Lee Ropp on a single count of endeavoring to intercept electronic communications, in connection with his allegedly installing a keystroke logger, an electronic device on a company computer that recorded all of the computer keyboard keystrokes made by an employee of a company where he had previously worked. See, DOJ release.

People and Appointments

4/1. David Higbee was named Chief of Staff and Deputy Assistant Attorney General for the Antitrust Division of the Department of Justice. Previously, Higbee briefly was a Special Assistant to the President, advising the President on senior appointments and management issues at the Departments of Justice, Department of Homeland Security, Federal Trade Commission (FTC) and other agencies. Before that, he was briefly Deputy Associate Attorney General at the DOJ. Before that he was briefly a Counsel at the DOJ, working on matters involving the Antitrust Division, Tax Division, U.S. Trustee program, Corporate Fraud Task Force, and international issues. He worked for the law firm of Miles & Stockbridge from 1998 through 2001. He was a tax consultant at Deloitte & Touche from 1996 through 1998. He graduated from law school in 1996. He worked in brief stints at the Senate Judiciary Committee in 1996 and at the FTC in 1995-1996. He graduated from Brigham Young University, in the state of Utah, in 1993. Sen. Orrin Hatch (R-UT), is the Chairman of the Senate Judiciary Committee, which oversees the Antitrust Division. See, DOJ release.

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