Center for Advanced Communications Policy | Archives

Telecom/IT Policy Highlights

Volume: 4.10
October 2004

Overview

Policy / Legislative Activities

Regulatory Activities

Judicial Activities

Research / Reports

Items of Interest

Newsletter Info

Overview
With the presidential election dominating the news, Washington focused on more low-key issues throughout the month of October. Although Congress continued to work past its initial deadline for recess (and will continue to work throughout the rest of the year), most of its attention was focused on the implementation of the 9/11 Commission Report, which remained locked in conference committee negotiations at the end of the month. It also focused on budgets for Fiscal Year 2005, which began on October 1. Given the need to pass appropriations legislation and the lame-duck nature of Congress’ remaining days, it is unlikely that any telecommunications-related legislation will advance out of the chambers before next year.

Part of this is due to the Senate, where several IT bills that have been passed by the House are stalled. Most prominent are two bills relating to the prevention of spyware, which passed the House but remain unaddressed by the upper chamber. Meanwhile, a sizeable delegation gave up on the chance of passing a law preventing states from regulating Voice over Internet Protocol (VoIP) and submitted a letter to the Federal Communications Commission (FCC) requesting a declaration that VoIP is inherently interstate in nature and therefore off-limits to states. FCC Chairman Michael Powell indicated he was receptive to the idea, and a ruling on that issue may be forthcoming in November.

The Commission also approved Cingular Wireless’ acquisition of AT&T Wireless with relatively few restrictions, allowing the creation of the largest U.S. wireless phone company with 46 million subscribers. FCC rules relating to broadband over power lines (BPL) and fiber-to-the-curb (FTTC) also were released in October, which the Commission hopes will increase opportunities for broadband deployment. The U.S. currently ranks 11th in the world in broadband penetration, and some new research indicates that asymmetric government regulation may be the major reason the U.S. is not ranked higher. More information is available in the “Research/Reports” section below.

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Policy / Legislative Activities
Sixty-Two In Congress Sign Letter Urging FCC to Control Internet Telephony
10.05.04 – Sixty-two members of Congress signed a letter urging FCC Chairman Michael Powell to declare exclusive federal regulatory authority over Voice over Internet Protocol (VoIP) before states have the opportunity to regulate it. The Representatives argue in the letter that VoIP is inherently interstate in nature and should only be regulated by the FCC. Legislation that would codify that position is forthcoming, they write, but it will not come soon enough to prevent states from creating a patchwork of regulation that could inhibit growth in VoIP services. A copy of the letter along with sixty-two signatures is available (PDF) at
[http://www.house.gov/pickering/PickeringVoIP.pdf].

The Commission has not commented officially on the letter, although Chairman Michael Powell has made several public statements approving of the federal approach to VoIP regulation. At a conference in Boston, MA, Powell said he would present the question of federal jurisdiction before his colleagues very soon. Chairman Powell’s remarks are available online at
[http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-253325A1.txt].

The issue of VoIP jurisdiction is one that the FCC and courts have struggled with in the past few years. A series of conflicting rulings by the federal courts have left VoIP open for regulation by some states, and the FCC has been slow to adopt precise rulings on the question of whether VoIP can be treated as more like the Internet or more like telephone service. In February the FCC ruled that Pulver.com’s Free World Dialing service, which travels solely across the Internet and does not interact with the public switched telephone network (PSTN), should remain free of state and federal regulation. [FCC 04-27] However, full VoIP, which interacts with the (PSTN), cannot easily evade the Telecom Act’s regulations. Congress’s inability to come up with a legislative solution has put some pressure on the Commission to bring clarity to a complex regulatory regime. The Commission is expected to issue their decision at their November 9 meeting.
[Source: FCC, Office of Representative Chip Pickering]

Cybersecurity Chief Resigns Abruptly, Possibly Due to Lack of Authority
10.02.04 – The top official at the Department of Homeland Security (DHS) in charge of cybersecurity abruptly announced his resignation on October 2, giving just one day’s notice that he would be leaving his post. Amit Yoran, who was serving as director of the National Cyber Security Division of the DHS, served just one year after becoming just the third person to leave the position in two years. Yoran was unclear as to why he was leaving the position, but some members of Congress feel that Yoran was constrained by limits on his authority. In September, Reps. Mac Thornberry (R-TX) and Zoe Lofgren (D-CA) introduced H.R. 5068, the Homeland Security Cybersecurity Enhancement Act of 2004, which would have raised Yoran’s position to that of Assistant Secretary for Cybersecurity, giving him primary authority over cybersecurity programs and policy formulation. No action was taken on this legislation. Andy Purdy, former deputy director, was named interim chief.
[Sources: Library of Congress, Department of Homeland Security, The Washington Post]

Spyware Bills Pass House
10.07.04 – The House of Representatives passed two anti-spyware bills, voting 399-1 to approve the SPY ACT [H.R. 2929] and voting 415-0 to approve the I-SPY Act [H.R. 4661] just two days later. The titles of both bills are acronyms. H.R. 2929 outlaws spyware activities as unfair and deceptive trade practices to be regulated by the Federal Trade Commission (FTC), whereas H.R. 4661 defines spyware activities as illegal, requiring interpretation and discretion by prosecutors and judges. Neither bill has passed the Senate, although a separate bill, S. 2145, is related to H.R. 4661. To view a copy of any of these bills, enter the bill number in the search query at [http://thomas.loc.gov].
[Source: Library of Congress]

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Regulatory Activities
Broadband over Power Line Rules Adopted by FCC
10.14.04 – The FCC issued a Report and Order [FCC 04-245] changing part of its rules to promote broadband over power line (BPL) technology. BPL enables high-speed data connections over the power grid, although early tests indicated a high potential for harmful interference. The FCC’s Order sets forth technical requirements for BPL in order to minimize interference problems and restricts the frequencies available for BPL. The Order also establishes administrative procedures for BPL operators to follow to measure radiofrequency emissions from BPL systems and mitigate interference problems. The Commission also concludes that BPL systems will be able to operate successfully on an unlicensed basis similar to the model used by Wi-Fi hotspots.

Investment in BPL systems has received much media attention, but rollout of the technology has been limited. Power companies appear to be reluctant to invest in the new service, if for no other reason than the broadband market is relatively alien to the heavily regulated utilities. Only one major power company, Cinergy, has begun offering BPL service on a large scale, and it is doing so through a non-regulated subsidiary. Nonetheless, the FCC has high hopes for BPL as a third competitor to cable and DSL for high-speed Internet access. To read the Commission’s Order, see [http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-04-245A1.txt].
[Source: FCC]

Cingular’s Acquisition of AT&T Wireless Authorized by Federal Regulators
10.26.04 – Atlanta-based Cingular Wireless completed its acquisition of AT&T Wireless Services to become the largest cell phone company in the United States with 46 million subscribers. The Justice Department, which reviewed the merger in light of anti-trust laws, issued a release [http://www.usdoj.gov/opa/pr/2004/October/04_at_718.htm] stating that Cingular must divest itself of assets in 11 states to avoid higher prices for consumers and reduced innovation and rollout of new services. Cingular is expected to agree with the terms of the proposed settlement.

The FCC also had regulatory review of the merger, and it announced one day after the Justice Department’s release that it approved of the acquisition, finding it to be in the public interest. The Commission conditioned its consent to the merger on a series of ameliorations to competitors in 22 local markets. For more information on the Commission’s review of the merger, see [http://www.fcc.gov/transaction/cingular-att_wireless.html]. The deal will allow Cingular to operate its own network in new markets instead of relying on roaming agreements, and most Cingular and AT&T Wireless customers will benefit from expanded services offered by the new company. The FCC’s competitive analysis found that the mobile telephone market is differentiated and that customers frequently substitute among carriers, suggesting the increased market share by Cingular would be unlikely to create an unfair competitive advantage that harms consumers.
[Sources: U.S. Department of Justice, FCC, Cingular Wireless, The Wall Street Journal]

Fiber-to-the-Home & Fiber-to-the Curb Rules Revisited by Commission
10.14.04 – The FCC issued an Order on Reconsideration [FCC 04-248] intended to address the disparate regulatory treatment afforded to fiber-to-the-home (FTTH) and fiber-to-the-curb (FTTC) loops. FTTH loops bring fiber from the telecom firm to a customer’s home, whereas FTTC loops bring fiber to a location off customer premises but nearby enough for an alternative “last mile” connection to the home. The Telecommunications Act of 1996 requires telecommunications providers to lease their networks to competitors at low costs, but the FCC blocked this requirement for FTTH in order to promote more fiber deployment. In the Order on Reconsideration, the Commission extends that exemption to Fiber-to-the-Curb loops because it found that the unbundling requirement (as it is called) was preventing build-out of fiber networks. Chairman Michael Powell said in a statement that “by limiting the unbundling obligations of incumbents when they roll out deep fiber networks to residential consumers, we restore the marketplace incentives of carriers to invest in new networks.” Text of the Chairman’s remarks and the Commission’s action can be found at [http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-04-248A1.txt].
[Source: FCC]

FCC Seeks Information About Foreign Mobile Phone Calls
10.14.04 – The FCC released a Notice of Inquiry [FCC 04-247] to look into the rates charged to U.S. customers making calls to mobile phones in foreign countries. Countries with a calling-party-pays (CPP) regime for cellular phones usually charge a high fee to incoming international calls. The Commission, concerned about detrimental effects to consumers and competition, is looking for information about the extent of this problem and asking whether the Commission should take action to correct excessive mobile termination rates. The Commission wants to ensure that U.S. customers are not subsidizing mobile phone usage in other countries by paying rates that greatly exceed cost. To read the Commission’s Notice, see
[http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-04-247A1.txt].
[Source: FCC]

Government-Used Spectrum Cleared for Use by Advanced Wireless Services
10.14.04 – The FCC released its Seventh Report & Order [FCC 04-246] clearing the way for spectrum held by the Federal government in the 1710-1755 MHz band to be used for the deployment of advanced wireless services (AWS), including 3G wireless systems. In 2003 the Commission dedicated 90 MHz to AWS, including the 1710-1755 MHz band, but it allowed some Federal government and military agencies to continue using their licenses in that part of the spectrum. With this Order the FCC implements a plan to relocate those agencies to other parts of the spectrum so the entire 90 MHz can be devoted to AWS. Chairman Michael Powell said this action was the “final step” towards his goal of increasing the spectrum available for advanced wireless services. See [http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-04-246A1.txt].
[Source: FCC]

Symposium to Examine Impact of New Technologies on Numbering System
10.29.04 – The FCC announced that its Wireline Competition Bureau would hold a symposium on the future of the nation’s telephone numbering system in order to examine the potential impact of Voice Over Internet Protocol (VoIP), cell phones, and other location-independent telecommunications technologies. The symposium, entitled “The Future of Numbering: Will New Technologies, Innovations and Services Affect Number Administration and Optimization,” will be held at the Commission on Thursday, November 4. In September, British regulatory agency Ofcom issued a non-geographic area code for VoIP subscribers. The panels at the symposium are not expected to directly address this option, but officials will consider concerns that numbers will soon be exhausted as telecommunication devices proliferate. See a copy of the release (PDF) at [http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-253829A1.pdf].
[Source: FCC]

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Judicial Activities
Appeals Court Will Reconsider Crucial Email Privacy Decision
10.05.04 – The U.S. Court of Appeals for the First Circuit has decided to rehear the case of United States v. Councilman [03-1383], in which it ruled on June 29th that the Wiretap Act did not prevent Internet Service Providers (ISPs) from reading subscribers’ email. The opinion in that case elicited a great deal of controversy over the privacy of electronic communications, and the Court will rehear the case en banc so that all ten 1st Circuit court judges can review the case instead of a three-judge panel. The Court’s decision to review the case means that the original decision is vacated. Original 1st Circuit decision at: [http://www.ca1.uscourts.gov/cgi-bin/getopn.pl?OPINION=03-1383.01A]. More analysis is available in the July-August edition of Telecom/IT Policy Highlights.
[Source: U.S. Court of Appeals for the First Circuit]

Supreme Court Refuses To Hear Challenge To Do-Not-Call List
10.04.04 – The Supreme Court refused to hear an appeal of a ruling by the 10th Circuit Court of Appeals upholding the constitutionality of the federal do-not-call registry. The case, Mainstream Marketing v. FTC, [03-1552], challenged the registry on the basis that it restricts the free speech rights of telemarketers. The U.S. Court of Appeals for the Tenth Circuit had upheld the constitutionality of the do-not-call registry as “valid commercial speech regulation.” To read that court’s opinion (PDF), see [http://www.ca10.uscourts.gov/opinions/03-1429.pdf].
[Source: U.S. Supreme Court, U.S. Court of Appeals for the Tenth Circuit]

Supreme Court Refuses to Hear Unbundling Case
10.12.04 – The Supreme Court refused to hear an appeal in the case of USTA v. FCC, upholding the Appeals Court’s decision to invalidate FCC rules on network sharing. In June, then-Solicitor-General Ted Olson decided not to appeal the case. The FCC followed suit in dropping its appeal, which left the Court without a compelling appellant. Most court observers believed it unlikely that the Supreme Court would hear the case without a U.S. government appeal, and they were proven right when the Court revealed its docket. For more background on this case, see the June edition of Telecom/IT Policy Highlights.
[Source: U.S. Supreme Court]

Trial Begins in Virginia for Accused Violators of Tough Anti-Spam Law
10.25.04 – Trial began for three people accused of violating Virginia’s tough anti-spam law, described by many as the toughest in the nation. The 1999 law imposes criminal liability (“computer trespass”) for falsifying or forging email transmission information in order to send unsolicited bulk email. Under the statute, violators will prosecuted for felony charges when more than $2,500 in damages are caused by the violation. Information on Virginia’s statute can be found at [http://leg1.state.va.us/cgi-bin/legp504.EXE?991+sum+hb1668]. The state is prosecuting three high-profile spammers for violations causing harm to America Online, Inc. (AOL), which routes most of its traffic through Virginia. Prosecution of the case is not uncontroversial, raising questions about states’ authority to regulate Internet traffic. The federal Can-Spam Act does not apply to this case.
[Sources: Virginia General Assembly, USA Today]

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Research / Reports
Lee, Choonkgok, and Sylvia Chan-Olmsted. 2004. “Competitive Advantage of Aroadband Internet: A comparative study between South Korea and the United States.” Telecommunications Policy, vol. 28(9-10), pp. 649-677.
This article examines the factors affecting broadband Internet adoption and finds that government policies can have an impact on the rate of adoption. According to recent statistics, South Korea is ranked first in the world in broadband penetration, whereas the U.S. ranks 13th. The article notes that South Korea has more aggressive government involvement in the broadband market than the United States, where regulatory asymmetry has slowed deployment. The authors conclude that this asymmetry and housing patterns in South Korean are the main contributors to the difference in broadband growth. The authors also suggest that lower levels of education among the South Korean people result in broadband having a less dramatic impact on daily life than in the United States. They also assert that Internet literacy is more of a barrier in South Korea, whereas cost is a primary factor in the United States.
[Source: Telecommunications Policy]

Consumer Report Critiques Federal Broadband Policies
10.26.04 – A report published by the Consumer Federation of America and Consumers Union criticizes Bush administration policies for keeping the cost of broadband Internet access too high to promote universal adoption. The report, entitled “Expanding the Digital Divide and Falling Behind in Broadband,” notes that the U.S. has fallen to thirteenth in the world in broadband adoption, with American consumers paying more than ten times more per megabit for high-speed service than consumers in Korea or Japan. The report blames this situation on a “radical shift in universal service policy” that has resulted from telecommunications deregulation. The report also includes a number details about how Americans use the Internet and how they access it. More information and a link to the full report (PDF) can be found at [http://www.consumersunion.org/pub//001464.html].
[Source: Consumers Union]

Pollsters Ignore Households Relying Solely on Cell Phones
10.22.04 – According to a survey by the Consumer Electronics Association (CEA), as many as eight million U.S. households are being ignored by political pollsters because they do not have a traditional landline telephone. Since cellular phone numbers are not listed in directories, pollsters have little or no access to them. According to CEA’s research, only ten percent (10%) of cellular-only customers report receiving a poll solicitation, compared to thirty percent (30%) for customers with landlines. According to CEA President and CEO Gary Shapiro, the proliferation of wireless services has made it easier for customers to “cut the cord,” and this has a significant impact on pollsters’ ability to read public opinion. To read the CEA’s release, see [http://www.ce.org/press_room/press_release_detail.asp?id=10589].
[Source: CEA]

Presidential Campaigns Ignore Internet Advertising Potential
10.03.04 – According to a study by the Pew Internet & American Life Project, the major party candidates for President have ignored the Internet as an advertising medium. The research data memo indicates that while candidates and interest groups have spent more than $330 million on television advertising, less than $3 million has been spent advertising over the web. The report found that most ads focused on raising money in small amounts and gathering volunteers rather than try to persuade voters with detailed messages. Analysis further reveals that candidates tended to place their ads on websites for news and information. For more information on the Pew Internet Project’s data, see [http://www.pewinternet.org/PPF/r/134/report_display.asp].
[Source: The Pew Internet & American Life Project]

Progressive Policy Institute Publishes Policy Report on RFID
10.06.04 – The Progressive Policy Institute, a non-profit research institute associated with the Democratic Leadership Council [www.ndol.org] has published a policy report entitled, “Radio Frequency Identification: Little Devices Making Big Waves.” The report argues that legislation to regulate RFID would be premature because the technology is still emerging and the threats to privacy and security are unknown. The report offers four principles for RFID regulation: waiting until RFID is mature enough to regulate, regulating only at the federal level, using commercial standards in federal agencies, and allowing the FTC to encourage best practices. To download a copy of the twelve-page report (PDF), see [http://www.ppionline.org/documents/RFID_1006.pdf].
[Source: Progressive Policy Institute]

Telephone Subscribership Continues to Decline
10.26.04 – The FCC released a report on telephone subscribership in the United States through July 2004 that indicates a significant decline in telephone use compared to the previous survey. The report indicated that 93.8% of households and apartments had at least one telephone, down from 94.2% in March 2004. The data come from questions asked by the Census Bureau in their Current Population Survey. According to previous surveys, telephone penetration peaked at 95.5% in March 2002 and has generally declined since then. Reasons for the decline are unknown, and the survey does not ask respondents about alternative communications technologies, such as access to the Internet or wireless services. A copy of the report, which includes graphs showing recent trends in telephone penetration, is available for download (PDF) at [http://www.fcc.gov/Bureaus/Common_Carrier/Reports/FCC-State_Link/IAD/subs0704.pdf].
[Source: FCC]

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Items of Interest
Kentucky Adopts Broadband Initiative
10.07.04 – Kentucky Governor Ernie Fletcher announced a plan to provide high-speed Internet access statewide by 2007, putting into practice the goal set forth by President Bush earlier this year for universal access nationwide. The Governor’s office released the plan, called the “Prescription for Innovation: Broadband Technology for a 21st Century Kentucky.” The plan aims to create the “most sophisticated telecommunications inventory map in the nation, using advanced GIS mapping technology and grassroots data collection.” The efforts will be led by ConnectKentucky, a technology-based economic development alliance. Under the plan, Kentucky will use state-owned property and communications towers to deploy wireless networks for underserved areas. For more information see [http://www.connectkentucky.org/pdf/EXS_PresInnovation.pdf].
[Source: ConnectKentucky]

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Newsletter Info

Center for Advanced Communications Policy

Telecom/IT Policy Highlights Volume 4.10
October 2004
Alan Bakowski, Editor

Telecom/IT Policy Highlights presents legislative, regulatory, legal, and other items of interest pertinent to information, telecommunications, and related technology policy and research. For additional information regarding the information provided in this report, or if there are newsworthy items that should be included in future editions, please contact , Research Specialist, or , Associate Director of Research.
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Volume: 4.10 October 2004

Contents:

Volume: 4.10
October 2004