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Telecom/IT Policy Highlights


February 2003

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Contents:
Overview
Legislative Activities
Policy / Regulatory Activities
Judicial Activities
Research/ Reports
Newsletter Info
  • Overview

    This month saw major developments at the Federal Communications Commission. In a much anticipated action, the FCC voted to allow states significant leeway in power to determining how the market for local telephone service is to be regulated. This decision is of particular interest as the split vote was the first time a chairman has been in a minority position since the early 1990’s. Chairman Powell had hoped to implement a national policy to free incumbent telephone service providers from many of the requirements of the ‘96 Act that forced them to lease their equipment to competitors at discounted rates. Instead, Republican appointee Kevin Martin sided with the two Democratic commissioners on the issue to give them a rare majority on the 5-seat board.

    On the legislative front, the Senate unanimously approved the PROTECT Act [S.151], a bill designed to battle child pornography, including “virtual” or computer generated media. The bill, sponsored by Senators Orrin Hatch (R-UT) and Patrick Leahy (D-VT), is in response to last year’s Supreme Court decision that declared the 1996 Child Pornography Prevention Act (CPPA) unconstitutional. It has been referred to the House of Representatives.


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  • Legislative Activities

    Cell Phone “Bill of Rights” Introduced in Senate
    02.27.03 – Sen. Charles Schumer (D-NY) proposed a bill aimed at protecting consumers who use wireless telephones. The “Cell Phone User Bill of Rights” would mandate phone number portability when switching service providers, require better disclosure of the terms of service contracts, and would introduce monitoring of service quality by the federal government. Sen. Schumer says the steps are necessary to protect consumers from unfair practices by wireless companies and improve wireless service. The plan was assailed by the leading wireless industry group, the Cellular Telecommunications and Internet Association (CTIA). The CTIA claims that the answer to customer complaints about service is for the government to improve zoning processes and other regulations so that companies can expand their infrastructures. As to number portability, they said that the massive funding necessary to implement and maintain such a system is better spent on improving service provision. [Source: Yahoo News]

    Child Pornography Bill Passes Senate
    02.24.03 – By a unanimous 84-0 vote the Senate passed the Prosecutorial Remedies and Tools Against the Exploitation of Children Today Act of 2003 [S.151], otherwise known as the “PROTECT” Act. The bill comes in response to last year’s decision by the Supreme Court in Ashcroft vs. Free Speech Coalition, which struck down the Child Pornography Prevention Act of 1996 (CPPA) on First Amendment grounds. The provisions of the bill are designed to allow prosecution of those accused of violations involving child pornography within the limits set forth by the nation’s highest court. The PROTECT Act, which was introduced by Senators Orrin Hatch (R-UT) and Patrick Leahy (D-VT), includes provisions on the controversial issue of computer-generated child pornography. For further details on the PROTECT Act, see http://leahy.senate.gov/press/200302/022403.html. [Source: U.S. Senate]

    Congress Sends Letter to FCC Regarding Proposed Media Rules
    02.03.03 – 30 members of Congress signed on to a letter to FCC Chairman Michael Powell regarding proposed changes to media ownership rules. The FCC is considering a change to ease regulatory restrictions on merger and consolidation in the media industry. These members of Congress, which include Reps. Barney Frank, John Conyers and Louise Slaughter, argue that further consolidation is dangerous, with conflicts of interest and more centralized media control being dangerous to principles of free speech and press. They highlight the fact that, with recent examples of corporate misconduct, a diverse media is increasingly important. The letter can be found online (PDF form only) at: http://www.democraticmedia.org/houseletterfcc_02-03-03.pdf

    Online Companies Volunteer to Collect Sales Tax on e-Commerce
    02.06.03 – A group of major online retailers has offered to voluntarily begin collecting sales taxes on transactions in exchange for being freed by states of any responsibility for taxes up until this point. 38 of the 45 states that have sales taxes entered into this agreement with the companies. While the companies signing the deal remain anonymous, the Washington Post reports that new sales tax policies have been posted on the websites for retailers such as Wal-Mart, Marshall Fields, Target, Toys R Us and Mervyn's. Federal law currently requires that companies only remit taxes to states if they have a physical presence in that state. Congress already passed two moratoriums in 1998 and 2001 on any laws requiring Internet tax collection, with more legislation to that effect pending in the 108th Congress. The deal was praised by representatives of the Streamlined Sales Tax Project, a group that has been working to simplify state sales taxes in order to pave the way for Internet collections.


    Despite this development many online merchants are reluctant to take this step. The companies entering into this agreement also have traditional retail stores, not just an online presence. The move to voluntarily collect online sales taxes will help to protect these companies in states where they have such stores operating. For companies that do not have retail stores, however, there is less incentive to collect these taxes. To date, no merchant that operates only on the Internet has agreed to voluntarily collect sales taxes for states in which they do not have a physical presence. [Source: Washington Post, Wired News]

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  • Policy / Regulatory Activities

    Broadband Now a Requirement for Kentucky Public Housing
    02.11.03 – In Kentucky, all housing funded with more than 50 percent funding coming from the state government must now be wired for broadband Internet access. The mandate was instituted by the Kentucky Housing Corporation. It is the first policy of this type in the United States. The KHC is also taking steps to get computers and low-cost Internet service to residents so they can find useful information on things such as employment and health care online. [Source: Wired News]

    “ENUM” Plan Gets Commerce Dept. Approval
    02.13.03 – The Department of Commerce has agreed to have the U.S. participate in the forming of an international standard that will consolidate telephone and Internet communication. The proposal, known as “ENUM” would create a single identifier for telephone, e-mail, fax, instant messaging and other forms of communication. The idea started at the Internet Engineering Task Force, an international standards group. For more information see http://www.ietf.org/html.charters/enum-charter.html. [Source: CNET News.com]

    FCC Approves Major Telecommunication Regulation Changes
    02.20.03 – By a 3-2 vote the Federal Communications Commission made the biggest change to federal telecommunication rules since the landmark 1996 Telecom Act. Under the new rules, individual states are given the authority to determine how competition will factor into their local telephone markets. This major change does not go as far, however, as FCC Chairman Michael Powell hoped it would. In a rare event, the Republican Powell was in the minority of the Commission’s vote, the first time an FCC Chairman has been out-voted since 1991. Powell, and the major telecom providers, had hoped for clear rules to be set on the federal level that freed the Regional Bell Operating Companies (RBOCs) from many of the provisions of the ‘96 Act that require them to lease parts of their networks to competitors at discounted rates. Instead, the rules that were approved delegate that authority to the states. This plan was crafted by Democrat Commissioner Michael Copps and Commissioner Kevin Martin, who broke from his Republican majority on this issue. The RBOCs pledged to fight the new rules in court, and Chairman Powell expressed his concern that the FCC’s decision will not stand up to judicial scrutiny, creating uncertainty in an already unstable telecom market.

    Chairman Powell did win a victory in the area of broadband, with the lifting of regulations that required RBOCs to provide competitive access to high-speed Internet facilities. The goal of this change is to encourage the major telecom providers to invest in the expansion and improvement of their broadband networks. Opponents of this change say this will hinder broadband growth and that consumers will now be given fewer options and be forced to pay higher prices. BellSouth and SBC, two of the four RBOCs, said they would not invest further in broadband deployment unless the new telephone competition rules are altered. [Sources: Wired News, SiliconValley.com, NY Times, Wall Street Journal, Wash. Post]

    ICANN Gets 3 Year Contract Extension
    02.03.03 – The Internet Corporation for Assigned Names and Numbers (ICANN) was granted a three year extension of their contract that gives them the sole authority over the country code domains (.us, .uk, etc.). The U.S. Department of Commerce, the agency that grants the contract, decided not to do a competitive bidding process. This decision has drawn criticism from abroad, especially in Europe, as some groups had hoped to compete for the contract. [Source: IETF]


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  • Judicial Activities

    Napster Investor Bertelsmann Sued by Recording Industry
    02.20.03 – Music publishers are suing the German corporation Bertelsmann over its role in keeping the music-swapping pioneer Napster from going under. They have filed a suit alleging that the Bertelsmann’s investment of over $85 million in Napster kept their file-trading network running and therefore they contributed to massive copyright infringement. Bertelsmann, who is also a music publisher, had hoped to turn Napster into their own online music distribution tool, but their deal collapsed while Napster was in bankruptcy. $17 billion in damages is sought. [Source: Wall Street Journal]


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  • Research/ Reports

    Cyber Security Plan Released by White House
    02.14.03 – The final draft of the Bush administration’s report The National Strategy to Secure Cyberspace was finally released. The final report cuts out many action items included in earlier drafts. It focuses on close cooperation between government and the private sector, who owns the vast majority of the nation’s information technology infrastructure. Plans include a national emergency warning system, improvements in training and reducing network weaknesses. The report is available online (in PDF form only) at: http://www.whitehouse.gov/pcipb/cyberspace_strategy.pdf

    "Digital Development” Paper Released
    01.25.03 - Greg Laudeman, a Community Technology Specialist at the Georgia Tech Economic Development Institute, released a report entitled Digital Development: A Framework for Applying Information Technology to Community Socioeconomic Development. The term “Digital Development” refers to the use of information technologies for promote economic growth, social improvements and provide a better quality of life. The focus of the paper is providing a set of tools to evaluate the level of digital development in a given community and offer ways to improve its usage. The report can be found online at http://greg.laudeman.com/digi-dev/dd_wp/DD_wp.htm.


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  • Newsletter Info

    Center for Advanced Communications Policy
    Telecom/IT Policy Highlights
    February 2003

    The focus of this publication is to present legislative, regulatory, legal, and other activities that are germane to technology policy news, events or products. For additional information regarding the information provided in this report, or if there are newsworthy items that should be included in future editions, please feel free to contact , Director of Research and Editor in Chief.
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