News from November 16-20, 2003

House and Senate Pass Nanotech R&D Bill

11/20. The House passed S 189, the "21st Century Nanotechnology Research and Development Act", by a voice vote. The Senate amended and passed the bill on November 18. The bill, which is sponsored by Sen. Ron Wyden (D-OR), Sen. George Allen (R-VA) and others, would authorize the appropriation of nearly $4 Billion for nanotechnology research and development programs at a variety of federal agencies. See, full story.

Rep. Markey and Rep Pitts Introduce Bill to Limit Wireless Directory Assistance

11/20. Rep. Ed Markey (D-MA) and Rep. Joe Pitts (R-PA) introduced HR 3558 [9 pages in PDF], the "Wireless 411 Privacy Act".

Rep. Ed MarkeyRep. Markey (at right) wrote in a statement [PDF] that "wireless consumers have also been the beneficiaries of a de facto privacy protection policy for their wireless phone numbers. Because wireless subscribers could not be reached through ``information´´ -- such as when callers dial 411 to request a phone number -- it meant that consumers were largely able to control the dissemination of their contact information themselves. For many consumers, this made their wireless phone more valuable because when it rang, it was likely to be a call from someone to whom the subscriber had given their number."

Markey continued that "According to press reports, the wireless industry is poised to change this privacy experience by implementing a national wireless directory assistance database. This will enable callers to 411 to receive a wireless subscriber's phone number, or be connected to a wireless subscriber -- something which today is not possible."

Markey stated that the bill "simply states that current wireless customers must be accorded the right to decide whether they want to be part of the directory assistance service. Wireless companies, in other words, need to ask consumers first and get their prior, affirmative approval before including them." Also, "New wireless customers ... must be given clear and conspicuous notice at the time of subscribing as to what the privacy policy of that carrier will be ..."

See also, Rep. Markey's release [PDF] and Rep. Pitts' release.

The bill would amend the Communications Act, at 47 U.S.C. 332(c), to provide that "A provider of commercial mobile services, or any direct or indirect affiliate or agent of such a provider, may not include the wireless telephone number information of any current subscriber in any wireless directory assistance service database unless (i) the mobile service provider provides a conspicuous, separate notice to the subscriber informing the subscriber of the right not to be listed in any wireless directory assistance service; and (ii) the mobile service provider obtains express prior authorization for listing from such subscriber, separate from any authorization obtained to provide such subscriber with commercial mobile service, or any calling plan or service associated with such commercial mobile service, and such authorization has not been subsequently withdrawn."

The bill also provides that "A provider of commercial mobile services, or any direct or indirect affiliate or agent of such a provider, may include the wireless telephone number information of any new subscriber in a wireless directory assistance service database only if the commercial mobile service provider (i) provides a conspicuous, separate notice to the subscriber, at the time of entering into an agreement to provide commercial mobile service, and at least once a year thereafter, informing the subscriber of the right not to be listed in any wireless directory assistance service database; and (ii) provides the subscriber with convenient mechanisms by which the subscriber may decline or refuse to participate in such database, including mechanisms at the time of entering into an agreement to provide commercial mobile service, in the billing of such service, and when receiving any connected call from a wireless directory assistance service."

It also provides that "A provider of commercial mobile services, or any direct or indirect affiliate or agent of such provider, may connect a calling party from a wireless directory assistance service to a commercial mobile service subscriber only if (i) such subscriber is provided prior notice of the calling party’s identity and is permitted to accept or reject the incoming call on a per-call basis; (ii) such subscriber’s wireless telephone number information is not disclosed to the calling party; and (iii) such subscriber is not an unlisted commercial mobile service subscriber."

Finally, the bill would ban the publication of directories. It would provide that "A provider of commercial mobile services, or any direct or indirect affiliate or agent of such a provider, may not publish, in printed, electronic, or other form, the contents of any wireless directory assistance service database, or any portion or segment thereof."

Steve Largent, P/CEO of the Cellular Telecommunications and Internet Association (CTIA) stated in a release, "Why now? Wireless directory assistance is still on the drawing board ... We are working aggressively to include strong consumer privacy protections as we continue to define a wireless directory assistance offering. The wireless industry has a long history of protecting consumers’ privacy and we look forward to working with all members of Congress as we move forward."

FCC Denies Petition for Stay of Number Portability Order

11/20. The Federal Communications Commission (FCC) adopted and released an Order [MS Word] denying the Joint Petition for Stay Pending Judicial Review [17 pages in PDF], filed on November 18, 2003, by the United States Telecom Association (USTA) and CenturyTel, seeking a stay of the FCC's November 10 Memorandum Opinion and Order and Further Notice of Proposed Rulemaking [35 pages in PDF] regarding number portability. The November 10 order requires that wireline carriers must port numbers to wireless carriers in certain circumstances.

The FCC wrote that "the new rules eliminate impediments to competition among wireless carriers, and between wireless and wireline carriers. In this manner, number portability promotes competition between telecommunications service providers, allowing customers the flexibility to respond to price and service changes without changing their telephone numbers."

The just released Order denying the wireline carriers' petition is FCC 03-298 in CC Docket No. 95-116.

The November 10 order is FCC 03-284 in CC Docket No. 95-116. See, story titled "FCC Releases LNP Order That Addresses Wireline to Wireless" in TLJ Daily E-Mail Alert No. 776, November 11, 2003. See also, story titled "Powell Addresses Number Portability" in TLJ Daily E-Mail Alert No. 784, November 20, 2003.

House Tax Bill Amends Special 301 Provisions

11/20. The House passed HR 3521, the "Tax Relief Extension Act of 2003" by voice vote. This is a large and wide ranging bill. However, Section 3751 of this bill would amend Section 304 of the Trade Act of 1974. This pertains to protection of intellectual property rights.

Section 301, et seq., is a means by which the United States asserts its international trade rights, including its rights under World Trade Organization (WTO) agreements. In particular, under the "Special 301" provisions of the Trade Act of 1974, the U.S. Trade Representative (USTR) identifies trading partners that deny adequate and effective protection of intellectual property or deny fair and equitable market access to U.S. artists and industries that rely upon intellectual property protection. See, for example, the USTR's 2003 Special 301 Report.

The Special 301 provisions are codified at 19 U.S.C. § 2411 et seq. The bill contains two changes to Section 304 of the Trade Act of 1974 (19 U.S.C. § 2414).

 First, the bill provides that "Section 304(a)(2)(A) of the Trade Act of 1974 (19 U.S.C. 2414(a)(2)(A)) is amended by inserting after 'agreement,' the following: 'except an investigation initiated pursuant to section 302(b)(2)(A) involving rights under the Agreement on Trade-Related Aspects of Intellectual Property Rights (referred to in section 101(d)(15) of the Uruguay Round Agreements Act) or the GATT 1994 (as defined in section 2(1)(B) of that Act) relating to products subject to intellectual property protection,'."

Second, the bill provides that Section 304(a)(3)(A) of the Trade Act of 1974 is amended to read as follows: "If an investigation is initiated under this chapter by reason of section 302(b)(2) and--
    (i) the Trade Representative considers that rights under the Agreement on Trade-Related Aspects of Intellectual Property Rights or the GATT 1994 relating to products subject to intellectual property protection are involved, the Trade Representative shall make the determination required under paragraph (1) not later than 30 days after the date on which the dispute settlement procedure is concluded; or
    (ii) the Trade Representative does not consider that a trade agreement, including the Agreement on Trade-Related Aspects of Intellectual Property Rights, is involved or does not make a determination described in subparagraph (B) with respect to such investigation, the Trade Representative shall make the determinations required under paragraph (1) with respect to such investigation not later than the date that is 6 months after the date on which such investigation is initiated."

Bills Introduced

11/20. Sen. Orrin Hatch (R-UT) and Sen. Patrick Leahy (D-VT) introduced S 1911, a bill containing several amendments to the Trade Act of 1974, the Andean Trade Preference Act, and the Caribbean Basin Economic Recovery Act, relating to violations of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Section 1 of the bill contains language that is also in Section 3751 of HR 3521, the "Tax Relief Extension Act of 2003", which the House passed by voice vote on November 20. See, story titled "House Tax Bill Amends Special 301 Provisions" in TLJ Daily E-Mail Alert No. 785, November 24, 2003. The bill was referred to the Senate Finance Committee. Sen. Hatch is a member.

11/20. Rep. Ted Strickland (D-OH) introduced HR 3564, the "Economic Sovereignty and Job Security Act of 2003". The bill provides that "No funds available to the Department of State or any other Federal department or agency may be used to make a United States contribution to the World Trade Organization (WTO)." But, the bill then provides that this provision does not apply "if the President determines and certifies to Congress that the Understanding on Rules and Procedures Governing the Settlement of Disputes (as referred to in section 101(d)(16) of the Uruguay Round Agreements Act) does not apply with respect to the United States involving a dispute under the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (as referred to in section 101(d)(7) of the Uruguay Round Agreements Act), the Agreement on Subsidies and Countervailing Measures (as referred to in section 101(d)(12) of the Uruguay Round Agreements Act), and the Agreement on Safeguards (as referred to in section 101(d)(13) of the Uruguay Round Agreements Act)." (All parentheses in original.) The bill was referred to the House Ways and Means Committee.

More News

11/20. The Department of Justice (DOJ) hosted a publicity event regarding the investigation and prosecution of computer related crimes, including internet fraud, investment fraud, identity theft, and software piracy, by the DOJ and other government entities. See, DOJ release and speech by Attorney General John Ashcroft. See also, list of cases brought in the months of October and November.

11/20. The Department of Commerce's (DOC) Technology Administration's (TA) Office of Technology Policy (OTP) released a report [105 pages in PDF] titled "Partners on a Mission: Federal Laboratory Practices Contributing to Economic Development". The report was prepared for the DOC by Innovation Associates. The principle author was Diane Palmintera.

11/20. Todd Zywicki, Director of the Federal Trade Commission's (FTC) Office of Policy Planning, gave a speech [PDF] titled "Competition Policy and Regulatory Reform: Means and Ends" in Tokyo, Japan.

Book Review: Human Achievement, by Charles Murray

11/19. One common denominator of many of the recent speeches, papers, and reports about innovation and public policy is that the speakers and writers often refer to historical support for their arguments. However, while it is common to state that history supports this or that proposition, very few cite any historical facts, let alone historical works.

Now, along comes veteran conservative controversialist Charles Murray of the American Enterprise Institute (AEI) with a book that is a history of innovators. It is titled Human Accomplishment: the Pursuit of Excellence in the Arts and Sciences, 800 B.C. to 1950. The book was released on October 21. It is 688 pages, with a substantial index, bibliography, endnotes, and appendices. Statistically minded readers will revel in his tables, graphs, and multivariate regression analysis results.

Human Accomplishment is quantitative study. He identifies the leading 4,000 innovators over the last three thousand years, and assigns scores indicating the extent of their contributions. He also collected data on such things as when they lived, where they lived, and what were some of the surrounding circumstances in which they lived.

Murray finds that "At irregular times and in scattered settings, human beings have achieved great things. They have discovered truths about the workings of the physical world, invented wondrous devices, combined sounds and colors in ways that touch our deepest emotions, and arranged words in ways that illuminate the mysteries of the human condition."

Having found that innovation occurs at irregular times and in scattered settings, Murray then makes some significant strides, through empirical analysis, towards identifying some conditions that have been conducive to innovation and accomplishment, and others that have not. Since some of these conditions, such as individual freedom and the presence of elite universities, can be either advanced or limited by governments, the book has public policy implications. See, full story.

House Passes Contact Lens Bill

11/19. The House passed HR 3140, the "Fairness to Contact Lens Consumers Act", by a vote of 406-12. See, Roll Call No. 644.

The bill does not reference the internet. However, it would remove some barriers to the sale of contact lenses over the internet. For example, it would require that ophthalmologists and optometrists release contact lens prescriptions to their patients and verify contact lens prescriptions for internet sellers and other third parties.

The bill was introduced on September 23, 2003 by Rep. Richard Burr (R-NC). An earlier version of the bill, HR 2221, also titled the "Fairness to Contact Lens Consumers Act", was introduced on May 22, 2003 by Rep. Burr. The House Commerce Committee's Subcommittee on Commerce, Trade, and Consumer Protection held a hearing on September 9, 2003. The Subcommittee approved the bill on September 24, and the full Committee approved it on October 1, 2003.

See also, story titled "Bill Would Facilitate Internet Sale of Replacement Contact Lenses" in TLJ Daily E-Mail Alert No. 669, May 29, 2003; and story titled "House Subcommittee Holds Hearing on Contact Lens Bill" in TLJ Daily E-Mail Alert No. 736, September 10, 2003.

Senators Introduce Bill to Require Expensing of Stock Options Granted to Officers

11/19. Sen. Mike Enzi (R-WY), Sen. Harry Reid (D-NV), and others introduced S 1890 [7 pages in PDF], the Stock Option Accounting Act, a bill that would require the expensing of stock options for only the top five executives of companies, and exempt small businesses and start ups.

Sen. Mike EnziSen. Enzi (at right) stated in the Senate that, "Simply put, at the end of the day, if FASB is going to earn its independence, it will have to adhere to a process that is objective, fair, open and balanced. So far, FASB seems to be more concerned about getting the job done -- than in getting it right. That is why I am offering legislation that will expense the stock options given to the top five executives of a company, exempt small businesses and start up companies, and set conditions for the expensing of broad-based options for the remaining employees. I treat the three groups differently in this matter because a very real and strong accounting distinction exists between the two types of workers." See, Congressional Record, November 19, 2003, at Page S15188.

Sen. Reid stated that "We have to protect investors and stockholders by ensuring that our Nation's accounting standards are transparent, open and balanced. At the same time, we don't want to choke the entrepreneurial spirit of start-up companies with too much bureaucratic red tape. This legislation achieves just the right balance. It gives regulators a framework to protect the integrity of the accounting process, but it doesn't stifle free enterprise."

The other original cosponsors of the bill are Sen. John Ensign (R-NV), Sen. Barbara Boxer (D-CA), Sen. George Allen (R-VA), Sen. Patty Murray (D-WA), Sen. Wayne Allard (R-CO), Sen. Conrad Burns (R-MT), and Sen. Gordon Smith (R-OR).

The bill was referred to the Senate Banking Committee, of which Sen. Enzi is a member. See also, Sen. Enzi's summary of the bill.

House Subcommittee Holds Hearing on Cyber Security and Consumer Data

11/19. The House Commerce Committee's Subcommittee on Commerce, Trade, and Consumer Protection will hold a hearing titled "Cybersecurity & Consumer Data: What's at Risk for the Consumer?".

Federal Trade Commission (FTC) Commissioner Orson Swindle wrote in his prepared testimony that the FTC "has sought to address concerns about the security of our nation's computer systems through a combined approach that stresses the education of businesses, consumers, and government agencies about the fundamental importance of good security practices; law enforcement actions; and international cooperation." He added that "In the information security matters, our enforcement tools derive from Section 5 of the FTC Act, which prohibits unfair or deception acts or practices, and the Commission's Gramm-Leach-Bliley Safeguard Rule".

Scott Charney, Microsoft's Chief Trustworthy Computing Strategist, wrote in his prepared testimony that the government should do several things. He stated that "law enforcement should receive additional resources, personnel, and equipment in order to investigate and prosecute cyber crimes. We also support tough penalties on criminal hackers, such as forfeiture of personal property used in committing these crimes."

He also stated that the "public sector should increase its support for basic research in technology and should maintain its traditional support for transferring the results of federally-funded R&D under permissive licenses to the private sector so that all industry participants can further develop the technology and commercialize it to help make all software more secure."

He also advocated greater cross-jurisdictional cooperation among law enforcement agencies, reduced barriers to the exchange of information, and government leading by example.

Rep. Mary Bono (R-CA) advocated passage of HR 2929, the "Safeguard Against Privacy Invasions Act", which she introduced on July 25, 2003 along with Rep. Edolphus Towns (D-NY). This bill would prohibit the distribution of certain spyware programs over the internet without notice and consent. See, story titled "Rep. Bono Introduces Spyware Bill" in TLJ Daily E-Mail Alert No. 706, July 29, 2003.

She stated that this bill "would help prevent Internet spying by requiring spyware entities to inform computer users of the presence of such software, the nature of spyware, and its intended function.  Moreover, before downloading such software, spyware companies would first have to obtain permission from the computer user."

She continued that "This is a very basic concept. The PC has become our new town square and global market as well as our private database. If a consumer downloads software that can monitor the information shared during transactions, for the sake of the consumer as well as e-commerce, it is imperative that the consumer be informed of whom he or she is inviting into their computer and what he or she is capable of. After being informed, the consumer should have the chance to decide whether to continue with the download."

Rep. Billy Tauzin (R-LA), the Chairman of the full Committee, issued a statement in which he wrote that "The public needs to be better educated about anti-virus software and personal firewalls for their home computers, as well as the insidious 'SpyWare' technology that can monitor individuals' computers and their actions on the Internet.  I know the gentlelady from California, Ms. Bono, has introduced a bill -- H.R. 2929, 'The Safeguard Against Privacy Invasions Act" -- that attempts to deal with this concern, and I look forward to working with her on the bill to try to prevent these intrusions."

See also, prepared testimony of Howard Schmidt (eBay), prepared testimony of David Morrow (EDS), prepared testimony of Mary Ann Davidson (Oracle), prepared testimony of Joseph Ansanelli (Vent, Inc.), prepared testimony of Daniel Burton (Entrust Technologies), and prepared testimony of Roger Thompson (PestPatrol, Inc.).

More Capitol Hill News

11/19. The House Judiciary Committee held an oversight hearing titled "Saving the Savings Clause: Congressional Intent, the Trinko Case, and the Role of the Antitrust Laws in Promoting Competition in the Telecom Sector". See, prepared testimony in PDF of witnesses: Hewitt Pate (Assistant Attorney General in charge of the Antitrust Division), Alfred Pfeiffer (Association for Local Telecommunications Services and the Competitive Telecommunications Association), John Thorne (Verizon), and Christopher Wright (Harris Wiltshire & Grannis). See also, TLJ story titled "Supreme Court Grants Certiorari in Verizon v. Trinko", March 10, 2003. The Supreme Court has heard oral argument, but not released its opinion, in this case.

11/19. The House Commerce Committee's Subcommittee on Telecommunications and the Internet held a hearing titled "Digital Dividends and Other Proposals to Leverage Investment in Technology". See, prepared statement [2 pages in PDF] of Rep. Ed Markey (D-MA), the ranking Democrat on the Subcommittee, and the sponsor of HR 1396, the "Spectrum Commons and Digital Dividends Act of 2003". See also, prepared testimony of witnesses: Newton Minow (Sidley Austin Brown & Wood), Eamon Kelly (Tulane University), James Welbourne (New Haven Free Public Library System), and Ginger Lew (Telecommunications Development Fund).

People and Appointments

11/19. President Bush announced that he intends to designate James Comey to be Acting Deputy Attorney General at the Department of Justice (DOJ). President Bush previously nominated Comey for this position. Sen. Charles Grassley (R-IA) announced on November 17, 2003 that he has placed a hold on this nomination, for reasons unrelated to Comey. See, White House release.

11/19. Nuala Kelly, Chief Privacy Officer of the Department of Homeland Security (DHS), gave a speech at her swearing in ceremony. She stated that "There is no more important role for our federal government than to provide a safe space for our citizens and our visitors -- in both mind and body. ... And I am confident that this mission can be accomplished while respecting the privacy and civil liberties of the individual." She added that "The role of the Department is not only to protect the people and places of this country, it is to protect the liberties and the way of life that make this country great. The protection of privacy, of the dignity of the individual, is not a value that can be added on to this or any other organization later, and that is why I am so pleased to have been here from almost the very beginning. This value is one that must be embedded in the very culture and structure of the organization."

More News

11/19. The Federal Communications Commission (FCC) released an Order [16 pages in PDF] in its proceeding titled "In the matter of Petition for Forbearance From E911 Accuracy Standards Imposed On Tier III Carriers For Locating Wireless Subscribers Under Rule Section 20.18(h)" denying a petition filed by twelve small Commercial Mobile Wireless Service (CMRS) carriers requesting forbearance of certain E911 Phase II requirements. This is FCC 03-297 in WT Docket No. 02-377.

11/19. The General Accounting Office (GAO) released a report [15 pages in PDF] titled "Computer-Based Patient Records: Short-Term Progress Made, But Much Work Remains to Achieve A Two-Way Data Exchange Between VA and DOD Health Systems".

11/19. The Progress and Freedom Foundation (PFF) published a paper [22 pages in PDF] titled "Pennsylvania at Another Crossroads: Will it Opt for Less Regulation and Real Competition to Achieve Digital Age Progress?" The paper was written by Randolph May and Adam Peters of the PFF.

11/19. Timothy Muris, Chairman of the Federal Trade Commission (FTC), gave a speech [59 pages PDF] titled "How History Informs Practice -- Understanding the Development of Modern U.S. Competition Policy".

11/19. The American Electronics Association (AEA) published a report titled "Cyberstates 2003: A State-By-State Overview of the High-Technology Industry". The report covers high tech employment trends. The AEA sells the report for $190. See, AEA release.

House Passes Conference Report on Energy Bill with Nanotechnology Provision

11/18. The House passed the conference report on HR 6, the "Energy Policy Act of 2003", by a vote of 246-180. See, Roll Call No. 630 and House Report No. 108-375. The Senate has yet to pass the conference report; although, it may pass it on November 19.

This bill includes the language of HR 238, the "Energy Research, Development, Demonstration, and Commercial Application Act of 2003", which was unanimously approved by the House Science Committee on April 2, 2003. This bill authorizes funding for energy related research. However, several sections are technology related.

One section provides for nanotech R&D. It provides, in part, that "The Secretary, acting through the Office of Science, shall implement a Nanotechnology Research and Development Program to promote nanotechnology research, development, demonstration, education, technology transfer, and commercial application activities as necessary to ensure continued United States leadership in nanotechnology across scientific and engineering disciplines."

Rep. Sherwood Boehlert (R-NY) stated in a release that "This compromise will help ensure that the President's nanotechnology initiative is well funded, focused, interdisciplinary and coordinated ... The bill also ensures that the potential societal consequences of nanotechnology are studied as the technology moves forward. The nanotechnology program will be a model of how government, universities and industry can work together to advance science and bolster our nation's economy."

Another section of the bill addresses computing. It provides, in part, that "The Secretary, acting through the Office of Science, shall support a program to advance the Nation's computing capability across a diverse set of grand challenge computationally based science problems related to departmental missions."

Powell Addresses Number Portability

11/18. Federal Communications Commission (FCC) Chairman Michael Powell gave a speech [2 pages in PDF] in Washington DC regarding number portability.

He stated that "In seven days, consumers will be able to enjoy new freedom in their phone service. Freedom to choose among cellular providers and keep their phone number, and Freedom to choose whether to cut the cord entirely and move their wired phone number to their wireless phone."

On November 10, the FCC announced and released a Memorandum Opinion and Order and Further Notice of Proposed Rulemaking [35 pages in PDF] regarding local number portability (LNP). This item states that "We find that porting from a wireline carrier to a wireless carrier is required where the requesting wireless carrier's ``coverage area´´ overlaps the geographic location in which the customer's wireline number is provisioned, provided that the porting-in carrier maintains the number’s original rate center designation following the port." It also states that "wireline carriers may not require wireless carriers to enter into interconnection agreements as a precondition to porting between the carriers." This is FCC 03-284 in CC Docket No. 95-116. See, story titled "FCC Releases LNP Order That Addresses Wireline to Wireless" in TLJ Daily E-Mail Alert No. 776, November 11, 2003.

On October 7, 2003, the FCC issued a Memorandum Opinion and Order (MOO) [PDF] in its proceeding titled "In the Matter of Telephone Number Portability -- Carrier Requests for Clarification of Wireless-Wireless Porting Issues". This MOO addressed wireless to wireless, but not wireless to wireline, LNP issues. See, story titled "FCC Issues LNP Order" in TLJ Daily E-Mail Alert No. 756, October 9, 2003. This is FCC 03-237, in CC Docket No. 95-116.

Steve Largent, P/CEO of Cellular Telecommunications Industry Association (CTIA) stated in a release that "Chairman Powell is right on the mark -- competition brings consumers lower prices, better quality, and more innovation ... Wireless competition has delivered for wireless consumers, and wireline consumers expect and deserve the same benefits. It's a simple matter of allowing competition into the marketplace to serve consumers better. Consumers should be able to take their phone numbers from wireless to wireless, from wireline to wireless, and vice versa."

Meanwhile, United States Telecom Association (USTA) and CenturyTel filed a petition [17 pages in PDF] with the FCC on November 18 seeking a stay of the FCC's order of November 10.

The petitioners write that "The Commission's decision to require wireline local exchange carriers ("LECs") to port numbers to any wireless carrier that provides service in the customer's rate center -- even if the wireless carrier lacks any numbering resources or point of interconnection in that rate center -- was procedurally improper and substantively inequitable."

Walter McCormick, P/CEO of the USTA, stated in a release that the FCC's "piecemeal approach to intermodal number portability will lead to negative consequences for carriers and their customers". He continued that "Real competition is a two-way street. This is government-managed competition at its worst ... These rules place the FCC in the role of ‘traffic cop,’ directing consumers away from wireline companies and toward wireless ones. Consumers don't have a real choice to move in the opposite direction, which means local telecommunications companies don't have the opportunity to compete on an equal footing for their business. This is a victory for regulatory favoritism rather than head-to-head competition."

The USTA release adds that if the FCC does not grant a stay, then the USTA "will ask the courts to intervene on behalf of regulatory parity and real consumer choice."

DOJ/FTC to Release Herfindahl-Hirshman Index Data

11/18. Hewitt Pate, Assistant Attorney General in charge of the Department of Justice's (DOJ) Antitrust Division, gave a speech in Washington DC on November 18. He said that in "early December" the DOJ and Federal Trade Commission (FTC) will release data relating to the Herfindahl-Hirschman Index.

The Herfindahl-Hirschman Index is a quantitative measure of market concentration. The DOJ states that "It is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers."

Hewitt PatePate stated that the DOJ and FTC "jointly are conducting a review of their recent past horizontal merger enforcement efforts. The Agencies will soon release data generated through a review of those efforts taken during the past five years. The data to be released will focus on the level of the post-merger Herfindahl-Hirschman Index (HHI) of market concentration and the change in the HHI level for mergers to which the Department or the Commission indicated opposition in a public way. For the Department, this means either that a complaint was filed or that a press release was issued indicating that the deal was abandoned or restructured as a result of our opposition."

Pate also stated that "Both Agencies will also be examining whether, and if so what, other data might usefully be disseminated."

He added that "we at the Antitrust Division have concluded that it would be helpful in a variety of ways to maintain a more comprehensive data base on our investigations. Thus, I have asked Antitrust Division staff to begin the process of determining the types of information we would ideally like to have on all horizontal merger matters we evaluate. Then we will work to collect such information and preserve it so future retrospectives of merger enforcement can be more robust."

See also, DOJ release.

NTIA to Hold Hearings on Spectrum Management

11/18. The Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA) announced that it will hold "a series of public meetings designed to gather information from the private sector and state and local governments about better ways to manage the nation's airwaves". See, NTIA release.

The NTIA shares spectrum management responsibilities with the Federal Communications Commission (FCC). The NTIA has authority with respect to government users. The NTIA also advocates the administration's position on telecommunications issues.

The first meeting will be held at the DOC on December 9. It will address "incentives encouraging spectrum efficiency" and "deployment of new and expanded services and technologies ".

The NTIA will co-sponsor another meeting on February 12 or 13 with the National Academy of Sciences that will address "critical spectrum needs, improving spectrum management, incentives to spur spectrum efficiency, and policies to streamline development of new technologies and expanded services".

The NTIA will cosponsor another meeting in January or February with the Department of Homeland Security's (DHS) Project SAFECOM that will address "state and local public safety issues". The NTIA may schedule further hearings.

The NTIA invites public comments. The NTIA further stated that the hearing participants "may include spectrum users, equipment vendors, financial and industry analysts, consumer groups and others". However, it did not state how interested parties should make requests to testify or make presentations at these hearings. For more information, contact Clyde Ensslin at or 202 482-7002.

FDA and Health Canada Debate Internet Drug Sales

11/18. Mark McClellan, Commissioner of the U.S. Food and Drug Administration (FDA), and Diane Gorman, Assistant Deputy Minister, Health Products and Food Branch, of Health Canada, signed a Memorandum of Understanding (MOU) regarding drug sales. The MOU provides for information sharing only.

McClellan also gave a long speech to the Drug Information Association in Ottawa, Canada in which he addressed many issues, including internet drug sales. Gorman then issued a statement disputing key points of McClellan's speech.

McClellan said that "We're seeing international counterfeit drug operations that are increasingly sophisticated and criminal networks that are better organized than ever before. And we're being called upon to police a growing illegal trade in dangerous drugs including controlled substances and unsafe knockoffs dispensed without proper medical oversight, all just an Internet click away from anyone in the world."

He continued that "These criminal problems, illegal in every developed country, simply cannot be solved by countries acting alone. In fact, the criminals are increasingly taking their operations across borders, because they are counting on our not working together internationally with the same vigor we work to enforce the laws within our own countries. We also cannot afford an ``every country for itself ´´ policy when it comes to improving the health of our citizens through access to new and better medicines."

He also stated that "we've also seen an increasing number of websites based in Canada that promote the uncontrolled use of controlled substances for profit. It's clearly illegal to get a prescription for a controlled substance under these circumstances, we've taken aggressive steps to shut down these sites when they operate in the United States, and we are taking more steps at the border as well. Not quite as disturbing, but still unsafe, are sites that purport to be Canadian pharmacies but may only have Canadian Internet Service Providers, and are actually providing drugs from elsewhere in the world. We've turned over information on some of these sites to Health Canada, and we stand ready to help them take action. And we're also worried about the increasing number of truly unscrupulous Internet peddlers from all over the world, who are trying to catch a free ride on the flow of drugs moving though Canada to the United States."

See also, Health Canada release and FDA web page titled "Prescription Drugs from Foreign Sources".

CDT Releases Report on Spyware

11/18. The Center for Democracy and Technology (CDT), a Washington DC based interest group that focuses on technology issues, released a report [14 pages in PDF] titled "Ghosts in Our Machines: Background and Policy Proposals on the ``Spyware´´ Problem".

The report states that "Computer users are increasingly finding programs on their computers that they did not know were installed and that they cannot uninstall, that create privacy problems and open security holes, that can hurt the performance and stability of their systems, and that can lead them to mistakenly believe that these problems are the fault of another application or their Internet provider."

Much of the report is devoted to a listing and description of the various technologies that are sometimes referred to as spyware. It states that the term "has been applied to everything from keystroke loggers, to advertising applications that track users' web browsing, to web cookies, to programs designed to help provide security patches directly to users. More recently, there has been particular attention paid to a variety of applications that piggyback on peer-to-peer file-sharing software and other free downloads as a way to gain access to people's computers." However, this report focuses primarily on what it labels "adware" applications.

The report also summarizes existing laws that may pertain to the use of various spyware applications, including the Electronic Communications Privacy Act (ECPA), the Computer Fraud and Abuse Act (CFAA), and the Federal Trade Commission Act (FTCA).

The report also reviews pending legislation, including HR 2929, the "Safeguard Against Privacy Invasions Act" introduced on July 25, 2003 by Rep. Mary Bono (R-CA) and Rep. Edolphus Towns (D-NY). This bill would prohibit the distribution of certain spyware programs over the internet without notice and consent. See, story titled "Rep. Bono Introduces Spyware Bill" in TLJ Daily E-Mail Alert No. 706, July 29, 2003.

The report also addresses S 197 (107th Congress), the "Spyware Control and Privacy Protection Act of 2000", introduced in the last Congress by Sen. John Edwards (D-NC) and Sen. Ernest Hollings (D-SC).

The report concludes that "Combating the most invasive of these technologies will require a combination of legislation, anti-spyware tools, and self-regulatory policies. However, it will be very difficult if not impossible to draft legislation that defines the spyware problem with sufficient specificity to tackle the problem in isolation from the issue of online privacy generally. We believe that it would be best to recognize this explicitly and address at least the privacy dimension of spyware as part of baseline Internet privacy legislation. At the same time, pending bills, because they focus on applications that take information from a user’s computer, do not address the larger problem of control."

Commentary on the Nature and Causes Innovation, and the Implications for Public Policy

11/18. In many of the public policy debates in Washington DC proponents of various positions assert that their proposals will further innovation, invention, and creation. The arguments often continue that this, in turn, will create jobs, wealth, prosperity, and now, homeland security. Claims of this nature are not limited to debates over patent, copyright, and other intellectual property laws. They are central to debates over government involvement in research and development, funding for universities, education policy, immigration policy, taxation, and communications policy.

Innovation is invoked in many different debates, often by competing interests advocating vastly different policies. Also, while the arguments abound, they are usually merely that -- arguments. Few proponents in debates over innovation and creation offer empirically based analysis, case stories or histories to support their propositions. Often, the phrase "promote innovation" is used without any explanation or analysis.

This article is the first of a series of articles to be published in the TLJ Daily E-Mail Alert over the next two weeks that address arguments regarding the nature, causes and consequences of innovation. Most of the arguments addressed in this series have been presented in the last month in books, reports, and speeches. See, full story.

Bush Says Liberty Creates Innovation Which Creates Wealth

11/18. President Bush gave a speech in Washington DC at the National Endowment for Democracy on November 6, 2003 in which he advocated promoting democracy in Iraq and the Middle East. He revealed that underlying his argument about U.S. foreign policy is an economic theory regarding the source of growth and prosperity, including the role of innovation and creativity.

In Bush's economic theory, freedom and liberty lead to creativity, innovation and technological progress, which in turn, lead to social progress, wealth and prosperity. Said Bush, "the prosperity, and social vitality and technological progress of a people are directly determined by extent of their liberty. Freedom honors and unleashes human creativity -- and creativity determines the strength and wealth of nations. Liberty is both the plan of Heaven for humanity, and the best hope for progress here on Earth."

Bush elaborated that "There are governments that still fear and repress independent thought and creativity, and private enterprise -- the human qualities that make for a -- strong and successful societies. Even when these nations have vast natural resources, they do not respect or develop their greatest resources -- the talent and energy of men and women working and living in freedom." See, full story.

People and Appointments

11/18. The Senate Commerce Committee approved the nomination of Michael Gallagher to be Assistant Secretary of Commerce and Information and Administrator of the National Telecommunications and Information Administration (NTIA).

11/18. The Senate Commerce Committee approved the nomination of Jeffrey Rosen to be General Counsel of the Department of Transportation.

More News

11/18. The Federal Communications Commission (FCC) released its "Report and Order" [62 pages in PDF] regarding additional spectrum for unlicensed wireless devices operating in the 5 GHz region. The FCC announced, but did not release, this order at its November 13 meeting. See, story titled "FCC Adopts Report and Order Providing More Spectrum for Unlicensed Devices" in TLJ Daily E-Mail Alert No. 779, November 14, 2003. This is FCC 03-287 in ET Docket No. 03-122.

11/18. Rep. Ed Markey (D-MA) introduced HR 3511 [PDF], the "Video Programming Consumer Privacy Protection Act of 2003". See also, Markey statement [PDF].

11/18. Makan Delrahim gave a speech titled "Department of Justice Perspectives on International Antitrust Enforcement: Recent Legal Developments and Policy Implications". Delrahim, who is a Deputy Assistant Attorney General in the Department of Justice's Antitrust Division, spoke to a legal group in Washington DC.

11/18. Ryan McCarty pled guilty in U.S. District Court (DNJ) to one count of mail fraud in violation of 18 U.S.C. § 1341, and one count of theft of mail in violation of 18 U.S.C. §§ 1708 & 1702. See, DOJ release. The first count of the Information states that McCarty "devised and intended to devise a scheme and artifice to defraud eBay purchasers of music concert tickets and sporting event tickets and to obtain money and property of these individuals by means of material false and fraudulent pretenses, representations and promises ..."

Groups Seek Regulation of Radio Frequency Identification Tags

11/17. A group of groups released a paper titled "Position Statement on the Use of RFID on Consumer Products". It argues that "Radio Frequency Identification (RFID) is an item-tagging technology with profound societal implications. Used improperly, RFID has the potential to jeopardize consumer privacy, reduce or eliminate purchasing anonymity, and threaten civil liberties."

The paper argues that "First, RFID must undergo a formal technology assessment, and RFID tags should not be affixed to individual consumer products until such assessment takes place. Second, RFID implementation must be guided by Principles of Fair Information Practice. Third, certain uses of RFID should be flatly prohibited."

Consumer food and beverage producers, and grocers and other retailers, plan to introduce RFID tags as a means to reduce the cost, and improve the accuracy, of inventory and distribution management. The technology offers the promise of lower prices for consumers.

Nevertheless, the just released report argues that there are several threats to consumer privacy and civil liberties. First, "RFID tags can be embedded into/onto objects and documents without the knowledge of the individual who obtains those items. As radio waves travel easily and silently through fabric, plastic, and other materials, it is possible to read RFID tags sewn into clothing or affixed to objects contained in purses, shopping bags, suitcases, and more."

Second, the report states, "RFID deployment requires the creation of massive databases containing unique tag data. These records could be linked with personal identifying data, especially as computer memory and processing capacities expand."

Moreover, "Tags can be read from a distance, not restricted to line of sight, by readers that can be incorporated invisibly into nearly any environment where human beings or items congregate. RFID readers have already been experimentally embedded into floor tiles, woven into carpeting and floor mats, hidden in doorways, and seamlessly incorporated into retail shelving and counters, making it virtually impossible for a consumer to know when or if he or she was being ``scanned.´´"

The report also asserts that "If personal identity were linked with unique RFID tag numbers, individuals could be profiled and tracked without their knowledge or consent. For example, a tag embedded in a shoe could serve as a de facto identifier for the person wearing it."

The report also mentions that "Industry proponents argue that when RFID applications are confined to closed systems, the data is only accessible to those within the system and those with a government mandate (perhaps via legislation such as the Communications Access to Law Enforcement Act (CALEA))." (Parentheses in original.)

CALEA, as written, and as implemented by Federal Communications Commission (FCC) rules, applies to certain communications technologies, but not RFID tags.

The paper was released at an event titled "RFID Privacy Workshop" which was held on November 15 at the Massachusetts Institute of Technology (MIT) in Cambridge, Massachusetts. See, workshop agenda, which contains hyperlinks to some of the participants' presentations.

The paper was issued or endorsed by, among others, the Consumers Against Supermarket Privacy Invasion and Numbering (CASPIAN), Privacy Rights Clearinghouse, American Civil Liberties Union (ACLU), Center for Democracy and Technology (CDT), Electronic Privacy Information Center (EPIC). For more information, see the EPIC's RFID web page.

Jim Harper, the editor of, stated in a release that "The report is as much science fantasy as legitimate privacy concern".

He continued that "A good imagination can come up with concerns about RFID tags, but concerns about commercial use of RFID tags fall apart under real-world analysis ... Under any scenario, there just isn't going to be post-sale data-collection about the movement of canned peaches."

He also wrote that "This is important because bogus anti-RFID hype can really harm consumers ... The sooner this technology can lower the price of baby formula and diapers, the better."

"Each concern listed in the report is premised on RFID tags being linked to particular people at the point of sale. This could be done by linking check payments, credit cards, and bank cards to purchases. The same potential exists today with the bar codes on nearly every consumer product today", wrote Harper. "If it worries consumers, they'll carry cash".

Senators Daschle and Kerry Introduce Call Center Protectionism Bill

11/17. Sen. Tom Daschle (D-SD) and Sen. John Kerry (D-MA) introduced S 1873, the "Call Center Consumer's Right to Know Act", a bill requiring call centers outside of the U.S. to disclose their location at the beginning of every telephone call or internet communication to or from the U.S. However, the bill does not prohibit the use of call centers outside of the U.S.

The bill provides that "A United States corporation or its subsidiaries that utilizes a call center to initiate telephone calls to, or receive telephone calls from, individuals located in the United States, shall require each employee in the call center to disclose the physical location of such employee at the beginning of each telephone call so initiated or received."

The bill defines "call center" as "a location that provides customer-based service and sales assistance or technical assistance and expertise to individuals located in the United States via telephone, the Internet, or other telecommunications and information technology."

Sen. John KerrySen. Kerry (at right) stated that "This legislation is in response to the mounting evidence showing that U.S. corporations are rapidly shifting hundreds of thousands high-tech and service sector jobs abroad. Labor officials, business leaders, economists, elected officials and ordinary Americans are concerned that this bleeding of American jobs will further slow our economy." See, Congressional Record, November 17, 2003, at pages S14965-6

He added that "These jobs are not specific to one sector or a select few companies, but span a broad array of services, including customer call service centers, payroll and other back-office related activities, stock market research for financial firms, medical transcription services, legal online database research and data analysis for consulting firms. In addition, firms involved with software services and business process outsourcing are rapidly expanding to a host of different countries, including India, the Philippines, Malaysia, China, Russia, Israel, and Ireland."

Bush Seeks Senate Ratification of Council of Europe Convention on Cybercrime

11/17. President Bush wrote a statement to the Senate urging that it ratify the Council of Europe (COE) Convention on Cybercrime. The U.S. signed the Convention November 23, 2001 in Budapest, Hungary.

Bush wrote that "The United States, in its capacity as an observer at the Council of Europe, participated actively in the elaboration of the Convention, which is the only multilateral treaty to address the problems of computer-related crime and electronic evidence gathering."

He continued that "The Convention promises to be an effective tool in the global effort to combat computer-related crime. It requires Parties to criminalize, if they have not already done so, certain conduct that is committed through, against, or related to computer systems. Such substantive crimes include offenses against the ``confidentiality, integrity and availability´´ of computer data and systems, as well as using computer systems to engage in conduct that would be criminal if committed outside the cyber-realm, i.e., forgery, fraud, child pormography, and certain copyright-related offenses. The Convention also requires Parties to have the ability to investigate computer-related crime effectively and to obtain electronic evidence in all types of criminal investigations and proceedings.

He also stated that "By providing for broad international cooperation in the form of extradition and mutual legal assistance, the Cybercrime Convention would remove or minimize legal obstacles to inter-national cooperation that delay or endanger U.S. investigations and prosecutions of computer-related crime. As such, it would help deny ``safe havens´´ to criminals, including terrorists, who can cause damage to U.S. interests from abroad using computer systems. At the same time, the Convention contains safeguards that protect civil liberties and other legitimate interests."

Bush recommended "that the Senate give early and favorable consideration to the Cybercrime Convention, and that it give its advice and consent to ratification, subject to the reservations, declarations, and understanding described in the accompanying report of the Department of State."

See, the Department of Justice's (DOJ) summary of the Convention, the Center for Democracy and Technology's (CDT) international cyber crime web page, and Privacy International's cyber crime web page.

See also, TLJ story titled "COE Cyber Crime Treaty Debated", December 11, 2000; story titled "Bush Administration Releases Final Cyber Security Plan" in TLJ Daily E-Mail Alert No. 605, February 17, 2003; and story titled "State Department Official Addresses International Cyber Security" in TLJ Daily E-Mail Alert No. 737, September 11, 2003.

People and Appointments

11/17. Sen. Charles Grassley (R-IA) made the following statement in the Senate regarding the nomination of James Comey. "I rise today to state that I object to proceeding to the consideration of executive nominee James Comey to be Deputy Attorney General at the Justice Department. I have placed a hold on this person because I have been unable to resolve outstanding issues with the Justice Department. I have been working with the Justice Department to get a satisfactory promise to ensure there are no reprisals against certain Justice Department employees in connection with testimony before the Senate Finance Committee. Although I support Mr. Comey's nomination, I intend to reserve my right to object to the Senate proceeding with this nominee of this legislation at this time." See, Congressional Record, November 17, 2003, at page S14961. Sen. Grassley has also held up other Department of Justice nominees this year.

11/17. Michael Schroeder was elected to the Board of Directors of EchoStar. See, EchoStar release.

More News

11/17. The Supreme Court issued a brief order in Nixon v. Missouri Municipal League, Nos. 02-1238, 02-1386, and 02-1405 . It wrote that "The motion of the Solicitor General for divided argument is granted." See, Order List [10 pages in PDF] at page 2. This case pertains to 47 U.S.C. § 253(a) and state statutes that prohibit political subdivisions from offering telecommunications services. See also, stories titled "Briefs Filed With Supreme Court in Nixon v. Missouri Municipal League" in TLJ Daily E-Mail Alert No. 776, November 11, 2003; and "Supreme Court Grants Certiorari in Nixon v. Missouri Municipal League" in TLJ Daily E-Mail Alert No. 687, June 25, 2003.

11/17. The Federal Communications Commission (FCC) released its annual report [210 pages in PDF] for the year ending December 31, 2002 titled "Statistics of Communications Common Carriers". See also, FCC release [PDF] of November 14.

11/17. The Federal Communications Commission (FCC) released its "Report and Order, Order on Reconsideration, and Further Notice of Proposed Rulemaking" [68 pages in PDF] expanding the entities eligible for universal service subsidies for rural health clinics, and expanding the services that qualify for subsidies. The FCC announced, but did not release, this order at its November 13 meeting. See, story titled "FCC Expands Universal Service Support for Rural Clinics and Telemedicine" in TLJ Daily E-Mail Alert No. 779, November 14, 2003. This is 03-288 in ET Docket No. 02-60.

Go to News from November 11-15, 2003.