TLJ News from May 21-25, 2008

7th Circuit Rules in UNE Case

5/23. The U.S. Court of Appeals (7thCir) issued its opinion in Illinois Bell v. Box, a case regarding mandatory leasing of unbundled network elements (UNEs) by incumbent local exchange carriers (ILECs) to competitive local exchange carriers (CLECs) pursuant to 47 U.S.C. § 251(c)(3), and the Federal Communications Commission's (FCC) rules thereunder.

The Court of Appeals affirmed the District Court in its entirety.

One of two issues before the Court of Appeals, and previously before the U.S. District Court (NDIll) and the state public utilities regulatory commission, was whether ILECs must provide CLECs access to fiber optic loops as UNEs. The FCC previously determined that ILECs need not do so. The state commission ruled that certain fiber optic loops must be shared. The District Court reversed, and the Court of Appeals affirmed the District Court. Had the Court of Appeals ruled that fiber optic loops must be shared, this would not only have undone the FCC's rule on this issue, it would have provided both ILECs and CLECs a disincentive to deploy fiber to homes and businesses.

The ILEC in this case is Illinois Bell Telephone Company (AT&T). (Illinois is within the region of Ameritech, one of the original regional bell operating companies. Ameritech merged with SBC. SBC then merged with AT&T.)

The CLEC is Access One. AT&T and Access One did not reach as agreement as to Access One's access to entrance facilities at total element long run incremental cost (TELRIC) prices for interconnection, or for fiber optic loops to deliver voice and data services to Access One's business customers.

Entrance facilities are the connections between a switch maintained by an ILEC and a switch maintained by a CLEC. Loops are the set of wires and routing facilities that transmit a signal between a switch and a customer's premises.

Illinois Commerce Commission (ICC) then ruled, pursuant to its authority under 47 U.S.C. § 252(b), that AT&T must allow CLECs to use entrance facilities at TELRIC prices. The ICC also ruled that AT&T must allow CLECs to use its fiber optic loops, except for service to mass market customers.

The District Court then affirmed the ICC as to entrance facilities, but reversed as to fiber optic loops.

The present appeal followed. The Court of Appeals affirmed the District Court on both issues.

Legal Background. 47 U.S.C. § 251 requires ILECs to make available to CLECs UNEs at regulated rates.

§ 251(c)(3) provides that ILECs have "The duty 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. An incumbent local exchange carrier shall provide such unbundled network elements in a manner that allows requesting carriers to combine such elements in order to provide such telecommunications service."

§ 251(d)(2) requires the FCC, in establishing unbundling requirements, to "consider, at a minimum, whether ... the failure to provide access to such network elements would impair the ability of the telecommunications carrier seeking access to provide the services that it seeks to offer." The interpretation of the work "impair" has been central the FCC's unbundling orders, and the Court opinions overturning them.

§ 251(d)(1) further requires the FCC to write implementing rules. After many years, and many tries, the FCC wrote rules that withstood judicial review.

The FCC adopted its triennial review order [576 pages in PDF] on February 20, 2003, and released the text on August 21, 2003. See, story titled "FCC Announces UNE Report and Order" and related stories in TLJ Daily E-Mail Alert No. 609, February 21, 2003, and story titled "Summary of FCC Triennial Review Order" in TLJ Daily E-Mail Alert No. 725, August 25, 2003. Then, the DC Circuit issued its opinion [62 pages in PDF] overturning parts of this order. See, story titled "Appeals Court Overturns Key Provisions of FCC Triennial Review Order" in TLJ Daily E-Mail Alert No. 848, March 3, 2004.

The FCC then adopted its triennial review remand order [185 pages in PDF] on December 15, 2004, and released the text on February 4, 2005. See, stories titled "FCC Adopts Unbundling Order" in TLJ Daily E-Mail Alert No. 1,039, December 16, 2004, and "Reaction to FCC Unbundling Order" in TLJ Daily E-Mail Alert No. 1,041, December 20, 2005. See also, story titled "FCC Releases Unbundling Order" in TLJ Daily E-Mail Alert No. 1,071, February 7, 2005. This order is FCC 04-290 in WC Docket No. 04-313 and CC Docket No. 01-338.

On June 16, 2006, the DC Circuit issued its opinion [41 pages in PDF] in Covad v. FCC, denying all petitions for review of this triennial review remand order. See, story titled "DC Circuit Upholds FCC's Unbundling Rules" in TLJ Daily E-Mail Alert No. 1,394, June 19, 2006.

Paragraph 140 of this triennial review remand order is pertinent to the first issue before the Court of Appeals. It states that "We note in addition that our finding of non-impairment with respect to entrance facilities does not alter the right of competitive LECs to obtain interconnection facilities pursuant to section 251(c)(2) for the transmission and routing of telephone exchange service and exchange access service. Thus, competitive LECs will have access to these facilities at cost-based rates to the extent that they require them to interconnect with the incumbent LEC’s network." (Footnote omitted.)

With respect to the second issue, the FCC ordered that ILECs need not provide optical loops to CLECs, and, although hybrid loops must be supplied as unbundled network elements, the incumbents are entitled to restrict the use to which these may be put.

Court of Appeals Holding. As for entrance facilities, the Court of Appeals held that "federal law permits a state agency to use the TELRIC method to regulate the price for the interconnection services that an ILEC must furnish under §251(c)(2)." As for fiber optic loops, the Court of Appeals held that the FCC's rules plainly exclude these from UNEs that must be shared. Hence, the Court of Appeals affirmed the District Court (and rejected the ICC's conclusion) as to fiber optic loops.

First, the Court of Appeals addressed the entrance facility issue. It explained that an "entrance facility" is "a connection between a switch maintained by an ILEC and a switch maintained by a CLEC. In other words, it is a means of transferring traffic from one carrier’s network to another. The connection may be by copper cable, fiber-optic cable, or radiofrequency link. The connection may be long or short; multiple carriers’ switches may even be in the same building (this is known as co-location). ILECs built entrance facilities to comply with their obligation to interchange traffic among networks." (Parentheses in original.)

It added that a CLEC "might route traffic among its own customers over the ILEC’s network. Using an entrance facility to move voice or data traffic among CLEC customers has come to be known as ``backhauling,´´ ..."

The Court of Appeals wrote that in its triennial review remand order "the FCC concluded that CLECs do not need entrance facilities for backhauling and should build their own equipment for handling CLEC--to--CLEC traffic. ILECs need not provide unbundled network elements to CLECs that can serve customers without ``impairment´´ through their own network elements."

The Court also noted that the ICC found that ILECs can detect and block any attempted use of an entrance facility for backhauling.

The Court of Appeals concluded that entrance facilities can be used by CLECs for interconnection. Moreover, the above quoted paragraph 140 of the triennial review remand order requires that the price to be paid is not AT&T's tariff price, but rather a cost based rate.

Second, the Court of Appeals addressed the fiber optic loop issue. The Court noted that FCC rules provide that ILECs must still provide CLECs access to their copper loops. However, under FCC rules, ILECs may build new loops entirely from fiber, which is also known as fiber to the home, or FTTH, whether the loops are to homes or offices, and not be subject to unbundling requirements.

The Court wrote that "The FCC found that CLECs' access to ILECs' loops based on traditional copper wire means that they are not ``impaired´´ by lack of access to ILECs' loops based on optical fiber. Carriers are building new circuits using optical fiber; the FCC concluded that CLECs, no less than the ILECs, can and should do this for themselves. As long as CLECs rely on network elements supplied by ILECs, real competition is hampered; the ILECs' facilities continue to be monopolies and require regulation."

Moreover, the Court wrote, the FCC's goal "is to wean CLECs from reliance on unbundled network elements so that fully competitive landline networks will be built".

The Court of Appeals held that the ICC was incorrect to conclude that CLECs can use the ILEC's fiber optic loops, except for service to mass market customers. It held that the FCC rules make no distinctions based on the nature of the customer.

The opinion also addresses state sovereign immunity, and the doctrine of Ex parte Young.

This case is Illinois Bell Telephone Company v. Charles Box, et al., U.S. Court of Appeals for the 7th Circuit, App. Ct. Nos. 07-3557 & 07-3683, an appeal from the U.S. District Court for the Northern District of Illinois, Eastern Division, D.C. No. 06 C 3550, Judge Virginia Kendall presiding. Judge Frank Easterbrook wrote the opinion of the Court of Appeals, in which Judge Wood and Tinder joined.

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5/23. The U.S. Court of Appeals (DCCir) issued its opinion [4 pages in PDF] in James Kay v. FCC, appeals of the Federal Communications Commission's (FCC) dismissal of applications to assign expired private land mobile radio station licenses. The Court of Appeals affirmed the FCC's dismissals. This case is James Kay v. FCC, U.S. Court of Appeals for the District of Columbia, App. Ct. Nos. 03-1072 and 05-1290.

Reps. Sanchez and Hulshof Introduce Cyber and Phone Harassment Bill

5/22. On May 22, Rep. Linda Sanchez (D-CA) and Rep. Kenny Hulshof (R-MO) introduced HR 6123 [LOC | WW], the "Megan Meier Cyberbullying Prevention Act".

Rep. Sanchez explained that this follows the tragic suicide of a teenage girl, Megan Meier, who had received messages via the MySpace social networking web site from the mother of a former friend of hers.

The bill as introduced would make it a federal felony to transmit a communication by internet or phone with intent to harass. Also, as introduced, it possess attributes of a hastily and inartfully drafted bill.

It was referred to the House Judiciary Committee (HJC), which has not yet held any hearing, or taken other action, on the bill. In addition to Rep. Sanchez and Rep. Hulfshof, the only other Representatives who have joined in cosponsoring the bill are Rep. Doris Matsui (D-CA) and Rep. Todd Akin (R-MO).

Rep. Sanchez, who is a member of the HJC, stated in a release that "Without a federal law making cyberbullying a crime, cyberbullies are going unpunished ... In the Meier case we saw an adult allegedly engaging in sick, demented behavior with tragic consequences. This bill sends a clear message to anyone who commits cyberbullying: online actions will have severe offline consequences."

She added that "We need to give prosecutors the ability to protect kids by punishing people who abuse the internet to bully."

Rep. Sanchez's release also asserts that "At the time of Megan's death, cyberbullying was not considered a crime."

Rep. Hulshof stated in this release that "It sets needed limits for online conduct while protecting free speech. Megan Meier's story is tragic and heart-breaking. It is my hope that this case can yield common sense reforms that help prevent something like this from ever happening again."

Bill Summary. This bill would add a new section to the federal criminal code.

The criminal prohibition is stated in one sentence: "Whoever transmits in interstate or foreign commerce any communication, with the intent to coerce, intimidate, harass, or cause substantial emotional distress to a person, using electronic means to support severe, repeated, and hostile behavior, shall be fined under this title or imprisoned not more than two years, or both."

The bill would define "communication" to mean "the electronic transmission, between or among points specified by the user, of information of the user's choosing, without change in the form or content of the information as sent and received".

The bill would define "electronic means" as "any equipment dependent on electrical power to access an information service, including email, instant messaging, blogs, websites, telephones, and text messages".

While the bill's title references "Cyberbulling", the criminal prohibition in the bill also extends to use of telephones and text messages.

The bill provides for felony criminal prosecution. The bill is silent as to whether it creates a private right of action.

The bill contains a recitation of findings that focus on children, children's use of the internet, and the harmful effects of cyber bullying on children. However, the bill would not restrict liability to those whose communications are directed at children.

Also, the bill does not make injury an element of the crime. Most, but not all, criminal prohibitions include as elements an act, a mental state, and a harm or injury. This bill contains an act (transmitting a communication) and a mental state (intent to harass), but not a harm or injury. Someone could be prosecuted for sending a message that had no effect upon the recipient. Indeed, the bill does not even require that the intended recipient read or see the communication.

The bill contains no reference to carrier or ISP liability and immunity. For example, 47 U.S.C. § 230 provides that "No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider". Similarly, carriers are not liable for the communications transmitted over their facilities.

This bill imposes liability, not on the speaker, but on "Whoever transmits". Carriers and ISPs transmit. Of course, the bill also makes "intent ... to harass" an element of the crime. Prosecutors and civil plaintiffs would have to prove intent. But, prosecutors and plaintiffs counsel could argue that they had notified the ISP or carrier of the harassing conduct, that it failed to terminate service to that user, and that it therefore intended the consequences of failing to terminate such harassing conduct.

Carriers and internet companies are well organized and participate in the Congressional process. They are unlikely sit by while Rep Sanchez and Rep. Hulshof push a bill that could impose liability upon them for the actions of their customers and users.

The bill, if enacted as introduced, would also likely have First Amendment infirmities. That is, it would enable the government to punish individuals for engaging speech, some of which would be Constitutionally protected.

Finally, this bill would not amend §1030, the section of the criminal code relied upon by the Department of Justice to prosecute Lori Drew.

McDermott Ban on Internet Harassment. HR 6123 would in many respects be redundant of a bill enacted by the Congress in the 109th Congress.

The Congress has already enacted one inartfully drafted, overbroad, and Constitutionally infirm criminal ban on internet based harassment. This was Rep. Jim McDermott (D-WA) ban on internet harassment.

Rep. McDermott succeeded in having his ban on internet harassment inserted late in the legislative process into HR 3402 (109th Congress), a large Department of Justice (DOJ) reauthorization bill. See, §113 of HR 3402. It was signed into law in January of 2006.

Both HR 6123 and HR 3402 are criminal bans. HR 6123 addresses both internet and phone communications, while HR 3402 added an internet provision to a statute, 47 U.S.C. § 223, that already addressed phone communications. Both criminalize harassment. Both are Constitutionally infirm.

It should also be noted that federal prosecutors have not rushed to enforce the McDermott ban on internet harassment. Indeed, while Lori Drew's alleged conduct fits squarely within the McDermott prohibition, the indictment of Drew does not contain a count alleging violation of 47 U.S.C. § 223.

This may reflect a realization by the DOJ that the McDermott ban is unconstitutional. Were HR 6123 to be enacted into law, as introduced, federal prosecutors might decline to use it for the same reason.

The McDermott ban provides that it is a crime for any person to use internet technologies "without disclosing his identity and with intent to annoy, abuse, threaten, or harass any person". The Drew indictment alleges that Lori Drew did not disclose her identity, and that she harassed Meier.

Congressional committee staff with whom TLJ spoke during the 109th Congress regarding the McDermott amendment disassociated themselves from his amendment. HJC members and staff had drafted a different provision to address cyber stalking. This language, found at §509 of HR 3402 as reported by the HJC and approved by the full House, was titled "Preventing Cyberstalking". It would have amended 18 U.S.C. § 2661A, a section of the criminal code which is titled "Interstate stalking". However, the Senate Judiciary Committee, at Rep. McDermott's request, deleted §509 and inserted §113. And, that bill eventually became law.

For a detailed explanation of the McDermott amendment, see story titled "Bush Signs DOJ Reauthorization Bill" in TLJ Daily E-Mail Alert No. 1,284, January 6, 2006. See especially, subsection titled "The Internet as a Telecommunications Device".

It should also be noted the at least one District Court has held that §230 immunity applies to actions alleging violation of the §223 internet harassment provision, and that §223 internet harassment does not give rise to a private cause of action. The U.S. Court of Appeals (1stCir) affirmed the U.S. District Court (DMass) in its February 23, 2007, opinion.

Although, the plaintiff did not raise these issues on appeal. The Court of Appeals wrote, "On the federal cyberstalking claim under 47 U.S.C. § 223, in addition to finding the claim barred by Section 230, the district court also found that the cyberstalking statute does not provide a private right of action. UCS does not challenge this dispositive ruling on appeal, so we affirm the dismissal of the claim on that basis, expressing no view on the appropriateness of applying Section 230 immunity to a putative civil claim under 47 U.S.C.§ 223."

This case is Universal Communication Systems, Inc. and Michael Zwebner v. Lycos, Inc., et al., U.S. Court of Appeals for the 1st Circuit, App. Ct. No. 06-1826, an appeal from the U.S. District Court for the District of Massachusetts, Judge Robert Keeton presiding.

Rep. Barton Asks Google for Answers to Questions Regarding DoubleClick, Cookies and Privacy

5/21. Rep. Joe Barton (R-TX), the ranking Republican on the House Commerce Committee (HCC) sent another letter [3 pages in PDF] to Eric Schmidt, Ch/CEO of Google, regarding its acquisition of DoubleClick, cookies, cybersecurity, and consumer privacy.

Rep. Joe BartonRep. Barton (at left) also sent a letter [PDF] to Eric Schmidt on December 12, 2007, while both the Federal Trade Commission (FTC) and European regulators were reviewing the pending Google DoubleClick merger.

On December 20, 2007, the FTC announced, after a long review, that it will not seek to block the Google DoubleClick merger. See, story titled "FTC Will Not Block Google DoubleClick Merger" in TLJ Daily E-Mail Alert No. 1,691, December 19, 2007.

In his May 21 letter, Rep. Barton wrote that "Now that the FTC and the European Union have approved the merger, I would like to take this opportunity to ask questions about Google's policies and practices as they relate to the Google-DoubleClick merger." He then propounded three pages of interrogatories.

For example, he asked if Google will merge Google and DoubleClick data, and if so, what data.

He also asked numerous other questions regarding cookies. For example, he asked "Is it DoubleClick's policy or practice that advertisers ``own´´ the cookie data associated with their advertisements, and that this data cannot be shared with other advertisers or publishers who are associated with DoubleClick?"

He also asked about manipulation of Google Search by hackers.

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5/21. The Government Accountability Office (GAO) released a report [62 pages in PDF] titled "Information Security: TVA Needs to Address Weaknesses in Control Systems and Networks". It finds that the Tennessee Valley Authority (TVA) "has not fully implemented appropriate security practices to protect the control systems used to operate its critical infrastructures. TVA’s corporate network infrastructure and its control systems networks and devices at individual facilities and plants reviewed were vulnerable to disruption. For example, on the corporate network, one remote access system we reviewed that was used for the network was not securely configured, and individual workstations we reviewed lacked key patches and had inadequate security settings for key programs."

5/21. The Copyright Office (CO) published a notice in the Federal Register that announces, describes, recites, and sets the effective date (May 20, 2008) for, its new rules regarding the payment of interest on late or underpaid royalty fees under the Copyright Act to clarify when interest for late and underpayments is
due in light of the CO's electronic funds transfer requirement, and regarding satellite carrier requirements to recognize changes made to 17 U.S.C. § 119 in 2004. See, Federal Register, May 20, 2008, Vol. 73, No. 98, at Page 29071-29073.

5/21. The Federal Trade Commission (FTC) published a notice in the Federal Register that announces, describes, recites, and sets the effective date (July 7, 2008) for, its amendments to its rules implementing the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, also known as the CAN-SPAM Act. See, Federal Register: May 21, 2008, Vol. 73, No. 99, at Pages 29653-29680.

Go to News from May 16-20, 2008.