|DOJ and FTC Warn Massachusetts Bar That Its
Drafts Rules Restrict Legal Software
12/16. The Department of Justice's (DOJ) Antitrust
Division and the Federal Trade Commission (FTC)
wrote a letter to the
Massachusetts Bar Association regarding its
"Draft Proposed Definition of the Practice of Law in Massachusetts".
The FTC/DOJ letter states, for example, that "the definition has the
potential to discourage lay activities such as ... the use of interactive
self-help legal software to produce simple legal documents. This would likely
raise costs for consumers and limit their choices."
The letter elaborates that the proposed definition could "restrict and
eliminate" such things as "inexpensive electronic software to complete wills,
trusts, tax forms, and other legal documents, because the applications can be interactive
and select certain clauses for the documents based on answers that consumers give, as well
as providing some legal information and/or advice about those clauses".
The letter adds that "Because the proposed rule is likely to restrain
competition without providing any benefits to consumers, we recommend against
adopting such a definition of the practice of law. Antitrust laws and
competition policy generally consider sweeping restrictions on competition
harmful to consumers and justified only by a showing that the restriction is
needed to prevent significant consumer injury."
The letter concludes that "The Task Force's proposed definition of the
practice of law will likely unnecessarily and unreasonably reduce competition
between attorneys and non-attorneys. Massachusetts consumers will likely pay
higher prices and face a smaller range of service options with little or no
offsetting benefit. The Task Force makes no showing of harm to consumers from
lay service providers that would justify these reductions in competition."
The DOJ/FTC letter is signed by
Hewitt Pate (Assistant
Attorney General in charge of the Antitrust Division), Jessica Arkow (a trial attorney
in the Antitrust Division), Deborah Majoras (Chairman of the FTC), and Maureen Ohlhausen
(Acting Director of the FTC's Office of Policy Planning).
TLJ spoke with Maureen Ohlhausen regarding the letter. She stated that the
DOJ and FTC are not threatening to bring an enforcement action. Rather, they are
simply "expressing our concerns that the proposal is not in the best interest of
The Massachusetts Supreme Judicial Court, which must approve the
Massachusetts Bar Association's recommendations, is immune from federal
antitrust liability under the state action doctrine. However, as the DOJ/FTC
letter points out (in footnote 6), the DOJ has obtained judgments and
injunctions against state bar associations for anti-competitive behavior.
|FCC Adopts Order
and NPRM Regarding Air Ground Service in the 800 MHz Band
12/15. The Federal Communications Commission
(FCC) adopted, but did not release, a Report and Order and Further Notice of
Proposed Rulemaking regarding the auctioning of 4 MHz of spectrum in the 800 MHz band
that is currently dedicated to commercial air-ground service. The FCC will allow auction
bidders to determine which of three proposed band plans will be chosen.
The FCC has issued only a short
[PDF] and a
[1 page in PDF] that depicts the three band plans. Also, three Commissioners prepared brief
separate statements. This item is FCC 04-287 in WT Docket 03-103.
FCC Chairman Michael Powell
wrote in a separate
[PDF] that "our rules for the 800 MHz commercial air-ground service has been locked
in a narrowly defined technological and regulatory box and have kept passengers from
using their wireless devices on planes. Nearly every party in the air-ground
proceeding has commented that the existing band plan and our rules have hindered
the provision of services that are desired by the public onboard aircraft."
The FCC release and chart disclose that one band plan would provide for two
overlapping, cross-polarized 3 MHz licenses. A second plan would provide for an
exclusive 3 MHz license and an exclusive 1 MHz license. A third plan would
provide for an exclusive 1 MHz license and an exclusive 3 MHz license with the
blocks at opposite ends of the band from the second plan.
The FCC release states that "New air-ground service may be any type
(e.g., voice, data, broadband internet, etc.) and may be provided to any or all
aviation markets (e.g., commercial, military, and general)."
Verizon Airfone is currently operating in this band. The FCC release also
states that this item grants Verizon Airfone "a non-renewable 5-year license,
subject to existing narrowband technical limits. Noting that the provision of high-speed
broadband services to consumers onboard aircraft by one or more new licensees will
require at least 3 MHz of the 4 MHz band, the Commission decided that following
the grant of the new license, Verizon Airfone must limit operations of the existing
narrowband Airfone system under the 5 year non-renewable license to the remaining
1 MHz of spectrum."
Michael Copps (at left) wrote in
[PDF] that "The current air-to-ground narrowband service surely
has not fulfilled expectations. There are few calls made each day and the
service is high-priced and limited to voice. A new broadband air-to-ground
service could allow a far greater diversity of services, including the ability
to check email, access the Web, enhance avionic support, and improve homeland
However, he also complained that "the way the FCC
has decided to launch this new service risks creating a monopoly for broadband
air-to-ground services. The Order creates an auction where one company can lock
up the only license that can support a true broadband air-to-ground service."
Powell (at right) said
that "we will soon be considering pending applications and a rulemaking to authorize
more satellite providers". He also pointed out that "we have asked questions
in our ongoing 3G proceeding about the possibility of air-ground services in those bands.
We will continue to explore opportunities for further competition in other bands and
Jonathan Adelstein wrote in a separate
[PDF] that "we already are seeing the deployment of satellite-based high-speed Internet
services on international long-distance routes."
However, he added that "But we lost a golden opportunity here to guarantee
true broadband competition. While a future auction likely will result in two
unique licensees, it is agreed that a licensee with one megahertz of spectrum
will be unable to compete against a licensee with three megahertz for a true
broadband service. We could have easily made a change to the item to ensure that
the broadband air-ground market would have been served by two competitors."
The FCC release states that the FCC "decided not to authorize ancillary
services in the band."
The CTIA praised this decision. CTIA P/CEO Steve Largent stated in a
that "There was simply too much
uncertainty regarding the Air to Ground spectrum and interference to allow a
terrestrial component in the 800 MHz band at this time. There is an obligation
to provide for interference-free homeland security communications, which could
have been negatively impacted by a new terrestrial offering".
|FCC Expands Rural Telemedicine Subsidy
12/15. The Federal Communications Commission
(FCC) adopted, but did not release, an item titled "Second Report and Order,
Order on Reconsideration, and Further Notice of Proposed Rulemaking" that
pertains to the the FCC's rules regarding its rural health care subsidy system.
The FCC issued only a short
and four Commissioners prepared brief separate statements. This item is FCC 04-289 in WC
Docket No. 02-60.
The FCC created its rural health care program in its
May 8, 1997. It is a cross subsidy program. It provides subsidies to schools,
libraries, and rural health clinics for telecommunications services, internet
access, and computer networking. It is loosely based upon the Telecommunications
Act of 1996.
Section 254 of the Act codified the long standing practice of providing
"universal service" support for telephone service in high cost and rural areas.
The Act also included a subsection that extended universal service support to
any school, library and rural health clinic.
The FCC last amended its rules regarding health clinics in November of 2003.
See, story titled "FCC Expands Universal Service Support for Rural Clinics and
TLJ Daily E-Mail Alert No. 779, November 14, 2003.
The present FCC release states that this item adopts rules changes that
"Redefine what constitutes a rural area" to enable more towns to qualify. The
FCC release cites as an example a small town in southwestern Virginia that will
Rep. Rick Boucher (D-VA), who
represents the area, and is a member of the
House Commerce Committee's
Subcommittee on Telecommunications and the Internet, has pressed the FCC on
this subject. See, for example,
comment [8 pages in PDF] submitted by Rep. Boucher on July 31, 2002.
The FCC release also states that this item adopts changes in FCC rules to
"Increase discounts available to mobile rural health care providers for the
purchase of mobile satellite telecommunications services". In addition, FCC
Chairman Michael Powell wrote
in a separate
[PDF] that this item "seeks comment on whether to modify its rule specifically to allow
mobile rural health care providers to receive discounts for facilities other
The FCC release also states that the further NPRM
portion of this item examines "whether a flat 25 percent discount for Internet
services is sufficient and whether network infrastructure should be funded under
the rural health care mechanism".
[PDF] of Commissioner
Kathleen Abernathy, separate
[PDF] of Commissioner Michael
statement [PDF] of Commissioner
|DOJ Charges Company with Universal Service
12/8. The Department of Justice (DOJ) and the
Office (USAO) for the Northern District of California charged Inter-Tel
Technologies Inc., a subsidiary of Inter-Tel Incorporated, with one count
of mail fraud and aiding and abetting, in violation of 18 U.S.C. §§ 1341 and 2,
and one count of criminal violation of the Sherman Antitrust Act, in violation
of 15 U.S.C. § 1, in connection with its bid rigging and wire fraud related to
the Federal Communications Commission's (FCC)
schools and libraries subsidy program.
The DOJ charged Inter-Tel by sealed
criminal information [9 pages in PDF] on December 6, 2004. The DOJ unsealed
the information on December 8, 2004. The DOJ also announced that Inter-Tel has
agreed to plead guilty. See,
release and USAO
Hewitt Pate, Assistant
Attorney General in charge of the DOJ's
Antitrust Division, stated that "This conduct deprived the E-Rate program of
fair and competitive prices, caused the program to pay for unnecessary,
inappropriate, and ineligible items, and as a result, prevented the program from
funding projects at other schools that should have received funding".
This case is another in a series of e-rate fraud prosecutions.
This case is United
States of America v. Inter-Tel Technologies, Inc., U.S. District Court for
the Northern District of California, San Francisco Division, D.C. No. CR
|Washington Tech Calendar
New items are highlighted in red.
|Friday, December 17
The House will next meet on January 4, 2004 at 12:00 NOON. See,
Republican Whip Notice.
The Senate will next meet on January 4, 2005 at 12:00 NOON.
The Supreme Court will next
meet on Monday, January 10, 2005. See,
List [9 pages in PDF] at page 9.
9:30 AM - 12:00 NOON. The U.S. China
Policy Foundation will host an event titled "Prospects for U.S.-China
Relations in Bush Administration". For more information, contact Chi Wang at
202 547-8615. Location: Murrow Room, National Press
Club, 529 14th St. NW, 13th Floor.
12:00 NOON. Deadline to submit comments to
the Office of the U.S. Trade Representative
(USTR) regarding various trade related telecommunications issues. The
USTR seeks comments on "Whether any WTO member is acting in a manner that is
inconsistent with its commitments under the WTO Basic Telecommunications
Agreement or with other WTO obligations", "Whether Canada or Mexico has failed
to comply with their telecommunications commitments or obligations under
NAFTA", "Whether Chile or Singapore or any other FTA partner with an Agreement
that comes into force on or before January 1, 2005 has failed to comply with
their telecommunications commitments or obligations under the respective FTAs",
"Whether other countries have failed to comply with their commitments under
additional telecommunications agreements", and "Whether there remain
outstanding issues from previous Section 1377 reviews". See, notice in the
Federal Register, Vol. 69, No. 226, Wednesday, November 24, 2004, at Page
|Tuesday, December 21
12:00 NOON. The Federal
Communications Bar Association's (FCBA) Executive Committee will meet.
Location: Wiley Rein & Fielding, 1776 K
Extended deadline to submit reply comments to the
Federal Communications Commission (FCC) in response to
its Notice of
Proposed Rulemaking and Declaratory Ruling (NPRM & DR) [100 pages in PDF] regarding
Assistance for Law Enforcement Act (CALEA) obligations upon broadband internet
access services and voice over internet protocol (VOIP). This NPRM is FCC 04-187 in ET
Docket No. 04-295. The FCC adopted this NPRM at its August 4, 2004 meeting, and released it
on August 9. See, story
titled "Summary of the FCC's CALEA NPRM" in
TLJ Daily E-Mail Alert No. 960,
August 17, 2004. See,
notice in the Federal Register, September 23, 2004, Vol. 69, No. 184, Pages
56976 - 56987. See also,
notice of extension [PDF].
|Saturday, December 25
|5th Circuit Rules on Jurisdiction, Removal
and Remand in Dispute Over Laying of Fiber Optic Cable
12/13. The U.S. Court of Appeals
(5thCir) issued its
opinion [8 pages in PDF] in Schexnayder v. Entergy, a case
involving the laying of fiber optic cable. However, this appeal involves
procedural questions regarding jurisdiction, removal, and remand. The Court of
Appeals held that it lacked jurisdiction to review the District Court's order
remanding the case to state court, and dismissed the appeal.
State courts have general jurisdiction, while federal District Courts have
limited jurisdiction. They have jurisdiction only over cases in which there is
diversity of citizenship or there is a claim based upon federal law. A case in which
there is diversity of citizenship or a federal question may be brought in a state court.
However, it can then be removed by a defendant to federal court. And, in some situations,
the federal court may remand the case back to the state court.
28 U.S.C. § 1447 covers removal jurisdiction.
This is important because the outcome of a case may be affected by which
court tries the case. The present case is a class action trespass and fraud case
against a set of telecom companies. The plaintiffs want it to proceed in state
court. The defendants want it to proceed in federal court.
Entergy Services and affiliated companies provide telecommunications services in
the states of Texas, Louisiana and Arkansas. They upgraded their infrastructure by
laying fiber optic cable.
Arthur Schexnayder and other land owners filed a complaint in state court in
Louisiana against Entergy Services and related companies alleging trespass and
fraud for laying cable across their properties without their permission. They
plead no federal claims.
Six months later another party intervened, and also alleged a RICO violation,
which is a federal claim. Entergy removed the action to the U.S. District Court
based upon federal subject matter jurisdiction.
Schexnayder moved to remand the case back to the state court, arguing that
removal jurisdiction cannot be based upon an intervenor's claim. The District
Court granted this motion. This appeal followed.
The Court of Appeals held that it lacks jurisdiction to review the District
Court order, and dismissed the appeal.
It wrote that "Congress has severely circumscribed
the power of federal appellate courts to review remand orders. Section 1447(d)
states that ``[a]n order remanding a case to the State court from which
it was removed is not reviewable on appeal or otherwise.´´"
The Appeals Court noted that the Supreme Court created a limited class of cases
that may be reviewed. The Supreme Court held that for a remand to be unreviewable, the
District Court must act within the authority granted to it by § 1447(c). See,
Allstate Ins. Co., 517 U.S. 706 (1996).
28 U.S.C. § 1447(c) provides, in part, that "A motion to remand the case
on the basis of any defect other than lack of subject matter jurisdiction must be made
within 30 days after the filing of the notice of removal ..."
The Appeals Court concluded that "this Court lacks
jurisdiction under § 1447 if the district court based its remand order on either
a lack of subject matter jurisdiction or a defect in removal procedure."
It wrote that "Here, the district court based its remand decision on two
factors. Principally, it ruled that Entergy’s removal petition was untimely
based on § 1446(b). It also rejected Entergy’s argument that it could base the
removal petition on Fear Farm’s intervening federal claim, which is to say that
the district court did not have subject matter jurisdiction. These two grounds
constitute allowable § 1447(c) reasons for remand. As a consequence, this Court
lacks jurisdiction to review the district court’s order."
This case is Arthur Schexnayder, et al. v. Entergy Louisiana, Inc., et al.,
App. Ct. No. 03–31138.
|People and Appointments
12/16. Suzanne Mencer, Executive Director of the
Department of Homeland Security's (DHS) Office
of State and Local Government Coordination and Preparedness, announced that she
will resign effective January 31, 2005. See, DHS
12/16. The Securities and Exchange Commission
(SEC) announced the formation of an advisory committee named "Securities and
Exchange Commission Advisory Committee on Smaller Public Companies". The
committee will examine the impact of the Sarbanes Oxley Act and other aspects of
the federal securities laws on smaller public companies. The SEC also announced
the appointment Co-Chairs of the committee: Herbert Wander of the law
firm of Katten Muchin Zavis Rosenman (KMZR),
and James Thyen, P/CEO of Kimball International, a manufacturer of
furnishings and electronics. The SEC also announced that is will appoint between
9 and 19 more members to the committee. See, SEC
release and KMZR
Communications Group announced that its signed an agreement with
Verizon "enabling Covad to continue to
provide line sharing services to digital subscriber line (DSL)
subscribers throughout Verizon territory for a four-year period." See, Covad
release. Also, Federal Communications Commission
(FCC) Chairman Michael Powell
and Commissioner Kathleen
Abernathy released a
[PDF] in which they wrote that "We applaud
Verizon and Covad for reaching a commercial agreement to provide for continued
DSL line sharing. We have been strong proponents of such commercial
arrangements, and they take on added importance and urgency as a result of the
Commission's elimination of mandatory line sharing last year. This agreement and
others that were reached previously will enhance choice and competition in the
broadband marketplace, to the great benefit of consumers. We hope that other
incumbent carriers and competitors continue to pursue negotiations to preserve
line sharing as a viable model."
12/16. Security software company Symantec
and storage software company Veritas announced
"a definitive agreement to merge in an all-stock transaction. Based on Symantec's
stock price of $27.38 at market close on December 15, 2004, the transaction is valued at
approximately $13.5 billion." See,
The merger is subject to approval by shareholders and government regulators.
12/15. Sprint and
Nextel Communications announced that
their Boards of Directors "have unanimously approved a definitive agreement for
a merger of equals. The combination will create ... a leading wireless carrier
augmented by a global IP network that will offer consumer, business and
government customers compelling new broadband wireless and integrated
communications services. The new company, which will be called Sprint Nextel,
also intends to spin off to its shareholders Sprint's local telecommunications
business following the merger." See, Nextel
release. See also,
Sprint release. The
merger is subject to approval by shareholders and government regulators.
12/8. Several government agencies, technology companies, financial
institutions, and other entities formed a joint initiative, titled
Digital PhishNet, to address
phishing attacks. The initiative's web site states that its goals are "to
identify, arrest and hold accountable, those that are involved in all levels of
phishing attacks to include spammers, phishers, credit card peddlers,
re-shippers and anyone involved in the further abuse of consumers' personal
information. This operation will draw upon the vast resources available to its
national and international members in order to successfully achieve its goals."
See also, Microsoft
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