News from May 11-15, 2003

FCC Adopts Order Allowing Some Secondary Leasing of Spectrum

5/15. The Federal Communications Commission (FCC) adopted, but did not release, a Report and Order (R&O) and a Further Notice of Proposed Rulemaking (FNPRM) which allows certain FCC spectrum licensees to enter into leasing arrangements with third parties.

The FCC released a press release [4 pages in PDF] announcing the R&O and FNPRM. It states that this item "(1) authorizes spectrum leasing in a broad array of wireless radio services, (2) adopts streamlined processing for certain categories of license transfer and assignment applications, and (3) seeks comment on additional steps to improve the functioning of secondary markets." See, full story.

Copps Disputes FCC's Authority to Allow Secondary Leasing of Spectrum

5/15. Federal Communications Commission (FCC) Commissioner Michael Copps questioned whether the FCC has legal authority to allow leasing of spectrum. He argued that 47 U.S.C. § 310 prohibits it. Commissioner Copps raised this matter in both his oral comments at the May 15 meeting, and in a dissenting statement [3 pages in PDF].

Section 310(d) provides: "No construction permit or station license, or any rights thereunder, shall be transferred, assigned, or disposed of in any manner, voluntarily or involuntarily, directly or indirectly, or by transfer of control of any corporation holding such permit or license, to any person except upon application to the Commission and upon finding by the Commission that the public interest, convenience, and necessity will be served thereby. Any such application shall be disposed of as if the proposed transferee or assignee were making application under section 308 of this title for the permit or license in question; but in acting thereon the Commission may not consider whether the public interest, convenience, and necessity might be served by the transfer, assignment, or disposal of the permit or license to a person other than the proposed transferee or assignee."

Michael CoppsCopps (at right) first stated that "From a policy perspective, I could support many of the ideas in today's Order." But then, he addressed the statutory perspective.

He wrote in his dissent, and read aloud at the meeting, the following: "But I keep running into the same problem and I cannot make it go away. I do not see how the law allows us to effectuate these policies. I must therefore respectfully dissent. Congress enacted Section 310(d) of the Communications Act and we must abide by it. That section makes it clear that no ``station license or any rights thereunder shall be transferred, assigned or disposed of in any manner ... except upon application to the Commission and upon finding by the Commission that the public interest, convenience, and necessity will be served thereby.´´ But today we allow licensees to transfer a significant right – the right to control the spectrum on a day-to-day basis -- without applying to the Commission and without the requirement of any Commission public interest finding. How can this be legal under Section 310(d)?" (Emphasis in original.)

He added, "Because Section 310(d) does not allow transfers without FCC approval, I remain of the opinion that the Commission, if we wish to go down this road, will have to go the Congress and seek legislative changes before proceeding with the sweeping changes it would make today. Any other approach puts us in conflict with the law."

John Muleta

John Muleta (at right), Chief of the FCC's Wireless Telecommunications Bureau, was asked about Commissioner Copps' arguments at a press conference following the FCC meeting of May 15. He stated that "It is open to interpretation. Obviously, he has a different interpretation." He did not offered a detailed statutory analysis.

Nor did Muleta state, for example, that the FCC has a long history of interpreting statutory mandates to meet the FCC's policy objectives, even when the plain meaning of the statute is to the contrary.

FCC Adopts NPRM to Increase Unlicensed Spectrum

5/15. The Federal Communications Commission (FCC) adopted, but did not release, a Notice of Proposed Rulemaking (NPRM) proposing to make available an additional 255 MHz of spectrum for unlicensed use. The FCC did issue a short press release [PDF] describing the NPRM.

The proposal, which would nearly double the amount of spectrum for unlicensed use, would not be for any exclusive use. However, the main use will likely be 802.11 (Wi-Fi) and Bluetooth devices.

The FCC stated in its release that the NPRM proposes "to make available for unlicensed use an additional 255 megahertz of spectrum in the 5.470-5.725 GHz band". It further proposes that "this spectrum be made available for use by unlicensed National Information Infrastructure (U-NII) devices, including Radio Local Area Networks (RLANs), operating under Part 15 of the FCC's rules."

The release also states that the NPRM proposes "additional technical requirements for U-NII devices, including transition periods for implementation of these requirements." It provides no further detail.

Michael PowellFCC Chairman Michael Powell (at right) wrote a separate statement [PDF]. He stated, "Once the backwater of baby monitors and cordless telephones, the unlicensed sector has developed into a hotbed of growth and innovation."

He noted that "we propose to forego exclusive-use licensing, allowing market forces to determine how the band will be used, and providing potential users the greatest possible flexibility."

He also addressed the prospects for global harmonization. "Our proposal does create the possibility of aligning the frequency bands used for U-NII devices domestically with those in other parts of the world, creating the potential for economies of scale for equipment manufacturers and a declining cost structure for consumers. But global harmonization is not yet a reality."

FCC Commissioners Kevin Martin and Michael Copps wrote a joint separate statement [PDF] that this NPRM will "the American delegation to the WRC an important tool in promoting these and other wireless applications around the globe."

FCC Commissioner Kathleen Abernathy wrote in a separate statement [PDF] that "this item promotes the deployment of broadband services via wi-fi technology". She added that "the true key to achieving Congress’s objective of a deregulatory and procompetitive framework lies in moving beyond duopoly towards a world where multiple facilities-based providers compete in the broadband arena."

Martin and Copps added that they hope that unlicensed devices "eventually provide a last-mile application to connect people's homes to the Internet, offering a real alternative to telephone wires, cable, and satellite connections."

This is ET Docket No. 03-122, and FCC 03-110. For more information, contact Ahmed Lahjouji at 202 418-2061.

FCC Unlicensed Spectrum NPRM and the Jumpstart Broadband Act

5/15. The Federal Communications Commission's (FCC) NPRM, announced on May 15, proposing to make available an additional 255 MHz of spectrum for unlicensed use closely follows several bills pending in the House and Senate which are titled the "Jumpstart Broadband Act". However, there are also differences.

Sen. Barbara BoxerOn January 14, 2003, Sen. Barbara Boxer (D-CA) (at right) and Sen. George Allen (R-VA) introduced S 159, the "Jumpstart Broadband Act", a bill to require the FCC to allocate at least 255 megahertz of contiguous spectrum in the 5 gigahertz band for unlicensed use by wireless broadband devices. See, story titled "Sen. Boxer and Sen. Allen Introduce WiFi Spectrum Bill", in TLJ Daily E-Mail Alert No. 586, January 20, 2003. See also, TLJ copy of bill as introduced.

On January 27, 2003, Rep. Darrell Issa (R-CA) introduced HR 340, also titled the "Jumpstart Broadband Act". Also on January 27, Rep. Mike Honda (D-CA) introduced HR 363, also titled the "Jumpstart Broadband Act". Both are companion bills to S 159, with minor differences.

Sen. Boxer stated in a release that "I commend the FCC for moving quickly to implement the allocation of spectrum our legislation requested."

Sen. Allen also praised the FCC in a release. He also stated that "Today's decision is a great victory for the technology industry, but most importantly, consumers. Now more people in their homes, schools, colleges and businesses will be able to receive high speed broadband on their laptop wirelessly. People will be able to carry their laptop computer like a cordless phone around their home, dorm room or business."

The FCC has not released its NPRM, thus making it impossible to compare the text of the NPRM to the text of the bills. However, the FCC did issue a short press release [PDF], and the Commissioners made brief statements at the May 15 meeting, and released brief written statements.

Both the legislation and the NPRM reference 255 megahertz of spectrum. The bill references its location as the "5 gigahertz band", while the NPRM is more specific. It references the "5.470-5.725 GHz band". The bill requires that the spectrum be "contiguous". The NPRM's proposal for 255 megahertz in the 5.470-5.725 GHz band is necessarily contiguous.

The bill requires the FCC to conduct an NPRM, which is just what the FCC is doing. The Allen Boxer bill, and the Honda bill require the FCC to allocate spectrum within 180 days; the Issa version allows 18 months. The bills also set deadlines for adopting "technical and device rules ". The FCC has not yet announced any timetables or deadlines.

The bill also contains a significant restriction on use not referenced so far by the FCC. The bill requires that the spectrum be used by "wireless broadband devices", which it defines in terms of speed, being two way, and being digital. The FCC referenced only wireless devices. It does not contain these "broadband" restrictions.

FCC Commissioner Jonathan Adelstein wrote in a separate statement [PDF] that this NPRM proposes that the new unlicensed spectrum may be used for "broadband and other important services". In contrast, Sen. Allen stated that "I've been working to make further broadband deployment and Wi-Fi adoption a reality, without interference from microwave ovens, cordless phones, baby monitors, and other wireless devices."

Hence, the FCC has not stated that one way, analog, and low speed devices are excluded from using the proposed unlicensed spectrum band. Indeed, the only word in the FCC release which qualifies the use of the spectrum is the word "use". There is not even a restriction that the use be communications related.

On the other hand, the FCC regularly fails to disclose key provisions of the items that it adopts, until it releases the actual text of the item. The FCC typically takes a week to several months to release the text of its important NPRMs and orders.

The bill also requires the FCC to "adopt minimal technical and device rules to facilitate robust and efficient use for wireless broadband devices" and "amend its rules to require that all wireless broadband devices manufactured after the effective date of those rules that operate in the spectrum allocated under paragraph (1) -- (i) be capable of 2-way digital communications; (ii) meet the interference protection standards established under paragraph (2)."

Paragraph (2) pertains to interference. It provides that "the National Telecommunications and Information Administration shall, after consultation with all interested agencies and parties, including the Department of Defense, establish standards for interference protection that is reasonably required to enable incumbent Federal government agency users of spectrum allocated under paragraph (1) to continue to use that spectrum, and advise the Commission of those standards."

The FCC's release states merely that its NPRM proposes "additional technical requirements for U-NII devices, including transition periods for implementation of these requirements."

However, the FCC released a working paper [65 pages in PDF] on May 14 titled "Joint OET-OSP White Paper on Unlicensed Devices and the Associated Regulatory Issues". It does address interference associated with wireless devices, and rules that could address interference problems.

FCC Announces NPRM Regarding Long Distance

5/15. The Federal Communications Commission (FCC) announced, but did not release, a Further Notice of Proposed Rulemaking (FNPRM) regarding the regulatory framework for local phone companies offering long distance service.

The FCC issued a press release [3 pages in PDF] describing this FNPRM. It states that this item "seeks comment on the regulatory classification of Bell Operating Companies (BOCs) and independent local exchange carriers (LECs), if and when these carriers provide in-region, interstate and international, interexchange services outside of a separate affiliate."

The FCC further stated that "Once a BOC is authorized under section 271 of the Telecommunications Act of 1996 (1996 Act) to provide in-region, long distance service, it is subject to statutory separate affiliate requirements designed to address potential discrimination and cost misallocation. These section 272 separate affiliate requirements sunset in each state, as prescribed by the 1996 Act, three years after a BOC gains permission to provide long distance in an in-region state, unless extended by the FCC."

This FCC release states that this FNPRM asks for public comments regarding "Whether there is a continued need for dominant carrier regulation of BOCs' in-region long distance service after sunset of the section 272 separate affiliate requirements", "With respect to independent LECs, whether or not they should be classified as non-dominant or dominant in the provision of in-region long distance service if the FCC modifies or eliminates the separate affiliate requirements currently imposed on independent LECs", and "Whether there are alternative regulatory approaches – besides dominant carrier regulation -- to address any potential anticompetitive behavior."

Also, Commissioners Michael Copps and Jonathan Adelstein released a separate statement [PDF]. The wrote that "Last December, the Commission decided to allow the separate affiliate requirements in section 272 to sunset in New York. This was done without, we believed, the detailed requisite market analysis and over the objections of our state colleagues. By revisiting these issues now in this proceeding, the Commission has an opportunity to get them right."

This is CC Docket No. 00-175 and WC Docket No. 02-112. For more information, contact Robert Tanner or Pam Megna at, or 202-418-1580.

Powell Sticks to June 2 Date for Broadcast Ownership Biennial Review

5/15. Federal Communications Commission (FCC) Chairman Michael Powell responded to the request of FCC Commissioners Michael Copps and Jonathan Adelstein for a delay of the June 2 consideration of media ownership rules. Powell announced in a letter to Copps and Adelstein, and in a release [PDF], that "I must respectfully decline to postpone the planned June 2nd consideration of the Broadcast Ownership Biennial Review".

On May 13, Copps and Adelstein issued a release [MS Word] which states that they have requested that the FCC "postpone the announced June 2nd consideration of changes to the Commission’s media concentration protections. Under long-standing Commission practices, such requests from Commissioners are traditionally honored." The two also "reiterated a request for a public airing of the proposed rule changes." See, story titled "Adelstein and Copps Seek Delay of FCC Action on Media Ownership" in TLJ Daily E-Mail Alert No. 661, May 14, 2003.

Powell's release further stated that the FCC "will vote on the media ownership Biennial Review on June 2, 2003, as previously scheduled. In addition, the sunshine period will be extended to Friday, May 30, the last business day before the open meeting, so that Commissioners and their staffs can continue to engage the public as the Commissioners deliberate the item internally."

Copps also responded to Powell's response: "This is really disappointing. The Chairman's decision not to make these proposals public, nor even to grant a short delay in voting, runs roughshod over the requests of the American people and the precedents of this Commission. This rush to judgment means that we will not fully understand the impact of the specific proposals on our media landscape before we are forced to vote. We are rushing to passage of new rules without letting the American people know who is going to own and control the public airwaves for years to come and without gaining the benefit of their input on what is being proposed. This is no way to do business when critical issues affecting every American are at stake. I am disappointed that the Chairman refuses to heed the calls of colleagues, as well as many Members of Congress, to let the sun shine on his proposals before the Commission decides on further media concentration."

Senate Passes Tax Bill With Broadband Expensing Amendment

5/15. The Senate passed S 1054, Jobs and Growth Tax Relief Reconciliation Act of 2003. More specifically, the Senate incorporated S 1054 into HR 2, the House version of the bill, as an amendment, and then passed HR 2. The vote on final passage was 51-49.

The House passed its version of HR 2 on May 9 by a vote of 222-203. See, Roll Call No. 182.

While the main features of the Senate bill are not related to information technology, some provisions of the bill as passed are technology related. For example, the Senate added an amendment that provides for the expensing of certain broadband expenditures. The bill also includes a one year extension of the enhanced deduction for corporate contributions of computer equipment for educational purposes. The bill would also revise the property subject to Section 179 expensing to include certain software.

Broadband Expensing. On May 15 the Senate approved by unanimous consent, Amendment 593. Sen. Conrad Burns (R-MT), Sen. Jay Rockefeller (D-WV) and others offered this amendment on May 14. This amendment would amend the Internal Revenue Code to allow the expensing of certain broadband internet access expenditures.

This amendment is very similar to the stand alone bill, S 160, introduced on January 14, 2003, by Sen. Burns and others. S 160, in turn, built upon legislation offered in the 107th Congress by Sen. Rockefeller and others -- S 88 (107th) and HR 267 (107th). See, story titled "Sen. Burns and Sen. Baucus Introduce Broadband Expensing Bill" in TLJ Daily E-Mail Alert No. 587, January 21, 2003.

The text of the Amendment 593 is published in the Congressional Record, May 14, 2003, at pages S6324-6.

Sen. Conrad BurnsSen. Burns (at right) stated in the Senate that this amendment "provides some incentives to accelerate the deployment of broadband high-speed Internet access across the country. ... What this amendment does is affords tax incentives for the buildout of broadband. Although many urban and suburban areas now have access to broadband connections, many rural areas across the country and, of course, in Montana do not."

He explained that "Our amendment would create a temporary tax incentive for providers in the form of expensing, allowing an immediate deduction of a capital expenditure in the first year of service rather than depreciating that investment over time. In the case of the current generation broadband investments in rural and underserved areas, the bill would allow a 50 percent expensing on the investment, with the rest to be depreciated according to the normal depreciation schedules. And where the providers build out next generation broadband networks, which are typically more expensive, the bill would provide for 100 percent expensing in that year." See, Congressional Record, May 14, 2003, at pages S6198-9.

Sen. Rockefeller stated that "What the Burns Rockefeller broadband amendment does is it says to broadband providers, if you will extend your networks to hard-to-reach, underserved and/or rural areas, you will get a break on your taxes. As the distinguished Senator from Montana indicated, it also encourages a leapfrog to the next generation. It has two different categories of tax breaks depending upon what generation of broadband you are dealing with. In any event, it is going to be faster than the DSL and cable modem services most typical today." See, Congressional Record, May 14, 2003, at page S6199.

Sen. Ted Kennedy (D-MA) also spoke in support of the amendment. He said that "One of our greatest challenges is to close this growing economic gap in access to computers and the Internet. If we do not act to close it now, the ``digital divide´´ will soon become an unacceptable opportunity gap. The broadband tax incentive is an important step in developing a national broadband policy." See, Congressional Record, May 14, 2003, at pages S6198-9.

Deductions for Contributions of Computer Equipment. The Senate also agreed to Amendment 644, as modified, by unanimous consent. The amendment would extend through through December 31, 2004, several provisions that are scheduled to expire on December 31, 2003. One of these provisions provides an enhanced deduction for corporate contributions of computer equipment for educational purposes.

Expensing Off the Shelf Software. The House version of HR 2 contains a Section 202, titled "Increased Expensing for Small Business". It would amend Section 179 of the Internal Revenue Code, which is codified at 26 U.S.C. § 179, and titled "Election to expense certain depreciable business assets". HR 2 would add to the definition of "Section 179 property" several items, including certain off the shelf software.

Specifically, it would add "computer software (as defined in section 197(e)(3)(B)) which is described in section 197(e)(3)(A)(i), to which section 167 applies, and which is placed in service in a taxable year beginning after 2002 and before 2008". (Parentheses in original.)

The Senate version of the legislation contains a similar, but differently worded, "off the shelf software" provision. See, Section 107 of Senate bill.

Senate Passes Tax Bill with Limitation of Deduction for Charitable Contributions of Intellectual Property

5/15. The Senate passed S 1054, Jobs and Growth Tax Relief Reconciliation Act of 2003. More specifically, the Senate incorporated S 1054 into HR 2, the House version of the bill, as an amendment, and then passed HR 2. The vote on final passage was 51-49.

The House passed its version of HR 2 on May 9.

The Senate passed bill, but not the House passed bill, contains a Section 364 titled "Limitation of Deduction for Charitable Contributions of Patents and Similar Property". It would limit the amount of deductions for charitable contributions of patents, copyrights, trademarks, trade secrets, and other intellectual property.

It would amend Section 170 of the Internal Revenue Code, which is codified at 26 U.S.C. § 170. This section provides for the deduction of charitable contributions made within the tax year. Subsection 170(e) provides for the deduction of certain contributions of ordinary income and capital gain property.

This subsection, as amended by the House bill, would provide that the "amount of any charitable contribution of property otherwise taken into account under this section shall be reduced by the sum of ... the amount of gain which would not have been long-term capital gain if the property contributed had been sold by the taxpayer at its fair market value (determined at the time of such contribution), and ... in the case of a charitable contribution ... of any patent, copyright, trademark, trade name, trade secret, know-how, software, or similar property, or applications or registrations of such property ... the amount of gain which would have been long-term capital gain if the property contributed had been sold by the taxpayer at its fair market value (determined at the time of such contribution)." (Parentheses in original.) The new language is in bold.

Sen. Charles Grassley (R-IA), who is the Chairman of the Senate Finance Committee and the sponsor of S 1054, discussed this provision with Sen. Rick Santorum (R-PA) during Senate debate. Congressional Record, at pages Page: S6456-7.

Sen. Rick SantorumSen. Santorum stated that ""This section would limit the deduction for charitable contributions of patents and similar properties. It is my understanding that this provision would include a limitation on tax deductions for donation of the following items: any patent , copyright, trademark, trade name, trade secret, know-how, software, or similar property, or applications or registrations of such property. The effective date of this limitation would apply to contributions made after May 7, 2003."

He continued that "I have a specific concern about this provision. I understand the intent behind this change is to eliminate abuses associated with deductions claimed under IRC 170(e)(1)(B). What has resulted, however, is the unintended consequence of capturing legitimate and pending contributions that were in the process of being formalized, but not enacted by the effective date." He referenced two pending transaction in the state of Pennsylvania.

Sen. Grassley stated that "We have learned that there is widespread abuse involving donations of patents and similar property. We made this provision effective May 7, 2003, so that abusive donations could not be rushed to completion if a later effective date was chosen."

Senate Rejects Amendment to Make R&D Tax Credit Permanent

5/15. The Senate passed S 1054, Jobs and Growth Tax Relief Reconciliation Act of 2003. More specifically, the Senate incorporated S 1054 into HR 2, the House version of the bill, as an amendment, and then passed HR 2. The vote on final passage was 51-49. During its consideration of the bill, the Senate rejected an amendment offered by Sen. Maria Cantwell (D-WA) that would have further extended the research and development tax credit.

The House passed its version of HR 2 on May 9, without any provision extending the R&D tax credit.

Amendment 577, offered by Sen. Cantwell and others, would have amended Section 41 of the Internal Revenue Code of 1986 to extend the research credit, to increase the rates of the alternative incremental credit, and to provide an alternative simplified credit for qualified research expenses.

This amendment is very similar to a stand alone bill, S 664, which was introduced by Sen. Orrin Hatch (R-UT) and others on March 19, 2003. Sen. Hatch has long been one of the leading proponents in the Senate for making the R&D tax credit permanent.

This amendment was defeated when the Senate rejected a motion to waive the budget point of order against the Cantwell amendment by a vote of 49-50. See, Roll Call No. 154. This motion would have required a 3/5 majority to pass.

It was a nearly straight party line vote. Democrats supported the amendment. Republicans opposed it. Sen. Zell Miller (D-GA) voted with the Republicans. Sen. Hatch voted for the amendment. Sen. Jim Talent (R-MO) did not vote.

Sen. Maria CantwellSen. Cantwell stated that "First, it will extend the research credit through June 30, 2014, which is the end of this reconciliation period. Second, it will increase the rates of the alternative incremental credit; and third, it will create a new alternative simplified credit for qualified research expenses."

She added that "The major investments in nano-technology and biotechnology, in software, and in the computer sciences take several years of investments. So what we are talking about is giving businesses the predictability they want to see in research and development so they can move ahead." See, Congressional Record, May 14, 2003, at page S6191.

Sen. Max Baucus (D-MT), the ranking Democrat on the Senate Finance Committee, stated that "the R&D tax credit has been an issue before us for quite some time, almost as long as I can remember since I have been in the Senate. The basic questions are, Should we extend the R&D tax credit and, second, should we make it permanent? Much too often the Congress has decided, yes, to extend the credit, which I agree with, but not to make it permanent. For the life of me, I cannot understand why we have not made this credit permanent."

He added that "Making the R&D tax credit permanent will give U.S. businesses, particularly in the technology sector, the confidence that those companies can invest in research and development and not have to keep guessing whether Congress is going to extend or not extend this tax credit."  See, Congressional Record, May 14, 2003, at page 6192.

Sen. Charles GrassleySen. Grassley (at right) stated that "this is another example where I must rise in opposition to an amendment, but not because of the good intent or because I have a disagreement with the amendment, but because of how it is accomplished. And most of that is on the side of where they take the money to pay for the proposal in this amendment, or any other amendment that we have had before us. I am very confident that we will extend the R&D credit this year. I call the attention of my colleagues to the fact that the President has proposed extending it in his budget. I note that the extension is paid for in this amendment by eliminating partial exclusion of dividends, and this exclusion of dividends is meant to encourage the investment we are talking about here."

He added that "While the purpose of the R&D credit is very important, as it encourages higher levels of technology development and innovation which brings about greater productivity, it does not help small businesses that will provide so many new jobs for the economy under our underlying legislation."

Sen. Grassley concluded that "Right now, I have to consider this amendment counterproductive in that it slashes job-creating provisions to give generous tax breaks to large corporations to do research and development. Many may ask: Why do rich corporations need a tax break to do something that is essential to their business anyway? As I indicated, I do support the R&D tax credit, but I also support, more importantly and more eminently, the provisions of this bill which are more broad based in helping to create jobs and doing it in a balanced way, not in the targeted way of this amendment. There is nothing wrong with the amendment. It is just the wrong time and wrong place." See, Congressional Record, May 14, 2003, at pages S6193-4.

House Committee Holds Hearing on Class Action Reform Bill

5/15. The House Judiciary Committee held a hearing on HR 1115, the Class Action Fairness Act of 2003. This bill would, among other things, amend 28 U.S.C. § 1332, regarding diversity of citizenship. It would provide federal jurisdiction in certain class actions with a minimum total of aggregated claims where any member of a class of plaintiffs is a citizen of a state different from any defendant.

The bill would also require increased judicial scrutiny of class action settlements that provide for coupon and other non-cash settlement payments to plaintiffs. It would also prohibit geographic discrimination in awards to plaintiffs.

Rep. Bob Goodlatte (R-VA), Rep. Rick Boucher (D-VA) and others introduced this bill on March 6, 2003. It is a re-introduction of HR 2341 (107th), which passed in the House by a vote of 233-190. See, story titled "Reps. Goodlatte and Boucher Re-Introduce Class Action Fairness Act" in TLJ Daily E-Mail Alert No. 619, March 10, 2003.

Rep. Bob GoodlatteRep. Goodlatte (at right) stated that "This bill will help end the forum shopping abuses and resultant extortionate settlements that plague class action litigation today ... Real plaintiffs with real grievances will be assured that settlements which give the lawyers millions and coupons to their clients will be stopped.”

Viet Dinh, Assistant Attorney General for the Office of Legal Policy, stated in his prepared testimony, that the Department of Justice supports the bill. He stated that "Class action abuses, however, have taken a toll on our legal system. All too often, class actions represent a lawyer’s rush to the courthouse in order to select the most favorable State forum before duplicative actions purporting to represent the same victims with the same claims are filed in other States. In essence, it becomes a race to the courthouse for the attorneys to see who among them can file and then settle his or her case the fastest and thereby collect attorney’s fees. The losers in this race are the victims who often gain little or nothing through the settlement, yet are bound by it in perpetuity."

See also, prepared testimony of other witnesses: Lawrence Mirel (District of Columbia Department of Insurance and Securities Regulation), John Beisner (O'Melveny & Myers), and Brian Wolfman (Public Citizen Litigation Group).

FCC Releases Working Paper on Unlicensed Devices

5/14. The Federal Communications Commission (FCC) published a working paper [65 pages in PDF] titled "Joint OET-OSP White Paper on Unlicensed Devices and the Associated Regulatory Issues". The paper reviews the technology of devices that use unlicensed spectrum, and interference problems. It also recommends making available more spectrum for unlicensed devices, and the promulgation of rules to address interference problems.

The paper states that "without a well-considered and forward-looking approach to policy reform, much the benefit and promise of unlicensed devices may be delayed, or unrealized. Considering the complexity of issues involved, the FCC should promulgate rules which are as clear as practicable, strictly enforced, and maximize utility to address the fundamental problem of interference."

It concludes that "effective policy reform includes enabling more unlicensed spectrum and promulgating rules to encourage technological and market-based solutions to optimize efficient use and sharing of spectrum. The FCC must be mindful of balancing competing interests and retain the low entry barriers that have proven so successful for unlicensed spectrum."

It was written by Kenneth Carter of the FCC's Office of Strategic Planning and Policy Analysis (OSP), Ahmed Lahjouji of the FCC's Office of Engineering and Technology (OET), and Neal McNeil of the OET.

Editor's Note. This working paper was published in the FCC website on May 14. It was subsequently removed, to make corrections and revisions. FCC staff states that it will be published again on Friday afternoon, May 16. If the above hyperlink does not operate, the working paper will be accessible from the OSP's Working Paper Series page.

House Judiciary Committee Approves Internet Gambling Bill

5/14. The House Judiciary Committee amended and approved HR 21, the "Unlawful Internet Gambling Funding Prohibition Act of 2003". The vote on reporting the bill was 16-15. The final vote broke down mostly along party lines, with Republicans supporting the bill.

The bill would attempt to bar internet gambling operations access to the U.S. financial services system by banning the use of credit cards, wire transfers, or any other bank instrument to fund illegal gambling transactions. The bill does not ban gambling. This is a matter of state law.

Much of the debate at the meeting focused on an amendment offered by Rep. Chris Cannon (R-UT). The bill as introduced, and as reported last week by the Crime Subcommittee, provided, in its definitional section, that "The term ``bets or wagers´´ ... (E) does not include --- (ix) any lawful transaction with a business licensed or authorized by a State." The Cannon amendment simply strikes the line "any lawful transaction with a business licensed or authorized by a State".

Rep. Chris CannonRep. Cannon (at right), who represents a state that bans all gambling, argued that this exception creates a carve out for state approved gambling on horse racing, dog racing, and jai alai.

He also stated that he opposes the bill because of "the burden that this bill would create on the internet".

Rep. Ric Keller (R-FL) argued that the Cannon amendment makes the bill "unnecessarily controversial", and would likely kill the bill on the House floor.

Rep. Bob Goodlatte (R-VA) argued for passing the bill without the Cannon amendment, because otherwise the dog, horse and jai lai gambling groups would oppose the bill in the full House. He said that rejecting the Cannon amendment would keep these groups on the sidelines.

The Cannon amendment passed by a vote of 16-15.

Opponents of the bill offered many of the same arguments that they presented at the Crime Subcommittee's mark up session on May 6. See, TLJ story titled "House Crime Subcommittee Approves Internet Gambling Bill", May 6, 2003. For example, Rep. Bobby Scott (D-VA) predicted that the bill "will be ineffective", because gamblers will miscode credit card transactions and use e-cash transactions to evade the prohibitions contained in the bill.

Rep. Scott also offered an amendment that he stated would "make individuals subject to the provisions of the bill". It failed on a voice vote.

Rep. Sheila Lee (D-TX) offered an amendment that would have stricken Section 3 from the bill. This is the section containing the prohibitions. Rep. James Sensenbrenner (R-WI), the Chairman of the Committee, stated that "this amendment strikes the guts of the bill". It failed on a voice vote. Rep. Lee also offered an amendment that she stated "removes credit cards from the scope of HR 21". It too failed on a voice vote.

The Committee then voted on reporting the bill, as amended. It passed by a vote of 16-15. The Cannon amendment also passed by a vote of 16-15. However, the same 16 member did not make up the majority on both votes. First, some members were present only for the vote on the Cannon amendment, while some other members were present only for the vote on reporting the bill.

Also, there was some strategic voting on the Cannon amendment. That is, while the Cannon amendment expanded the scope of the prohibition of the bill, some members who opposed the underlying bill nevertheless voted for the Cannon amendment in order to report a bill that would be less likely to pass in the full House or Senate. These members voted for the Cannon amendment, but against reporting the bill. Similarly, some members who likely supported the concept of the Cannon amendment as well as the underlying bill, nevertheless voted against the amendment because they wanted to report a bill that would pass in the House and Senate.

More Information. See, story titled "House Subcommittee Holds Hearing on Internet Gambling Bills" in TLJ Daily E-Mail Alert No. 654, May 2, 2003. The House Financial Services Committee, which has jurisdiction over the bill along with the House Judiciary Committee, approved it on March 13. See, story titled "House Committee Approves Internet Gambling Bill" in TLJ Daily E-Mail Alert No. 623, March 14, 2003. See also, story titled "Rep. Leach Introduces Internet Gambling Bill" in TLJ Daily E-Mail Alert No. 579, January 9, 2003. The companion bill in the Senate is S 627. See, TLJ story titled "Senate Committee Holds Hearing on Internet Gambling Bill", March 18, 2003.

Report Offers Recommendations for Authentication Systems

5/14. The Center for Democracy and Technology (CDT) released a report titled "Interim Report: Privacy Principles for Authentication Systems".

It states that authentication systems must build trust in consumer initiated transactions and government services and be consistent with applicable law. To accomplish this, the report offers six recommendations, which are as follows:

"1) Provide User Control -- The informed consent of the individual should be obtained before information is used for enrollment, authentication and any subsequent uses."

"2) Support a Diversity of Services -- Individuals should have a choice of authentication tools and providers in the marketplace. While convenient authentication mechanisms should be available, privacy is put at risk if individuals are forced to use one single identifier for various purposes."

"3) Use Individual Authentication Only When Appropriate -- Authentication systems should be designed to authenticate individuals by use of identity only when such information is needed to complete the transaction. Individual identity need not and should not be a part of all forms of authentication."

"4) Provide Notice -- Individuals should be provided with a clear statement about the collection and use of information upon which to make informed decisions."

"5) Minimize Collection and Storage -- Institutions deploying or using authentication systems should collect only the information necessary to complete the intended authentication function.

"6) Provide Accountability -- Authentication providers should be able to verify that they are complying with applicable privacy practices."

The report is supported by a working group comprised of the CDT, Consumer Action, Corporate Privacy Group,
eBay, Hewlett-Packard, Intel, Liberty Alliance, Microsoft, NeuStar, TRUSTe, and VeriSign.

PPI Report Addresses Native American IPR and Digital Divide

5/14. The Progressive Policy Institute (PPI), a Washington DC based Democratic think tank, released a short report titled "Main Obstacles to Native American Trade: Digital Divide and Intellectual Property Piracy".

The report states that native Americans face higher unemployment and poverty than the population as a whole, but that "electronic commerce and trade promotion programs, by enabling rural and geographically isolated communities to reach world markets, can help tribes both with economic development and cultural continuity." That is, as native Americans market "traditional jewelry, textiles, and pottery" they face "significant obstacles in the form of digital divides and intellectual property piracy". The "reservations suffer more than most communities from the 'digital divide,' and thus are less able to reach overseas customers. Traditional arts are also highly vulnerable to intellectual property piracy." For example, "Hopis estimate losses to piracy at $44 million, or four times sales."

The report offers no legislative or policy recommendations.

The Senate Indian Affairs Committee held a hearing on May 17, 2000 that addressed piracy of native American arts and crafts. See, list of witnesses, with hyperlinks to prepared testimony.

People and Appointments

5/14. David Marventano, staff director for the House Commerce Committee, will leave to become Senior Vice President of Government Affairs for the Fluor Corporation.

More News

5/14. The Federal Communications Commission (FCC) released a report [2.1 MB PDF file] titled "Statistics of the Long Distance Telecommunications Industry". The report contains data on revenues, market shares, and number of companies. It also contains data on residential long distance calling, focusing on usage patterns, market shares, prices, and expenditures. See, also FCC release [2 pages in PDF] summarizing the findings of the report.

5/14. The Office of Science and Technology Policy (OSTP) published a notice in the Federal Register stating that it wants "white papers" from the public regarding its High End Computing Revitalization Task Force (HECRTF). Also, it wants them within one week. The deadline to submit papers is May 21, 2003. See, Federal Register, May 14, 2003, Vol. 68, No. 93, at Page 25888.

5/14. The General Accounting Office (GAO) released a report [pages in PDF] titled "Free Trade Area of the Americas: United States Faces Challenges as Co-Chair of Final Negotiating Phase and Host of November 2003 Ministerial".

5/14. The House Science Committee (HSC) held a hearing on cyber security research and development. See, prepared testimony of Arden Bement, Director of the National Institute of Standards and Technology (NIST); prepared testimony of Charles McQuery, Under Secretary for Science and Technology at the Department of Homeland Security; prepared testimony of Rita Colwell, Director of the National Science Foundation (NSF); and prepared testimony of Anthony Tether, Director of the Defense Advanced Research Projects Agency (DARPA). See also, hearing charter and HSC release.

5/14. HR 1588, the House version of the "National Defense Authorization Act for Fiscal Year 2004", authorizes appropriations for the development of facial recognition technology. The House Armed Services Committee (HASC) approved the bill on May 14 by a vote of 58-2. The House is scheduled to begin consideration of this bill on May 21. See, HASC summary of the bill.

Adelstein and Copps Seek Delay of FCC Action on Media Ownership

5/13. Two of the five Commissioners of the Federal Communications Commission (FCC) announced that they favor delaying the FCC's decision on revising its media ownership rules. FCC Chairman Michael Powell has stated that the FCC would announce its decision on June 2.

Jonathan AdelsteinCommissioner Jonathan Adelstein (at right) and Commissioner Michael Copps issued a release [MS Word] which states that they have requested that the FCC "postpone the announced June 2nd consideration of changes to the Commission’s media concentration protections. Under long-standing Commission practices, such requests from Commissioners are traditionally honored." The two also "reiterated a request for a public airing of the proposed rule changes."

They stated in the release that "We believe a full notice and comment period on the specific proposals is warranted. Sound policymaking, perhaps even the law, requires no less. ... When the Commission is considering significant changes that could unalterably remake our media landscape for years to come, we believe it is prudent to have a transparent process that ensures we understand the full implications of our decisions. Such an open forum is especially critical for issues of this magnitude when the Notice to the public asked broad, general questions, and did not set forth specific proposed rule changes."

They added that "Revealing the outlines of the proposals to the public would allow us to obtain concrete input that would not only help avoid unintended consequences, but would also provide a sounder basis for defending the specific proposals against the inevitable court challenges."

FCC Commissioner Kathleen Abernathy, who is one of three Commissioners who favor relaxing media ownership rules, responded in a release [MS Word].

Kathleen AbernathyAbernathy (at right) wrote that "I must respectfully oppose their request. I conclude that for both legal and policy reasons we should move forward with the June 2nd meeting. The Commission has a statutory obligation to review our broadcast ownership rules every two years. We are already behind schedule, as June 2003 is past the date by which our 2002 biennial review should have been completed. Furthermore, we are fast approaching the time in which we need to begin our 2004 biennial review. If we don’t act, the courts may step in themselves."

She added that "We have compiled a thorough and comprehensive record in this proceeding, which includes over 18,000 comments, 12 studies and testimony from a number of broadcast ownership hearings. We have provided notice of the rules we are reviewing, and the comments in the record reflect an understanding of these issues. I am satisfied that we have the information and the input we need to make a sound, judicially sustainable decision that will benefit the public interest. Although we are resolving very important and difficult issues, this task will not become any easier a week from now, a month from now, or even a year from now."

FCC Commissioner Kevin Martin stated in his release that "Many of the rulemakings incorporated into this proceeding have been pending for over a year. Indeed, the newspaper/broadcast rulemaking was opened in September 2001. The Commission has not acted on this rule in any of its biennial reviews since the biennial provision was enacted in 1996. It is past time for the Commission to act. I think the Commission should go forward with the scheduled vote on June 2."

Legislators Introduce Bills to Establish 35% National Broadcast Ownership Cap

5/13. On May 9, Rep. Richard Burr (R-NC), Rep. John Dingell (D-MI), Rep. Nathan Deal (R-GA), Rep. David Price (D-NC), and Rep. Ed Markey (D-MA) introduced HR 2052, the "Preservation of Localism, Program Diversity, and Competition in Television Broadcast Service Act of 2003". On May 13, Sen. Ernest Hollings (D-SC) and Sen. Ted Stevens (R-AK) introduced the companion bill in the Senate. The bill would establish by statute a 35% national broadcast ownership cap.

Sen. Hollings, the ranking Democrat on the Senate Commerce Committee, stated in a release that "While many of us in Congress had hoped that the FCC would recognize the serious consequences that could result from a laissez faire approach to media ownership, it appears the message is not getting through".

Sen. Ernest HollingsSen. Hollings (at right) continued that "While details of the Commission's proposal are finally starting to leak into the press, the process conducted by the FCC on a matter so fundamental to the foundation of American democracy has been shameful ... Instead of sparking a national debate by putting forward specific rule changes to stand in the rigors of sunlight, as earlier requested by a majority of the members of this committee, the FCC has instead opted to keep its plans under wraps, further strengthening the hand of big media companies with direct-dial connections to the FCC and keeping the American public in the dark. Furthermore, by creating an arbitrary deadline of June 2nd, Chairman Powell and other proponents of further deregulation have sought to squelch any meaningful criticism of this proposal and hammer through one of the most far-reaching policy decisions in the history of American media."

Rep. Price issued a release which states that "HR 2052 would preserve a 35% cap on media ownership for companies, meaning that businesses would be prohibited from owning stations that reach greater than 35% of the national television audience. The 35% cap protects against the nationalization of local programming decision by maintaining a healthy balance of local, non-network owned stations that are obligated to serve local community interests. The cap is one of six rules currently under consideration by the FCC, and Chairman Michael Powell has expressed a preference to raise the cap to 45%."

On May 12, Rep. Dingell, who is the ranking Democrat on the House Commerce Committee, and Rep. Burr, a member of the Committee, wrote a letter to Federal Communications Commission (FCC) Chairman Michael Powell. They stated that "We believe any weakening of the present rule will provide Americans with fewer sources of news and information and damage the delicate competitive balance that presently exists in the broadcast industry. We are particularly concerned, however, with recent news reports that the FCC may substantially raise the national cap for reasons pertaining to the emergence of new media, but, at the same time, may completely ignore those same facts with regards to an adjustment in the UHF discount."

They also asked several questions: "Do you agree that the circumstances that dictated the initial 50% UHF discount have largely changed? If no, why not? If yes, shouldn’t the Commission consider altering or eliminating the UHF discount in the pending proceeding?"

In addition, they asked, "During the public hearing on media ownership which occurred at Columbia University on January 16, 2003, you stated ``The right way [for the FCC to proceed] is by building rules that are based on empirical evidence. That is why the FCC has been engaged in an unprecedented fact finding effort.´´ What empirical evidence in the record supports keeping the UHF discount at 50%?"

Also on May 13, the Senate Commerce Committee held another hearing on media ownership. This hearing focused on broadcast media. See, prepared statement of Sen. Hollings. See also, prepared testimony of witnesses, Mel Karmazin (P/COO of Viacom), Jim Goodmon (P/CEO of Capitol Broadcasting Company), Frank Blethen (Publisher of the Seattle Times), William Singleton (Vice Chairman and CEO of Media News Group and Publisher of the Denver Post and Salt Lake Tribune), and Kent Mikkelsen (Vice President of Economists Inc.)

Mikkelsen wrote that "it is difficult to find any connection at all between diversity concerns and the national television broadcast ownership cap. What matters to diversity is the range of viewpoints available to individuals. That range is not diminished when a local media outlet available to an individual is jointly owned with another media outlet in another geographic area that is not available to the individual. In conclusion, competition in media can be preserved using antitrust standards without the need for one-size-fits-all restrictions like the ``duopoly´´ rule and the cross-ownership ban."

FCC Receives Few Comments on AOL Time Warner Petition

5/13. Monday, May 5, was the deadline to submit original comments to the Federal Communications Commission (FCC) regarding AOL Time Warner's petition [58 pages in PDF] requesting relief from the FCC's January 22, 2001 Memorandum Opinion and Order (MOO) approving the merger of AOL and Time Warner, and imposing conditions upon AOL Time Warner regarding instant messaging services. Specifically, AOL Time Warner seeks relief from the condition restricting its ability to offer internet users streaming video advanced Instant Messaging based high speed services (AIHS) via AOL Time Warner broadband facilities.

As of May 12, the FCC had published in its web site only one noteworthy comment. Gerald Faulhaber and David Farber submitted a comment [pages in PDF] on April 5 in which they stated that "We urge the FCC to proceed cautiously. While conditions have evolved since the Merger Order that suggest network effects and tipping are not as urgent today, other evidence suggests that it is perhaps even more urgent. The FCC needs to recall that AOL Time Warner has in its own hands the ability to offer advanced IM-based highspeed services without let or hindrance: it need only interoperate with its competitors, as it promised the world it would do two years ago, to the benefit of all customers."

Both are now professors at the University of Pennsylvania. However, both previously worked at the FCC on the AOL Time Warner merger.

They also pointed out that "there is one condition that is unchanged" -- "AOL Time Warner's failure to interoperate."

They added that "AOL Time Warner has a very easy way to demonstrate that it is no longer dominant in IM: offer to interoperate with their competitors. If they are truly not dominant, then this is their best strategy. But if they are dominant (as they claim they are not), then they would refuse to interoperate (which is what they are actually doing)." (Parentheses in original.)

May 20 is the deadline to submit reply comments. This is FCC Docket No. 00-30.

Antitrust Division Has No Present Intention to Challenge Chemical Industry Database

5/13. Hewitt Pate, Acting Assistant Attorney General in charge of the Department of Justice's (DOJ) Antitrust Division, wrote a business review letter to William Jibilian, attorney for BroChem Marketing, Inc. regarding the DOJ's antitrust enforcement intentions regarding the proposed Chemical Information System (CIS), a computer database that would be made available to chemical distributors seeking information on the product lines of chemical producers.

The letter recites facts provided by BroChem. For example, it states that "Chemical producers will be able to access the database for the information they have provided to BroChem, and chemical distributors will be able to access the database for the information on the chemical products they are selling." It also states that "price-sensitive information is not accessible to competitors or others who should not have access to it." It adds that "BroChem will establish computer safeguards to ensure that each chemical producer can access only the data that the producer has provided to BroChem, and that each chemical distributor has access only to information regarding products that the chemical producers have authorized the distributor to market."

The DOJ letter concludes that "we conclude that the revised CIS is not likely to reduce competition. Therefore, the Department has no present intention to challenge the proposed operations of BroChem. In accordance with our normal practice, however, we remain free to bring whatever action or proceeding we subsequently come to believe is required by the public interest, if BroChem's operations prove to be anticompetitive in purpose or effect." See also, DOJ release.

Federal Circuit Rules in StorageTek v. Cisco

5/13. The U.S. Court of Appeals (FedCir) issued its opinion [MS Word] in StorageTek v. Cisco, a patent infringement case involving communication networks.

Background. Storage Technology Corporation (StorageTek) sells storage products, including tape storage systems, disk storage systems, and software and services. It is the assignee of two patents that relate to the forwarding of packets by a network device: U.S. Patent No. 5,842,040 titled "Policy caching method and apparatus for use in a communication device based on contents of one data unit in a subset of related data units", and U.S. Patent No. 5,566,170 titled "Method and apparatus for accelerated packet forwarding". Both

Cisco Systems makes networking products. Its NetFlow Feature Acceleration technology and Multi-Protocol Label Switching (MPLS) technology are at issue in this case.

District Court. StorageTek filed a complaint in U.S. District Court (WDWisc) against Cisco alleging patent infringement. It alleged that Cisco's NetFlow Feature Acceleration technology and Multi-Protocol Label Switching (MPLS) technology infringe the '040 and '170 patents. Cisco moved to transfer venue pursuant to 28 U.S.C. § 1404(a). The District Court (WDWisc) transferred the case to the U.S. District Court (NDCal). The District Court (NDCal) conducted a Markman hearing, and entered a claim construction order. It then granted summary judgment of non-infringement to Cisco. StorageTek appealed.

Court of Appeals. The Court of Appeals affirmed the decision to transfer the case (becaues most of Cisco's witnesses are in Northern California), and the summary judgment as to the '170 patent. However, it held that the District Court erred in its construction of certain limitations in the '040 patent. It vacated the judgment of non-infringement of this patent, and remanded to the District Court.

9th Circuit Rules in Antitrust Case

5/13. The U.S. Court of Appeals (9thCir) issued its opinion [29 pages in PDF] in Paladin v. Montana Power, an antitrust case involving the natural gas industry. However, while this is not a technology case, the topics addressed by the Court, including the essential facilities doctrine, illegal tying, and illegal group boycotts, may be applicable in other antitrust cases.

Paladin is a natural gas marketer. Montana Power is a natural gas pipeline company. Paladin filed a complaint in U.S. District Court (DMont) against Montana Power and others alleging federal antitrust and state law tort claims. Paladin alleged that Montana Power and another company created an illegal group boycott, that Paladin created an illegal tying arrangement, and that Paladin possessed storage facilities that constitute essential facilities and that it illegally monopolized them.

The District Court granted summary judgment to Montana Power and the other defendants on the federal antitrust claims, and dismissed the state law claims. The Appeals Court affirmed.

FBI Legal Memorandum Addresses Questions Related to Government Use of Private Databases

5/13. The Electronic Privacy Information Center (EPIC) published in its web site a heavily redacted copy of a Federal Bureau of Investigation (FBI) memorandum [16 page PDF scan] titled "GUIDANCE REGARDING THE USE OF CHOICEPOINT FOR FOREIGN INTELLIGENCE COLLECTION OR FOREIGN COUNTERTERRORISM INVESTIGATIONS".

The memorandum is dated September 17, 2001, which is several days after the terrorist attacks of September 11, 2001. It is also several months after the Wall Street Journal published an article titled "FBI's Reliance on the Private Sector Has Raised Some Privacy Concerns", by Glenn Simpson, dated April 13, 2001. The FBI memorandum addresses whether the FBI may pay for access to ChoicePoint's database of personally identifiable information about Americans. Were the FBI to collect and maintain such data itself, it might violate the Privacy Act.

Chris Hoofnagle, Deputy Counsel for the EPIC, told Tech Law Journal that the memorandum is important because it "show the thinking of the FBI's General Counsel" on the use of internet materials in its investigations, and the use of ChoicePoint.

The unredacted portions of the memorandum state that the FBI may use the internet to collect publicly available information in foreign counterintelligence investigations (FCI) provided that the FBI complies with the Privacy Act and the Attorney General's Guidelines. See, Department of Justice (DOJ) document [28 pages in PDF] titled "The Attorney General's Guidelines on General Crimes, Racketeering Enterprise and Terrorism Enterprise Investigations". This version was signed by Attorney General John Ashcroft on May 30, 2002.

However, on the question of whether the FBI may use ChoicePoint's private database, the memorandum's key sections are redacted. There is an unredacted statement at the conclusion of the memorandum that states that "Finally, the Attorney General Guidelines do not preclude the use of an Internet resource, such as ChoicePoint, to obtain publicly available identifying data concerning either known or unknown persons."

The unredacted portions of the memorandum further state that use of ChoicePoint does not violate the Fair Credit Reporting Act (FRCA). See, 15 U.S.C. § 1681, et seq. See, full story.

People and Appointments

5/13. Sprint announced the appointment of Gary Forsee as Chairman of its Board of Directors, effective immediately. He is already President and CEO. See, Sprint release. Sprint also announced the appointment of Michael Stout as EVP and Chief Information Officer, and Bruce Hawthorne as EVP and Chief Staff Officer. Hawthorne is a partner in the Atlanta office of the law firm of King & Spalding, and chairman of the firm's telecom practice group. He was lead outside counsel for Sprint in the proposed merger of Sprint and MCI Worldcom, which was rejected by regulators. See, Sprint release.

5/13. AOL announced that Kevin Conroy, who is SVP and General Manager of AOL Entertainment, has been promoted to the new position of EVP and COO of AOL for Broadband. He has been with AOL since January 2001. See, AOL release.

5/13. Computer Associates International named Gary Fernandes to its Board of Directors. He was previously Vice Chairman of EDS. See, CAI release.

More News

5/13. Nancy Victory, Director of the National Telecommunications and Information Administration (NTIA), gave a speech at a meeting titled "Wireless Innovations: New Technologies and Evolving Policies", hosted by the NTIA, State Department and Federal Communications Commission (FCC).

5/13. The Federal Communications Commission (FCC) released a list of the members of the FCC's Technology Advisory Council. It also announced that the Council will next meet at 10:00 AM on July 7, 2003. See, notice [PDF].

5/13. The Internet Corporation for Assigned Names and Numbers (ICANN) published in its web site a memorandum titled "Staff Manager's Issues Report on Privacy Issues Related to Whois".

5/13. Sen. Olympia Snowe (R-ME), Sen. Bill Frist (R-TN), and others introduced S 1053, the "Genetic Nondiscrimination Act of 2003", a bill to prohibit discrimination on the basis of genetic information with respect to health insurance and employment. It was referred to the Senate Committee on Health, Education, Labor, and Pensions.

5/13. S 1050, the Senate version of the "National Defense Authorization Act for Fiscal Year 2004", requires a report on the potential uses of unmanned aerial vehicles (UAVs) for homeland security missions. This version of the defense authorization bill was introduced on May 13. The Senate is scheduled to begin consideration of this bill on May 19. See, summary [15 pages in PDF], at page 9, written by the Senate Armed Services Committee.

More News

5/12. The Securities and Exchange Commission (SEC) published a notice in the Federal Register containing the SEC's interpretation of its rule permitting broker-dealers to store required records in electronic form. The SEC stated that "Under the rule, electronic records must be preserved exclusively in a non-rewriteable and non-erasable format. This interpretation clarifies that broker-dealers may employ a storage system that prevents alteration or erasure of the records for their required retention period." See, Federal Register, May 12, 2003, Vol. 68, No. 91, at Pages 25281 - 25283.

5/12. The Federal Communications Commission (FCC) fined Western Wireless Corporation $200,000 for operating a cellular radio transmitting tower from an unauthorized location, in violation of 47 U.S.C. § 301. See, FCC release [PDF] and Notice of Apparent Liability [14 pages in PDF].

5/12. The Federal Communications Commission (FCC) announced that an individual named Rayon "Junior" Payne was sentenced by the U.S. District Court (MDFl) to 9 months in prison for operating an unlicensed FM radio facility, in violation of 47 U.S.C. § 301. See, FCC release.

Go to News from May 6-10, 2003.