TLJ News from September 6-10, 2013

Lower 700 MHz Interoperability Agreement Announced

9/10. The Federal Communications Commission (FCC), spectrum license holders, and interest groups announced agreement, but did not release the text of any contracts or agreements, regarding interoperability in the lower 700 MHz band.

Mignon ClyburnFCC Chairman Mignon Clyburn (at right) stated in a release that "wireless carriers have finally reached a voluntary industry solution that will resolve the lack of interoperability in the lower 700 MHz band in the most efficient manner".

AT&T's Joan Marsh wrote in a statement that "AT&T, for its part, has committed to investing considerable time and resources to the modification of its 700 MHz LTE network through the implementation of a newly-standardized software feature. That effort will allow AT&T's network to support Band 12 capable devices."

March added that "AT&T has also committed to working collaboratively with its chipset partners and OEMs to introduce, within a reasonable time frame, new Band 12 capable devices into its device portfolio. AT&T’s commitments are spelled out in detail in a letter filed today with the FCC."

Finally, she wrote that "These commitments, along with actions the FCC intends to take to harmonize the service rules for the 700 MHz E Block to address interference concerns, will put the industry on a path to increased investment and deployment opportunities in the 700 MHz A Block."

Steven Berry, head of the Competitive Carriers Association (CCA), stated in a release that "Every CCA member appreciates her commitment and tenacity. In particular, lower A block licensees like U.S. Cellular and C Spire Wireless will finally be able to use all of their lower 700 MHz spectrum, unleashing investment and innovation, helping to achieve the Administration’s goal of universal access to mobile broadband. In turn, every consumer, especially rural and disadvantaged consumers who lack access to high speed broadband, will benefit from her efforts".

Gigi Sohn, head of the Public Knowledge (PK), stated in a release that "This agreement will make it possible for smaller wireless carriers to compete with larger service providers to the benefit of consumers. Enabling standards of interoperability at the lower 700MHz band gives consumers the chance to use their devices with large and small wireless carriers without purchasing a new device."

Sohn added that "Today's agreement also means that low-cost equipment will be available to smaller wireless carriers and they will be able to roam on AT&T's network as well as build out their own network. This could dramatically improve wireless availability and wireless competition in rural areas, as these smaller local providers will now be able to build out their 700 MHz A Block license networks."

The Interoperability Alliance stated in a release that this agreement "also helps address public safety and first responder communities’ needs for an interoperable broadband network during critical emergencies."

On January 7, 2013, four members of the House Commerce Committee (HCC) sent a letter to the FCC Commissioners urging the FCC to "move quickly to ensure interoperability in the lower 700 MHz band".

More News

9/10. Federal Communications Commission (FCC) Chairman Mignon Clyburn gave a speech in Washington DC in which she discussed the FCC's waste, fraud and abuse plagued e-rate tax and subsidy program. She said that it "is one of the FCC’s biggest success stories". The FCC has long been running its e-rate program beyond the grant of statutory authority codified at 47 U.S.C. § 254(h)(1)(B). Clyburn used this speech to tout the FCC's July Notice of Proposed Rulemaking (NPRM) [175 pages in PDF], another in a series of e-rate reform NPRMs. The FCC adopted this NPRM on July 19, 2013 and released it on July 23. It is FCC 13-100 in WC Docket No. 13-184. Initial comments are due by September 16, 2013. Reply comments are due by October 16, 2013.

Rep. Eshoo Releases Draft of Bill to Alter Retransmission Consent Regime

9/9. Rep. Anna Eshoo (D-CA) released a discussion draft [6 pages in PDF] of a bill titled "Video Consumers Have Options in Choosing Entertainment Act", or "Video CHOICE Act". It would amend 47 U.S.C. § 325 to revise the retransmission consent regime.

Section 325 provides that "No cable system or other multichannel video programming distributor shall retransmit the signal of a broadcasting station, or any part thereof, except ... with the express authority of the originating station".

Under Section 325 broadcasters can charge cable companies and other MVPDs for retransmission of their programming. The companies have been negotiating retransmission consent contracts since this section was enacted by the Cable Act of 1992.

Withholding of consent by broadcasters, and resulting the blackouts, have become common. Rep. Eshoo's bill would empower the Federal Communications Commission (FCC) to "authorize interim carriage" by MVPDs to prevent blackouts.

Rep. Anna EshooRep. Eshoo (at left) stated in a release that "Recurring TV blackouts, including the 91 U.S. markets impacted in 2012, have made it abundantly clear that the FCC needs explicit statutory authority to intervene when retransmission disputes break down. This discussion draft is intended to spur constructive, actionable debate on ways to improve the video marketplace for video content creators, pay-TV providers and, most importantly, consumers."

Her bill follows a month long blackout that followed the expiration of an agreement between CBS and Time Warner Cable (TWC). See, stories titled "CBS, Time Warner Cable, and Retransmission Consent" in TLJ Daily E-Mail Alert No. 2,588, August 7, 2013, and "CBS Reaches Carriage Agreement with Time Warner Cable" in TLJ Daily E-Mail Alert No. 2,593, September 2, 2013.

Rep. Eshoo's bill would add a new subsection that would grant the FCC the power to "authorize interim carriage". It provides that "If a retransmission consent agreement between a television broadcast station and a multichannel video programming distributor expires and the Commission determines that such station and such distributor have reached an impasse in negotiating a new agreement, the Commission may ... authorize interim carriage of such station by such distributor pending the conclusion of a new agreement."

The bill would also add a new subsection that would prohibit agreements conditioned upon carriage of affiliated programming. It provides that "A television broadcast station that elects to exercise its right to grant retransmission consent under this subsection may not enter into a retransmission consent agreement with a multichannel video programming distributor that is directly or indirectly conditioned on carriage of any other programming affiliated with such station (or with a person who owns or controls, is owned or controlled by, or is under common ownership or control with such station)." (Parentheses in original.)

The bill would also require the FCC to conduct a rulemaking proceeding in which it determines "whether the blocking during retransmission consent negotiations of online content owned by or affiliated with a television broadcast station (or a person who owns or controls, is owned or controlled by, or is under common ownership or control with such station) constitutes a failure to negotiate in good faith ..." ( Parentheses in original.)

See also, story titled "Blocking Access to and the FCC's Network Neutrality Regime" in TLJ Daily E-Mail Alert No. 2,588, August 7, 2013.

This bill would also amend 47 U.S.C. § 543 to provide that "each cable operator of a cable system shall offer its subscribers a separately available retransmission consent service tier that consists only of the signal of each television broadcast station electing retransmission consent under section 325(b) that is carried on the cable system," which tier "shall be subject to rate regulation".

The bill would also amend Section 543 to provide that "A cable operator may not require the subscription to any tier other than the basic service tier ... as a condition of access to, or discriminate between subscribers to the basic service tier and other subscribers with regard to the rates charged for -- (i) video programming offered on a per channel or per program basis; or (ii) the retransmission consent service tier ... ."

Finally, the bill would require that the FCC conduct a study of sports programming costs.

The House Commerce Committee's (HCC) Subcommittee on Communications and Technology (SCT) held a hearing titled "Innovation Versus Regulation in the Video Marketplace" on September 11. Rep. Eshoo used the occasion to promote her draft bill. See, related story in this issue titled "House Subcommittee Holds Hearing on Video Marketplace".

The American Cable Association's (ACA) Matthew Polka released a statement and another  statement in which he praised Rep. Eshoo's draft bill, and criticized the National Association of Broadcasters' (NAB) opposition.

House Passes Bill to Consolidate FCC Market Reports

9/9. The House passed HR 2844 [LOC | WW], the "Federal Communications Commission Consolidation Reporting Act of 2013", by a vote of 415-0. See, Roll Call No. 449.

This bill would consolidate eight statutorily mandated annual and tri-annual reports into a single biannual Communications Marketplace Report.

The floor debate was brief. Rep. Greg Walden (R-OR), the Chairman of the House Commerce Committee's (HCC) Subcommittee on Communications and Technology, and Rep. Steve Scalise (R-LA), the sponsor of the bill, spoke in support of the bill.

Rep. Anna Eshoo (D-CA), who also spoke in favor of the bill, stated that it "also ensures that the FCC has the flexibility to continue assessing the state of competition, which is so essential and so important in our country across the entire communications marketplace, including particular submarkets like wireless, cable, and satellite."

Ajit PaiFCC Commissioner Ajit Pai (at right) stated in a release that "The FCC's reporting requirements are numerous, outdated, and unnecessarily burdensome. Replacing them with a single biennial Communications Marketplace Report will not only enable more efficient use of agency resources, it will also provide Congress and the public with a comprehensive and far more useful set of data that reflects the realities of today's converged marketplace. This is straightforward, good-government legislation, and I hope that the U.S. Senate will act quickly to send this bill to the President for his signature."

The Senate has not yet passed this bill. The Senate version is S 1379 [LOC | WW], also titled "Federal Communications Commission Consolidated Reporting Act of 2013 ". Sen. Dean Heller (R-NV) introduced this bill on July 29, 2013.

FCC Seeks Comments on Mobile Device Location Surveillance Capabilities

9/9. The Federal Communications Commission's (FCC) Public Safety and Homeland Security Bureau (PSHSB) issued a Public Notice (PN) that requests comments, and announces an event, regarding mobile device location surveillance capabilities and precision.

The deadline to submit comments is September 25, 2013. The FCC will host an event titled "public workshop" on October 2, 2013, in the FCC's Commission Meeting Room. The PN states that the purpose is "to discuss recent developments in the use of wireless technology to contact emergency services".

The FCC mandates location detection capabilities for certain mobile devices. In addition, the FCC has proceeded with greater speed and compulsion in this area than in most of its regulatory endeavors.

The FCC has always proceeded with the assertion that its purpose is to enhance 911 systems. However, the FCC also mandates location detection capabilities for two other purposes. First, the FCC seeks to enable commercial location based services.

Second, the FCC works to expand the surveillance capabilities of law enforcement and intelligence agencies. See, story titled "Spiegel Reports that NSA Accesses Location Information and Data Stored on Smartphones" in TLJ Daily E-Mail Alert No. 2,597, August 9, 2013.

This PN, which has many attributes of a notice of proposed rulemaking (NPRM), asks, for example, "Is currently available location technology able to deliver more precise location information than the Commission’s current E911 rules require?"

Also, it asks, "What is the potential for current technology to provide vertical location (z-axis) as well as horizontal location (x- and y-axis)?" and "What is the potential for future location technology to improve accuracy performance, particularly as providers deploy 4G networks and increase the use of small cells and other advanced infrastructure?" (Parentheses in original.)

This PN states that it is issued in response to a one page letter from the City and County of San Francisco dated March 25, 2013.

This PN is DA 13-1873 in PS Docket No. 07-114.

Court of Appeals Hears Oral Argument in Verizon v. FCC

9/9. The U.S. Court of Appeals (DCCir) heard oral argument in Verizon v. FCC, App. Ct. No. 11-1355, the challenge to the Federal Communications Commission's (FCC) December 2010 Report and Order (R&O) [194 pages in PDF] that adopted rules regulating broadband internet access service (BIAS) providers.

The three judge panel is Judge David Tatel, Judge Laurence Silberman, and Judge Judith Rogers.

The argument lasted two hours. The hearing room was filled to capacity, and an overflow room with an audio feed held nearly fifty more. Most of those in attendance were attorneys, and mostly white men of advanced ages.

The Judges focused their questions on whether the FCC possesses statutory authority under Section 706 to promulgate the rules under review, whether the FCC's rules impermissibly subject BIAS providers to common carrier regulation, and the significance of market power and agency findings of market power.

The Judges also asked about severability. That is, if the Court finds that one part of the rules under review is impermissible, can it overturn only that part, or must it overturn the entire rule.

Judge Silberman asked about Verizon's First Amendment rights.

Helgi Walker of the Washington DC office of the law firm of Wiley Rein argued for Verizon. Sean Lev argued for the Federal Communications Commission.

After the oral argument, at a panel discussion hosted by the Tech Freedom, none of the speakers offered a prediction regarding how the Court will rule.

However, former FCC Commissioner Robert McDowell, who dissented from the 2010 order under review, said that "I don't think that the Court is going to blue pencil the order". That is, it is not severable. He also said that he does not think that the Court will get to the Constitutional First Amendment issue. This implies that the Court will rule in Verizon's favor on statutory grounds

The order under review is FCC 10-201 in GN Docket No. 09-191 and WC Docket No. 07-52. The FCC adopted it in late December of 2010. See, stories in TLJ Daily E-Mail Alert No. 2,186, December 22, 2010, and TLJ Daily E-Mail Alert No. 2,188, December 24, 2010.

Verizon filed its brief on July 2, 2012. The FCC filed its brief [121 pages in PDF] on September 10, 2012. See, story titled "FCC Files Brief with DC Circuit in Challenge to BIAS Rules" in TLJ Daily E-Mail Alert No. 2,445, September 11, 2012. See also, FCC's surreply brief [15 pages in PDF] filed on January 15, 2013.

People and Appointments

9/9. The Department of Homeland Security (DHS) published a notice in the Federal Register (FR) that requests nominations for membership on its DHS Data Privacy and Integrity Advisory Committee. The deadline to submit nominations is October 9, 2013. This committee provides advice regarding "programmatic, policy, operational, administrative, and technological issues within DHS that relate to personally identifiable information (PII), as well as data integrity and other privacy-related matters". See, FR, Vol. 78, No. 174, September 9, 2013, at Pages 55088-55089.

More News

9/9. Rep. Eddie Bernice Johnson (D-TX) and Rep. Marc Veasey (D-TX) introduced HR 3064 [LOC | WW], the "Forensic Science and Standards Act of 2013". This bill would create a "national forensic science research program", and establish a National Forensic Science Coordinating Office at the National Institute of Standards and Technology (NIST). Notably, it defines forensic science to include digital forensics. The bill was referred to the House Science Committee (HSC) and House Judiciary Committee (HJC).

9/9. U.S. Trade Representative Michael Froman met via conference call with representatives of organized interests with a stake in the outcome of ongoing Trans Pacific Partnership Agreement (TPPA) negotiations. See, OUSTR release.

Spiegel Reports that NSA Accesses Location Information and Data Stored on Smartphones

9/8. The English language version of Spiegel published a story titled "Privacy Scandal: NSA Can Spy on Smart Phone Data".

It states that the National Security Agency (NSA) "is capable of accessing user data from smart phones from all leading manufacturers. Top secret NSA documents that SPIEGEL has seen explicitly note that the NSA can tap into such information on Apple iPhones, BlackBerry devices and Google's Android mobile operating system".

It adds that "documents state that it is possible for the NSA to tap most sensitive data held on these smart phones, including contact lists, SMS traffic, notes and location information about where a user has been."

The story cites only "internal NSA documents". It does not reference Edward Snowden. It does not disclose its author.

District Court Issues Final Judgment in Apple E-Books Antitrust Case

9/6. The U.S. District Court (SDNY) issued its final judgment and permanent injunction [17 pages in PDF] in U.S. v. Apple, the e-books antitrust case.

On July 10, 2013, the District Court released its Opinion and Order [160 pages in PDF] at the conclusion of the bench trial, finding that Apple conspired to raise e-book prices in violation of Section 1 of the Sherman Act. However, that order did not address remedies. See, story titled "District Court Finds that Apple Conspired to Raise E-Book Prices" in TLJ Daily E-Mail Alert No. 2,583, July 10, 2013.

Prohibitions in the Final Judgment. The just released final judgment bars Apple from engaging in numerous activities related to conspiring to fix prices.

See, full story.

Yahoo Releases Surveillance Transparency Report

9/6. Yahoo released a document [PDF] that provides minimal information about "government data requests" during the time period of January 1, 2013 through June 30, 2013. Like Microsoft and Google, Yahoo attaches the ironic title of "Transparency Report" to this disclosure.

It states that for the U.S. Yahoo received 12,444 government data requests that cover 40,332 "government specified accounts". It provides no break down based on law enforcement and intelligence, by requesting agency, by type of surveillance, or by legal authority asserted.

This report states that Yahoo rejected 2% of the U.S. data requests. Yahoo's introduction to the document states that "We regularly push back against improper requests for user data, including fighting requests that are unclear, improper, overbroad or unlawful."

It adds that "we mounted a two-year legal challenge to the 2008 amendments to the Foreign Intelligence Surveillance Act, and recently won a motion requiring the U.S. Government to consider further declassifying court documents from that case."

The report also provides information for data requests from some other countries. For example, Yahoo received 839 requests from Hong Kong regarding 839 accounts, and that it rejected none of these requests. In contrast, Yahoo states that it rejected 41% of the 138 requests from government of Singapore, and 34% of the 704 requests from Australia.

IRS Proposes Changing Rules for Research and Experimental Expenditures Credit

9/6. The Internal Revenue Service (IRS) published a notice in the Federal Register (FR) that announces, describes, and recites proposed changes to rules that would, among other things, revise 26 C.F.R. § 1.174-2 regarding the "Definition of research and experimental expenditures".

This FR notice sets December 5, 2013 as the deadline to submit comments. This FR notice also announces that the IRS will hold a public hearing on these proposed rules changes on January 8, 2014 at the IRS headquarters in Washington DC.

Large incumbent technology companies, and technology groups, state that the research and development tax credit is fundamentally important for incenting R&D activities. The R&D tax credit is codified at 26 U.S.C. § 41. The Congress has a long history of passing short term extensions. See, story titled "R&D Tax Credit Extended" in TLJ Daily E-Mail Alert No. 2,504, January 7, 2013.

The current credit is set to expire on December 31, 2013. Bills are pending that would extend it. See, story titled "R&D Tax Credit Bills Introduced" and related stories in TLJ Daily E-Mail Alert No. 2,521, February 7, 2013.

Subsection 41(a) provides a credit for "qualified research expenses".

Subsection 41(d) provides that "The term ``qualified research´´ means research -- (A) with respect to which expenditures may be treated as expenses under section 174, (B) which is undertaken for the purpose of discovering information -- (i) which is technological in nature, and (ii) the application of which is intended to be useful in the development of a new or improved business component of the taxpayer, and (C) substantially all of the activities of which constitute elements of a process of experimentation for a purpose described in paragraph (3)." Subsections 4(d)(2)-(3) elaborate.

26 U.S.C. § 174 elaborates further on the meaning of "Research and experimental expenditures".

The IRS has promulgated regulations that provide further definition and examples of "Research and experimental expenditures". It is these rules that the IRS now proposes to revise.

The IRS's FR notice offers this summary of the proposed changes:

"First, these proposed regulations provide that if expenditures qualify as research or experimental expenditures, it is irrelevant whether a resulting product is ultimately sold or used in the taxpayer's trade or business."

"Second, these proposed regulations provide that the Depreciable Property Rule contained in Sec.  1.174-2(b)(4) is an application of the general definition of research and experimental expenditures contained in Sec.  1.174-2(a)(1) to depreciable property."

"Third, these proposed regulations define the term ``pilot model.´´"

"Fourth, these proposed regulations clarify the general rule that the costs of producing a product after uncertainty concerning the development or improvement of a product is eliminated are not eligible expenses under section 174 because these costs are not for research or experimentation."

"Finally, these proposed regulations provide a ``shrinking-back´´ provision, similar to the rule provided for in Sec.  1.41-4(b)(2), to address situations in which the requirements of Sec.  1.174-2(a)(1) are met with respect to only a component part of a larger product and are not met with respect to the overall product itself."

See, FR, Vol. 78, No. 173, September 6, 2013, at Pages 54796-54800.

People and Appointments

9/6. President Obama announced his intent to appoint Megan Mack to be the Officer for Civil Rights and Civil Liberties at the Department of Homeland Security (DHS). See, White House news office release.

More News

9/6. The Washington Post published a story titled "Google encrypts data amid backlash against NSA spying" by Craig Timberg.

9/6. The Department of Commerce's (DOC) Bureau of Industry and Security (BIS) published a notice in the Federal Register (FR) that announces, describes, recites, and set the effective date (September 6, 2013) for, its changes to its Export Administration Regulations (EAR) to add an end-user, Intel Semiconductor (Dalian) Ltd., located in the People's Republic of China (PRC) to the list of Validated End-Users (VEUs). See, FR, Vol. 78, No. 173, September 6, 2013, at Pages 54752-54755.

9/6. The National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) released its draft SP 800-90 A Rev 1 [137 pages in PDF] titled "Recommendation for Random Number Generation Using Deterministic Random Bit Generators", its draft SP 800-90 B [78 pages in PDF] titled "Recommendation for the Entropy Sources Used for Random Bit Generation", and its draft SP 800-90 C [50 pages in PDF] titled "Recommendation for Random Bit Generator (RBG) Constructions". The deadline to submit comments is November 6, 2013.