Source: http://www.techlawjournal.com/alert/2006/03/22.asp
Timestamp: 2019-04-20 11:00:48+00:00

Document:
TLJ Daily E-Mail Alert No. 1,334, March 22, 2006.
March 22, 2006, Alert No. 1,334.
3/21. The Federal Communications Commission (FCC) issued a release that states that the FCC, by operation of law has granted Verizon's December 20, 2004, petition for forbearance from Title II of the Communications Act, and the FCC's Computer Inquiry rules.
The FCC adopted no order or decision upon a majority vote of the members of the Commission. The FCC issued only a short release, and Commissioners wrote separate statements.
The release states as follows: "The Verizon telephone companies (Verizon) filed a petition for forbearance from Title II of the Communications Act of 1934, as amended, and the Commission's Computer Inquiry rules on December 20, 2004. On December 19, 2005, the Commission extended the forbearance deadline to March 19, 2006. Verizon amended its petition on February 7 and February 17th, 2006. Section 10(c) provides that a forbearance petition ``shall be deemed granted if the Commission does not deny the petition for failure to meet the requirements for forbearance under subsection (a) within one year after the Commission receives it, unless the one year period is extended by the Commission.´´ This is to inform the public that, pursuant to section 10(c), the relief requested in Verizon’s petition was deemed granted by operation of law, effective March 19, 2006."
See, Verizon's December 20, 2004, petition [29 pages in PDF], its letter of February 7, 2006 (part I [25 pages in PDF] and part II [PDF]), and its February 17, 2006, letter [1 page in PDF]. This proceeding is Docket No. 04-440.
FCC Chairman Kevin Martin and Commissioner Deborah Tate wrote in a joint statement [2 pages in PDF] that "Broadband access is essential to an expanding Internet-based information economy. Promoting broadband deployment is one of the highest priorities of the FCC. To accomplish this goal, the Commission seeks to establish a policy environment that facilitates and encourages broadband investment, allowing market forces to deliver the benefits of broadband to consumers. Today, we take another step in establishing a regulatory environment that encourages such investments and innovation by granting Verizon’s petition for regulatory relief of its broadband infrastructure and fiber capabilities. This relief will enable Verizon to have the flexibility to further deploy its broadband services and fiber facilities without overly burdensome regulations."
They also wrote that Verizon's petition and clarifications seek forbearance for broadband services, including "packet-switched broadband services, such as Frame Relay and Asynchronous Transfer Mode Cell Relay (ATM) as well as non-time division multiplexing-based (non-TDM-based) optical networking, optical hubbing, and optical transmission services."
The added that Verizon's request "excludes traditional special access services (DS1 and DS3 services) and excludes TDM-based optical networking. Verizon also stated that it would continue to make these services available as wholesale common carrier services. Finally, Verizon also narrowed its petition by stating that it ``does not seek forbearance of federal universal service obligations for the services at issue in this petition.´´"
Commissioner Jonathan Adelstein wrote in a separate statement [PDF] that the FCC now "abdicates oversight of the telecommunications services used by America’s most technology-dependent consumers. This course raises the specter of price hikes and fewer choices for businesses, banks, universities, government agencies and other high volume users of communications services, in addition to consumers in Rural America."
He added that the "Congress has given the Commission a powerful tool in our section 10 forbearance authority, but the Commission must wield this tool responsibly. By allowing this petition to grant by operation of law, and without a shred of analysis, the Commission prejudges important open proceedings and ignores precedent. It helps one telecommunications giant at the expense of virtually everyone else, including small and rural telephone companies, and business users of all sizes."
Commissioner Michael Copps wrote in a separate statement [PDF] that "I am deeply disappointed at the outcome of this proceeding. This is not the way to make environment-altering policy changes."
Copps continued that "this sweeping outcome is unaccompanied by any regulatory footsteps. Here we permit a forbearance petition go into effect that erases decades of communications policy in a single stroke. In effect, we provide industry the pen and give it the go-ahead to rewrite the law."
He also argued that "the contribution base for universal service could be put in jeopardy. Rural America relies on the universal service fund to ensure they have telecommunications on a par with the rest of the country. Without it, too many places would not have phone service, much less the possibility of broadband. By pulling a whole swath of services out of the obligation to contribute, universal service could be on newly shaky ground."
CALEA. Copps wrote that "By failing to act, national and local law enforcement agencies charged with protecting the American people could find that key networks are no longer subject to the Communications Assistance for Law Enforcement Act (CALEA)."
Adelstein wrote that "We also put at risk the law enforcement access protections under section 229 and the Communications Assistance for Law Enforcement Act (CALEA). Just last fall, we adopted a very complicated legal analysis to keep wireline broadband Internet access services within the scope of CALEA, a decision that is currently subject to appeal. Here, the Commission fails to take any such preemptive action, potentially pushing these services outside the scope of CALEA's protections."
In contrast, Martin and Tate wrote in a footnote that "Our action today does not constitute a failure to ensure adequate law enforcement access to Verizon’s broadband services Rather, as we made clear in our CALEA decision last summer, broadband internet access services, and the facilities used to provide such internet access, are subject to the Communications Assistance for Law Enforcement Act."
The just announced deemed granted disposition is not a final order of the FCC subject to judicial review. The FCC's order of August 5, 2005, is subject to judicial review, and has been challenged. The U.S. Court of Appeals (DCCir) will hear oral argument on May 5 in ACE v. FCC. Moreover, a plain reading of the relevant statutes would lead the Court to overturn the August 5 CALEA order.
See, story titled "FCC Amends CALEA Statute" in TLJ Daily E-Mail Alert No. 1,191, August 9, 2005. The FCC released the text [59 pages in PDF] of this item on September 23, 2005. It is FCC 05-153 in ET Docket No. 04-295 and RM-10865. See also, story titled "FCC CALEA Order Challenged" in TLJ Daily E-Mail Alert No. 1,240, Wednesday, October 26, 2005. See also, ACE brief [71 pages in PDF] and FCC brief [52 pages in PDF]. This case is American Council on Education, et al. v. FCC and USA, U.S. Court of Appeals for the District of Columbia, App. Ct. Nos. 05-1404, 1408, 1438, 1451 and 1453.
3/21. Verizon announced in a release that it filed a complaint with the Federal Communications Commission (FCC) against Cablevision Systems Corp. and its wholly owned subsidiary, Rainbow Media Holdings, "to secure Rainbow's sports programming for Verizon's FiOS TV customers in New York and New England".
The complaint states that "This case involves the paradigmatic abuse of monopoly power that the program access rules were adopted to prevent. It presents the Commission with an opportunity to take quick and decisive action against a particularly egregious example of the cable industry’s efforts to block telephone companies from competing in video services."
It continues that "Apparently to make it more difficult for Verizon to compete effectively and to protect Cablevision’s dominant position, Cablevision and Rainbow are refusing to negotiate terms for Verizon’s distribution of Rainbow’s valuable regional sports networks. Although Rainbow provides that programming to all other major MVPDs in the New York City metropolitan area and Massachusetts, including of course Cablevision, Rainbow will not sell to Verizon -- its largest potential wireline competitor."
The complaint alleges violation of 47 U.S.C. §§ 548(b) and (c)(2)(B), and §§ 76.1001 and 76.1002(b) of the FCC's rules.
Verizon's Terry Denson stated that "Cablevision's consistent refusal to negotiate carriage terms clearly is an attempt to block competition and preserve its market position ... and the 1992 Cable Act specifically prohibits this type of refusal to deal."
3/21. The Federal Communications Commission (FCC) released the text [30 pages in PDF] of its "Eighth Notice of Proposed Rulemaking" regarding public safety communications in the 764-776 MHz and 794-806 MHz bands. The FCC adopted, but did not release, this item at its meeting of Friday, March 17, 2006. See, story titled "FCC Adopts NPRM Re Public Safety Communications in the 700 MHz Band" in TLJ Daily E-Mail Alert No. 1,332, March 20, 2006. See also, FCC release [PDF] that describes this item. Initial comments will be due 60 days after publication of a notice in the Federal Register. Reply comments will be due 90 days after publication. This item is FCC 06-34 in WT Docket No. 96-86.
3/20. The Federal Communications Commission (FCC) issued a notice [PDF] announcing that its Wireless Telecommunications Bureau (WTB) and the Consumer and Governmental Affairs Bureau will hold a public demonstration on March 30 of changes to be made to Tower Construction Notification System (TCNS).
3/21. Securities and Exchange Commission (SEC) Chairman Chris Cox gave a speech in Washington DC. He discussed, among other topics, the SEC's internet proxy proposal.
See also, comments that have been submitted to the SEC in response to this NPRM.
See also, story titled "SEC Proposes to Allow Internet Delivery of Proxy Materials" in TLJ Daily E-Mail Alert No. 1,263, December 1, 2006.
Cox stated in his March 21 speech that the SEC's electronic proxy proposal "is another step we're taking to make the Internet a more efficient forum for communication with shareholders. By giving investors more, and importantly, more usable information, we can enable increased participation by better informed shareholders."
He continued that "A postcard-sized notice would apprise shareholders of the availability of their proxy materials on the Web. By going online, they could search the proxy statement for the items they want, and follow links to other, more detailed information. They could do everything they do now with paper proxies, just more of it, and faster and more efficiently. Investors who want paper in addition, or instead, would simply call a toll free number."
He concluded that "With more than 75% of Americans having access to the Internet -- and spending an average of 25% of their waking hours online -- it's high time to bring this revolutionary technology to the world of shareholder democracy. When progress is about to overtake you, you either ride the wave or get wiped out -- or at least that's how it is in Southern California."
3/21. Karan Bhatia, a Deputy U.S. Trade Representative, gave a speech [7 pages in PDF] to the Shanghai Institute of Foreign Trade, in Shanghai, China. He said that "we face the threat of protectionism on both sides of the Pacific".
He reviewed protectionist trends in the U.S., and then turned to China.
He said that "There are worrisome trends in China as well. There are numerous voices calling for new policies and regulations to restrict market access by foreign firms, particularly in high technology and service sectors. There are growing calls to provide protection, and other forms of government support to domestic companies. And there signs that the government is listening to these requests and is increasingly experimenting with mercantilist policies that seek to direct markets rather than opening them."
He argued that "This is a mistake. Not only will these efforts generate trade frictions, but they will also prevent the market from selecting optimal technologies, reducing the efficiency and raising the cost structure of the entire Chinese economy."
He continued that "From the U.S. perspective, there are several concerns. There is concern that, while the United States has fulfilled its commitment to open its market to Chinese companies, China is not fulfilling its part of the bargain. There is growing frustration that China is not ``playing by the rules.´´"
For example, he said that "Americans do not believe that China is competing fairly when rampant piracy, counterfeiting, and copyright infringement cost businesses billions of dollars each year. The movie, music, publishing, software and electronic entertainment industries are areas where the U.S. is especially competitive, and China's weak enforcement of copyright laws has a disproportionately heavy impact on our sales to China. IPR enforcement problems in China also affect us in markets outside of China. Last year, for example, 69 percent of IPR infringing goods seized by U.S. customs at the U.S. border had originated in China.
He added that "the failure to protect intellectual property also hurts innovative Chinese companies, and could undermine China’s efforts to continue to foster an even more dynamic, knowledge-based economy."
3/20. Deputy U.S. Trade Representative Susan Schwab gave a speech [PDF] at Thunderbird University in Glendale, Arizona. She reviewed the status of ongoing trade negotiations, advocated free trade, and rebutted the arguments for "protectionism", "economic isolationism", and "xenophobia".
3/21. The U.S. Court of Appeals (7thCir) issued its opinion [8 pages in PDF] in U.S. v. Connors, a case that demonstrates the lengths that the Department of Homeland Security's (DHS) Customs and Border Protection (CBP) will go to prosecute people who bring Cuban cigars into the U.S., in violation of the Trading with the Enemy Act [PDF], which is codified at 50 U.S.C. Appendix. Richard S. Connors for years brought Cuban cigars into the U.S. in his luggage when he returned from trips to Cuba (via Toronto or Cancun). He also has an ex-wife, who for years collected evidence for the CBP. Court of Appeals Judge Evans wrote that "marital splits get nasty when an ex-spouse decides to dish out a little dose of discomfort", but "the havoc visited on Chicago lawyer Richard Connors by his ex-wife would win a gold medal for creativity". The CBP spent over three years investigating Connors. The prosecution, after an 11 day trial, obtained a guilty verdict, and a 37 month prison sentence. The ex-wife's activities were not disclosed to Connors. The prosecution did not call her as a witness. After trial the ex-wife informed Connors, and testified in a post trial hearing. Judge Evans wrote that she testified that the CBP "not only asked her to cozy up to Connors but also suggested that she obtain incriminating documents from his house and place them in the trash" where the CBP would retrieve them. Connors asserted that this constituted unreasonable government searches and seizures in violation of the 4th Amendment, and that failure to disclose violated his Due Process rights. The District Court found this testimony to be not credible, and rejected these arguments. The Court of Appeals affirmed. Judge Evans wrote that "When a friend is false, blame the friend, not the government." Also, citing "The Betrothed" by Rudyard Kipling, he wrote that a "woman is only a woman, but a good cigar is a Smoke."
3/21. The Supreme Court released its opinion [PDF] in Merrill Lynch v. Dabit, holding that the Securities Litigation Uniform Standards Act's (SLUSA) pre-emption provision applies to class action claims asserted by holders of securities, notwithstanding the SLUSA's language, "in connection with the purchase or sale".
Shadi Dabit, a former Merrill Lynch broker, filed a complaint in U.S. District Court (WDOkla) against Merrill Lynch alleging violation of Oklahoma securities law. Dabit, who also sought class action status, pled that Merrill Lynch breached the fiduciary duty and covenant of good faith and fair dealing that it owed its brokers by disseminating misleading research, and manipulated stock prices.
That is, Dabit did not plead Section 10b-5 fraud or any other cause of action under federal securities law. Nor did he technically plead fraud "in connection with the purchase or sale". He plead fraud in connection with holding on to already held securities -- the decision not to sell.
Dabit argued that the broker class was injured by Merrill Lynch's actions because these actions caused them to hold on to overvalued securities, and because they lost commission fees when their clients made bad investments and took their business to other brokers.
Other similar actions were filed in other district courts. They were consolidated in the U.S. District Court (SDNY).
Merrill Lynch argued that the SLUSA preempts these state law claims. The District Court agreed. Dabit appealed.
The U.S. Court of Appeals (2ndCir) held that the claims asserted by the class of holders did not allege fraud "in connection with the purchase or sale" of securities within the meaning of the preemption language of the SLUSA.
The Supreme Court vacated the opinion of the Court of Appeals. It wrote that "The holder class action that respondent tried to plead, and that the Second Circuit envisioned, is distinguishable from a typical Rule 10b-5 class action in only one respect: It is brought by holders instead of purchasers or sellers. For purposes of SLUSA pre-emption, that distinction is irrelevant; the identity of the plaintiffs does not determine whether the complaint alleges fraud "in connection with the purchase or sale" of securities. The misconduct of which respondent complains here -- fraudulent manipulation of stock prices -- unquestionably qualifies as fraud "in connection with the purchase or sale" of securities ..."
This case is Sup. Ct. No. 04–1371.
The House will not meet. It will next meet on Tuesday, March 28. See, Republican Whip Notice.
The Senate will not meet. It will next meet on Monday, March 27 at 1:00 PM.
12:00 NOON - 2:00 PM. The Federal Communications Bar Association (FCBA) will host an event titled "FCBA Mentoring Luncheon". The price to attend is $20. See, registration form [PDF]. Location: Arnold & Porter, 10th floor, 555 12th St., NW.
6:00 - 8:15 PM. The Federal Communications Bar Association (FCBA) will host a continuing legal education (CLE) seminar titled "DTV: The Hard Date is Set -- What’s Next?" The speakers will include Eloise Gore (Assistant Chief of the FCC's Media Bureau's Policy Division), David Donovan (MSTV), John Orlando (CBS), and Peter Tannenwald (counsel to the Community Broadcasters Association). See, registration form [PDF]. The price to attend ranges from $75-$150. Reservations and cancellations are due by 5:00 PM on March 20. Location: Dow Lohnes & Albertson, Suite 800, 1200 New Hampshire Ave., NW.
Day two of a four day event hosted by the National Institute of Standards and Technology's (NIST) Optical Technology Division titled "Spectroradiometry Short Course". See, notice. Location: 100 Bureau Drive, Gaithersburg, MD.
12:00 NOON - 1:30 PM. The Federal Communications Bar Association's (FCBA) State and Local Practice Committee will host a brown bag lunch titled "Network Neutrality". The speakers will be Greg Sidak (Georgetown University Law Center), Randolph May (Progress and Freedom Foundation), and Jason Oxman (CompTel),Jim Kohlenberger (Voice on the Net Coalition), and Harold Feld (Media Access Project). For more information, contact Erick Soriano at 202 939-7921 or esoriano at fw-law dot com. Location: Fleischman and Walsh, Suite 600, 1919 Pennsylvania Ave., NW.
Day three of a four day event hosted by the National Institute of Standards and Technology's (NIST) Optical Technology Division titled "Spectroradiometry Short Course". See, notice. Location: 100 Bureau Drive, Gaithersburg, MD.
9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in Bruce Gilmore v. FCC, App. Ct. No. 05-1413. See, brief [PDF] of FCC. Judges Ginsburg, Sentelle and Brown will preside. Location: Prettyman Courthouse, 333 Constitution Ave., NW.
12:00 NOON. Deadline to submit written comments to the Office of the U.S. Trade Representative (USTR) regarding the proposed free trade agreement with the Republic of Korea. The USTR seeks comments on, among other topics, "electronic commerce issues" and "trade-related intellectual property rights issues that should be addressed in the negotiations". See, notice in the Federal Register: February 9, 2006, Vol. 71, No. 27, at Pages 6820-6821.
Day four of a four day event hosted by the National Institute of Standards and Technology's (NIST) Optical Technology Division titled "Spectroradiometry Short Course". See, notice. Location: 100 Bureau Drive, Gaithersburg, MD.
The Senate will meet at 1:00 PM. It will resume consideration of of S 2349, the "Legislative Transparency and Accountability Act of 2006".
10:00 AM. The Senate Judiciary Committee (SJC) may hold an executive business meeting. The SJC frequently cancels or postpones meetings without notice. See, notice. Press contact: Blain Rethmeier (Specter) at 202 224-5225, David Carle (Leahy) at 202 224-4242 or Tracy Schmaler (Leahy) at 202 224-2154. Location: Room 226, Dirksen Building.
Effective date of the U.S. Patent and Trademark Office's (USPTO) interim rule revising the rules of practice relating to the filing date requirements for ex parte and inter partes reexamination proceedings. See, notice in the Federal Register, February 23, 2006, Vol. 71, No. 36, at Pages 9260-9262.
The House will return from its St. Patrick's Day District Work Period. It will meet at 2:00 PM. See, Republican Whip Notice.
8:30 AM - 12:30 PM. The Federal Communications Bar Association (FCBA) will host a continuing legal education (CLE) seminar titled "Privacy and Data Security for Communications & Media Companies". See, registration form [PDF]. The price to attend ranges from $50 to $200. Location: Covington & Burling, 1201 Pennsylvania Ave., NW.
9:00 AM. The Senate Judiciary Committee (SJC) may hold a partially closed hearing to examine war time executive power and the FISA Court. The SJC frequently cancels or postpones hearings without notice. Press contact: Blain Rethmeier (Specter) at 202 224-5225, David Carle (Leahy) at 202 224-4242 or Tracy Schmaler (Leahy) at 202 224-2154. Location: Room 219, Hart Building.
9:00 AM - 5:15 PM. The Catholic University Law School's Journal of Communications Law and Policy will host its annual communications law symposium. See, agenda. Location: Catholic University of America, Columbus School of Law, 3600 John McCormack Rd., NE.
2:00 PM. The House Appropriations Committee's Subcommittee on Science, the Departments of State, Justice, and Commerce, and Related Agencies will hold a hearing on the Federal Bureau of Investigation (FBI). Location: Room 2359, Rayburn Building.
2:30 PM. The Senate Judiciary Committee (SJC) may hold a hearing on pending judicial nominations. The SJC frequently cancels or postpones hearings without notice. Press contact: Blain Rethmeier (Specter) at 202 224-5225, David Carle (Leahy) at 202 224-4242 or Tracy Schmaler (Leahy) at 202 224-2154. Location: Room 226, Dirksen Building.
Extended deadline to submit reply comments to the Federal Communications Commission's (FCC) Notice of Proposed Rulemaking (NPRM) [26 pages in PDF] regarding Section 621(a)(1)'s directive that local franchising authorities (LFAs) not unreasonably refuse to award competitive franchises. The FCC adopted this NPRM on November 3, 2005, and released it on November 18, 2005. It is FCC 05-189 in MB Docket No. 05-311. See, notice in the Federal Register, December 14, 2005, Vol. 70, No. 239, at Pages 73973 - 73980. See also, story titled "FCC Adopts NPRM Regarding Local Franchising of Video Services" in TLJ Daily E-Mail Alert No. 1,247, November 4, 2005. See, FCC notice [MS Word] of March 7, 2006.
9:30 AM. The Copyright Office will hold one is a series of hearings on possible exemptions to the prohibition against circumvention of technological measures that control access to copyrighted works. See, notice in the Federal Register, February 23, 2006, Vol. 71, No. 36, at Pages 9302-9303. See also, stories titled "Copyright Office Announces Proceeding on DMCA Anti-Circumvention Exemptions" in TLJ Daily E-Mail Alert No. 1,229, October 7, 2005, and "Copyright Office Announces Hearings on Exemptions to Anti-Circumvention Provisions" in TLJ Daily E-Mail Alert No. 1,318, February 27, 2006. Location: Mumford Room, LM-649, James Madison Building, Library of Congress, 101 Independence Ave., SE.
2:30 PM. The Senate Commerce Committee's (SCC) Subcommittee on Technology will hold a hearing titled "Importance of Basic Research to United States' Competitiveness". The hearing will address "basic research in the physical sciences impacts both long-term economic development in the United States and the ability of American industry to remain globally competitive". See, notice. Sen. John Ensign (R-NV) will preside. Press contact: Melanie Alvord (Stevens) at 202 224-8456, Aaron Saunders (Stevens) at 202 224-3991, or Andy Davis (Inouye) at 202 224-4546. Location: Room 562, Dirksen Building.
3/21. Microsoft announced that it has delayed the scheduled release of its next generation of operating system, Vista, until January of 2007. See, Microsoft release.
3/17. The Supreme Court issued an order in eBay v. MercExchange, Sup. Ct. No. 05-130. It wrote that "The motions of the Solicitor General for leave to participate in oral argument as amicus curiae and for divided argument are granted." See, March 17, 2006, Order List [PDF]. The Supreme Court will hear oral argument on March 29, 2009. See, Supreme Court calendar [PDF], Supreme Court docket, March 16, 2004, opinion [31 pages in PDF] of the Court of Appeals (FedCir), and story titled "Supreme Court to Consider Availability of Injunctive Relief in Patent Cases" in TLJ Daily E-Mail Alert No. 1,261, November 29, 2005.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v.