TLJ News from September 26-30, 2012

FCC Adopts Spectrum Aggregation NPRM

9/28. The Federal Communications Commission (FCC) adopted and released a Notice of Proposed Rulemaking (NPRM) [50 pages in PDF] regarding spectrum aggregation limits and analyzing spectrum holdings.

In 2001 the FCC ended its spectrum aggregation limits, or spectrum caps. Since then, the FCC has engaged in case by case analysis of transactions that involve spectrum licenses. This NPRM asks whether the FCC should exhume its spectrum cap regulation. It also proposes new attribution rules, and asks questions about the spectrum screen, and other issues.

This NPRM contains the text of proposed rules, but only on the one issue of attribution of spectrum holdings. This NPRM contains no proposed rules regarding spectrum aggregation limits, or regarding what spectrum is to be included in the analysis.

That is, except for the attribution issue, this notice bears the attributes of a notice of inquiry (NOI). A NOI would be followed later by a NPRM. This mischaracterization has procedural consequences. By not issuing a NOI, the FCC could adopt rules without adopting and seeking comment on a second notice -- a NPRM. The FCC could, for example, adopt rules in this proceeding at the same time that it adopts rules governing incentive auctions.

Moreover, this proceeding and the incentive auctions proceeding are related. If the FCC were to adopt new spectrum caps, or tighten the spectrum screen, this would not only affect wireless companies that might bid on and acquire spectrum in the incentive auctions -- it could also decrease spectrum revenues, and hence, disbursements to broadcasters, and to build the public safety broadband network.

See, full story.

FCC Adopts NPRM on Incentive Auctions

9/28. The Federal Communications Commission (FCC) adopted, but did not release, a Notice of Proposed Rulemaking (NPRM) regarding incentive auctions. The FCC released only a short release, and each of the five commissioners released a statement.

FCC Chairman Julius Genachowski wrote in his statement that "This is a big deal. Today, the U.S. becomes the first nation in the world to launch incentive auctions -- a new paradigm in spectrum policy that uses market forces to repurpose beachfront spectrum for licensed and unlicensed wireless broadband. The world is watching. As Japan's Nikkei Weekly wrote recently, ``Japan can learn from the incentive auction system adopted by the U.S. government.´´"

Rep. Greg Walden (R-OR), Chairman of the House Commerce Committee's (HCC) Subcommittee on Communications and Technology, stated in a release that "we are one step closer to advancing spectrum policies this subcommittee has been championing for more than five years. If implemented well, the law has the potential to help meet Americans' hunger for mobile broadband services, generate hundreds of thousands of jobs, and raise billions of dollars toward buildout of the nationwide, interoperable public safety network called for by the 9/11 Commission. We will work with stakeholders and the FCC to try to make those goals come to fruition."

Sen. John Rockefeller (D-WV) stated in a release that "Today's action by the FCC moves us yet another step closer to creating a truly nationwide, interoperable public safety broadband network for our first responders ... When we authorized voluntary incentive auctions to fund the public safety network earlier this year, Congress recognized the dual benefit of promoting innovative spectrum policy and providing funding for next-generation public safety communications. I know that developing the rules for the incentive auctions will be a complex process, but I am optimistic that broadcasters, wireless companies, and others will work cooperatively with the FCC to make sure these auctions are successful.”

The Congress enacted HR 3630, [LOC | WW], the "Middle Class Tax Relief and Job Creation Act" in February. This bill, among other things, gives the FCC authority to conduct incentive auctions.

An incentive auction provides for the sharing of spectrum auction proceeds with the licensees who voluntarily relinquish that spectrum. It provides a financial incentive for television broadcasters and other licensees to relinquish some of their spectrum. Auction proceeds will also be used to construct a public safety broadband network.

See also, stories titled "House and Senate Negotiators Reach Agreement on Spectrum Legislation", "Summary of Spectrum Bill", and "Reaction to Spectrum Bill" in TLJ Daily E-Mail Alert No. 2,339, February 17, 2012, story titled "House and Senate Pass Spectrum Bill" in TLJ Daily E-Mail Alert No. 2,340, February 18, 2012, and story titled "Obama Signs Spectrum Bill into Law" in TLJ Daily E-Mail Alert No. 2,345, February 23, 2012.

CTIA's Steve Largent release this is "an important step toward alleviating the looming spectrum crisis that we’ve been warning policymakers about for the last three years."

"We also commend the Commission for working to ensure that it not only establishes rules that result in a successful auction, but also completes its efforts in a timely manner. In order to maintain our global leadership in the mobile ecosystem, we must ensure that this spectrum is brought to market more quickly than the almost ten years it took to bring the last two spectrum blocks to market."

The Consumer Electronic Association's (CEA) Julie Kearney stated in a release that "Additional spectrum is not only key to our national competitiveness, but also needed for creating jobs and spurring economic growth. The FCC’s adoption of this critical spectrum item is great step forward toward unleashing countless innovative products and services that rely on our nation’s valuable spectrum resources."

This NPRM is FCC 12-118 in GN Docket No. 12-268.

Unlicensed Use. Allocating relinquished spectrum for unlicensed use would not generate revenue for either the public safety broadband network or broadcasters. It would create disincentives for relinquishing spectrum.

HR 3630, at Section 6407, provides that the FCC may use "relinquished or other spectrum to implement band plans with guard bands". However, "guard bands shall be no larger than is technically reasonable to prevent harmful interference between licensed services outside the guard bands".

Then, Section 6407 provides that the FCC may permit the use of certain guard bands for unlicensed use, subject to the limitation that it "may not permit any use of a guard band that the Commission determines would cause harmful interference to licensed services".

The FCC's release states that "This proceeding also offers the possibility of unique benefits to entrepreneurs and innovators of unlicensed spectrum for game-changing applications like next-generation Wi-Fi."

It also states that "We invite comment on measures that would make a substantial amount of spectrum available for unlicensed uses, including a significant portion that would be available on a uniform nationwide basis for the first time. Television white spaces will continue to be available for unlicensed use in the repacked television band. In addition, we seek comment on making the guard bands spectrum in the 600 MHz band plan available for unlicensed use, making channel 37 available for such use, and making two channels currently designated for wireless microphone use available for white space devices."

Rep. Henry Waxman (D-CA), the ranking Democrat on the HCC, praised the NPRM in a release, and added that "I am pleased that the FCC's action today is faithful to Congressional intent and aims to promote unlicensed use as well as the innovation that will surely follow."

The Public Knowledge's (PK) John Bergmayer stated in a release that "The Commission should be commended for recognizing that unlicensed, as well as licensed, uses of spectrum are essential for promoting wireless broadband use. Unlicensed, cheap WiFi hotspots in homes, business, and coffee shops have been as important as billion-dollar cellular buildouts in promoting mobile access."

Free Press's (FP) Matt Wood stated in a release that "it's imperative that ... competitors, innovators and entrepreneurs alike to have access to licensed and unlicensed spectrum."

FCC Fines NobelTel for Deceptively Marketing Prepaid Calling Cards

9/28. The Federal Communications Commission (FCC) adopted of a Notice of Apparent Liability for Forfeiture that fines NobelTel LLC $5 Million for deceptively marketing prepaid calling cards to immigrants in violation of 47 U.S.C. § 201(b). The FCC released a redacted copy [11 pages in PDF].

There is no statute enforced by the FCC that specifically prohibits deceptive marketing of prepaid calling cards. Subsection 201(b) is a general provision that states, in part, that "All charges, practices, classifications, and regulations for and in connection with such communication service, shall be just and reasonable, and any such charge, practice, classification, or regulation that is unjust or unreasonable is declared to be unlawful".

FCC Chairman Julius Genachowski stated in a release that the FCC "will continue to monitor marketing activities around prepaid calling cards -- and will not hesitate to take decisive action when warranted."

Rep. Eliot Engel (D-NY), a member of the House Commerce Committee (HCC), has been introducing bills for years that would require the FCC to "promulgate regulations that require prepaid calling card providers and prepaid calling card distributors to accurately disclose the terms and conditions applicable to prepaid calling cards". See, HR 4319 [LOC | WW], the "Calling Card Consumer Protection Act", and story titled "Rep. Engel Again Introduces Bill to Regulate Prepaid Calling Card Disclosures" in TLJ Daily E-Mail Alert No. 2,366, April 9, 2012.

The HCC has not marked up this bill. However, a similar bill in the 111th Congress was marked up in subcommittee. See, story titled "House Subcommittee Approves Calling Card Consumer Protection Act" in TLJ Daily E-Mail Alert No. 2,065, March 25, 2010.

OUSTR and EC Seek Comments on US EC Regulatory Compatibility

9/28. The Office of the U.S. Trade Representative (OUSTR) published a notice in the Federal Register (FR) that requests comments regarding "how to promote greater transatlantic regulatory compatibility". See, FR, Vol. 77, No. 189, September 28, 2012, at Pages 59702-59703.

See also, joint letter of the European Commission (EC) and the OUSTR.

The deadline to submit comments to the OUSTR or EC is October 31, 2012.

This is the second request for comments by both the US and EC. See, notice in the Federal Register, Vol. 77, No. 7 January 11, 2012, at Pages 1778-1779. The comment deadline was February 3, 2012.

US tech companies and groups did not submit many comments. However, the Competitive Enterprise Institute (CEI) submitted comments condemning the availability of government antitrust processes as a competitive weapon, which occurs in various tech sectors. The National Electrical Manufacturers Association (NEMA) submitted comments regarding obtaining greater market access for US electronics makers. And, the Coalition of Service Industries (CSI) submitted comments addressing international data flows, privacy, and the EU data protection directive.

The present OUSTR notice states that US and EC "share the goal of reducing excessive regulatory costs, unjustified regulatory differences, and unnecessary red tape while respecting each other's right to protect public health, safety, welfare, and the environment. Promoting this goal will help businesses to grow, create jobs, and compete globally."

The OUSTR notice does not disclose that governmental entities of the US, EC and other nations sometimes pursue protectionist policies, which they then attempt to pass off as public health, safety, welfare, and the environment protection policies.

The OUSTR notice states that "the U.S. Government and EC invite your views on how to promote greater transatlantic regulatory compatibility generally. We also invite you to share your concrete ideas on how greater
compatibility could be achieved in a particular economic sector by providing detailed information for that sector".

For industry sector comments, the OUSTR seeks the names of the relevant regulatory agencies in the US and EU, citations to the relevant statutes and regulations, descriptions of the differences, "possible solutions for bridging these differences", any steps that the US and/or EU "should consider to address horizontal and/or sectoral differences between the two jurisdictions that may be impeding deeper regulatory compatibility in the sector", and an "assessment of the effects of enhanced regulatory compatibility (quantified benefits and costs, if possible, or else qualitative descriptions), the likelihood of these effects occurring, and the time period over which they would occur." (Parentheses in original.)

People and Appointments

9/28. President Obama named Verizon's John Stratton to be a member of the President's National Security Telecommunications Advisory Committee. See, White House news office release.

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9/28. The U.S. Patent and Trademark Office (USPTO) and European Patent Office (EPO) released, as part of their joint Cooperative Patent Classification (CPC) effort, the CPC scheme and CPC definitions. See also, USPTO release and EPO release. EPO President Benoît Battistelli stated that "In less than two years, we have finalized and published a joint scheme incorporating the best classification practices of both offices, which will align our patent procedures more closely and deliver major efficiency gains. In the process, the CPC will be a stepping stone towards a more general harmonization of the world's patent systems."

9/28. The Department of State (DOS) published a lengthy notice in the Federal Register regarding the process for applying for diversity visas. The diversity visa program does nothing to promote innovation, technological advances, or the tech sector. However, HR 6429 [LOC | WW | PDF], the "STEM Jobs Act of 2012" would eliminate this program, and replace it with a comparably sized STEM visa program, that would provide 55,000 visas per year to aliens with Ph.D.s, and then Masters degrees, in math, science, engineering or technology (STEM) fields. The House rejected HR 6429 in a suspension vote (which required a two thirds majority for passage) on September 20, 2012. See, story titled "House Rejects STEM Visas Bill in Suspension Vote" in TLJ Daily E-Mail Alert No. 2,452, September 20, 2012.

ITIF Asserts That Do Not Track is Madness

9/27. The Information Technology and Innovation Foundation (ITIF) published a short piece condemning web browser technology known as "Do Not Track" or "DNT". The author is the ITIF's Daniel Castro.

The ITIF asserts that "Do Not Track is a detrimental policy that undermines the economic foundation of the Internet." The ITIF criticizes the "typical fear-mongering that privacy advocates tend to engage in (and that the media tends to subsequently report)." (Parentheses in original.)

The ITIF wants to "stop the madness".

"Advertising revenue supports most of the free content, services, and apps available on the Internet. In exchange for viewing online ads, users get access to a wide range of free content (e.g., news, music, movies, and games), free services (e.g., email, storage, and personal productivity tools), and increasingly free mobile apps." (Parentheses in original.)

The ITIF adds that "advertisers are willing to pay more to advertise to individuals who are more likely to be interested in their products. In general, everyone wins: ad-supported websites increase their revenue, users receive fewer irrelevant ads and more free content, and advertisers get to be front of their target audiences." But, DNT threatens this model.

Currently, recent versions of Microsoft's Internet Explorer and Firefox support DNT. See, story titled "Microsoft's Next Brower Will Have Do Not Track on by Default" in TLJ Daily E-Mail Alert No. 2,389, June 4, 2012. "Microsoft Reaffirms Its Commitment to Do Not Track By Default" in TLJ Daily E-Mail Alert No. 2,426, August 10, 2012.

This ITIF piece states that "Do Not Track has been heavily promoted by various groups, including the Federal Trade Commission (FTC) and the White House."

The Federal Trade Commission (FTC) released a report [112 pages in PDF] on March 26, 2012, titled "Protecting Consumer Privacy in a Era of Rapid Change: Recommendations for Businesses and Policy Makers". It states that while companies that make browsers offer "a mechanism to limit online tracking", "consumers are largely unaware of their ability to limit or block online tracking through their browsers, in part because these options may be difficult to find".

The FTC report also states that FTC "staff supports a more uniform and comprehensive consumer choice mechanism for online behavioral advertising, sometimes referred to as ``Do Not Track.´´ Such a universal mechanism could be accomplished by legislation or potentially through robust, enforceable self-regulation. The most practical method of providing uniform choice for online behavioral advertising would likely involve placing a setting similar to a persistent cookie on a consumer's browser and conveying that setting to sites that the browser visits, to signal whether or not the consumer wants to be tracked or receive targeted advertisements. To be effective, there must be an enforceable requirement that sites honor those choices."

The ITIF also states that "privacy advocates ... have been pushing for the creation and implementation of a Do Not Track standard".

The World Wide Web Consortium's (W3C) Tracking Protection Working Group (TPWG) is an internet standards body that is working on a standard regarding what DNT means, and what web sites are expected to do, or not expected to do, in response to a user's DNT expression. See, W3C's March 13, 2012 draft document titled "Tracking Preference Expression". See also, story titled "Rep. Barton and Rep. Markey Write W3C Regarding Do Not Track" in TLJ Daily E-Mail Alert No. 2,399, June 19, 2012.

The ITIF states that web sites could "block users who have enabled Do Not Track ... So users who wanted to access sites for free would have to disable Do Not Track". Hence, "the only way that Do Not Track would be viable is if policymakers passed legislation that would require websites to allow users who opt out of tracking to access to their sites".

There is legislation pending in the Congress. For example, Rep. Joe Barton (R-TX) and Rep. Ed Markey (D-MA) introduced HR 1895 [LOC | WW], the "Do Not Track Kids Act", on May 13, 2011. See, story titled "Rep. Markey and Rep. Barton Release Draft of Do Not Track Kids Act" in TLJ Daily E-Mail Alert No. 2,236, May 9, 2011. Also, Rep. Jackie Speier (D-CA) and others introduced HR 654 [LOC | WW], the "Do Not Track Me Online Act", on February 11, 2011.

The ITIF's argument is predicated on the assumption that advertising is the best business model for financing the creation of internet based services, and that market price transactions should not be the basis of these services. Rather, internet services must be free, and must be financially supported by ads.

The ITIF further argues "This is a classic case of economic externalities: individuals may receive a small benefit from enabling Do Not Track, but in doing that, they impose costs on the rest of Internet users."

Economic externalities is a theoretically loose, and hence easily asserted, consequence of any market transaction.

The ITIF does not point out that there are also positive externalities to DNT. For example, universal adoption of broadband is widely agreed to be a meritorious policy objective. Yet, some people do not adopt broadband out of concerns over loss of privacy or security. The availability of DNT would encourage assure some of these people, and therefore provide the positive externality of increasing adoption and use of broadband.

Second, service providers have engaged in illegal or bad tracking and/or advertising related behavior on the internet that harms the interests of individuals in privacy and security. The availability of DNT would give increased incentives in online ad industry to work out methods and practices to diminish such illegal and bad behavior, and therefore provide the positive externalities that would flow from a more secure internet. Third, this might also obviate the need for, or pressure upon government to create, a government regulatory regime. Any regulatory regime would be burdensome, outdated at inception, subject to politically manipulated enforcement, and would treat all individuals as if they had the same interests in privacy.

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9/27. The US's Department of Justice (DOJ) and Federal Trade Commission (FTC) entered into a Memorandum of Understanding on Antitrust Cooperation [4 pages in PDF] with India's Ministry of Corporate Affairs (MCA) and Competition Commission of India (CCI) regarding enhancing "the effective enforcement of their competition laws by creating a framework that provides for enforcement cooperation between the U.S. and Indian competition authorities". This memorandum states that "It is understood that the U.S. and Indian competition authorities do not intend to communicate information to the other if such communication is prohibited by the laws governing the agency possessing the information or would be incompatible with that agency's interest." It also states that "In so far as information is communicated, the recipient should, to the extent consistent with its laws, maintain the confidentiality of any such information communicated to it in confidence."

9/27. The Federal Trade Commission (FTC) published a notice in the Federal Register (FR) that announces, describes, recites, and sets the effective date for, its revised Rules of Practice, codified at 16 C.F.R. Part 2, governing the FTC's nonadjudicative procedures in investigative proceedings. These rules changes take effect on November 9, 2012. See, FR, Vol. 77, No. 188, September 27, 2012, at Pages 59294-59311. The American Bar Association's (ABA) Section of Antitrust Law submitted a comment [9 pages in PDF] on March 22, 2012, that criticized some aspects of the FTC's notice of proposed rulemaking.

Representatives Condemn FTC Participation in W3C Development of DNT Standard

9/26. Nine Republican members of the House of Representatives sent a letter to Jonathan Leibowitz, Chairman of the Federal Trade Commission (FTC), condemning the FTC for participating in the World Wide Web Consortium's (W3C) development of a do not track (DNT) standard for web site operators.

The nine wrote "to express serious concern over participation by you and your agency in multiple meetings, some held overseas, with members of the World Wide Web Consortium (W3C), and to request information pursuant to our oversight and budgetary authority. Specifically, we are alarmed that the Federal Trade Commission (FTC) is driving the development of policies and technical Do Not Track (DNT) standards to restrict online advertising without any formal legal process or Congressional authorization, but rather through informal agency threats."

The nine also propounded numerous interrogatories. For example, they asked "By what authority did Congress empower the FTC to participate in, or encourage Internet policy development through, international organizations such as W3C?"

They also asked the FTC to "provide itemized details relating to any federal funds spent by the FTC on W3C activities, including all meetings of FTC staff with anyone connected with W3C."

The W3C's Tracking Protection Working Group (TPWG) is an internet standards body that is working on a standard regarding what DNT means, and what web sites are expected to do, or not expected to do, in response to a user's DNT expression. See, W3C's March 13, 2012 draft document titled "Tracking Preference Expression".

The W3C TPWG can write a standard. However, it cannot compel companies that make browsers to include a DNT feature, or to have that feature turned on by default. Nor can the W3C TPWG compel web site operators to honor a DNT request from a user's browser.

The nine signers of the letter include Rep. Tom Graves (R-GA) and Rep. Marsha Blackburn (R-TN). Rep. Graves is a member of the House Appropriations Committee (HAC), and its Subcommittee on Commerce, Justice, Science and Related Agencies, which is responsible for the FTC's annual appropriation. Rep. Blackburn is a member of the House Commerce Committee (HCC), which oversees the FTC.

However, the list is notable for its lack of other members of the HCC.

The other seven are Rep. Mick Mulvaney (R-SC), Rep. Reid Ribble (R-WI), Rep. Tim Walberg (R-MI), Rep. Tim Huelskamp (R-KS), Rep. Jeff Duncan (SC), Rep. Dennis Ross (R-FL), and Rep. Dan Burton (R-IN).

Microsoft's browser, Internet Explorer, supports DNT. Moreover, Microsoft is moving towards a DNT setting by default. See, story titled "Microsoft's Next Brower Will Have Do Not Track on by Default" in TLJ Daily E-Mail Alert No. 2,389, June 4, 2012. "Microsoft Reaffirms Its Commitment to Do Not Track By Default" in TLJ Daily E-Mail Alert No. 2,426, August 10, 2012.

Firefox and Apple's Safari also support DNT, but users must navigate through a series of menus to turn on the DNT feature. Google Chrome supports DNT only if a user installs a browser extension. See, June 12, 2012, article titled "How to Turn on Do Not Track in Your Browser", by Eva Galperin, published in the Electronic Frontier Foundation (EFF) web site.

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9/26. The Government Accountability Office (GAO) released a report [59 pages in PDF] titled "Information Technology: Department of Labor Could Further Facilitate Modernization of States' Unemployment Insurance Systems".

9/26. The Government Accountability Office (GAO) released a report [49 pages in PDF] titled "Information Technology: DHS Needs to Enhance Management of Cost and Schedule for Major Investments".

Go to News from September 21-25, 2012.