7/21. The U.S. Court of Appeals (6thCir) issued its opinion [5 pages in PDF] in BellSouth v. Universal Telecom, an interconnection case.

For the purposes of this case, BellSouth is an incumbent local exchange carrier (ILEC), and Universal Telecom is a competitive local exchange carrier (CLEC). The Kentucky Public Service Commission (KPSC) is the state of Kentucky's communications regulatory commission with authority under 47 U.S.C. §§ 251 and 252.

47 U.S.C. § 251 provides, at subsection (a)(1), that "Each telecommunications carrier has the duty -- (1) to interconnect directly or indirectly with the facilities and equipment of other telecommunications carriers".

47 U.S.C. § 252 provides, at subsection (a)(1), that "Upon receiving a request for interconnection, services, or network elements pursuant to section 251 of this title, an incumbent local exchange carrier may negotiate and enter into a binding agreement with the requesting telecommunications carrier or carriers ..."

47 U.S.C. § 252(e) requires that such agreements must be submitted for approval or rejection to the state commission. Back in 2002 BellSouth and MCI completed the negotiation of an interconnection agreement. It contained a change in law provision. The KPSC approved it on August 28, 2002.

47 U.S.C. § 252(i) provides in full that "A local exchange carrier shall make available any interconnection, service, or network element provided under an agreement approved under this section to which it is a party to any other requesting telecommunications carrier upon the same terms and conditions as those provided in the agreement."

Universal Telecom, taking advantage of subsection 252(i) notified BellSouth on March 12, 2004, that it wished to adopt the MCI interconnection agreement. BellSouth refused.

The KPSC then issued an order, pursuant to 47 U.S.C. § 252(i), allowing Universal Telecom to adopt the existing interconnection agreement between BellSouth and MCI.

BellSouth filed a complaint in U.S. District Court (EDKy) against Universal Telecom, the KPSC, and its members, challenging the decision of the KPSC. The District Court affirmed the order of the KPSC. And, in the present opinion, the Court of Appeals affirmed the judgment of the District Court.

BellSouth argued that notwithstanding subsection 252(i) it should not have to enter into an interconnection agreement with Universal Telecom upon the same terms and conditions as contained in the MCI agreement because of the expiration of a reasonable period of time.

The Federal Communications Commission (FCC) has promulgated a rule, which is codified at 47 C.F.R. § 51.809(c), that provides, in part, that a subsection 252(i) request to adopt a prior interconnection agreement must be made within "a reasonable period of time after the approved agreement is available for public inspection". The FCC's rules contain no fixed time limit. The FCC rule references time, but not change in the law.

BellSouth argued that between the time that it reached its agreement with MCI, and the time that Universal Telecom requested to adopt that agreement, the FCC issued two orders that changed the legal environment in which interconnection agreements are negotiated.

The FCC adopted its the ISP remand order, which governs telecommunications traffic bound for ISPs. However, the Court of Appeals wrote that since Universal Telecom is not an ISP, the relevant part of the MCI agreement would not affect Universal Telecom.

The FCC also adopted it triennial review order. The Court Appeals wrote, however, that BellSouth failed to explain "what it is about the Triennial Review Order that makes adoption of the BellSouth-MCI agreement infeasible, unduly costly, or otherwise indicative that an unreasonable time for adopting the agreement has run."

The Court of Appeals added that "The company also has failed to explain why the MCI agreement’s change-of-law provision does not solve this problem and indeed acknowledged at oral argument that it has not yet sought relief under this provision."

While the Court of Appeals affirmed the District Court (which upheld the KPSC order), it wrote no clear rule. It did conclude that "any" change in law was insufficient for an ILEC to avoid a prior agreement.

It also wrote that "We have no doubt that intervening changes in the law are one of the reasons for the ``reasonable period of time´´ limitation, and it may well be that the FCC has authority in construing its own regulation to say that certain significant orders necessarily run out the reasonable-period clock. But that hardly proves that any change in law, no matter how soon after approval of the underlying agreement and no matter how irrelevant to that agreement, necessarily establishes that a ``reasonable period of time´´ has run. Were that the FCC’s objective, one would not expect the agency to promulgate a regulation using time and time alone as its measure."

It added the the term "reasonable" in the FCC rule "plainly is a relative term, dependent on context and circumstances, and the FCC’s invocation of that term here casts considerable doubt on the contention that a change in law necessarily establishes that a reasonable period of time has lapsed."

This case is BellSouth Telecommunications Inc. v. Universal Telecom, Inc., et al., U.S. Court of Appeals for the 6th Circuit, App. Ct. No. 05-5674, an appeal from the U.S. District Court for the Eastern District of Kentucky at Frankfort, D.C. No. 04-00035, Judge Joseph Hood presiding. Judge Boggs wrote the opinion of the Court of Appeals, in which Judges Keith and Sutton joined.

7/24. The Federal Communications Commission (FCC) released the text [157 pages in PDF] of its Memorandum Opinion and Order that approves the sale of most of the cable systems and assets of Adelphia Communications Corporation to Time Warner Inc. and Comcast Corporation, subject to conditions.

The FCC adopted, but did not release, this item at its July 13, 2006, meeting. See also, story titled "FCC Approves Sales of Adelphia Assets" in TLJ Daily E-Mail Alert No. 1,411, July 17, 2006. This item is FCC 06-105 in MB Docket No. 05-192.

The MOO addresses network neutrality issues at paragraphs 212-223. The MOO states that "Several commenters assert that the proposed transactions would reduce competition in the market for residential high-speed Internet access or would facilitate discrimination by Comcast or Time Warner against unaffiliated providers of Internet content or applications."

However, the MOO does not include a condition similar to that contained in the AOL-Time Warner order in 2001, which required AOL Time Warner to give unaffiliated ISPs open access to its cable systems. Nor does the MOO condition approval upon compliance with the FCC's policy statement [3 pages in PDF], adopted on August 5, 2005, and released on September 23, 2005. See also, story titled "FCC Adopts a Policy Statement Regarding Network Neutrality" in TLJ Daily E-Mail Alert No. 1,190, August 8, 2005, and story titled "FCC Releases Policy Statement Regarding Internet Regulation" in TLJ Daily E-Mail Alert No. 1,221, September 26, 2005.

The MOO concludes that "the transactions are not likely to increase incentives for either Comcast or Time Warner to engage in conduct that is harmful to consumers or competition with respect to the delivery of Internet content, services, or applications given the competitive nature of the broadband market."

It finds that recently, "consumers have gained access to more choice in broadband providers", and that "cable modem service and DSL service are facing emerging competition from deployment of cellular, WiFi, and WiMAX-based competitors, and broadband over power line (BPL) providers."

It also concludes that increased penetration of broadband services "has been accompanied by more vigorous competition. In turn, greater competition limits the ability of providers to engage in anticompetitive conduct, a concern of some commenters, since subscribers would have the option of switching to alternative providers if their access to content were blocked or degraded."

The MOO states that "The only specific factual allegation in the record concerns an instance of e-mails being inadvertently blocked by a Comcast firewall provider." (Footnotes removed from this and other quotes.)

It adds that "There is no evidence that the block was motivated by subjective judgments regarding the content being transmitted or that it was anything other than the result of a legitimate spam filtering effort by Symantec."

The MOO concludes that "There is, other than this, no record evidence indicating that Comcast or Time Warner has willfully blocked a web page or other Internet content, service, or application via its high speed Internet platforms. Commenters and petitioners do not offer evidence that Time Warner and Comcast are likely to discriminate against Internet content, services, or applications after the proposed transactions are complete; nor do they explain how the changes in ownership resulting from the transactions could increase Time Warner’s or Comcast’s incentive to do so.

The MOO adds that "If in the future evidence arises that any company is willfully blocking or degrading Internet content, affected parties may file a complaint with the Commission."

Finally, the MOO discusses the FCC's policy statement. It states that "This statement reflects the Commission’s view that it has the jurisdiction necessary to ensure that providers of telecommunications for Internet access or Internet Protocol-enabled (IP-enabled) services are operated in a neutral manner."

The MOO continues that "The Commission held out the possibility of codifying the Policy Statement’s principles where circumstances warrant in order to foster the creation, adoption, and use of Internet broadband content, applications, services, and attachments, and to ensure consumers benefit from the innovation that comes from competition. Accordingly, the Commission chose not to adopt rules in the Policy Statement. This statement contains principles against which the conduct of Comcast, Time Warner, and other broadband service providers can be measured. Nothing in the record of this proceeding, however, demonstrates that these principles are being violated by Comcast or Time Warner or that the transactions before us create economic incentives that are likely to lead to violations. Additionally, the vigorous growth of competition in the high-speed Internet access market further reduces the chances that the transactions are likely to lead to violations of the principles."

7/24. The Seniors Coalition published a report [91 pages in PDF] titled "``Universal Service´´ Telephone Subsidies: What Does $7 Billion Buy". The author is Tom Hazlett, a professor of law and economics at George Mason University, and a former Chief Economist of the Federal Communications Commission (FCC).

The report concludes that universal service "benefits are largely distributed to shareholders of rural telephone companies, not consumers, and fail -- on net -- to extend network access." It also argues that "the incentives created by these subsidies encourage widespread inefficiency and block adoption of advanced technologies -- such as wireless, satellite, and Internet-based services -- that could provide superior voice and data links at a fraction of the cost of traditional fixed-line networks."

High Cost Fund. The paper notes the potential for VOIP services provided over cable broadband connections, and wireless services, to substitute for subsidized wireline service. It argues that "no more than two or three percent of Americans are beyond the reach of communications systems offering an alternative to traditional fixed line phone service". It adds that satellite service could provide service for remote locations and mission critical functions. It concludes that the "emergence of these multiple rival networks allows us to plausibly consider capping, reducing, or even abolishing the $3.7 billion per year high-cost fund."

The paper takes issue with the high cost fund's subsidization of carriers, rather than consumers. It argues that this leads to great inefficiency. It states that some rural telephone companies manage to spend over $500 per year per subscriber just on corporate overhead, and up to $13,345 per line per year to provide service to remote areas. The paper jests that "It would be cheaper to purchase a $3,000 solar-powered, self-contained satellite phone booth for each residential unit than to continue doling out payments to the highest cost rural carriers".

The paper argues that if high cost universal service subsidies are continued that the government should consider auctioning the "provider of last resort" duty to the low-cost bidder, or "distributing subsidies not to carriers (encouraging cost inflation) but to consumers in the form of phone service vouchers (thus encouraging smart shopping)". (Parentheses in original.)

E-Rate. The paper concludes that "The E-Rate program generously funds computers and computer network connections in educational institutions. Much of this spending would likely take place without the E-Rate program, especially in higher income areas, while lax oversight results in gold-plated systems and fraud. More generally, research on student achievement suggests that E-Rate program benefits are unproven."

It adds that the program also leads to both "gold-plating and fraud". Moreover, by taxing productive activities, it may result in lost economic output greater than the taxes collected.

7/24. The Federal Communications Commission (FCC) released Notice of Proposed Rulemaking [22 pages in PDF] in a new proceeding titled "In the Matter of Amendment of Section 90.20(e)(6) of the Commission's Rules". This is a reaction to Lojack's petition for rulemaking relating to the use of spectrum for stolen vehicle recovery systems (SVRS). The FCC proposes to revise section 90.20(e)(6) of its rules "to permit increased mobile output power, to permit digital emissions in addition to the analog emissions currently authorized by the Rules, and to relax the limitations on duty cycles", among other things. The FCC adopted this item on July 19, 2006, and released it on July 24, 2006. It is FCC 06-107, in WT Docket No. 06-142. Comments will be due 30 days after publication of a notice in the Federal Register. Reply comments will be due 45 days after such publication.

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The House will meet at 12:30 PM for morning hour, and at 2:00 PM for legislative business. Votes will be postponed until 6:30 PM. It will consider numerous non-technology related items under suspension of the rules. See, Republican Whip Notice.

8:30 AM - 2:30 PM. The Center for American Progress (CAP) will host an event titled "The Internet and the Future of Consumer Protection". The speakers will be Sarah Wartell (CAP), Teresa Schwartz (George Washington University), Eileen Harrington, (Deputy Director of the FTC Bureau of Consumer Protection), Peter Swire (Ohio State University) Susan Grant (National Consumers League), Jules Polonetsky (America Online), Ari Schwartz (Center for Democracy and Technology), Frank Torres (Microsoft), Jodie Bernstein, Thomas Rosch (FTC Commissioner), Jon Leibowitz (FTC Commissioner), Robert Pitofsky, and Howard Beales. See, notice. Location: CAP, 1333 H Street, NW, 10th Floor.

11:00 AM. The Heritage Foundation will host a panel discussion titled "Rethinking Visa Policy for the 21st Century". See, notice. The speakers will be Stewart Baker (DHS's Assistant Secretary for Policy), Dan Griswold (Cato Institute), Michael McCarry (Alliance for International Educational and Cultural Exchange), and James Carafano (Heritage). Location: Heritage, 214 Massachusetts Ave., NE.

5:00 PM. The House Rules Committee will meet to adopt a rule for consideration of HR 1956, the "Business Activity Tax Simplification Act of 2006". Location: Room H-313, Capitol Building.

The House will meet at 9:00 AM for morning hour, and at 10:00 AM for legislative business. The House will consider HR 5852, the "21st Century Emergency Communications Act of 2006" HR 1956, the "Business Activity Tax Simplification Act of 2006". See, Republican Whip Notice.

9:30 AM - 12:00 NOON. The American Enterprise Institute (AEI) will host a program titled "Strengthening the U.S.-Taiwan Relationship: The Prospects for a Free Trade Agreement". Steve Ruey-Long Chen (Ministry of Economic Affairs of Taiwan) will give the keynote address at 9:30 AM. There will be a panel discussion at 10:00 AM. The speakers will be Claude Barfield (AEI), Rupert Hammond-Chambers (U.S.-Taiwan Business Council), Webster Wei-Ping Kiang (Chinatrust Commercial Bank), and Chun-Der Wu (Institute for Information Industry). See, notice. Location: AEI, 12th floor, 1150 17th St., NW.

9:30 AM - 5:30 PM. The Antitrust Modernization Commission (AMC) will hold a meeting to deliberate on possible recommendations regarding the antitrust laws to Congress and the President. The meeting is open to the public, but registration is required. See, notice in the Federal Register, June 23, 2006, Vol. 71, No. 121, at Pages 36059-36060.

10:00 AM. Senate Judiciary Committee (SJC) Staff Director Mike O’Neill will hold a background briefing for reporters on the Terrorist Surveillance Plan / FISA compromise that was reached between Sen. Arlen Specter (R-PA) and the Bush administration. RSVP to Courtney_Boone at judiciary-rep dot senate dot gov or 202-228-5860. Location: Room 226, Dirksen Senate Office Building.

10:30 AM. The Senate Finance Committee will hold a hearing titled "How Much Should Borders Matter?: Tax Jurisdiction in the New Economy". The witnesses will be Sen. Michael Enzi (R-WY), Sen. Byron Dorgan (D-ND), Daniel Noble (Wyoming Department of Revenue), George Isaacson (Brann & Isaacson, Lewiston), Christopher Rants (Speaker of the Iowa House of Representatives), Robert Benham (Balliet's, LLC), Gary Imig (Sierra Trading Post), Douglas Lindholm (Council on State Taxation), Dan Bucks (Montana Department of Revenue), and Michael Mundaca (Ernst & Young). See, notice. Location: Room 215, Dirksen Building.

11:30 AM. The House Judiciary Committee's (HJC) Subcommittee on Commercial and Administrative Law will hold an oversight hearing titled "The 60th Anniversary of the Administrative Procedure Act: Where Do We Go From Here?" See, notice. The hearing will be webcast by the HJC. Press contact: Jeff Lungren or Terry Shawn at 202-225-2492. Location: Room 2141, Rayburn Building.

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

9:00 AM - 4:00 PM. Day one of a two day public meeting of the Federal Accounting Standards Advisory Board (FASAB). See, agenda [PDF] and notice in the Federal Register, July 12, 2006, Vol. 71, No. 133, at Pages 39318. Location: Room 7C13, GAO Building, 441 G St., NW.

9:30 AM. The Senate Judiciary Committee (SJC) may hold a hearing titled "FISA for the 21st Century". See, notice. The SJC frequently cancels or postpones hearings without notice. Press contact: Courtney Boone at 202-224-5225. Location: Room 226, Dirksen Building.

9:30 AM - 5:30 PM. The Antitrust Modernization Commission (AMC) will hold a meeting to deliberate on possible recommendations regarding the antitrust laws to Congress and the President. The meeting is open to the public, but registration is required. See, notice in the Federal Register, June 23, 2006, Vol. 71, No. 121, at Pages 36059-36060.

12:00 NOON - 2:00 PM. The DC Bar Association's Intellectual Property Law Section will host a panel discussion titled "Introduction To Patent Law and Trade Secret Law". The speakers will include Steven Warner (Fitzpatrick Cella Harper & Scinto) and Milton Babirak (Babirak Vangellow & Carr). The price to attend ranges from $15-$30. For more information, call 202-626-3463. See, notice. Location: D.C. Bar Conference Center, 1250 H Street NW, B-1 Level.

12:15 - 1:15 PM. Federal Trade Commission (FTC) Commissioner Thomas Rosch will speak at a brown bag lunch regarding "(1) the Closing of the Investigation for Transactions Involving Comcast, Time Warner Cable, and Adelphia Communications; (2) In re Valassis Communications, Inc.; and (3) Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co." See, ABA notice. RSVP to Laverne Mimms at LMimms at OMM dot com. Location: O'Melveny & Myers, 1625 Eye Street, NW, Conference Room 10K/L.

2:00 - 5:00 PM. The National Telecommunications and Information Administration (NTIA) will hold a meeting regarding management of the internet domain name and addressing system. See, NTIA notice and notice in the Federal Register, Federal Register, May 26, 2006, Vol. 71, No. 102, at Pages 30388-30389. Location: auditorium of the Department of Commerce's main building at 1401 Constitution Ave., NW.

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

9:00 AM. The House Judiciary Committee's Subcommittee on Courts, the Internet and Intellectual Property will hold a hearing on HR 5055, an untitled bill to amend the Copyright Act to provide to protection for fashion design. See, notice. Press contact: Jeff Lungren or Terry Shawn at 202-225-2492. Location: Room 2141, Rayburn Building.

9:00 AM - 4:00 PM. Day one of a two day public meeting of the Federal Accounting Standards Advisory Board (FASAB). See, agenda [PDF] and notice in the Federal Register, July 12, 2006, Vol. 71, No. 133, at Pages 39318. Location: Room 7C13, GAO Building, 441 G St., NW.

11:45 AM - 1:15 PM. The Federal Communications Bar Association's (FCBA) Young Lawyers Committee will host a brown bag lunch titled "The Role of Communications Trade Association Counsel and Policymakers". The speakers will be Dan Brenner (National Cable & Telecommunications Association), Carolyn Brandon (Cellular Telecommunications & Internet Association), Ann Bobeck (National Association of Broadcasters), Colin Sandy (National Exchange Carriers Association), and David Cavossa (Satellite Industry Association). Location: Willkie Farr & Gallagher, 1875 K Street, NW.

6:00 - 8:00 PM. The DC Bar Association will host a continuing legal education (CLE) seminar titled "Trade Secrets: Case Law Update 2006". The speakers will include Milton Babirak (Babirak Vangellow & Carr). The price to attend ranges from $70-$125. For more information, call 202-626-3488. See, notice. Location: D.C. Bar Conference Center, 1250 H Street NW, B-1 Level.

The House may meet at 9:00 AM for legislative business. See, Republican Whip Notice.

9:30 AM. The Senate Homeland Security and Governmental Affairs Committee's Subcommittee on Federal Financial Management, Government Information, and International Security will hold a hearing titled "Cyber Security: Recovery and Reconstitution of Critical Networks". The witnesses will be George Foresman (Virginia's Under Secretary for Preparedness), Richard Schaeffer (NSA's Director of Information Assurance), Karen Evans (OMB), David Powner (GAO), Tom Noonan (ISS), Roberta Bienfait (AT&T), Michael Aisenberg (Verisign), Karl Brondell (State Farm, for the Business Roundtable). See, notice. Location: Room 342, Dirksen Building.

The House will not meet from Monday, July 31 (tentative), through Monday, September 4. See, Majority Whip's calendar.

Deadline to submit comments to the National Institute of Standards and Technology (NIST) regarding NIST Special Publication 800-53A [305 pages in PDF], titled "Guide for Assessing the Security Controls in Federal Information Systems".

Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its Further Notice of Proposed Rulemaking (FNPRM) regarding on whether and how an open global database of proxy numbers of Video Relay Service (VRS) users may be created so that a hearing person may call a VRS user through any VRS provider without having to ascertain the first VRS user's current internet protocol address. See, notice in the Federal Register, May 31, 2006, Vol. 71, No. 104, at Pages 30848-30856. This FNPRM is FCC 06-57 in CG Docket No. 03-123.

Extended deadline to submit comments to the U.S. Patent and Trademark Office (USPTO) in response to its notice in the Federal Register regarding revisions to guidelines used by USPTO personnel in their review of patent applications to determine whether the claims in a patent application are directed to patent eligible subject matter. The USPTO seeks comments on, among other topics, "claims that perform data transformation" and "claims directed to a signal per se". With respect to the later, the USPTO asks "If claims directed to a signal per se are determined to be statutory subject matter, what is the potential impact on internet service providers, satellites, wireless fidelity (WiFi [reg]), and other carriers of signals?" See, Federal Register, December 20, 2005, Vol. 70, No. 243, at Pages 75451 - 75452. See also, story titled "USPTO Seeks Comments on Subject Matter Eligible for Patents" in TLJ Daily E-Mail Alert No. 1,278, December 22, 2005. See also, notice in the Federal Register (June 14, 2006, Vol. 71, No. 114, at Pages 34307-34308) extending deadline, and story titled "USPTO Seeks Further Comments on Patentable Subject Matter" in TLJ Daily E-Mail Alert No. 1,391, June 14, 2006.