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May 26, 2005, 9:00 AM ET, Alert No. 1,143.
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FCC Reports Continuing Decline in Telephone Subscribership

5/25. The Federal Communications Commission's (FCC) Wireline Competition Bureau's (WCB) Industry Analysis and Technology Division (IATD) released its latest report [50 pages in PDF] titled "Telephone Subscribership in the United States".

In March 2005 of the telephone penetration rate in the U.S. was 92.4%. It was 93.5% in November of 2004. This is a drop of  over 1% in four months. The penetration rate was 95.5% in March of 2003. The FCC's figure has decreased in each of the last six reports. The report does not explain the cause of this trend. Nor does the FCC staff have an understanding of the cause. See also, FCC release [1 page in PDF]

The FCC issues this report three times per year. It provides extension data on penetration levels for March, July and November of each year.

These reports contain detailed data on penetrations rates, including breakdowns by income level, race, and state. This report does not, however, offer an explanation for this steady decline over the past two years.

The report also lacks data that might enable readers to develop their own hypotheses regarding the cause of the decline. For example, there is no data in this report on fungible services that consumers might substitute for telephones. There is no data in the report on e-mail, instant messaging, broadband internet access, VOIP applications, pagers, blackberries, or other wireless devices with internet access.

The FCC has been revising the wording of its survey question, in an effort to make sure that it is not undercounting various types of phone service other than traditional land line POTS service, such as cell phones and VOIP service. (See, footnote 2 of the report.) However, despite the tinkering with the survey questions, the downward trend continues.

One possible explanation would be that despite the changes in wording of the question, some consumers still consider that their cell phone service is not phone service. Although, the trend did not begin until two years ago, well after the trend towards cell phone only consumers. A related explanation would be that some VOIP users do not consider their service to be phone service, and answer the FCC's question in the negative.

Another possible explanation would be an increase in the use of non phone substitutes, such as instant messaging, blackberries, and e-mail. Yet another explanation would be that consumers are responding that their home does not have a phone even though they use devices and services provided by their employers for voice and other communications.

Adelstein Angles for More FCC Regulation of Speech

5/25. Federal Communications Commission (FCC) Commissioner Jonathan Adelstein gave a speech to the Media Institute in Washington DC in which he made the case that the "increasing commercialization of American media", including news media, warrants renewed enforcement of existing FCC rules that regulate speech, as well as new rules.

Jonathan AdelsteinAdelstein (at right) decried what he described as "fake news". However, he made no reference in the prepared text of his speech to items that have literally been both "fake" and "news", such as recent news reporting by Jack Kelley and Jayson Blair. See for example, story in USA Today titled "Ex-USA TODAY reporter faked major stories", March 19, 2004, and story in CNN titled "New York Times: Ex-reporter faces fraud inquiry", May 13, 2003.

Rather, Adelstein began with the example of a celebrity TV gourmet who once said of frozen shrimp, "Fresh is not as fresh as frozen". Indeed, this was the title of the speech. Adelstein continued that there is "trend by TV chefs", and it "will undercut public trust" in TV cooking commentary. The Commissioner steamed about the current state of TV shrimp commentary.

But, the problem is deeper than fish and shellfish. Adelstein said that TV "soap operas have woven cosmetic lines into their tales" and Coke is displayed on the TV program American Idol.

Adelstein lamented a bygone era when viewers could obtain "real news coverage" and "accurate information". There was once an "era of integrity" in American television. He mentioned Julia Child, who provided TV viewers with accurate information about cooking shrimp?

(Adelstein's source on the declining quality of TV cooking commentary is a Wall Street Journal story titled "The Sponsored Chef", April 22, 2005.)

Adelstein is outraged and wants the FCC to do something about it.

He discussed regulation of the content of broadcast speech. He said that "careful regulations to ensure that American broadcasters also serve the public interest have been wiped off the books over the last couple of decades."

He wants the FCC to enforce existing regulations regarding disclosure of "who is behind sponsored programming". Moreover, he argued that "where disclosure itself is not adequate for the audience to form such an understanding, stricter measures are needed." He cited one such example. "We need to move forward with an outright ban on interactive advertising to children through TV."

He complained about fake news and the state of the media. However, whenever he provided either specific or general examples, it was almost always in reference to radio, television, and cable television. He offered little criticism of the state of other media, including daily newspapers, periodical magazines, book publishing, or internet publications.

He did not state the reason for this. Nor did he assert his descriptions regarding the state of the media are limited to radio, TV and cable.

He complained about the "increasing commercialization of American media". He said that there is "a bottomless pit of commercialism in today’s media into which even icons we hold sacred are sinking and becoming sullied". He identified that culprits as corporation, their "PR agents" and their "shills".

He identified the practices of "video news releases" and "product placements".

"We see reports of video news releases masquerading as independent, legitimate news; PR agents pushing political and commercial agendas that squeeze out real news coverage and local community concerns; product placements turning news and entertainment shows alike into undisclosed commercials; and well-trained marketers preying on the unsuspecting minds of our young children."

He added that no good "comes from marinating children's brains in advertising".

Adelstein also asserted that compelling "disclosure of the source or sponsor of the information does not amount to government compelled speech, nor does it infringe First Amendment rights of broadcasters."

He continued that "Undisclosed promotions are not just wrong -- they are payola, and they are illegal. That applies to product placements, paid VNRs, or anything for which payment is made but not disclosed. It is high time to employ some lessons about the law so this does not continue happening."

He added that "We have a right to know that people who present themselves to be independent, unbiased experts and reporters are not shills hired to promote a corporate -- or governmental -- agenda."

Adelstein also condemned "media consolidation" at length in this speech, as he has done many times in the past. But, he added that media consolidation was not the topic of this speech.

Senate IP Subcommittee Holds Hearing on International IP Piracy

5/25. The Senate Judiciary Committee's Intellectual Property Subcommittee held a hearing titled "Piracy of Intellectual Property". The hearing focused on piracy of intellectual property in other countries, and measures related to the protection of intellectual rights, including the TRIPS agreement, Section 301 reviews and classifications by the Office of the U.S. Trade Representative (USTR), and the Generalized System of Preferences (GSP) program and other tariff preference programs.

Sen. Orrin Hatch (R-UT), the Chairman of the Subcommittee, wrote in his opening statement that "during the Cold War, it was said that the Soviet Union’s style of negotiation could be summed up as follows: What’s mine is mine ... and what’s yours is negotiable. If Russia, China, or any other government attempts to adopt this view with respect to their responsibilities to protect intellectual property under international trade law and agreements, I can assure you that public support for U.S. trade agreements will be undermined and there will be strong resistance from -- and appropriate action taken by -- members of Congress. To put a fine point on it, before the Congress votes in favor of Russia joining the WTO, many of us will have to be convinced that the Russian government is serious about cracking down on theft of U.S. intellectual property."

See also, prepared testimony of Marybeth Peters (Register of Copyrights), prepared testimony of Stephen Pinkos (Deputy Director of the U.S. Patent and Trademark Office), prepared testimony of James Mendenhall (acting General Counsel of the Office of the USTR), prepared testimony of Eric Smith (President of the International Intellectual Property Alliance), and prepared testimony of Robert Holleyman (P/CEO of the Business Software Alliance).

See also, stories titled "House Subcommittee Holds Hearings on IP Theft in China and Russia" and "Bush Says New USTR Will Stop IPR Piracy in China" in TLJ Daily E-Mail Alert No. 1,138, May 18, 2005.

Thursday, May 26

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

The Senate will meet at 9:30 AM. It will resume its consideration of the nomination of John Bolton to be ambassador to the United Nations.

8:30 AM - 2:00 PM. The Competitive Enterprise Institute (CEI) will host a program titled "The Role of the State Attorney General: Differing Perspectives". The speakers will include Pennsylvania AG Tom Corbett, Georgia AG Thurbert Baker, and Indiana AG Steve Carter RSVP to Brent Tjarks at 202 463-3187 or btjarks at uschamber dot com. Location: U.S. Chamber of Commerce, 1615 H Street, NW.

9:30 AM. The House Judiciary Committee's (HJC) Subcommittee on Crime, Terrorism, and Homeland Security will hold another in its long series of oversight hearings on the USA Patriot Act (PA). This hearing is titled "Implementation of the USA PATRIOT Act: Sections 505 and 804". Section 505 of the PA pertains to national security letters. Section 804 of the PA pertains to jurisdiction over crimes committed at U.S. facilities abroad, and material witness provisions of the Criminal Code. The witnesses will be Chuck Rosenberg (Chief of Staff to the Deputy Attorney General), Matthew Berry (Counselor to the Assistant Attorney General), Greg Nojeim (American Civil Liberties Union), and Shayana Kadidal (Center for Constitutional Rights) See, notice [PDF]. The hearing will be webcast by the HJC. Press contact: Jeff Lungren or Terry Shawn at 202 225-2492. Location: Room 2141, Rayburn Building.

9:30 AM. The Senate Judiciary Committee has scheduled an executive business meeting. See, notice. The SJC frequently cancels meetings without notice. The SJC rarely follows its agenda. Press contact: Blain Rethmeier (Specter) at 202 224-5225, David Carle (Leahy) at 202 224-4242 or Tracy Schmaler (Leahy) at 202 224-2154. Location: Room 226, Dirksen Building.

11:30 AM. The House Commerce Committee's (HCC) Subcommittee on on Telecommunications and the Internet will hold a hearing on its discussion draft of HR __, the "DTV Transition Act of 2005". This hearing will be webcast by the HCC. See, notice. Press contact: Larry Neal at 202 225-5735. Location: Room 2322, Rayburn Building.

2:00 PM. The Senate Appropriations Committee's Subcommittee on Commerce, Justice, State, and the Judiciary will hold a hearing on the proposed budget for FY 2006 for the Department of Commerce. Secretary of Commerce Carlos Gutierrez will testify. See, notice. Location: Room S-146, Capitol Building.

2:30 PM. The Senate Homeland Security and Governmental Affairs Committee's Subcommittee on Federal Financial Management, Government Information, and International Security will hold a hearing titled "An Assessment of Federal Funding for Private Research and Development". The witnesses will be Robin Nazzaro (Government Accountability Office), Brian Reidl (Heritage Foundation), and Charles Wessner (The National Academies). See, notice. Location: Room 562, Dirksen Building.

9:30 AM. The Senate Judiciary Committee's Subcommittee on  Immigration, Border Security and Citizenship has scheduled a hearing titled "The Need for Comprehensive Immigration Reform: Serving Our National Economy". See, notice. The SJC frequently cancels meetings without notice. Sen. Jon Cornyn (R-TX) will preside. Location: Room 226, Dirksen Building.

Friday, May 27

 The House may meet at 10:00 AM for legislative business. It would continue its consideration of HR 1815, the "National Defense Authorization Act FY 2006". See, Republican Whip Notice.

EXTENDED TO JUNE 27. Deadline to submit comments to the Bureau of Industry and Security (BIS) in response to its notice in the Federal Register pertaining to deemed exports. The BIS seeks comments regarding the report [64 pages in PDF] written by the Department of Commerce's (DOC) Office of Inspector General (OIG) titled "Deemed Export Controls May Not Stop the Transfer of Sensitive Technology to Foreign Nationals in the U.S.". See, Federal Register, March 28, 2005, Vol. 70, No. 58, at Pages 15607 - 15609.

Deadline to submit comments to the Copyright Office in response to its notice of proposed rulemaking (NPRM) regarding requiring eligible digital audio services availing themselves of the statutory licenses set forth in 17 U.S.C. §§ 112 and 114 to report their usage of sound recordings. See, notice in the Federal Register, April 27, 2005, Vol. 70, No. 80, at Pages 21704-21711.

Monday, May 30

Memorial Day.

The House will not meet on Monday, May 30 through Friday, June 3. See, House calendar.

The Senate will not meet on Monday, May 30 through Friday, June 3. See, Senate calendar.

The Federal Communications Commission (FCC) and other federal offices will be closed for Memorial Day. See, Office of Personnel Management's (OPM) list of federal holidays.

Wednesday, June 1

Day one of a two day conference titled "Broadband Policy Summit 2005: A New Leadership Blueprint" hosted by Pike & Fischer. See, notice. Location: Willard InterContinental Hotel.

Deadline to submit comments to the National Institute of Standards and Technology (NIST) regarding two modes of operation -- Galois Counter Mode (GCM) or the Carter-Wegman + Counter (CWC) -- for use with the Advanced Encryption Standard (AES). See, NIST web page regarding modes.

Thursday, June 2

10:00 AM - 11:30 AM. The Federal Communications Commission's (FCC) Media Security and Reliability Council (MSRC) will meet. See, notice [PDF]. Location: Commission Meeting Room, FCC, 445 12th Street, SW.

12:15 - 2:30 PM. The DC Bar Association will host a panel discussion titled "The Nuts And Bolts Of Transfers Of Control At The FCC". The speakers will be Jim Bird (FCC Office of General Counsel), William Dever (FCC Wireline Competition Bureau), Susan O'Connell (FCC International Bureau), Nina Shafran (FCC Media Bureau), and Jeff Tobias (FCC Wireless Telecommunications Bureau). The price to attend ranges from $10-$20. For more information, contact 202-626-3463. See, notice. Location: D.C. Bar Conference Center, 1250 H Street NW, B-1 Level.

Day one of a two day conference titled "Broadband Policy Summit 2005: A New Leadership Blueprint" hosted by Pike & Fischer. See, notice. Location: Willard InterContinental Hotel.

People and Appointments

5/25. The Senate confirmed Priscilla Owen to be a Judge of the U.S. Court of Appeals for the 5th Circuit by a vote of 55-43. See, Roll Call No. 128.

5/25. President Bush nominated William Alan Jeffrey to be Director of the National Institute of Standards and Technology (NIST). Bush announced his intent to make this nomination on May 24. See, White House release.

5/25. President Bush nominated Kathie Olsen to be Deputy Director of the National Science Foundation (NSF). Bush announced his intent to make this nomination on May 24. See, White House release.

More News

5/25. The Government Accountability Office (GAO) released a report [PDF] titled "Electronic Government: Funding of the Office of Management and Budget’s Initiatives".

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