TLJ News from October 1-5, 2012

Sen. Grassley States Cyber Security Should Be Addressed by Legislation Rather Than Presidential Order

10/5. The Executive Office of the President has not yet released are final or draft executive order that attempts to impose a regulatory regime upon US companies for the purpose of promoting cyber security.

Sen. Charles Grassley (R-IA) issued a release on October 5 that states that "the White House called a meeting with Senate staff about the President's upcoming executive order on cybersecurity."

Sen. Grassley stated that "The Senate staff meeting with representatives from the Obama Administration made clear that cybersecurity is a complex topic that should be addressed by the legislative process, rather than by administrative fiat via an Executive Order."

He continued that "The executive branch does not have the legal authority to implement a comprehensive cybersecurity policy. Consequently, an Executive Order could potentially result in intrusive regulation, confusion, gaps in coverage, and uneven application of policy, thus causing more harm than good. The Administration should work constructively with Congress to carefully craft legislation to improve our nation's cybersecurity."

Sen. Grassley is a co-author of S 2151 [LOC | WW], the "SECURE IT Act". Sen. John McCain (R-AZ) is the lead sponsor.

FCC Lets Expire Its Per Se Ban on Exclusive Program Distribution Contracts

10/5. The Federal Communications Commission (FCC) adopted and released an item [146 pages in PDF] that, among other things, allows the exclusive contract prohibition section of the FCC's program access rules to expire.

The FCC unanimously adopted this Report and Order (R&O), Further Notice of Proposed Rulemaking (FNPRM), and Order on Reconsider (OR). It is FCC 12-123. The R&O portion of this item ends the per se prohibition of exclusive contracts (MB Docket No. 12-68). The FNPRM portion of this item seeks comments on establishing several rebuttal presumptions in case by case consideration of exclusive contracts (MB Docket Nos. 07-18 and 05-192). The OR portion of this item is in MB Docket No. 07-29.

The Cable Act of 1992 contained a ten year ban on these exclusive contracts, gave the FCC rulemaking authority, and allowed the FCC to extend the ban if it found that the ban was "necessary to preserve and protect competition and diversity in the distribution of video programming".

The FCC extended the per se ban in 2002 for five years. It again extended the per se ban in 2007. The U.S. Court of Appeals (DCCir) upheld the 2007 extension order, but suggested that it would not do so if the FCC made yet another extension.

The just released item is likely the product for three modes of analysis at the FCC. First, it reflects the FCC's policy and market analysis; that is, the FCC concluded that changes in the multichannel video programming distribution (MVPD) market warranted a change in its rules. Second, this reflects the FCC's consideration of the lobbying and rent seeking activities of organized interests. Third, this item reflects the FCC's recognition that any attempt to further extend the ban would have been an exercise in regulatory futility, because the Court of Appeals suggested in its review of the last extension that it would overturn a further extension.

This R&O ends the FCC's blanket ban, or per se ban, on exclusive contracts. What remains will be FCC case by case analyses of exclusive contracts in complaint proceedings and antitrust merger reviews (nominally license transfer proceedings). That is, MVPDs can still file complaints with the FCC alleging that exclusive contracts violate the 1992 Act.

See, full story.

FCC Adopts Report and Order on Program Access Rules

10/5. The Federal Communications Commission (FCC) adopted and released an item [146 pages in PDF] that, among other things, allows the exclusive contract prohibition section of the FCC's program access rules to expire.

The R&O portion of this item amends Part 76 of the FCC's rules, which are codified at 47 C.F.R. §§ 76.1000 et seq. to remove the per se ban on exclusive contracts.

The FCC will continue to conduct proceedings on complaints filed by multichannel video programming distributors (MVPD) that allege that exclusive contracts violate the Cable Act of 1992 and the FCC's rules. This R&O also provides a shot clock to ensure timely resolution of these complaints.

This R&O creates a presumption that an exclusive contract involving a cable affiliated regional sports network (RSN) has the purpose or effect prohibited by the 1992 Act.

The FCC will also maintain the ability to regulate exclusive contracts via conditions imposed during merger reviews.

The FCC adopted and released its Notice of Proposed Rulemaking (NPRM) [108 pages in PDF] on March 20, 2012. See, story titled "FCC Adopts NPRM on Exclusive Contract Prohibition of Program Access Rules" in TLJ Daily E-Mail Alert No. 2,352, March 21, 2012.

The FCC's regulations banned cable operators from entering into exclusive contracts with cable affiliated programming vendors that deliver their programming to cable operators via satellite.

These rules were a forced sharing mandate that compelled cable video programming networks to share their content with all video programming distributors. They were based upon a bottleneck monopoly rationale, underlying the Cable Television Consumer Protection and Competition Act of 1992 (aka Cable Act of 1992), that the FCC now recognizes is outdated by changes in the marketplace.

Section 628 of the Communications Act was enacted by the Cable Act of 1992. It is codified at 47 U.S.C. § 548. It requires that the FCC write regulations "to promote the public interest, convenience, and necessity by increasing competition and diversity in the multichannel video programming market and the continuing development of communications technologies".

Subsection (c)(2)(D) provides that these regulations "shall ... with respect to distribution to persons in areas served by a cable operator, prohibit exclusive contracts for satellite cable programming or satellite broadcast programming between a cable operator and a satellite cable programming vendor in which a cable operator has an attributable interest or a satellite broadcast programming vendor in which a cable operator has an attributable interest, unless the Commission determines (in accordance with paragraph (4)) that such contract is in the public interest". (Parentheses in original.)

The 1992 Act also provided a ten year sunset, but allowed the FCC to extend its rules. The FCC extended its program access rules in 2002.

FCC extended its rules again in 2007. The FCC adopted a Report and Order and NPRM on September 11, 2007, which it released on October 1, 2007, that concluded that the exclusive contract prohibition is still necessary. That order also contained a sunset of October 5, 2012.

That item was FCC 07-169 in MB Docket Nos. 07-29 and 07-198. See also, FCC release, and story titled "FCC Adopts R&O and NPRM Regarding Program Access Rules" in TLJ Daily E-Mail Alert No. 1,640, September 17, 2007.

Cable operators challenged the 2007 order. The U.S. Court of Appeals (DCCir) upheld the order in a divided opinion. However, even the majority suggested that it would not uphold a further extension of these rules. See, opinion in Cablevision Systems v. FCC, 597 F.3d 1306. See also, story titled "Commentary: Cablevision I and the Exclusivity Rule" in TLJ Daily E-Mail Alert No. 2,352, March 21, 2012.

The just released R&O states that "We find that a preemptive prohibition on exclusive contracts is no longer “necessary to preserve and protect competition and diversity in the distribution of video programming” considering that a case-by-case process will remain in place after the prohibition expires to assess the impact of individual exclusive contracts." (Footnote omitted.)

FCC Adopts NPRM on Case by Case Analysis of Exclusive Contracts

10/5. The Federal Communications Commission (FCC) adopted and released an item [146 pages in PDF] regarding its program access rules. The Report & Order (R&O) portion of this item lets expire the per se ban on exclusive contracts. The FCC will henceforth review exclusive contracts on a case by case basis. However, the R&O leaves unresolved several questions regarding how the FCC will conduct these reviews. The Further Notice of Proposed Rulemaking (FNPRM) portion of this item seeks comments on establishing presumptions.

The FNRM seeks comment on whether to establish certain rebuttable presumptions that were proposed by other other multichannel video programming distributors (MVPD), including telcos, smaller cable companies, and satellite MVPDs.

First, the FNPRM asks if the FCC should establish "a rebuttable presumption that an exclusive contract for a cable-affiliated RSN (regardless of whether it is terrestrially delivered or satellite-delivered) is an “unfair act” under Section 628(b)". (Parentheses in original.)

Second, should the FCC establish a "a rebuttable presumption that a complainant challenging an exclusive contract involving a cable-affiliated RSN (regardless of whether it is terrestrially delivered or satellite-delivered) is entitled to a standstill of an existing programming contract during the pendency of a complaint". (Parentheses in original.)

Third, should the FCC establish a "rebuttable presumptions with respect to the “unfair act” element and/or the “significant hindrance” element of a Section 628(b) claim challenging an exclusive contract involving a cable-affiliated “national sports network” (regardless of whether it is terrestrially delivered or satellite-delivered)". (Parentheses in original.)

Fourth, should the FCC establish a "a rebuttable presumption that, once a complainant succeeds in demonstrating that an exclusive contract involving a cable-affiliated network (regardless of whether it is terrestrially delivered or satellite-delivered) violates Section 628(b) (or, potentially, Section 628(c)(2)(B)), any other exclusive contract involving the same network violates Section 628(b) (or Section 628(c)(2)(B))." (Parentheses in original.)

This FNPRM also seeks comments on revisions to the program access rules to ensure that buying groups utilized by small and medium-sized MVPDs can avail themselves of these rules.

Initial comments in response to this FNPRM will be due within 30 of publication of a notice in the Federal Register (FR). Reply comments will be due within 45 days of such publication. As of the October 5, 2012 issue of the FR this notice had not yet been published.

Reaction to FCC's Program Access Order

10/5. The following is an overview of reaction to the Federal Communications Commission's (FCC) October 5, 2012  item [146 pages in PDF] regarding its program access rules.

Sen. John Rockefeller (D-WV), Chairman of the Senate Commerce Committee (SCC), stated in a release that "I am reviewing the FCC's action today very carefully. As recent hearings in the Commerce Committee have demonstrated, consumers still face ever-escalating rates and little power to address them. The program access rules were an integral part of Congress's attempt to promote competition and consumer choice in the 1992 Cable Act. I appreciate that the FCC has put into place a process by which individual complaints can be brought against cable companies that lock up their programming. But if this new process does not deter anticompetitive behavior that harms consumers, Congress will need to consider whether it should restore appropriate safeguards."

Walter McCormick, head of the USTelecom, stated in a release that "While we appreciate the commission's willingness to make some changes to this order, today's action is likely to make it more difficult to build and operate broadband networks, especially in rural communities where revenues from offering competitive video services are essential in order to make a business case for broadband deployment."

USTelecom's members include AT&T, which provides U-Verse TV, and Verizon, which provides Fios TV. USTelecom is also a member of the Coalition for Competitive Access to Content.

McCormick continued that "There is near universal agreement in the record in support of continuing the commission’s long-standing prohibition on the ability of large cable companies to withhold critical programming as a tool for suppressing the ability of alternative providers to compete -- including support from small cable companies, rural telephone companies, satellite providers and public interest groups."

Matthew Polka, head of the American Cable Association (ACA), stated in a release that the "ACA is disappointed that the FCC decided to permit the prohibition on exclusive contracts to sunset, but it appreciates the FCC's willingness to adopt some modifications to the Section 628(b) unfair practices complaint process to make it less burdensome for multichannel video programming distributors (MVPDs)."

However, he praised this item for establishing a rebuttable presumption with respect to regional sports networks (RSN), and for making "clear that a selective refusal to deal, particularly with regard to cable overbuilders and new entrants, can be a violation of the program access rules' prohibition on discrimination." He also praised the Further Notice of Proposed Rulemaking (FNPRM) portion of this item.

John Bergermeyer of the Public Knowledge (PK) stated in a release that "The FCC's program access rules have been vital in bringing some competition to the video marketplace. Without them, satellite providers like DirecTV, telco video like AT&T's U-Verse TV, and smaller cable systems would not have been able to get off the ground and provide customers the programming they demand. They are still needed to preserve the progress we've made toward video competition."

"What's more, the program access rules are an important part of broadband competition. Even fiber-to-the-home providers like Google Fiber and Verizon FiOS need to offer a video service alongside their fast broadband to be appealing to consumers. By making it harder to compete in the video marketplace, the FCC has made it harder to provide competitive broadband, as well."

The Free Press's Matt Wood stated in a release that "This decision suggests that the competitive landscape has changed since the program access rules were adopted. That's true to some extent, but the choices we have in the market today emerged as a result of these very same rules. Getting rid of them or weakening them threatens to undermine that landscape, especially at a time when incumbent cable operators wield so much power over traditional pay-television services and online video options."

He added that "We hope there will be some continued protection for cable sports programming and other must-have shows, which cable companies have so often denied to satellite customers in cities from Philadelphia to Portland. We also hope the Commission will use its general authority to prevent unfair practices by big cable when abuses inevitably crop up."

More on T-Mobile USA MetroPCS Combination

10/5. On October 3, 2012 Deutsche Telekom and MetroPCS Communications announced that they have signed a definitive agreement to combine T-Mobile USA and MetroPCS. See, story titled "T-Mobile USA and MetroPCS to Merge" in TLJ Daily E-Mail Alert No. 2,457, October 3, 2012.

T-Mobile is 4th largest wireless service provider in the US, when measured by number of customers. MetroPCS is the 5th largest. However, they are much smaller than the two largest providers, Verizon and AT&T. Moreover, the merged entity would still be the 4th largest, behind Verizon, AT&T and Sprint.

However, if the focus of analysis is the market for prepaid services, then it may be significant that T-Mobile USA and MetroPCS are the two leading providers.

Rep. Henry Waxman (D-CA), ranking Democrat on the House Commerce Committee (HCC), stated in a release that "Consumers benefit from strong, vibrant competition in the wireless marketplace. Competition on a national scale can bring innovation, better service, and lower prices to consumers everywhere. The proposed merger between T-Mobile and MetroPCS may have the potential to enhance nationwide wireless competition and benefit consumers throughout the United States. I urge the Department of Justice and the Federal Communications Commission to review the merits of this proposed transaction rigorously but swiftly."

John Bergmayer of the Public Knowledge wrote a short analysis titled "A Stronger T-Mobile Could Keep Verizon and AT&T in Check". He argued that "this is a very different situation from when AT&T tried to buy T-Mobile. That transaction would have gutted nationwide wireless competition. The T-Mobile/Metro PCS deal could improve it."

He wrote that "By combining with Metro PCS, T-Mobile will have more spectrum and more towers, and thus more flexibility. It should be able to offer its lower-cost plans to more consumers, while improving the service of existing Metro PCS and T-Mobile customers."

He added that "on balance, this transaction is likely to be good for value-conscious subscribers, including prepaid customers." Moreover, "a stronger T-Mobile might actually put some pricing pressure on AT&T and Verizon".

FCC Issues Citations to Online Sellers of Cell Phone Jamming Devices

10/5. The Federal Communications Commission's (FCC) Enforcement Bureau issued two citations to individuals who offered for sale online cell phone jamming devices.

The FCC stated that they violated FCC rules promulgated pursuant to 47 U.S.C. § 302a. Subsection 302a(b) provides that "No person shall manufacture, import, sell, offer for sale, or ship devices or home electronic equipment and systems, or use devices, which fail to comply with regulations promulgated pursuant to this section." Subsection 302a(a) provides in part that the FCC may promulgate regulation "governing the interference potential of devices which in their operation are capable of emitting radio frequency energy by radiation, conduction, or other means in sufficient degree to cause harmful interference to radio communications".

And, 47 U.S.C. § 503(b) provides that the FCC may impose a "forfeiture penalty" for violation of these rules.

One citation [11 pages in PDF] is directed to an individual named Richard Naparty, who listed a cell phone jammer on the Craigslist web site. The second citation [9 pages in PDF]] is directed to James Christopher Garcia, who also listed a cell phone jammer via Craigslist. The FCC did not cite Craigslist.

These citations impose no fines or other penalties. Moreover, since Naparty and Garcia are not FCC licensees, the FCC has limited leverage over them. However, the citations state that the FCC "may impose monetary forfeitures of up to $16,000 for each such violation or, in the case of a continuing violation, the Commission may impose monetary forfeitures of up to $16,000 for each day of such continuing violation".

Both citations state that "Jamming devices, such as cell phone jammers and GPS blockers, pose serious risks to critical public safety communications and can prevent individuals from making 9-1-1 and other emergency calls. Jammers can also interfere with law enforcement communications. You should take immediate steps to come into compliance and to avoid any recurrence of this misconduct. For example, any operation of a signal jammer must cease immediately, and you are strongly encouraged to voluntarily relinquish any jamming device(s) remaining in your possession. You also may not advertise jamming devices for sale to any consumer in the United States through Craigslist or through any other means."

These citations are DA 12-1591 and DA 12-1592.

BLS Releases Employment Data for September 2012

10/5. The Department of Labor's (DOL) Bureau of Labor Statistics (BLS) released employment data for the U.S. for the month of September 2012.

The BLS stated in a release that the seasonally adjusted unemployment rate in the US in September was 7.8%. This is a decrease from the 8.1% rate in August, and 8.3% in July. The unemployment rate had held steady in the range of 8.1% to 8.3% for the first eight months of this year.

Table B-1 attached to the BLS report reveals employment trends in various industry sectors, including information and communications technology (ICT) sectors.

The BLS's categories do not facilitate precise analysis of trends in ICT sectors. Nevertheless, the data set out in the table below contains ICT related categories, taken from BLS Table B-1.

While the overall employment rate dropped, ICT related sectors did not fare well in September. Employment in all four of the ICT related manufacturing sectors dropped in September. Overall employment in ICT related services sectors also dropped. However, in the category of professional services, employment in the subcategory of "Computer systems design & related services" rose in September. Also, employment in this sector is up significantly from a year ago.

While overall unemployment dropped, much of the employment gains came in government or quasi-government categories. The BLS reported that "total nonfarm payroll employment rose by 114,000". But, 43,500 of this gain came in "health care", 13,600 came in "state government education", and 6,800 came in "Federal, except Post Office". Also, there were large gains in some low end categories. For example, the BLS reported a gain of 15,700 jobs in "food services and drinking places".

The table below contains ICT related excerpts from the BLS table titled "Table B-1. Employees on nonfarm payrolls by industry sector and selected industry detail". This is the seasonally adjusted data.

Table: Total Number of Employees in Thousands by ICT Industry Sector
  Computer & peripheral equipment 160.0 165.9 167.0 164.4
  Communication equipment 114.3 109.4 108.5 107.9
  Semiconductors & electronic comp. 387.7 388.5 386.3 385.9
  Electronic instruments 403.8 400.8 399.1 397.4
Information Services:        
  Publishing industries, except Internet 747.6 738.7 740.5 738.9
  Motion picture & sound recording 356.6 375.7 377.4 373.1
  Broadcasting, except Internet 280.9 279.8 278.7 278.9
  Telecommunications 858.2 832.5 829.2 828.8
  Data processing, hosting & related serv. 242.2 241.4 242.7 240.3
  Other information services 163.5 168.8 169.7 171.6
Professional Services:        
  Legal services 1,114.5 1,120.8 1,119.4 1,120.4
  Computer systems design & related serv. 1,546.1 1,606.3 1,613.1 1,616.0
Source: BLS, October 5, 2012 employment report, Table B-1.

Also, while the BLS reported that unemployment dropped from 8.1% to 7.8%, and total nonfarm payroll employment rose by 114,000, an examination of the data suggests even greater improvement in September.

The government collects data from two sources -- households (that is, its survey of individuals) and establishments (reports from businesses that employ people). The unemployment rate (7.8%) is based on household data. The total nonfarm payroll employment gain (114,000) is based on establishment data.

The household data also reveals not only that the unemployment rate dropped, but that it did so with a large number of persons entering the workforce, and a resulting increase in the labor force participation rate. See, BLS Table A. The participation rate is still lower than it was recent years. But, at least it is up from August.

Moreover, while the establishment data provides the 114,000 figure, the household survey data shows an increase in the total number of persons employed from 142,101,000 in August to 142,974,000 in September. This is a gain of 873,000.

Rep. Allen West (R-FL) wrote in a Facebook comment that "Chicago style politics is at work here. Somehow by manipulation of data we are all of a sudden below 8 percent unemployment, a month from the Presidential election. This is Orwellian to say the least".

Rep. Nancy Pelosi (D-CA) stated in a release that "Today's jobs report marks the lowest unemployment rate in four years, but we have more work to do. Because of President Obama's leadership on the economy, we avoided another depression and now have registered 31 straight months of private sector job growth."

Rick Kaplan Joins NAB

10/5. Rick Kaplan will go to work for the National Association of Broadcasters (NAB) as EVP, Strategic Planning, starting on October 22.

He worked at the Federal Communications Commission (FCC) from 2009 until recently, where he held numerous positions, including Chief of Staff to FCC Commissioner Mignon Clyburn, Chief Counsel to FCC Chairman Julius Genachowski, and Chief of the FCC's Wireless Telecommunications Bureau (WTB).

The NAB stated in a release that he "will lead NAB's efforts related to spectrum and innovation policy".

He has also worked for the law firm of Sidley Austin and in the House of Representative's Office of the General Counsel. See also, FCC release of May 30, 2012.

More News

10/5. The Federal Communications Commission (FCC) released its first biennial report [68 pages in PDF] to Congress on the "Twenty-First Century Communications and Video Accessibility Act of 2010", which is also known as the CVAA.

Google and Five Book Publishers Settle 2005 Copyright Infringement Action

10/4. Google and the Association of American Publishers (AAP) announced that they have settled the copyright infringement action filed by five AAP members in 2005.

They did not release any documents that comprise their agreement, or describe its terms with particularity. They issued a short vaguely worded release.

This release states that the agreement "will provide access to publishers’ in-copyright books and journals digitized by Google for its Google Library Project".

This release adds that "The settlement acknowledges the rights and interests of copyright-holders. US publishers can choose to make available or choose to remove their books and journals digitized by Google for its Library Project. Those deciding not to remove their works will have the option to receive a digital copy for their use. Apart from the settlement, US publishers can continue to make individual agreements with Google for use of their other digitally-scanned works."

This release discloses nothing regarding damages for prior infringement, or compensation for future use.

Nor does it disclose anything about future book scanning by, or on behalf of, Google.

Nor does it use the term "orphan works".

Google, the AAP and Authors Guild had attempted to impose a broad class action settlement agreement that was legislative in scope upon book publishing and digitization. However, the Department of Justice (DOJ) criticized it, and the U.S. District Court (SDNY) rejected it.

The just announced agreement only settles the dispute between the five companies and Google. It does not require court approval.

Other related copyright infringement litigation against Google continues.

Paul Aiken, Executive Director of the Authors Guild, stated in a release that this settlement does not affect the certified class action Authors Guild v. Google, U.S. District Court for the Southern District of New York, D.C. Nos. 05-CV-8136.

He added that "Google continues to profit from its use of millions of copyright-protected books without regard to authors’ rights, and our class-action lawsuit on behalf of U.S. authors continues."

See also, American Society of Media Photographers v. Google, U.S. District Court for the Southern District of New York, D.C. No. 10-CV-2977, another class action.

Background on Google Books Litigation. The Author's Guild filed a class action complaint against Google in the U.S. District Court (SDNY) on September 20, 2005. See, story titled "Author's Guild Sues Google for Copyright Infringement" in TLJ Daily E-Mail Alert No. 1,218, September 21, 2005.

Various large book publishers filed a complaint (which action has just been settled) against Google in the same District Court on October 19, 2005. See, story titled "Major Book Publishers Sue Google for Digitizing Copyrighted Books" in TLJ Daily E-Mail Alert No. 1,237, October 20, 2005. Both complaints alleged copyright infringement in connection with Google scanning and distributing books.

See also, story titled "University Publishers Accuse Google of Systematic Infringement of Copyright on a Massive Scale" in TLJ Daily E-Mail Alert No. 1,142, May 25, 2005, story titled "Google, Publishers and Authors Debate Google's Print for Libraries Program" in TLJ Daily E-Mail Alert No. 1,239, October 25, 2005, and story titled "Microsoft Counsel Says Google Systematically Violates Copyright" in TLJ Daily E-Mail Alert No. 1,547, March 6, 2007.

Google, publishers and the Authors Guild announced their original proposed class action settlement in October of 2008. They announced an amended agreement in November of 2009. See, story titled "Amended Settlement Agreement Filed in Google Books Case" in TLJ Daily E-Mail Alert No. 2,015, November 16, 2009.

The Department of Justice (DOJ) filed pleadings criticizing components of the agreements. See, story titled "DOJ Files Pleading in Google Books Case" in TLJ Daily E-Mail Alert No. 1,985, September 21, 2009, and story titled "DOJ Criticizes Amended Google Books Settlement" in TLJ Daily E-Mail Alert No. 2,043, February 12, 2010.

The District Court rejected the proposed settlement. See, stories titled "District Court Rejects Google Books Class Action Settlement" in TLJ Daily E-Mail Alert No. 2,206, March 22, 2011, and "Orphan Works and the Court's Rejection of the Google Book Deal" in TLJ Daily E-Mail Alert No. 2,207, March 23, 2011.

Finally, see "Commentary: Google's Net Neutrality Deal Compared to Google's Books Deal" in TLJ Daily E-Mail Alert No. 2,121, August 9, 2010.

Genochowski Addresses Spectrum Allocation

10/4. Federal Communications Commission (FCC) Chairman Julius Genachowski gave a long speech [12 pages in PDF] in Philadelphia, Pennsylvania in which he addressed wireless technologies, making more spectrum available for commercial services, more efficient use of spectrum, and unlicensed use of spectrum.

It was a political speech, spinning history to give credit to President Obama, and to Genachowski's and former Chairman Reed Hundt's efforts. It was also a self-congratulatory rebuttal to comments that his FCC has not actually auctioned any spectrum for mobile broadband, and has been pushing for too much unlicensed use of spectrum.

Julius GenachowskiGenachowski (at left) has given numerous spectrum crunch speeches. His FCC staff wrote a lengthy plan, released in 2010. And, President Obama has signed an order, and declared a spectrum goal. Nevertheless, the FCC has not auctioned any spectrum for mobile broadband use under the leadership of Genachowski.

He used this speech to offer his take on the recent history of spectrum allocation.

He said that when he returned to the FCC in 2009 "the spectrum pipeline we inherited was largely dry. The year before, the FCC auctioned off a significant amount of spectrum in the 700 MHz band. That, by the way, was the direct result of policy decisions made in the late 1990s under Chairman Reed Hundt."

He said that "This highlights an important fact about freeing up spectrum for broadband. It takes several years to bring new spectrum to consumers through traditional reallocation and auctioning of spectrum. But while FCC auctions in the 2000s were in many respects a big success, the FCC didn't in those years replenish the spectrum pipeline. When I returned to the agency in 2009, we had our work cut out for us. And we've been working."

He discussed the FCC's March 2010 staff report titled "National Broadband Plan". And, he said that while the FCC has not actually auctioned any spectrum, "we are on track" to do so.

He said that "We are on track to auction 75 MHz of licensed Advanced Wireless Service spectrum -- essential for 4G cellular service -- by 2015. This includes an auction of shared rights to the 1755-1780 MHz band, which could be paired with the 2155-2180 MHz band already in inventory to extend the valuable AWS band by 50 MHz. We expect the first of these auctions -- of the AWS-2 H-block -- will happen in 2013, and the revenue generated will serve as a down-payment on funding a nationwide Public Safety Network and to reduce the deficit."

Second, he said, there is "removing regulatory barriers to flexible spectrum use. Later this year, we will finish removing outdated rules and restrictions on 70 MHz of spectrum. This includes 40 megahertz of mobile satellite spectrum that I expect the Commission will repurpose for land-based mobile use, and 30 megahertz in the long-troubled Wireless Communications Service band that is now poised to be used for LTE service. We're also working with stakeholders to enable use of the portions of the mobile satellite spectrum in the L- and BIG LEO bands for terrestrial service, and this would add to our megahertz total."

Third, there are the forthcoming incentive auctions provided for by the Congress in February in HR 3630 [LOC | WW]. Genachowski said that this will enable the repurposing of broadcast television spectrum in the 600 MHz band for mobile broadband.

He added that incentive auctions were in the FCC's 2010 report, and that "Last Friday we launched a proceeding to implement this idea, and expect to hold the world’s first incentive auction in 2014." See, Notice of Proposed Rulemaking, and story titled "FCC Adopts NPRM on Incentive Auctions" in TLJ Daily E-Mail Alert No. 2,455, October 1, 2012.

Fourth, he said that there is "dynamic sharing". He asserted that "In 2010 we created a new spectrum sharing paradigm by allowing unlicensed devices to access valuable unused spectrum in between broadcast TV channels -- known as white spaces".

Actually, the FCC created this paradigm in 2008, and Genachowski claims credit for the work of others. On October 15, 2008, the FCC's Office of Engineering and Technology (OET) released a report [146 pages in PDF] titled "Evaluation of the Performance of Prototype TV-Band White Space Devices Phase II". See, story titled "FCC Releases White Space Report" in TLJ Daily E-Mail Alert No. 1,844, October 16, 2008.

Then, on November 4, 2008, the FCC adopted white space rules in its Second Report and Order and Memorandum Opinion and Order [130 pages in PDF]. See, story titled "FCC Adopts White Space Order" in TLJ Daily E-Mail Alert No. 1,852, November 4, 2008.

Then, he concluded, "So with 75 MHz from traditional auctions, 70 MHz from removing regulatory barriers, 100 MHz from dynamic sharing, and significant spectrum from incentive auctions, reallocations of government spectrum, and white spaces, we are on track to exceed the 300 MHz target by 2015."

Genachowski also said that the FCC is "promoting competition, reducing barriers to broadband build-out and driving broadband investment". For example, it is "implementing a ``shot clock´´ for wireless tower siting, modernizing rules related to pole attachments, and reforming our rules for wireless backhaul." It is also "removing barriers to collocating antennas, and streamlining access to rights of ways."

He said the to accommodate ever more users, there must be both "technology and business innovations that dramatically increase spectrum efficiency", and "legislation to drive reallocation of inefficiently used government spectrum".

He advocated "spectrum sharing". He said that "From the perspective of military and other government spectrum users, sharing can help narrow the growing gap between government and commercial communications equipment, a gap characterized by a widening disparity in both functionality and price."

Finally, he defended his advocacy of unlicensed spectrum use, including for WiFi.

"Some disagree with this approach. Earlier this year, there was an effort in Congress to prohibit the FCC from designating any TV band spectrum repurposed through the incentive auction for unlicensed use. And just last week, one of my colleagues at the Commission suggested that the FCC significantly limit unlicensed opportunities in the spectrum freed up by incentive auctions".

He argued that "expanded unlicensed use" is both "forward-thinking and forward-acting".

"Launching a war on the kinds of ideas that gave us Wi-Fi would be a self-inflicted wound to U.S. innovation and economic leadership."

Solicitor General Files Cert Petition in FTC v. Watson

10/4. The Office of the Solicitor General (OSG) filed a petition for writ of certiorari [164 pages in PDF] with the Supreme Court in FTC v. Watson Pharmaceuticals, a case regarding patent litigation reverse payment settlement agreements.

The OSG states that the question presented is "Whether reverse-payment agreements are per se lawful unless the underlying patent litigation was a sham or the patent was obtained by fraud ..., or instead are presumptively anticompetitive and unlawful ..."

The U.S. Court of Appeals (11thCir) held the former in its opinion [39 pages in PDF] issued on April 25, 2012. The OSG and Federal Trade Commission (FTC) urge the Supreme Court to hold the latter.

At issue is the legality of settlements of patent litigation, brought by patent holders against allegedly infringing generic drug makers, in which the patent holder pays for delay of entry into the market by the generic drug maker.

The FTC filed a complaint in the U.S. District Court (NDGa) alleging that this practice is an unfair restraint on trade and a violation of federal antitrust law. The FTC lost in the District Court, and the Court of Appeals.

This case is FTC v. Watson Pharmaceuticals, Inc., et al., Supreme Court, a petition for writ of certiorari to the U.S. Court of Appeals for the 11th Circuit, App. Ct. No. 10-12729.

NTIA Releases Public Safety Network NOI

10/4. The National Telecommunications and Information Administration (NTIA) published a notice in the Federal Register that requests comments regarding the creation of the interoperable public safety broadband network by the First Responder Network Authority, or FirstNet, as required by the spectrum bill enacted in February.

Comments are due by 5:00 PM on November 1, 2012. See, FR, Vol. 77, No. 193, October 4, 2012, at Pages 60680-6068. The NTIA also published a draft of this notice of inquiry (NOI) in its web site on October 1.

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. It provides for use of some of the auction proceeds to build a public safety network. It also provided for the creation of the FirstNet at the NTIA.

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.

This notice asks for comments regarding "network design and business plan considerations".

It asks for comments regarding the network architecture presentation made at the FirstNet Board of Directors' meeting on September 25, 2012, as well as other options. See, September 25 presentation slides [23 pages in PDF] titled "First Responders Network Authority Presentation to the Board FirstNet Nationwide Network (FNN) Proposal".

The NTIA notice asks for comments on "how it can deploy a reliable, ubiquitous, redundant, and interoperable broadband network for public safety users."

The NTIA requests "proposals that address the following criteria: 1. Meets public safety's requirements for priority, quality of service, and preemption features;  2. Uses, to the extent possible, existing radio access network and core network infrastructure installed by commercial mobile operators in order to maximize the coverage and performance delivered to public safety while minimizing the capital expenditures; 3. Reaches operational capability as quickly as possible; and 4. Enables voice services (cellular telephony and push-to-talk (PTT)) both within the FirstNet network as well as to/from other commercial networks, including the public switched telephone network (PSTN)." (Parentheses in original.)

The FirstNet also adopted a resolution [14 pages in PDF] containing the FirstNet's bylaws, and other resolutions, at its September 25 meeting.

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Catherine Ashton10/4. Catherine Ashton (at right), a senior European Commission official, gave a speech in Budapest, Hungary, titled "Cyber security: an open, free and secure Internet". Her title is "High Representative of the Union for Foreign Affairs and Security Policy and Vice-President of the European Commission"

10/4. The Council of the European Union adopted the European Commission's (EC) Directive on Orphan Works [15 pages in PDF]. EC Internal Market and Services Commissioner Michel Barnier stated in a release that "It will enable easy online access for all citizens to our cultural heritage." On the other hand, this Directive will reduce creators' ability to enforce their copyrights. It will particularly harm individuals and small businesses and creators of visual works, and decrease incentives to create.

10/4. AT&T released a short piece titled "Interference Testing: Slight of Hand, Part Deux", regarding the lower 700 MHz band. The author is AT&T's Joe Marx. See also, AT&T's October 3 filing with the Federal Communications Commission (FCC) in WT Docket No. 12-97.

10/4. The Organisation for Economic Cooperation and Development (OECD) published, and offered for sale, a report titled "OECD Internet Economy: Outlook 2012". The OECD released online for free a release and preview. James Waterworth of the Computer and Communications Industry Association (CCIA) stated in a release that "This report underlines the key role of the Internet in job creation and restoring growth both via the value ICT firms create and the indirect effects on the rest of the economy The ICT sector, especially Internet services with 31% average annual revenue growth between 2000-2011, grew tremendously at a time when most other sectors were seeing flat growth and declines. This underscores the need to promote Internet openness and balanced approaches to intellectual property policy so that the tech sector can continue to thrive and help lead the economic recovery."

T-Mobile USA and MetroPCS to Merge

10/3. Deutsche Telekom and MetroPCS Communications announced that they have signed a definitive agreement to combine T-Mobile USA and MetroPCS.

The transaction requires approvals from numerous regulatory agencies, including the Department of Justice's (DOJ) Antitrust Division, and the Federal Communications Commission (FCC).

See, full story.

Holder and Cole Address IP Theft

10/3. Attorney General Eric Holder, Deputy Attorney General James Cole, and U.S. Attorney for Maryland Rod Rosenstein spoke at an event at Towson University, in Maryland, at which they announced the award of $2.4 Million in grants to 13 state and local jurisdictions to assist with the enforcement of criminal laws related to intellectual property theft.

Eric Holder$2.4 Million is not much. Moreover, it is spread across numerous agencies. Nevertheless, AG Holder (at right) stated in his speech that these grants "will help to achieve our common goals: to advance prosecutions -- as well as prevention and education activities -- related to IP theft."

He continued that "These resources will be used to fund new police department positions specifically tasked with investigating IP crime; to create Spanish-speaking radio messages about the dangers of IP theft; to purchase cutting-edge surveillance, evidence collection, and storage equipment; to develop and implement more law enforcement and prosecutor training programs; and to improve coordination, information sharing, and data collection."

He also described the Department of Justice's (DOJ) operations. He said that "we now have 40 prosecutors and four computer forensics experts serving in the Computer Crime and Intellectual Property Section; 25 Computer Hacking and Intellectual Property -- or, ``CHIP´´ units --- in our U.S. Attorney’s offices; more than 260 specially-trained CHIP prosecutors; more than 50 FBI IP Special Agents; a robust international IP program; and strong partnerships with a broad range of IP rights holders."

Cole said in his speech that "Rather than take the time to develop their own ideas, all too often competitors try to steal proprietary designs, systems, processes, and formulas from American manufacturers who invest years of hard work and millions of dollars in the research and development necessary to create smarter cars, better computer technologies and more sophisticated military equipment. Ironically, new technology itself has made it easier than ever to steal our intellectual property. Just one thumb drive can capture years of work and millions of dollars in research, and enable instant transmission to a foreign competitor."

Sen. Rockefeller Urges FTC Participation in W3C Development of DNT Standard

10/3. Sen. John Rockefeller (D-WV), Chairman of the Senate Commerce Committee (SCC), sent a letter to Jonathan Leibowitz, Chairman of the Federal Trade Commission (FTC), urging the FTC to continue its participation in the World Wide Web Consortium's (W3C) development of a do not track (DNT) standard for web site operators.

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".

Last week nine Republican members of the House of Representatives sent a letter to Leibowitz condemning the FTC for participating in the W3C's deliberations regarding development of a DNT standard. See, related story in this issue titled "Representatives Condemn FTC Participation in W3C Development of DNT Standard".

Sen. John Rockefeller Sen. Rockefeller (at right) wrote that "I ... urge you to continue your positive and constructive involvement" in the W3C TPWG's deliberations.

He elaborated that "It is entirely appropriate that the FTC is participating in the W3C process to provide technical expertise or otherwise facilitate the promulgation of voluntary standards on DNT".

He reasoned that "an important element of the FTC's mission is to be a public advocate for consumer protection", and that "it is not unusual for government agencies to play prominent roles in the development of voluntary standards"

He argued that "the FTC should continue to actively encourage all relevant stakeholders to develop voluntary standards to honor do-not-track requests"

He also wrote that the Digital Advertising Alliance (DAA) "pledged to honor DNT browser requests. However, the commitment itself is currently riddled with exceptions -- allowing for the collection and user of personal information for ``product development´´ and ``market research´´ -- that could render DNT compliance meaningless. And it is not clear if any or all member companies will honor the commitment at all. Furthermore, the current self-regulatory initiative is an ineffective regime in which third party ad networks honor consumer ``opt out´´ requests by abstaining from serving targeted behavioral advertisements, while continuing to collect personal information."

Sen. Rockefeller concluded that "If the advertising industry cannot be coaxed into living up to its commitment and adopting robust voluntary DNT standards, I believe it will only highlight the need for Congress to act ..."

CDT Urges Stakeholders to Develop DNT Standard

10/3. The Center for Democracy and Technology (CDT) published a piece on the recent debate over development of a do not track (DNT) standard World Wide Web Consortium's (W3C) Tracking Protection Working Group (TPWG). This piece, written by the CDT's Leslie Harris and Justin Brookman, is titled "The Bizarre, Belated Assault on Do Not Track".

For more on this "assault", see, related story in this issue titled "Representatives Condemn FTC Participation in W3C Development of DNT Standard", and story titled "ITIF Asserts That Do Not Track is Madness" in TLJ Daily E-Mail Alert No. 2,456, October 2, 2012.

The two wrote that "It is possible that this uproar stems entirely from Microsoft's decision in June to aggressively steer its users to turn on Do Not Track during install (initially, it sounded like Microsoft would silently turn on Do Not Track for all users; since, they have decided to list Do Not Track as "on" in the "express settings" you are encouraged to choose as you set up your Windows device)." (Parentheses in original.)

Harris and Brookman continued that "It remains an open question what industry or the W3C will do to respond to Microsoft's implementation. At the end of the day, advertisers might decide to ignore en masse headers from browsers like Microsoft's where they don't like the user interface. Of course, ignored browsers can respond in kind -- either blocking third-party cookies from companies that ignore their headers (indeed, Apple already prevents all third parties from setting cookies in Safari, Do Not Track or not), or even blocking the third parties from rendering ads at all. Sites then could the respond in turn by blocking users who block cookies or ads (as happens sometimes today for users who install Ad Block), thus pushing users to install work-arounds that forge (or exchange) cookie values or out of desperation pirate publishers' content entirely. The result would be turning the online ecosystem into an ever-escalating war between privacy interests and advertisers -- precisely the war that a negotiated Do Not Track setting was designed to avoid." (Parentheses in original.)

They argued that "Rather than rush headlong into a privacy arms race, all stakeholders need to work together to develop a meaningful standard that allows valuable ad serving but stops the boundless collection of online web surfing behavior by a host of unknown companies. At the end of the day, privacy advocates will have to settle for something less than they would like in an ideal world. And advertisers must honor their commitment to comply with users' Do Not Track instructions."

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10/3. The U.S. Patent and Trademark Office (USPTO) announced in a release that it launched s Patent Prosecution Highway (PPH) program with the patent office of the Czech Republic on October 1, and that it will launch PPH programs with the patent offices of the Philippines and Portugal in January of 2013.

10/3. The Copyright Office (CO) again extended the deadline to submit reply comments in response to its notice in the Federal Register (FR) that announces, describes, recites and requests comments on its proposed rules regarding the verification of Statements of Account and royalty payments that are deposited with the CO by cable operators and satellite carriers. See, original notice in the FR, Vol. 77, No. 115, June 14, 2012, at Pages 35643-35652, first extension notice in the FR, Vol. 77, No. 176, September 11, 2012, at Page 55783, and second extension notice in the FR, Vol. 77, No. 192, October 3, 2012, at Pages 60333-60334. The new deadline is 5:00 PM on October 24, 2012.

10/3. The Federal Communications Commission (FCC) concluded Auction 901 on September 27, 2012. This auctioned high cost universal service subsidies through reverse competitive bidding. It is also titled "Mobility Fund Phase I Auction". The FCC stated in a Public Notice (DA 12-1566) on October 3 that "there were a total of 33 winning bidders. The winning bidders are eligible to receive a total of $299,998,632 in one-time Mobility Fund Phase I universal service support to provide 3G or better mobile voice and broadband services covering up to 83,494.23 road miles in 795 biddable geographic areas located in 31 states and 1 territory." Winner bidders must submit FCC Form 680 by 6:00 PM on November 1, 2012. See also, winning bids and FCC release.

Representatives Urge OUSTR to Take Action Against India for Its Protectionist Tech Policies

10/2. Rep. Michael McCaul (R-TX), Rep. Doris Matsui (D-CA), and 43 other members of the House of Representatives sent a letter to the Ron Kirk, head of the Office of the U.S. Trade Representative (OUSTR), regarding protectionist policies of India directed at information and communications technology (ICT) companies outside of India.

They asked the OUSTR to "take urgent action on the recent Preferential Market Access (PMA) Policy issued by the Government of India. The potential detrimental impact of this policy on U.S. high-tech exports to India warrant USTR's consideration of all available tools to ensure U.S. technology companies are able to compete fairly in this critical market."

Rep. Doris MatsuiRep. McCaul and Rep. Matsui (at right) are the co-chairmen of the Congressional High Tech Caucus, a bipartisan group.

The letter elaborates that "the PMA is designed to boost domestic manufacturing of information and communications technology (ICT) hardware through discriminatory, local content requirements, and more specifically, is aimed at forcing foreign ICT companies to establish manufacturing in India. Furthermore, it seems clear this policy will be applied not only to public procurements but also to procurements by private-sector entities."

They quoted from guidelines issued by the Indian government in September: "It shall be mandatory for all organizations, public or private, procuring electronic products notified under this clause to provide preference to domestically manufactured electronic products in terms of this policy."

They concluded that the US should not allow "countries to violate fundamental international trade obligations", and urged the OUSTR to use "all tools at your disposal to remedy this situation".

However, they did not specifically request that the OUSTR file a complaint with the World Trade Organization (WTO).

Also, on June 11, Rep. McCaul, Rep. Matsui, and 19 other Representatives sent a letter to Indian Ambassador Nirupama regarding the PMA Policy.

In April, a large number of ICT trade groups based in the US, Japan, Taiwan, Korea, Hong Kong, Canada, Australia and Europe sent a letter to Indian Prime Minister Manmohan Singh to "to express our serious concerns with new" PMA rules.

The ICT groups wrote that "If the PMA applies to private entities, this would represent an unprecedented interference in the procurements of commercial entities and would be inconsistent with India's WTO obligations. We urge the Government of India to rescind this PMA entirely and initiate a consultation process with the private sector and other stakeholders to more effectively address India’s security and economic concerns."

The PMA Policy will harm ICT companies outside of India. Hence, most of the major ICT groups from around the world have joined in criticizing it. However, this letter focuses on arguments regarding how the PMA Policy with harm the Indian ICT sector and the Indian economy. This letter states that the PMA Policy will "unnecessarily restrict competition at home which could also spark reciprocation by other countries".

The parties to the April letter, in alphabetical order, are as follows: AMCHAM India, Australian Services Roundtable, Australian Services Roundtable, Business Software Alliance, Business Europe, Canada-India Business Council, Canadian Services Coalition, Consumer Electronics Association, Communications and Information Network Association of Japan, Computing Technology Industry Association, Coalition of Service Industries, Digital Europe, European-American Business Council, Emergency Committee for American Trade, European Services Forum, Federation of Korean Information Industries, Global VSAT Forum, Hong Kong Coalition of Service Industries, Information Technology Association of Canada, Information Technology Industry Council, Korea Information Technology Service Industry Association, Korea Software Enterprise Association, Japan Business Machine and Information System Industries Association, Japan Electronics and Information Technology Industries Association, Japan Information Technology Service Industry Association, Korean Software Industry Association, National Foreign Trade Council, Semiconductor Equipment and Materials International, Semiconductor Industry Association, Software and Information Industry Association, Taipei Computer Association, TechAmerica, Telecommunications Industry Association, U.S. Chamber of Commerce, United States Council for International Business, and U.S.-India Business Council.

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10/2. The Federal Communications Commission (FCC) released the text [205 pages in PDF] of the Notice of Proposed Rulemaking (NPRM) that its adopted on September 28, 2012, regarding incentive auctions. See, story titled "FCC Adopts NPRM on Incentive Auctions" in TLJ Daily E-Mail Alert No. 2,455, October 1, 2012. This NPRM discloses comment deadlines. Initial comments are due by December 21, 2012. Reply comments are due by February 19, 2013. This NPRM is FCC 12-118 in GN Docket No. 12-268.

USPTO to Take Up to 64 Law School Clinic Patent Applications Out of Order

10/1. The U.S. Patent and Trademark Office (USPTO) published a notice in the Federal Register (FR) that announces and describes its pilot patent examination acceleration program for law school clinics.

Under this program "a law school clinic participating in the USPTO Law School Clinic Certification Pilot Program may file an application for a pro bono client of the law school clinic and that applicant's application may be advanced out of turn".

Each law school participating in the patent pilot program is allowed only two applications to be examined out of turn per semester. And, the entire program is limited to 64 per year.

Ordinarily, and subject to certain exceptions, patents are examined in the order in which they are filed. By taking law school clinic applications out of order, students will be more likely to obtain practical experience since "they will be more likely to receive substantive examination of applications within the school year that the application is filed".

See, FR, Vol. 77, No. 190, Monday, October 1, 2012, Pages 59911-59913.

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10/1. Ben Bernanke, Chairman of the Federal Reserve Board (FRB), gave a speech in Indianapolis, Indiana in which he stated that "monetary policy is no panacea". He said that "many other steps could be taken to strengthen our economy over time, such as putting the federal budget on a sustainable path, reforming the tax code, improving our educational system, supporting technological innovation, and expanding international trade".

10/1. President Obama issued a proclamation that proclaims that October is "National Cyber Security Awareness Month". See, notice in the Federal Register, Vol. 77, No. 193,  October 4, 2012, Pages 60607-60608. See also, Department of Homeland Security (DHS) release and National Cyber Security Alliance release.

Go to News from September 26-30, 2012.