TLJ News from January 26-31, 2007

Rep. Dingell and Rep. Markey Send Questions to FCC

1/31. Rep. John Dingell (D-MI), the Chairman of the House Commerce Committee (HCC), and Rep. Ed Markey (D-MA), Chairman of the HCC's Subcommittee on Telecommunications and the Internet (STI), sent a letter to the five Commissioners of the Federal Communications Commission (FCC).

The letter contains numerous written interrogatories to be answered by the FCC Commissioners. The two ask Chairman Kevin Martin to provide information about the FCC's failure to investigate allegations that carriers have provided data to the NSA in violation of the CPNI statute. They pose argumentative questions for Martin and Commissioner Deborah Tate regarding FCC enforcement of the AT&T BellSouth merger conditions. They propound a wide range of additional questions to be answered by each of the five Commissioners.

The HCC also announced that the STI will hold an FCC oversight hearing on Thursday, February 15, 2007.

NSA Access to Carrier Data and the CPNI Statute. Rep. Dingell and Rep. Markey ask Chairman Martin about National Security Agency (NSA) collection of records from carriers, and 47 U.S.C. § 222, regarding customer proprietary network information (CPNI).

They stated that on May 22, 2006, Martin wrote to Rep. Markey stating that "the Commission was ``unable to investigate´´ allegations that telecommunications carriers were disclosing personal phone records of consumers to the National Security Agency (NSA) in apparent contravention of Section 222 of the Communications Act and other laws."

They ask, for example, "Is it your belief that the National Security Act governs the ability of the FCC to commence an investigation into an alleged violation of the Communications Act by a telecommunications carrier, regardless of whether privileges may later affect the ability of the Commission to complete such investigation?"

AT&T BellSouth Merger. Rep. Dingell and Rep. Markey ask Chairman Martin and Commissioner Tate about the AT&T BellSouth merger.

See, FCC release [23 pages PDF] of December 29, 2006, that describes the yet to be released Memorandum Opinion and Order (MOO) regarding the merger of AT&T and BellSouth, and story titled "FCC to Approve AT&T BellSouth Merger with Conditions" in TLJ Daily E-Mail Alert No. 1,512, January 2, 2007.

Rep. Dingell and Rep. Markey opposed FCC approval of the merger without imposition of certain conditions. Martin and Tate opposed the imposition of burdensome conditions, but lacked a third vote on the Commission. The two votes of Commissioners Jonathan Adelstein and Michael Copps were sufficient to hold up the approval until AT&T consented to the imposition of certain conditions.

Adelstein and Copps, and Dingell and Markey, now find themselves in a weak position with respect to obtaining FCC follow through in enforcing the FCC's merger conditions. Martin remains the Chairman, and Adelstein and Copps are only two votes. Moreover, Martin and Tate wrote in joint statement [PDF] that "There are certain conditions, however, that are not self-effectuating or cannot be accomplished by AT&T alone. To the extent Commission action is required to effectuate these conditions as a policy going forward, we specifically do not support those aspects of the conditions and will oppose such policies going forward."

Now, Rep. Dingell and Rep. Markey seek to pressure Martin and Tate to do otherwise. For example, they ask "What is your authority to vote to approve an order and then refuse to implement it? Please identify and describe the provisions of the Communications Act, sections of the FCC's rules and other legal authority, if any, supporting your answer."

They also ask, "If both of you did not support the same subset of merger conditions as implied in your Joint Statement, how is it that the AT&T-BellSouth merger is legally deemed approved?"

Other Issues. The two Democrats also ask numerous policy related questions about broadband deployment, wireless and spectrum policy, the DTV transition, FCC data collection, and transparency.

Some of the questions contained in the letter are too broad and complicated to be answered in the requested one week. For example, Rep. Dingell and Rep. Markey ask "What steps, if any, can the Commission take to enhance the depth and accuracy of its collection of data and analysis of affected industries?" and "What steps, if any, can the Commission take to better prevent waste, fraud, or abuse in programs it administers?"

There are also many subjects not covered by these interrogatories, including media ownership, decency, E911, CALEA, and pretexting.

Bush Calls for Reform of Sarbox 404 Implementation and Extension of TPA

1/31. President Bush gave a speech in New York City on the state of the U.S. economy.

On January 23, 2007, he gave a speech in Washington DC on the state of the union. See, story titled "Bush Gives Speech" in TLJ Daily E-Mail Alert No. 1,525, January 24, 2007. He had little to say about technology in that state of the union address. He had much to say about technology in this state of the economy address.

He criticized the implementation of Section 404 of the Sarbanes Oxley Act, which burdens small technology companies. He called for extension of trade promotion authority (TPA), completion of the Doha round, and negotiation of other free trade agreements (FTA). He advocated greater use of information technology in health care. He advocated more funding for math, science, and technology research and education.

Sarbox 404. Section 404 implementation, which is a concern to many small technology companies, has now risen to the level of Presidential issue. Bush said that "complying with certain aspects of the law, such as Section 404, has been costly for businesses and may be discouraging companies from listing on our stock exchanges."

The "Sarbanes-Oxley Act of 2002" was HR 3763 in the 107th Congress. It is now Public Law No. 107-204. Section 404 was debated little at the time of enactment. Since then, small tech companies have argued that this section as implemented harms small and start up companies. See for example, American Electronics Association (AEA) report [23 pages in PDF] titled "Sarbanes-Oxley Section 404: The Section of Unintended Consequences and its Impact on Small Business".

Bush continued that "We don't need to change the law. We need to change the way the law is implemented. America needs a regulatory environment that promotes high standards of integrity in our capital markets, and encourages growth and innovation. And I'm pleased of the progress that Hank Paulson and Chairman Chris Cox are making to make sure the regulatory burden is not oppressive, and fair, and helps us meet a great national objective to keep the United States the economic leader in the world."

See, similar speech by Secretary of the Treasury Henry Paulson, given in New York City on November 20, 2006. See also, story titled "Paulson Calls for More Effective Section 404 Implementation" in TLJ Daily E-Mail Alert No. 1,493, November 21, 2006.

See also, stories titled "Atkins Discusses Sarbox 404" in TLJ Daily E-Mail Alert No. 1,527, January 26, 2007, and "GAO Reports that Section 404 of Sarbanes Oxley Burdens Small Public Companies" in TLJ Daily E-Mail Alert No. 1,366, May 9, 2006.

Trade and TPA. Bush spoke at length about free trade. He first advanced arguments for the merits of free trade.

He said that "Our growing economy is also a changing economy. The rise of new technologies, new competition, and new markets abroad is bringing changes -- and these changes are coming faster than ever. There was a time when most people expected they'd keep a job for life. Now the average American has 10 jobs before the age of 40. It used to be that a company's name would stay the same for decades."

He continued that "By and large, our dynamic and innovative economy has helped Americans live better and more comfortable lives. Yet the same dynamism that is driving economic growth is also -- can be unsettling for people. For many Americans, change means having to find a new job, or to deal with a new boss after a merger, or to go back to school to learn new skills for a new career. And the question for America is whether we treat the changes in our economy as opportunity to help improve people's lives, or as an excuse to retreat into protectionism."

Bush argued against protectionism. "Every time we break down barriers to trade and investment, we open up new markets for our businesses and our farmers. As we improve free trade, consumers get lower prices. There are better American jobs. You see increased productivity. Jobs supported by exports of goods pay wages that are 13 to 18 percent higher than the average. So one of our top priorities has been to remove obstacles to trade everywhere we can."

He stated that "the most promising opportunity to expand free and fair trade is by concluding the Doha Round at the World Trade Organization. Global trade talks like Doha have the potential to lower trade barriers all around the world. They come around only once every decade or so."

"The Doha Round is a chance to level the playing field for our goods and services -- in other words, so we can be treated fairly in foreign markets", said Bush. "We are dedicated to making sure we have a successful Doha Round.

Finally, he made his pitch for Congressional extension of TPA. "The only way America can complete Doha and make headway on other trade agreements is to extent Trade Promotion Authority. This authority allows the President to negotiate complicated trade deals for our country, and then send them to Congress for an up or down vote on the whole agreement."

"Presidents of both parties have considered this authority essential to completing good trade agreements. Our trading partners consider it essential for our success at the negotiating table. The authority is set to expire on July 1st -- and I ask Congress to renew it. I know there's going to be a vigorous debate on trade, and bashing trade can make for good sound bites on the evening news. But walling off America from world trade would be a disaster for our economy. Congress needs to reject protectionism, and to keep this economy open to the tremendous opportunities that the world has to offer", said Bush.

Susan Schwab, the U.S. Trade Representative (USTR), stated afterwards in a release that "An extension of TPA will be needed to successfully complete the Doha Development Round, which is crucial to economic growth at home, opening markets abroad, and alleviating poverty around the world."

She added that "I am also encouraged by recent statements from Congressional leaders of both parties about the importance of TPA. I look forward to working with them on opening markets overseas, addressing the concerns of the American people, and strengthening bipartisan support for the U.S. trade agenda."

See also, USTR release regarding TPA.

Sen. Charles Grassley (R-IA), the ranking Republican on the Senate Finance Committee (SFC), stated in a release that "I welcome the President's call for renewal of trade promotion authority. This should not be a partisan issue. Every President should have trade promotion authority. It’s in our interest to open up new markets for U.S. exporters. We have the most open economy in the world. We benefit from that openness by lower prices and more consumer choices. The United States needs to keep opening markets that are closed to our exports. If we shut down trade promotion authority, we’ll shut down new opportunities for our exporters. Trade promotion authority helps ensure that trade is a two-way street. I’ve started to hear more promising signals from some of my colleagues on the other side of the aisle. That leaves me a little more optimistic than I was. I hope those positive signals translate into concrete action over the next few months so we renew trade promotion authority before it expires on July 1st."

Health Care and IT. Bush has long advocated, and worked to implement, the digitization of medical records. In this speech he said that "We're using information technology. Listen, we're a giant consumer of health care at the federal level. And we're insisting upon new technologies to make health care more efficient, and thereby reducing costs inherent in an inefficient system, and reducing medical errors."

In this state of the economy speech he also said that "We believe that the health care industry needs to post price and quality, so as consumers have more choice, they're able to make better decisions about the health care they get. We understand that a non-transparent system where somebody else pays the bills is likely to cause costs to continue to rise."

Research. President Bush stated that "I also believe it's a vital role for the federal government to spend money on basic scientific research. So I've called upon Congress to double the funding for basic scientific research at the National Institute of Standards and Technology labs, or the Department of Energy's Office of Science, or the National Science Foundation."

FCC Releases Report on Phone Competition

1/31. The Federal Communications Commission's (FCC) Wireline Competition Bureau's (WTB) Industry Analysis and Technology Division released a report [24 pages in PDF] titled "Local Telephone Competition: Status as of June 30, 2006". See also, FCC release [PDF].

The FCC issues a report on local telephone competition twice per year. It is based upon information provided to the FCC by carriers on Form 477.

The report states that end-user customers obtained local telephone service by utilizing approximately 142.2 million ILEC switched access lines, 29.8 million CLEC switched access lines, and 217.4 million mobile telephony service subscriptions at the end of June 2006.

The total number of both ILEC and CLEC lines declined, while the number of mobile phone service subscriptions continued its rapid growth. Also, CLECs' percentage share of total LEC lines decreased to 17.3%, down from a high of 19.1% in June of 2005.

The report also states that at least one CLEC was serving customers in 82% of zip codes, which zip codes include about 98% of US households.

FCC Report Shows Rapid Growth in Broadband Users

1/31. The Federal Communications Commission's (FCC) Wireline Competition Bureau's (WTB) Industry Analysis and Technology Division released a report [26 pages in PDF] titled "High-Speed Services for Internet Access: Status as of June 30, 2006". See also, FCC release [PDF].

The report states that "High-speed lines connecting homes and businesses to the Internet increased by 26% during the first half of 2006, from 51.2 million to 64.6 million lines in service, compared to a 21% increase, from 42.4 million to 51.2 million lines, during the second half of 2005."

The FCC prepares these broadband reports twice per year based upon data provided in Form 477. The FCC uses a minimal definition fo broadband. It counts any connection that provides 200 kilobits per second (kbps) in at least one direction.

FCC Data on Broadband
  June 2005 Dec 2005 June 2006
ADSL 16,316,309 19,515,619 22,575,010
Cable Modem 23,936,536 26,469,242 28,513,500
Fiber 315,651 448,257 700,083
BPL 4,872 4,571 5,208
Mobile Wireless 379,536 3,129,763 11,015,968
Fixed Wireless 208,695 257,431 360,976
Satellite 376,837 426,928 495,365
Other 898,468 904,539 948,160
Total 42,436,904 51,156,350 64,614,270

Kyle McSlarrow, head of the National Cable & Telecommunications Association (NCTA), stated in a release on February 2 that "Cable's Internet service today is available to 94 percent of all U.S. homes and features access speeds averaging 5-15 megabits per second. This success story has been driven by cable's investment of $110 billion in infrastructure and innovation, spurred by a deregulatory environment. We welcome the focus on broadband deployment by Senators and FCC Commissioners, and we encourage both Congress and the Commission to support policies that further encourage capital investment and network innovation, including reforms of current government programs to ensure they are targeting assistance to those areas of the country that currently are unserved with broadband access."

Steve Largent, head of the CTIA -- The Wireless Association, stated in a release that the report shows that "in the first half of 2006, nearly 8 million wireless high speed lines were added. That was more than wire line and cable combined. Classifying wireless broadband as an information service would mean the industry's hallmarks of competition, innovation, and choice would kick high speed access service into overdrive, and consumers will ultimately benefit the most from that. It could also provide public safety with additional means to perform their critical tasks, and would give investors the ability to make decisions based on the market, and not regulation. Wireless is driving America forward in the 21st century, and the Chairman's initiative is the right move at the right time."

EFF Files FOIA Complaint to Obtain DOD Records Regarding Monitoring of Army Bloggers

1/31. The Electronic Frontier Foundation (EFF) filed a complaint [8 pages in PDF] in U.S. District Court (DC) against the Department of Defense (DOD) alleging violation of Freedom of Information Act (FOIA) in connection with its withholding of "records concerning an Army unit that monitors the Internet publishing activities of soldiers and seeks to have online material removed from Internet websites when it is deemed to be a security threat."

The complaint further states that the EFF submitted a request for records on November 2, 2006, pursuant to the FOIA, which is codified at 5 U.S.C. § 552, but that the DOD has not produced the relevant records. The complaint seeks an order from the court directing the DOD to expedite its processing of this request.

The complaint states that the EFF's FOIA request seeks "Emails, letters, statements, memoranda, or other correspondence providing guidance or criteria to or from the Army Web Risk Assessment Cell on how to conduct Internet surveillance and/or monitoring", "Records describing how data collected by the Army Web Risk Assessment Cell is retained, secured, used, disclosed to other entities, or combined with information from other sources", "Any guidance or requirements issued to soldiers on blogging or posting material on the Internet", and "All requests or orders from Army officials to soldiers concerning revision or deletion of material from soldiers' blogs or websites", and other records."

The EFF's attorneys of record are Marcia Hoffman and David Sobel of the EFF's Washington DC office. This case is Electronic Frontier Foundation v. Department of Defense, U.S. District Court for the District of Columbia, D.C. No. 1:07CV00216, Judge Emmet Sullivan presiding.

People and Appointments

1/31. Christine Kurth was named Republican Staff Director for the Senate Commerce Committee (SCC), effective in "early March". Kurth is currently Deputy Staff Director. She will replace Lisa Sutherland. See, Sen. Ted Stevens' (R-AK) release.

More News

1/31. Henry Paulson, the Secretary of the Treasury, testified before the Senate Banking Committee. He wrote in his prepared testimony, that "China must live up to its WTO commitments. It must protect and vigorously enforce intellectual property rights. It must increasingly open its markets to foreign competition -- for its own good as well as for ours."

1/31. The U.S. Patent and Trademark Office (USPTO) announced the designation of the University of Baltimore School of Law Library as a Patent and Trademark Depository Library (PTDL). This PTDL will open to the public on February 1, 2007. See, USPTO release.

1/31. The Securities and Exchange Commission (SEC) announced in a release that it "voted to publish for comment rule amendments that would expand the agency's interactive data voluntary program to enable mutual funds to submit data tagged risk/return summary information." However, the SEC did not release the text of the proposed interactive data rule changes. Comments will be due within 30 days after publication of a notice in the Federal Register. This publication has not yet occurred. The SEC's release also states that the rule changes would "enable mutual funds to submit risk/return summary information from their prospectuses using interactive data under the Commission's voluntary program. The risk/return summary at the front of every mutual fund prospectus includes information about a fund's investment objectives and strategies, risks, costs, and historical performance." It adds that "The submission of tagged risk/return summary information would be supplemental and would not replace the required official versions of the information. Any mutual fund submitting tagged risk/return summary information would be required to include this information as an amendment to a filing on Form N-1A, the registration form for mutual funds. The proposed rule amendments would permit mutual funds to submit tagged risk/return summary information using a taxonomy being developed by the Investment Company Institute (ICI)."

1/31. The National Institute of Standards and Technology (NIST) released its Draft Special Publication 800-104 [9 pages in PDF] titled "A Scheme for PIV Visual Card Topography". It contains recommendations for federal agencies in the color coding of Personal Identity Verification (PIV) Cards. The deadline to submit comments is 5:00 PM on February 28, 2007.

FTC Takes Administrative Action Against Sony BMG Over Music CDs

1/30. The Federal Trade Commission (FTC) filed an administrative Complaint [7 pages in PDF] against Sony BMG Music Entertainment alleging violation of the Federal Trade Commission Act in connection with its surreptitiously imbedding software on music CDs that spies on consumers and creates security risks. The FTC and Sony BMG also entered into an Agreement Containing Consent Order [11 pages in PDF].

Sony BMG admitted no wrongdoing, but agreed to make certain disclosures to music CD consumers in the future. The agreement also bars Sony BMG from using collected information for marketing, prohibits it from installing software without consumer consent, and requires it to provide a reasonable means of uninstalling that software. It also requires Sony BMG to accept exchanges of affected CDs, and to pay affected consumers up to $150 in damages.

Sony BMG has already settled civil actions filed by many states. See, for example, story titled "Texas Obtains Permanent Injunction Against Sony BMG" in TLJ Daily E-Mail Alert No. 1,508, December 19, 2006.

FTC Chairman Deborah Majoras stated in a release that "Installations of secret software that create security risks are intrusive and unlawful ... Consumers' computers belong to them, and companies must adequately disclose unexpected limitations on the customary use of their products so consumers can make informed decisions regarding whether to purchase and install that content."

Schwab Discusses Doha Round and IPR Violations in PR China

1/30. Susan Schwab, the U.S. Trade Representative, held a new conference in Geneva, Switzerland, in which she discussed Doha round trade negotiations and intellectual property rights (IPR) violations in the People's Republic of China. See, transcript [7 pages in PDF] and transcript [HTML].

Susan SchwabSchwab (at right) said that "counterfeiting, piracy, violations of intellectual property are a very very serious problem that trading nations, rules-based trading nations face, that entrepreneurs and innovators and artists, those who create face -- whether you were talking about writing a book or filming a movie or inventing a life-saving medicine, there are IP issues that come into play."

She continued that "China has been a major source of intellectual property rights violations. In fact if you look at where the problems have come from, China is first, Russia is second, and then there are other countries, Brazil and others, that have played into this."

She asserted that "there is a genuine interest on the part of responsible governments to address the protection of intellectual property, piracy and counterfeiting issues. I believe in China, for example, the conversations that we had, that I had in China in December as part of the Strategic Economic Dialogue, it is very clear that there is a commitment on the part of many Chinese leaders to address this problem."

"Any country that aspires to be a knowledge-based economy, to promote its entrepreneurial and artistic classes sees the value of protecting intellectual property. But if you look, for example, at the statistics of pirated and counterfeit goods coming into the United States, well over 70 percent of the goods captured, the pirated, counterfeit goods captured at the border in the United States come from China and that number has been growing, not going down. So this is an issue we need to address", said Schwab.

She was also asked about IP based companies that are reluctant "to take on and make public their case. They’re expecting governments, the U.S. and others, to make the case but they’re getting the impression that that’s not happening."

Schwab responded that "The question that you raised about corporate executives, unfortunately whether it’s in the intellectual property rights area or many other trade disputes, frequently individual companies, corporations, feel very vulnerable to pressure from governments in countries where they do business. This isn't just exclusively related to intellectual property rights. It is something that I have heard through my entire career as a trade negotiator. It is a reason that in many cases trade associations take the lead in terms of filing cases, registering complaints, and why governments are prepared to take on the responsibility of addressing complaints, because individual companies can be pressured or held hostage and are nervous about speaking out, even when they are in the right."

Peter Mandelson, the EU's trade commission, gave a speech on January 22, 2007, in Amsterdam, Netherlands, in which he stated that the European response to globalization "means a new approach to China that accepts tough competition while insisting that China meets its WTO obligations and plays by the rules of international trade. It means a hardnosed approach to market access where European businesses are shut out by unfair restrictions. It means a global fight against counterfeiting and intellectual property theft."

Peter MandelsonMandelson (at right) also gave a speech on January 27, 2007, in which he addressed Doha round negotiations. He stated that "We are not going to hammer out a deal, but we do have a responsibility to move things forward. We need to tell the world that Doha is not dead and, internally, we need to re-collectivise the negotiating process."

He added that "I emphatically reject the view that, overall, this outcome would be Doha-lite. A deal around these lines would be the single most ambitious multilateral trade agreement ever negotiated."

He also discussed the consequences of failure to negotiate an agreement. "The world will lose its insurance policy against the spread of protectionism. We will see a loss of confidence in the WTO system. And we will preside over a major setback for multilateralism. This is what makes an imperfect deal better than no deal."

See also, World Intellectual Property Organization (WIPO) release regarding meeting in Geneva on January 30 and 31, 2007.

FCC Grants Petition for Forbearance From Unbundling Requirements in Anchorage

1/30. The Federal Communications Commission (FCC) released its Memorandum Opinion and Order [39 pages in PDF] in its proceeding on ACS's petition for unbundling forbearance in the Anchorage market.

This MO&O grants forbearance from certain unbundling obligations imposed by 47 U.S.C. § 251(c)(3), and the related pricing standard contained in 47 U.S.C. § 252(d)(1), for much of the Anchorage area.

The FCC granted a similar petition for forbearance submitted by Qwest in 2006 for the Omaha, Nebraska, area. The present MO&O relies on the Omaha order. In both cases, the incumbent phone company obtained forbearance in those areas where a cable operator provided facilities based competition.

The just released MO&O contains the following summary: "we grant ACS relief from section 251(c)(3) unbundling obligations and section 252(d)(1) pricing obligations in 5 of the 11 wire centers in the Anchorage study area, where the level of facilities-based competition by the local cable operator, General Communication Inc. (GCI), ensures that market forces will protect the interests of consumers and that such regulation, therefore, is unnecessary. Second, as a condition of today’s Order, we require ACS to make loops and certain subloops available in those wire centers where we grant relief, by no later than the end of the transition period, at the same rates, terms and conditions as those negotiated between GCI and ACS in Fairbanks, Alaska until commercially negotiated rates are reached. Third, similar to the Qwest Omaha decision, we create a one-year transition period before the forbearance grant takes effect." (Footnote and fonts omitted.)

This MO&O is FCC 06-188 in WC Docket No. 05-281. The FCC issued a short release [PDF] regarding this MO&O on Friday, December 29, 2006, but did not release the MO&O until January 30, 2007.

Alaska Communications Systems (ACS) is the incumbent local exchange carrier (ILEC) in Anchorage, the state of Alaska's largest city, and its commercial center. ACS filed a forbearance petition with the FCC on September 30, 2005, pursuant to 47 U.S.C. § 160 (which is also known as Section 10 of the Telecommunications Act of 1996).

Section 160 provides, in part, that the FCC "shall forbear from applying any regulation or any provision of this chapter to a telecommunications carrier or telecommunications service, or class of telecommunications carriers or telecommunications services, in any or some of its or their geographic markets, if the Commission determines that -- (1) enforcement of such regulation or provision is not necessary to ensure that the charges, practices, classifications, or regulations by, for, or in connection with that telecommunications carrier or telecommunications service are just and reasonable and are not unjustly or unreasonably discriminatory; (2) enforcement of such regulation or provision is not necessary for the protection of consumers; and (3) forbearance from applying such provision or regulation is consistent with the public interest ..."

Section 251(c)(3) provides, in part, that "each incumbent local exchange carrier has the following duties ... (3) ... to provide, to any requesting telecommunications carrier for the provision of a telecommunications service, nondiscriminatory access to network elements on an unbundled basis at any technically feasible point on rates, terms, and conditions that are just, reasonable, and nondiscriminatory in accordance with the terms and conditions of the agreement and the requirements of this section and section 252 of this title."

General Communications, Inc. (GCI) is a cable operator, and a facilities based telephone service competitor in the Anchorage area. GCI also provides local, wireless, and long distance telephone, cable television, internet and data communications services around Alaska.

The 6 wire centers for which there is no forbearance under this MO&O cover the two military bases north of downtown Anchorage, the hillside areas of O'Malley and Rabbit Creek, and outlying areas, such as the ski resort community of Girdwood, where Sen. Ted Stevens (R-AK) lives.

FCC Chairman Kevin Martin wrote in his statement that this order removes "the application of legacy network unbundling requirements on ACS". He said that "This relief is warranted based on the specific market facts before us", that is, that GCI "has made a substantial infrastructure investment in the Anchorage study area and has used these facilities to provide competing telephone services to thousands of residential and business customers."

He added that "As was the case in the Commission's Qwest Omaha Order, this success of intermodal competition warrants the Commission’s careful exercise of its forbearance authority."

FCC Commissioner Deborah Tate wrote in a separate statement that the competition between ACS and GCI "epitomizes the benefits of local significant network investment and facilities-based competition made possible by the market-opening 1996 Act."

She added that "When sustainable competition arrives, we must exercise our regulatory humility and transition markets away from the constant touch of government regulation, such as price-setting."

FCC Commissioners Michael Copps and Jonathan Adelstein wrote in a joint concurring statement that "we have concerns with the analysis in this decision", because it "relies on the intermodal efforts of a single alternative provider to conclude that sufficient competition exists".

Jonathan AdelsteinCopps and Adelstein (at right) continued that "While we agree that there is especially strong evidence of competition between the incumbent cable and wireline provider in parts of the Anchorage market, we believe the statute contemplates more than just competition between a wireline and cable provider -- and that both residential and business consumers deserve more.

They added that "We concur also because this decision does not adequately address market differentiations, as between residential and business, making it difficult to conclude which market segments are actually receiving the benefit of emerging competitive choice."

And, they concluded that "this decision should not be considered generally applicable for future forbearance petitions involving phone providers facing different competitive landscapes, challenges, and market share."

In addition, the MO&O states that "we adopt herein no rules of general applicability".

Commissioner McDowell did not participate.

GCI stated in a release [PDF] on December 29, 2006, that "The FCC’s decision grants ACS some relief in 5 of the 11 Anchorage wire centers. The decision, however, conditions the relief on ACS’ continuing to provide GCI unbundled loops in those 5 wire centers at the same rates, terms, and conditions as those negotiated between GCI and ACS for Fairbanks in 2004. This condition will remain in effect until such time as GCI and ACS establish new commercially negotiated rates for Anchorage. Both the forbearance relief and the condition will take effect after a one-year transition period."

"GCI expects the primary effect of the decision to be an increase, starting at the end of 2007, in the unbundled loop rate in the 5 Anchorage wire centers from $18.64 per loop per month to $23.00. GCI estimates that at the end of 2006, it will be using approximately 26,500 ACS unbundled loops in the 5 Anchorage wire centers." GCI added that "The rate increase reinforces GCI’s determination to finish converting the customers it serves in Anchorage using ACS unbundled loops to GCI’s own facilities."

People and Appointments

1/30. President Bush named Michael Scudder to be Associate Counsel to the President. He was previously Counsel to the Deputy Attorney General. See, White House release.

1/30. President Bush named Jean Mamo to be Deputy Assistant to the President and Director of Media Affairs. See, White House release.

1/30. President Bush named Joel Bagnal to be Deputy Assistant to the President for Homeland Security. He was previously Special Assistant to the President for Homeland Security. See, White House release.

1/30. President Bush named Martin McGuinness to be Special Assistant to the President for Legislative Affairs. He was previously Senior Manager at Washington Council Ernst & Young. See, White House release.

1/30. The Senate confirmed Lisa Wood to be a Judge of the U.S. District Court for the Southern District of Georgia by a vote of 97-0. See, Roll Call No. 35 and Congressional Record, January 30, 2007, at Page S1358.

1/30. The Senate confirmed Philip Gutierrez to be a Judge of the U.S. District Court for the Central District of California by a vote of 97-0. See, Roll Call No. 36 and Congressional Record, January 30, 2007, at Page S1358.

More News

1/30. The Progress & Freedom Foundation (PFF) and the Centre for European Policy Studies (CEPS) will host a conference titled "The Future of Communications Services in Europe and the United States: The Role of Regulation and Markets in a Converged World" in Brussels, Belgium. There will be panels titled "Investment in Next-Generation Networks", "Net Neutrality", and "Content Development" . The speakers will include Boyden Gray (U.S. Representative to the European Union), William Kovacic (FTC Commissioner), David Gross (U.S. Department of State), Fabio Colasanti (European Commission Director General for Information Society), and David Currie (Chairman of Ofcom). See, PFF notice.

Priceline, Travelocity and Cingular Agree to Stop Using Deceptive Adware

1/29. The Attorney General of the State of New York Internet Bureau (AGNY) entered into three similar agreements [21 pages PDF] titled "Assurance of Discontinuation" with Incorporated, LP, and Cingular Wireless LLC in connection with their having advertised on the internet via an intermediary who deceptively used adware. These agreements were signed on January and 23, 18, and 29, 2007, respectively.

The AGNY stated in a release that the three businesses were "promoting products and services on the Internet through deceptively installed programs known as ``adware.´´" AG Andrew Cuomo stated in this release that "Advertisers will now be held responsible when their ads end up on consumers’ computers without full notice and consent ... Advertisers can no longer insulate themselves from liability by turning a blind eye to how their advertisements are delivered, or by placing ads through intermediaries, such as media buyers."

The AGNY filed a civil action in April of 2006 against DirectRevenue LLC, but did not name as defendants either Priceline, Travelocity or Cingular. The agreements state that Priceline, Travelocity and Cingular used Direct Revenue to deliver ads on the internet.

For example, the agreement with Priceline states that "Direct Revenue installed adware programs onto millions of computers worldwide that delivered to users surfing the Internet a steady stream of advertisements for Direct Revenue's clients, such as Priceline. In selecting which ads to show, Direct Revenue programs also monitored the websites visited by users, along with data typed into web forms. Direct Revenue installed its adware programs on consumers' computers without adequate notice or the consent of consumers. Furthermore, Direct Revenue software was difficult to remove and also surreptitiously installed other programs and updates onto desktops already running its adware."

Moreover, this agreement states, "Priceline knew that consumers had downloaded Direct Revenue adware without full notice and consent and continued to receive ads through that software", and that "Some of Priceline's advertisements were delivered directly to consumers from web servers owned or controlled by Priceline."

These agreements state that the AGNY has not filed civil actions against Priceline, Travelocity and Cingular, and that the three businesses enter into these agreement in lieu of litigation.

The Priceline agreement, for example, states that the AGNY "finds that, by using Direct Revenue's adware programs to advertise its products and services on the Internet, Priceline has engaged in deceptive business practices in violation of New York General Business Law Section 349 and Executive Law Section 63(12)." Although, the three businesses do not admit wrongdoing in these agreements.

The agreements then impose limits on the future online advertising practices of the three businesses. It requires full disclosure to consumers, branding of adware advertisements, easy uninstallation of adware, and initiation of a due diligence program with reviews to be performed quarterly

These agreements define adware as "any downloadable software program that displays advertisements to a computer user, including, but not limited to, programs that display pop-up or pop-under advertisements, redirect website or search requests, install toolbars onto Internet browsers or electronic mail clients, or highlight particular keywords or phrases for Internet users as they surf the web."

The Center for Democracy and Technology (CDT) praised these agreements in its web site. The CDT has published studies of adware. See, March 20, 2006, report [11 pages in PDF] titled "Following the Money: How Advertising Dollars Encourage Nuisance and Harmful Adware and What Can be Done to Reverse the Trend", which the CDT updated on May 2, 2006. See also, and August 9, 2006, report [28 pages in PDF] titled "Following the Money II: The Role of Intermediaries in Adware Advertising".

SEC Seeks Comments on Proposal to Mandate Internet Availability of Proxy Materials

1/29. The Securities and Exchange Commission (SEC) published a notice in the Federal Register that announces, describes, recites, and sets the effective date (March 30, 2007) of its new rules regarding voluntary internet availability of proxy materials. The SEC adds that "Persons may not send a Notice of Internet Availability of Proxy Materials to shareholders prior to July 1, 2007." See, Federal Register, January 29, 2007, Vol. 72, No. 18, at Pages 4147-4173.

The SEC also published a second notice in the Federal Register that announces, describes, and sets the comments deadline (March 30, 2007) for its further notice of proposed rulemaking (NPRM) regarding mandatory internet availability of proxy materials.

This notice states that "Currently, issuers decide whether to provide shareholders with the choice to receive proxy materials by electronic means. We are proposing amendments to the proxy rules that would require issuers and other soliciting persons to furnish proxy materials to shareholders by posting them on an Internet Web site and providing shareholders with notice of the availability of the proxy materials. The proposal, if adopted, would provide all shareholders with the ability to choose whether to receive proxy materials in paper, by e-mail or via the Internet." (Footnote omitted.) See, Federal Register, January 29, 2007, Vol. 72, No. 18, at Pages 4175-4188.

The SEC adopted its original NPRM on November 29, 2005. See, SEC release and story titled "SEC Proposes to Allow Internet Delivery of Proxy Materials" in TLJ Daily E-Mail Alert No. 1,263, December 1, 2005. The SEC adopted its new rule [119 pages in PDF] for voluntary internet availability of proxy materials on December 13, 2006. See, SEC release and story titled "SEC Adopts E-Proxy Rule Changes" in TLJ Daily E-Mail Alert No. 1,506, December 15, 2006.

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1/29. The U.S. Patent and Trademark Office (USPTO) announced in a release that the USPTO and the Intellectual Property Office of the Republic of the Philippines have "signed a Memorandum of Understanding (MOU) on technical cooperation between the two intellectual property offices".

1/29. The Federal Communications Commission (FCC) released a report [6 pages in PDF] titled "Annual Report on the National Do-Not-Call Registry" in its proceeding titled "In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991". This report is DA 07-279 in CG Docket No. 02-278.

People and Appointments

1/29. The Federal Trade Commission (FTC) issued a release that lists numerous staff appointments and promotions made 2006 in its Bureau of Consumer Protection.

1/29. President Bush nominated James Clapper to be Under Secretary of Defense for Intelligence. See, White House release.

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1/29. The Federal Bureau of Investigation's (FBI) Electronic Surveillance Technology Section (ESTS) extended the deadline (to February 28, 2007) to submit comments regarding its Communications Assistance for Law Enforcement Act of 1994 (CALEA) related cost recovery process information collection activities. See, original notice in the Federal Register, November 29, 2006, Vol. 71, No. 229, at Pages 69146-69147, which set the original comment deadline of January 29, 2007, and notice of extension in the Federal Register, January 29, 2007, Vol. 72, No. 18, at Pages 4045-4046.

NIST Seeks Applications for EE and IT Grants

1/26. The National Institute of Standards and Technology (NIST) published a notice in the Federal Register announcing that it seeks applications for grants in fiscal year 2007 under several grant programs, including the "Electronics and Electrical Engineering Laboratory Grants Program" (EEEL) and the "Information Technology Laboratory Grants Program" (ITL).

The notice states that the EEEL grant program "will provide grants and cooperative agreements for the development of fundamental electrical metrology and of metrology supporting industry and government agencies in the broad areas of semiconductors, electronic instrumentation, radio-frequency technology, optoelectronics, magnetics, superconductors, electronic commerce as applied to electronic products and devices, the transmission and distribution of electrical power, national electrical standards (fundamental, generally quantum-based physical standards), and law enforcement standards." (Parentheses in original.)

The NIST awarded $657,871 under the EEEL grant program in FY 2006. The notice also states that for FY 2007 "Individual awards are expected to range between $5,000 and $150,000." Applications are due by 5:00 PM on June 15, 2007.

The NIST's notice states that the ITL grant program "will provide grants and cooperative agreements in the broad areas of mathematical and computational sciences, advanced network technologies, information access, and software testing. Specific objectives of interest in these areas of research include: quantum information theory, computational materials science, computational nanotechnology, mathematical knowledge management, visual data analysis, verification and validation of computer models, software testing, human-robot interaction, human factors/security/core requirements/testing of voting systems, information visualization, systems biology, grid computing, service oriented architecture and complex systems, security for the IPv6 transition from and coexistence with IPv6, and device mobility among heterogeneous networks."

The NIST awared $266,366 under the ITL grant program in FY 2006. It expects to award between $10,000 and $150,000 per grant in FY 2007. Applications are due by 5:00 PM on June 29, 2007.

People and Appointments

1/26. Jeffrey Sullivan was named interim U.S. Attorney for the Western District of Washington. See, USAO release.

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1/26. The Bureau of Industry and Security (BIS), the federal export regulation agency, published a notice in the Federal Register that announces, describes, recites, and sets the effective date (January 26, 2007) of its rule imposing new export and reexport controls on North Korea. See, Federal Register, January 26, 2007, Vol. 72, No. 17, at Pages 3722-3730. This notice states that this new rule is promulgated as a consequence of North Korea's testing of nuclear weapons. The BIS rule prohibits the export to North Korea of, among other things, nuclear or missile-related items and other items included on the Commerce Control List (CCL). The new rule also prohibits the export of "Computer laptops", except for use by humanitarian organizations. It also prohibits the export of "Personal digital music players", "Flat-screen, plasma, or LCD panel televisions or other video monitors or receivers", and "electronic entertainment software". It also prohibits the export of musical instruments, tapestries, fashion accessories, and artificial furs. It prohibits the export of all "luxury goods". Moreover, according to the BIS's rule, beer is a luxury good.

Go to News from January, 21-25, 2007.