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January 9, 2008, Alert No. 1,698.
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Apple Announces iTunes Price Drop in UK Following EC Antitrust Investigation

1/9. The European Commission (EC) and Apple issued releases on January 9, 2008, that pertain to the EC's efforts to regulate the business practices of Apple and various record companies in the distribution of music online.

The EC has in recent years undertaken to regulate U.S. technology companies. The EC asserts, sometimes without merit, that it is applying economic analysis and limiting anti-competitive conduct.

The present EC investigation of Apple and record companies, begun in April of 2007, concerns the pricing and availability of music downloads in European nations. Apple distributes music by national markets, using credit card information to determine the residency of the purchaser.

A United Kingdom group named Which filed a complaint with the EC. It complained that Apple charged slightly more for downloads in the UK than in other European nations.

Price discrimination by geographic market, by category of purchaser, and by other criteria, is a common feature of many industries. For example, the UK's BBC charges significantly more to US consumers than to European consumers for DVD purchases.

The group named Which argued that Apple's charging of different prices in different countries violated "the principles of a single European market".

Apple and the record companies face different copyright regimes in different European nations.

The EC issued only a short news release on January 9, 2008. It praises "Apple's announcement to equalize prices", and states that the EC's "antitrust proceedings have also clarified that it is not agreements between Apple and the major record companies that determine how the iTunes store is organized in Europe. Consequently, the Commission does not intend to take further action in this case."

The EC release also states that this antitrust proceeding finds "that there is no agreement between Apple and the major record companies regarding how the iTunes store is organized in Europe. Rather, the structure of the iTunes store is chosen by Apple to take into account the country-specific aspects of copyright laws."

Apple stated in a release of April 9, 2008, without referencing the antitrust proceeding, that "within six months it will lower the prices it charges for music on its UK iTunes® Store to match the already standardized pricing on iTunes across Europe in Austria, Belgium, Denmark, Germany, Finland, France, Greece, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal, Sweden, Switzerland and Spain. Apple currently must pay some record labels more to distribute their music in the UK than it pays them to distribute the same music elsewhere in Europe. Apple will reconsider its continuing relationship in the UK with any record label that does not lower its wholesale prices in the UK to the pan-European level within six months."

Chris Warner, of the group named Which, stated in a release that "We complained about Apple's price discrimination back in 2004 -- so we're glad it's finally agreed to give British music lovers a fair deal." He added that "We hope that other internet companies -- including other online music companies -- will now follow Apple's lead and ensure their UK prices are aligned with those in continental Europe." See also, Which's release of September 15, 2004.

Nellie KroesNellie Kroes (at left), the EC Competition Commissioner, stated in the EC release that "The Commission is very much in favor of solutions which allow consumers to benefit from a truly Single Market for music downloads".

Kroes gave a series of speeches late last year in which she offered her take on antitrust based regulation in Europe. See, speech in Barcelona, Spain, on November 19, 2007, titled "Assessment of and perspectives for competition policy in Europe"; speech in Lisbon, Portugal, on November 15, 2007, titled "Helping Europeans get the best deal: a sound competition policy for well-functioning markets"; and speech in Brussels, Belgium, on October 20, 2007, regarding Microsoft's capitulation.

TLJ requested, but did not receive, from the EC any orders or decisions of the EC, or agreements between the EC and Apple, that relate to the just announced disposition.

USTR Schwab Addresses Trade in Electronics

1/8. Susan Schwab, head of the Office of the U.S. Trade Representative (OUSTR), gave a speech [PDF] in Las Vegas, Nevada, on January 7, 2008, at the annual Consumer Electronics Show (CES) in which she advocated free trade and explained why it is important to the consumer electronics sector.

She stated in the prepared text of her speech that "ninety five percent of the world's consumers live outside the United States. We need to pry open growing markets so U.S. consumer electronic products and services are available to these billions of consumers. We need to promote free trade, not cower from it."

Gary Shapiro, head of the Consumer Electronics Association (CEA), gave a speech on January 8 in which he too advocated free trade. He said that the successes of the consumer electronics industry and the U.S. economy "are not guaranteed -- they stem from one source -- a vibrant free market that encourages trade in innovative goods and services. Innovation can be slowed, products can be priced out of reach, competition can be choked and services can be restricted".

Susan SchwabSchwab (at right) elaborated on the agenda of the OUSTR. "Topping our priority list is to secure Congressional approval of the pending Free Trade Agreements with Colombia, Panama, and Korea, and keeping our multilateral efforts in the Doha Development Round and the Information Technology Agreement on track."

She added that "the FTAs we negotiate include provisions preventing discriminatory treatment of digital products delivered over the internet such as software, games, videos, music. We have this for physical products in the WTO, but not for products delivered electronically."

"Embedded in our FTAs as well is our commitment to not only open foreign markets for telecommunication services, but also to ensure that access to networks is reasonable and non-discriminatory and governed by transparent rules and rule-making procedures", said Schwab.

The OUSTR has negotiated a FTA with Korea, but the Congress has yet to approve it. Schwab said that this FTA "is our most commercially significant agreement in at least 15 years."

"South Korea is one of the world’s largest markets for high-tech goods from the United States. Only five countries are larger export destinations for American tech products than South Korea." She noted that the U.S. "exports more to South Korea than to the United Kingdom or France."

She argued that "It would be unconscionable for Congress to let this languish."

See, story titled "US and Korea Announce FTA" in TLJ Daily E-Mail Alert No. 1,559, April 2, 2007. See also, text of the agreement, and particularly, sections regarding telecommunications [17 pages in PDF], electronic commerce [4 pages in PDF], intellectual property rights [35 pages in PDF].

Schwab also addressed the long running World Trade Organization (WTO) Doha round negotiations. She said that "we are working with U.S. industry and several WTO Members to promote a sectoral initiative in the Doha negotiations to eliminate tariffs on electronics and electrical products. For those of you from Europe and other sources and markets, for your products, we would like to see governments step to promote the sectoral initiative. We are also developing an initiative to address non-tariff barriers -- such as regulatory and standards policies in many countries."

Finally, she addressed the Information Technology Agreement. She said that it has been an "unqualified success in promoting trade, jobs, and investment in the information technology sector".

However, she added that "the United States and other ITA participants continue to have serious concerns about recent actions by Europe that would no longer guarantee duty-free treatment on key ITA covered products, many of which are presented here at the CES. Technology convergence should not be an excuse to raise tariffs. In fact, as noted, we want to expand and build on the ITA through a sectoral agreement in the Doha round."

Shapiro articulated an ominous warning. He said "never before have I been as concerned that some in our country might hurt our leadership of the digital revolution".

"Storm clouds are gathering. After decades of bipartisan support for free trade, we hear thunderous voices in the media, in Congress and even presidential candidates advocating protectionism as a solution to American woes. We see isolationism gaining favor from those who want a wall around this nation. This is a dangerous and disturbing trend. If followed, it will lead to economic disaster. Free trade is critical to our industry and our technology leadership."

He also preached the gospel of technology, trade, and competition. He said that "our technologies along with free trade share something else in this increasingly divided world. They are blind to religion, blind to sexual orientation, blind to race, national origin and ethnicity and they allow the disabled to succeed alongside those who are not disabled. Trade and technology are remedies for that which divides us. They shatter our differences. They unite us. They offer a shared experience. For those that are less fortunate, free trade and its twin, competition, bring lower prices and increase access to the world of entertainment, education and information."

This trinity, said Shapiro, creates "opportunities for entrepreneurs", rewards "hard work and innovation", creates "new outlets for creativity", and raises "the living standards for global citizens".

Shapiro advocated approval of FTAs and extension of Presidents' trade promotion authority, under which the President, through the OUSTR, negotiates FTAs which the Congress can approve or reject, but not amend. He also urged CEA members to contact their representatives in Congress.

He concluded, "We can be isolationists with a weak economy, and the nation that used to lead the world in democracy, freedom, innovation and trade. Or we can be the bright beacon for those willing to take risks, work hard, innovate and compete."

People and Appointments

1/7. Andrea Jung was elected to Apple's Board of Directors. Jung is Ch/CEO of Avon Products, which produces cosmetics for women. She also speaks Mandarin Chinese. See, Apple release.

More News

1/9. The Motion Picture Association (MPA) announced in a release [PDF] that a trial court in Hong Kong "ordered the forfeiture of five VCD lines, each worth HK$3 million, used to produce pirated VCDs. The forfeiture order was issued after the conclusion of criminal trial and appeal procedures in 2005 when three defendants, including the owners of the factories were sentenced to imprisonment for periods ranging between 21 and 30 months." This forfeiture order came 9 years after the original seizure, in 1998. MPA representatives praised the order.

1/9. The Department of Justice (DOJ) published a notice in the Federal Register that announces, describes, recites, and sets the effective date (January 9, 2008) for, changes to its rules that provide whistleblower protections to Federal Bureau of Investigation (FBI) employees. See, Federal Register, January 9, 2008, Vol. 73, No. 6, at Pages 1493-1495.

1/8. Microsoft announced in a release that "it will make an offer to acquire" Fast Search & Transfer ASA, a "provider of enterprise search solutions, through a cash tender offer for 19.00 Norwegian kroner (NOK) per share."

1/7. The National Telecommunications and Information Administration (NTIA) issued a release regarding the DTV transition. It states that "more than 250 retailers, representing more than 15,000 outlets nationwide, are certified to participate in a program to aid in the transition to digital television. Also, 19 converter box models are eligible for purchase with the coupon and more are being tested as part of the certification process."

Washington Tech Calendar
New items are highlighted in red.
Thursday, January 10

11:00 AM. The National Science Foundation's (NSF) National Science Board's (NSB) Committee on Programs and Plans will hold a teleconferenced public meeting. See, notice in the Federal Register, December 31, 2007, Vol. 72, No. 249, at Page 74347. Location: 4201 Wilson Blvd., Arlington, VA.

12:30 - 1:30 PM. The DC Bar Association will host a closed event titled "2008: Washington’s View of the Year for Telecom, Media and IT". The speakers will be Carolyn Brandon (CTIA), Jessica Rosenworcel (Senate Commerce Committee staff), Brian Huseman (FTC Chief of Staff), Jessica Zufolo (Medley Global Advisors), David Murray (NTIA Senior Advisor), Bruce Gottleib (advisor to FCC Commissioner Michael Copps). The price to attend ranges from $15 to $30. For more information, call 202-626-3463. See, notice. Location: DC Bar Conference Center, B-1 Level, 1250 H St., NW.

Friday, January 11

No events.

Monday, January 14

8:15 AM - 5:00 PM. Day one of a two day conference hosted by the Utilities Telecom Council (UTC) titled "2008 Pole Attachment Meeting". On January 14, there will be programs titled "Overview of the FCC Notice of Proposed Rulemaking", "Access Issues: Application Processing", "Access Issues: Make Ready", "Access Issues: NESC Interpretation", "Access Issues: Audits and Inspections", "Rate Issues: Broadband Rate -- What should it be?", and "Rate Issues: Legal/Regulatory Strategies". See, notice. Location: Marriott Washington, 1221 22nd St.,  NW.

CANCELLED. 12:00 NOON - 2:00 PM. The DC Bar Association will host a program titled "The Foreign Corrupt Practices Act: Part I". For more information, call 202-626-3463. See, notice. Location: DC Bar Conference Center, B-1 Level, 1250 H St., NW.

Deadline to submit initial comments to the Federal Communications Commission (FCC) in response to its Notice of Proposed Rulemaking (NPRM) in which it proposes to extend the current five year registration period for the Do Not Call Registry. This NPRM is FCC 07-203 in CG Docket No. 02-278. See, notice in the Federal Register, December 14, 2007, Vol. 72, No. 240, at Pages 71099-71102. See also, story titled "FCC Adopts NPRM Regarding Extending Do Not Call Registrations" in TLJ Daily E-Mail Alert No. 1,680, November 30, 2007.

Tuesday, January 15

The House is scheduled to return from recess. Votes will be postponed at least until 6:30 PM. See, Rep. Hoyer's 2008 calendar [4.25 MB PDF].

8:15 AM - 12:45 PM. Day two of a two day conference hosted by the Utilities Telecom Council (UTC) titled "2008 Pole Attachment Meeting". On January 15, there will be programs titled "Rate Issues: What Happens to Joint Use?", "Case Study: Arkansas State Certification", "Case Study: Unauthorized Attachments and Code Compliance", and "Case Study: Muni Wireless". See, notice. Location: Marriott Washington, 1221 22nd St., NW.

12:15 - 1:30 PM. The Federal Communications Bar Association's (FCBA) Wireline Committee will host a closed brown bag lunch titled "Forbearance". The speakers will be John Nakahata (Harris Wiltshire & Grannis), Neil Fried (Republican Senior Counsel, House Commerce Committee), Amy Levine (Democratic Legislative Counsel, House Commerce Committee), Genny Morelli (Kelley Drye & Warren), and Bennett Ross (Wiley Rein). See, notice. Location: Wilmer Hale, 1875 Pennsylvania Ave., NW.

3:30 - 5:00 PM. The National Association of Broadcasters (NAB) will host a closed webcast seminar titled "What Every Station Should Know about Political Advertising". The speakers will include Bobby Baker (head of the FCC's Office of Political Programming). See, notice. This event is closed to all but NAB members.

Wednesday, January 16

The House is scheduled to be in session. See, Rep. Hoyer's 2008 calendar [4.25 MB PDF].

8:00 - 9:30 AM. The Northern Virginia Technology Council (NVTC) will host a breakfast program titled "Old Media Meets New Media: Advertising Sales and the Internet". See, notice. The price to attend ranges from $45-$85. Location: Oracle, 1910 Oracle Way, Reston, VA.

10:00 AM. The Supreme Court will hear oral argument in Quanta Computer v. LG Electronics. See also, story titled "Supreme Court to Hear Case Regarding Patent Exhaustion Doctrine" in TLJ Daily E-Mail Alert No. 1,683, December 5, 2007.

12:15 - 1:30 PM. The Federal Communications Bar Association's (FCBA) Young Lawyers and Access to Records Committees will host a brown bag lunch titled "FCCdotgov -- Tips and Tricks to Navigating and Using the FCC Website and Online Databases". For more information, contact Chris Bjornson at crbjornson at mintz dot com, Chris Fedeli at chrisfedeli at dwt dot com or Tarah Grant at tsgrant at hhlaw dot com. Location: Mintz Levin, 701 Pennsylvania Ave., NW.

2:30 - 4:30 PM. The Department of State's (DOS) International Telecommunication Advisory Committee (ITAC) will hold a public meeting to prepare advice for the U.S. on positions for the February 2008 meeting of the working groups of the International Telecommunication Union Council. See, notice in the Federal Register, December 31, 2007, Vol. 72, No. 249, at Page 74402. Location: undislcosed.

The Federal Communications Commission's (FCC) 700 MHz auction (Auction Number 73) is scheduled to commence. See, Public Notice [PDF] (DA 07-3415).

The Information Technology Association of America (ITAA), INPUT, and the Software and Information Industry Association (SIIA) will host an event titled "SaaS/Gov '08". See, ITAA notice. For more information, contact Madeleine Rial at mrial at itaa dot org. Location: Ritz Carlton Hotel.

Thursday, January 17

The House is scheduled to be in session. See, Rep. Hoyer's 2008 calendar [4.25 MB PDF].

9:15 AM - 1:30 PM. The AeA will host an event titled "AeA Government-Industry Executive Interchange". The topics to be addressed include "Mobility and Wireless", "Telework" and "Identity Management". See, notice. Location: AeA, 601 Pennsylvania Ave., NW.

9:30 AM. The Federal Communications Commission (FCC) will hold an event titled "Open Commission Meeting". The agenda [PDF] includes adoption of no items. The five Commissioners will hear from four panels comprised of FCC staff. Location: FCC, Commission Meeting Room.

2:00 - 4:00 PM. The Department of State's (DOS) International Telecommunication Advisory Committee (ITAC) will meet to prepare for advice for the U.S. on positions for the February 2008 meeting of the Telecommunication Development Advisory Group (TDAG) of the International Telecommunication Union (ITU-D). See, notice in the Federal Register, December 19, 2007, Vol. 72, No. 243, at Page 71992. Location: DOS Main, Room 5804, 2201 C St., NW.

Friday, January 18

The House is scheduled to be in session. See, Rep. Hoyer's 2008 calendar [4.25 MB PDF].

8:00 - 9:30 AM. The Northern Virginia Technology Council (NVTC) will host a breakfast program titled "Have it All! Raise Capital to Pursue Government and Commercial Success: FortiusOne and its Investors Tell All". See, notice. The price to attend ranges from free to $85. Location: Price Waterhouse, 1800 Tysons Blvd., 9th floor, McLean, VA.

9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in New Jersey Department of Public Advocacy v. FCC, a petition for review of an Federal Communications Commission (FCC) order pertaining to the rates the local exchange carriers (LECs) charge independent payphone service providers (IPSPs). See, FCC's brief [51 pages in PDF]. This case is numbered App. Ct. No. 07-1020. Location: 333 Constitution Ave., NW.

Highlights of
Anti-Spyware Coalition Workshop
Capitol Hill Hyatt Regency, January 31)

9:00 AM. Opening speech.
9:45 AM. Panel titled "User Behavior & Spyware". The speakers will be Eric Davis (Google), Susannah Fox (Pew Internet & American Life Project), Anna Stepanov (McAfee), and Jeff Fox (Consumer Reports).
11:00 AM. Panel titled "Anti-Spyware Liability". The speakers will be Erik Belt (Bromberg & Sunstein) and Peter Swire (Ohio State University law school).
12:00 NOON. Lunch. The speaker will be Stefan Savage (UC San Diego).
1:30 PM. Panel titled "Is Adware Dead?". The speakers will be Colin O’Malley (TRUSTe), Justin Brookman (Office of the New York Attorney General), Eric Goldman (Santa Clara University law school), and Alissa Cooper (Center for Democracy and Technology).
2:30 PM. Panel titled "CSI Spyware: Can Investigators Stay Ahead of the Bad Guys?". The speakers will be Alex Eckelberry (Sunbelt Software), Chris Boyd (FaceTime Security Labs), Lance James (Secure Science Corporation), Cindy Southworth (National Network To End Domestic Violence), and Luke Erickson (FTC).
4:00 PM. Panel titled "Education: What Works and What Doesn't?". The speakers will be Michael Kaiser (National Center for Victims of Crime), Maxim Weinstein (, Ron Texeira (National Cyber Security Alliance), Paula Selis (Office of the Washington Attorney General), Cynthia Fraser (NNEDV), and Nathaniel Wood (FTC).
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