News from October 11-15, 2002

Sen. McCain Introduces Telecom Ownership Diversification Bill

10/15. Sen. John McCain (R-AZ) introduced S 3112, the Telecommunications Ownership Diversification Act of 2002. This bill amends the Internal Revenue Code of 1986 to provide for a deferral of tax on gain from the sale of telecommunications businesses in specific circumstances or a tax credit and other incentives to promote diversity of ownership in telecommunications businesses. It was referred to the Senate Finance Committee.

Sen. McCain stated that "This legislation is designed to ensure that new entrants and small businesses will have the chance to participate in today's telecommunications marketplace. At a time when the telecommunications industry is economically depressed, this bill promotes the entry of new competitors and small businesses into the field by providing carefully limited changes to the tax law."

He explained that "This legislation would give sellers of telecommunications businesses a tax deferral when their assets are bought for cash by small business telecom companies. It would also encourage the entry of new players and the growth of existing small businesses by enabling the seller of a telecom business to claim a tax deferral on capital gains if it invests the proceeds of any sale of its business in purchasing an interest in an eligible small telecom business." See, Congressional Record, October 15, 2002, at S10446.

Federal Communications Commission (FCC) Chairman Michael Powell released a statement [PDF]. He commented that "I applaud and welcome Senator John McCain's on-going and consistent efforts to encourage and facilitate new entry, including women and minorities, into the telecommunications industry. Senator McCain has consistently shown great leadership in his commitment to creating an incentive structure to promote greater inclusiveness in our media and communications delivery sectors and I wholeheartedly support this effort."

Powell concluded that "We must all look for new tools that will promote opportunity for new entry into telecommunications businesses. This tax based incentive system, designed to provide such opportunity while avoiding some of the problems of past programs, would be a welcome addition to the toolbox."

A copy of the bill is in the Congressional Record, October 15, 2002, at S10447-9

People and Appointments

10/15. The Securities and Exchange Commission's (SEC) Division of Corporation Finance (DCF) announced that Gerald Laporte has been appointed Chief of the DCF's Office of Small Business Policy. Laporte was previously an attorney with the law firm of Hogan & Hartson. See, SEC release.

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10/15. The General Accounting Office (GAO) released a report [73 pages in PDF] titled "Electronic Transfers: Use by Federal Payment Recipients Has Increased but Obstacles to Greater Participation Remain".

10/15. The National Institute of Standards and Technology (NIST) published a notice in the Federal Register stating that it has "approved changes to Federal Information Processing Standard (FIPS) 186-2, Digital Signature Standard (DSS). These changes extend the transition period for the implementation of FIPS 186-2 to December 2002 and clarify that a private sector algorithm (PKCS 1, version 1.5 or higher) may be used during the extended transition period." These changes are effective October 15, 2002. See, Federal Register, October 15, 2002, Vol. 67, No. 199, at Pages 63621 - 63622.

10/15. Deputy Secretary of the Treasury Kenneth Dam gave a speech titled "Promoting Growth Throughout the Americas".

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10/14. U.S. Trade Representative (USTR) Robert Zoellick gave a speech [11 pages in PDF] titled "Trading in Freedom: The New Endeavor of the Americas" to the Miami Herald's Sixth Annual Americas Conference.

NTIA Seeks Comments on Wills & Trusts Exception to E-SIGN Act

10/11. The National Telecommunications and Information Administration (NTIA) published a notice in the Federal Register announcing that it is seeking public comments on the wills, codicils, and testamentary trusts exception to the E-SIGN Act.

The Electronic Signatures in Global and National Commerce (E-SIGN) Act provides, at Section 101, for the acceptance of electronic signatures in interstate commerce, with certain enumerated exceptions. Section 103 of the Act provides that "The provisions of section 101 shall not apply to ... a State statute, regulation, or other rule of law governing the creation and execution of wills, codicils, or testamentary trusts". The Act also requires the NTIA to review, evaluate and report to Congress on each of the exceptions.

The deadline to submit written comments to the NTIA regarding this exception is December 10, 2002. See, Federal Register, October 11, 2002, Vol. 67, No. 198, at Pages 63379 - 63381.

This is the fifth notice in a series. On September 3, the NTIA published a pair of notices in the Federal Register regarding two other exceptions -- court records and hazardous materials notices. The deadline for comments on those exceptions is November 4. See also, NTIA release, notice in Federal Register, September 3, 2002, Vol. 67, No. 170, at Pages 56277 - 56279, regarding court records, and notice in Federal Register, September 3, 2002, Vol. 67, No. 170, at Pages 56279 - 56281, regarding hazardous materials notices. On September 24, the NTIA published a notice in the Federal Register that it is seeking public comments on the product recall notices exception. See, Federal Register, September 24, 2002, Vol. 67, No. 185, at Pages 59828 - 59830. On October 1, the NTIA published a notice in the Federal Register that it is seeking public comments on the domestic and family law documents exception. The deadline for those comments is December 2, 2002. See, Federal Register, October 1, 2002, Vol. 67, No. 190, at Pages 61599 - 61601.

Commerce Officials Address Role of Government in Nanotech

10/11. The Commerce Department's Philip Bond gave a speech on October 9 in which he affirmed President Bush's committment to fund nanotech research. The Commerce Department's Bruce Mehlman gave a speech on October 11 in which he outlined ten elements of the government's role in nanotech research, development and commercialization.

Bond is Under Secretary of Commerce for Technology, and Chief of Staff to Commerce Secretary Donald Evans. His speech was titled "Nanotechnology; opportunities for Texas, the US and the world, and demands on education and the workforce".

He stated that "nanotechnology is a priority of President Bush. Even as we struggle to meet funding priorities across government against the backdrop of our war on terrorism and need to bolster homeland security, President Bush has proposed a record $111.8 billion Federal investment in R&D for FY2003, an 8 percent increase over last year’s spending. In particular, the President has proposed a 17 percent increase in NNI funding in FY2003 -- to more than $700 million in fiscal year."

He also stated that "these powerful technologies can be put to inappropriate uses and may create moral and ethical dilemmas beyond those we struggle with today. In the hands of terrorists, these technologies could be used to injure or kill millions. They could be used to pierce our privacy monitoring our communications, movements and associations. They could render all current encryption technologies powerless to protect national secrets or our personal privacy." He added that "These are issues that we cannot afford to wait to deal with. Our social and governmental institutions do not react quickly to change. So we have to start thinking about them now."

Bond also discussed recent information technology nanotech developments. He referenced IBM's transistor made from a carbon nanotube, Intel's planned TeraHertz transistor, and HP's announcement that "it had figured out how to use a chemical process to make grids of nanowires a few atoms thick, how to place molecules at the intersections of the wires, and how to manipulate the molecules to function like a microprocessor." Bond concluded that "As a result of developments like these, policymakers in Washington are beginning to understand what you already know: intelligence may be embedded everywhere."

Mehlman stated that "The federal government does indeed have an important and critical role in nanotech. Yet just because VCs aren't willing or able to fund every would be nano entrepreneur with an idea it does not mean government should. Nor could it. I would suggest the government's role in the research, development, and commercialization of nanotechnology includes 10 core elements."

He listed these as "Funding long term basic research ... Coordinating efforts among federal and university research, to leverage synergies and avoid redundancies ... Monitoring global developments and competitiveness implications ... Helping everyone maintain realistic expectations ... Helping ensure consideration of the social, legal and ethical implications ... Aggressively protecting intellectual property while also ensuring protections do not stifle research ... Supporting academic access to the best and brightest students and researchers from around the world while protecting national security and encouraging more American students to pursue careers in technology ... Working to improve nanotech networks ... Purchasing goods and services where appropriate and needed ... Ensuring reliable information in the markets so efficient investments can be made."

Mehlman is Assistant Secretary for Technology Policy. He spoke at the Foresight Conference in Bethesda, Maryland. His speech was titled "The Federal Government's Role in Nanotechnology Research, Development & Commercialization".

Copyright Office Seeks Comments on DMCA Anti Circumvention Exemptions

10/11. The Copyright Office published in its web site a document [PDF] dated October 4, 2002 that is titled "Notice of Inquiry" into the "Exemption to Prohibition on Circumvention of Copyright Protection Systems for Access Control Technologies".

This document states that "The Copyright Office of the Library of Congress is preparing to conduct proceedings mandated by the Digital Millennium Copyright Act, which provides that the Librarian of Congress may exempt certain classes of works from the prohibition against circumvention of technological measures that control access to copyrighted works. The purpose of this rulemaking proceeding is to determine whether there are particular classes of works as to which users are, or are likely to be, adversely affected in their ability to make noninfringing uses due to the prohibition on circumvention."

This document is not designated as a notice of proposed rule making (NPRM). Rather, it is designated as a notice of inquiry (NOI). The document repeatedly refers to "this rulemaking".

17 U.S.C. § 1201(a)(1)(A) provides, in part, that "No person shall circumvent a technological measure that effectively controls access to a work protected under this title." § 1201(a)(1)(B) then provides that "The prohibition contained in subparagraph (A) shall not apply to persons who are users of a copyrighted work which is in a particular class of works, if such persons are, or are likely to be in the succeeding 3-year period, adversely affected by virtue of such prohibition in their ability to make noninfringing uses of that particular class of works under this title, as determined under subparagraph (C)."

The Librarian of Congress previously conducted a rule making proceeding in which it promulgated a rule containing exemptions to the general prohibition. However, that rule remains in effect only until October 28, 2003.

The Librarian of Congress will conduct (or is conducting) a rule making proceeding to promulgate a rule that will be in effect for another three years.

The document states that "This rulemaking will examine adverse effects in the current marketplace and in the next 3-year period to determine whether any exemptions to the prohibition on circumvention of technological protection measures that effectively control access to copyrighted works are warranted by the evidence raised during this rulemaking."

Comments are due by December 18, 2002. Reply comments are due by February 19, 2003.

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10/11. The Federal Communications Commission (FCC) released its First Report and Order [27 pages in PDF] in the proceeding titled "In the Matter of Digital Audio Broadcasting Systems And Their Impact on the Terrestrial Radio Broadcast Service". This report and order selects in-band, on-channel (IBOC) as the technology to be used by AM and FM broadcasters for the introduction of digital broadcasting. The FCC announced, but did not release, this report and order at its October 10 meeting. This is MM Docket No. 99-325.

10/11. The Federal Communications Commission (FCC) issued an Order [PDF] extending the deadlines to submit comments and reply comments in response to its Notice of Proposed Rulemaking (NPRM) [15 pages in PDF] in its proceeding titled "In the Matter of Digital Broadcast Copy Protection". This NPRM proposes that the FCC promulgate a broadcast flag rule, and seeks comment on this, and related questions. This is MB Docket No. 02-230. The comment deadline is extended from October 30 to December 6. The reply comment deadline is extended from December 13 to January 17, 2003.

10/11. The Senate approved HJRes 114, authorizing the use of force against Iraq, by a vote of 77-23. See, Roll Call No. 237.

10/11. AT&T announced in a release that its received a tax ruling from the Internal Revenue Service (IRS) regarding its planned spinoff of AT&T Broadband. AT&T stated that "the spinoff will be tax-free to AT&T Corp.'s U.S. shareholders. The IRS ruling satisfies a condition of the proposed merger of AT&T Broadband and Comcast Corporation, and marks a significant milestone toward completion of that merger, AT&T said. The company expects the merger to close by year-end."

Go to News from October 6-10, 2002.