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Telecom/IT Policy Highlights

Volume: 5.04
April 2005

Contents:
Overview
Policy / Legislative Activities
Regulatory Activities
Judicial Activities
Items of Interest
Research / Reports
Events
Newsletter Info
  • Overview

    April was a transition month for the Federal Communications Commission (FCC), where new Chairman Kevin Martin spent much of the month preparing his agenda for the future of the Commission. As a result, the Commission postponed until late in the month its previously scheduled April meeting, leaving few formal actions to be discussed. Chairman Martin appeared before Congress to request funding for the FCC in the next fiscal year, asking for an extra $14 million for new initiatives. He also signaled his support for quick Commission action on ensuring emergency 911 access for VoIP services.

    On Capitol Hill, House and Senate committees were dealing with a lot of telecommunications issues, many focusing on a re-write of the Telecom Act of 1996. The Senate Commerce Committee approved two bills that had also passed in the 108th Congress, one dealing with technology grants for minority-serving educational institutions and another dealing with the rules against sending unsolicited faxes to persons with whom there is an “established business relationship.” The Senate panel also held a hearing on exempting universal service funds from standard government accounting rules. On the House side, the Subcommittee on Telecommunications and the Internet actively looked into potential telecom reform by holding a hearing on video and data services and a hearing on the role of federalism in telecommunications policy.

    The U.S. Chamber of Commerce jumped into the telecom policy debate by forming a coalition of businesses to support certain reforms; find more information about their efforts under “Items of Interest” below. Additionally, a new report shows dramatic growth in digital broadcast satellite services since 2001, showing more vigorous competition against cable providers in urban and suburban markets. However, a report from the International Telecommunications Union shows that the U.S. position in global broadband penetration has fallen again, this time from 13th to 16th place in 2005.


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  • Policy / Legislative Activities

    Bush Signs Family Entertainment and Copyright Act 04.27.05 – President Bush signed into law the Family Entertainment and Copyright Act [Public Law No. 109-9], which earlier in the month passed the Senate by unanimous consent and in the House by a voice vote. The law is aimed at preventing piracy of motion pictures, music, or software programs that have yet to be commercially distributed. Under the law’s provisions, any person with a pre-release copy of a movie, song, or software package could be subjected to up to three years in prison for making a copy of that content or for making a copy available for electronic file sharing. Works that have less than $1,000 commercial value are exempted. The law also criminalizes the act of recording films via camcorder in a movie theater. In addition to deterring copyright infringement, the law also allows exemptions from copyright law for technologies that are used to alter films in ways that delete adult content, allowing for more family-friendly viewing. To read a copy of the bill [S. 167] in its final form, see [http://thomas.loc.gov/cgi-bin/query/z?c109:S.167:].
    [Source: Library of Congress]

    House Committee Examines Telecom Policy Implications of Internet Services 04.27.05 – The House Subcommittee on Telecommunications and the Internet held two hearings this month to address potential changes to the Telecommunications Act that might be brought about by Internet-enabled services. The hearings were titled “How Internet Protocol-Enabled Services Are Changing the Face of Communications,” and they examined video and data services and the issues faced by government officials. In the first hearing, representatives from phone companies discussed their plans to offer video services along with broadband Internet access on fiber optic lines. Incumbent phone giants like SBC and Verizon commented that existing regulations make it difficult for them to compete on a level playing field. Representatives from the cable industry stressed the importance of regulating any new video content providers in the same manner cable operators are regulated. Internet communications companies testified in favor of complete deregulation for all Internet services, continuing the status quo. Although each official who testified served a different interest, each spoke of the importance of reforming the current telecommunications regulations to adapt to the realities of new technologies. Prepared testimony and the hearing agenda can be found at [http://energycommerce.house.gov/108/Hearings/04202005hearing1483/hearing.htm].

    In a second hearing, state and local government officials offered their perspective on how government authority should be shared between jurisdictions in the Internet age. Traditionally, the states have played an important role in regulating the telecommunications industry, but the Internet calls into question the appropriateness of the distinction between interstate and intrastate services. A representative from the National Association of Regulatory Utility Commissioners (NARUC) testified in favor of preserving some state powers, such as consumer protection, emergency services, and promoting competition and guaranteeing universal service. Testimony and other information about the hearing can be found at [http://energycommerce.house.gov/108/Hearings/04272005hearing1488/hearing.htm].
    [Source: House Energy and Commerce Subcommittee on Telecommunications and the Internet]

    Martin Presses for 911 Service in VoIP, Requests Funds from Congress 04.26.05 – New FCC Chairman Kevin Martin informed a House subcommittee that he would be pushing for a plan to require VoIP service providers to ensure customers have access to 911 emergency services. Martin indicated that he has asked his staff to develop a proposal that could be voted on at the next open Commission meeting in May. The issue was raised by Rep. Mark Kirk (R-IL), who voiced concerns about customers who bought VoIP service, unaware that their ability to dial 911 might be compromised. Although he answered questions on policy issues from members of the Appropriations subcommittee, Martin was appearing to defend the FCC’s 2006 Fiscal Year budget request. The Commission requested the authority to spend $304 million, over 98% of which would be raised from regulatory fees. The budget request includes $14.3 million of new spending, which would focus on four initiatives: an e-government program to manage personnel data, an upgrade of computer systems that handle licensing activities, renovation of an FCC field office in Maryland, and hiring personnel for a special audit of the Universal Service Fund. A copy of Chairman Martin’s prepared testimony, including descriptions of budget requests, is available at [http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-258333A1.txt].
    [Sources: Reuters, FCC]

    Telephone Excise Tax Not Applied to Internet, Bill Proposes 04.11.05 – Another bill prohibiting Internet taxation was introduced this month, although this one is aimed at changing a (telephone) tax law that was first written in 1898. The Federal Internet Tax Prohibition Act of 2005 [S. 758] is designed to prohibit the Internal Revenue Service (IRS) from interpreting the federal telephone tax, currently three percent, as applying to the Internet. The IRS announced last July that it was considering expanding its application of the Communications Excise Tax to Internet-based services such as VoIP. The excise tax on telephone service was first instated as a luxury tax in 1898. The bill, sponsored by Sens. George Allen (R-VA) and Ron Wyden (D-OR), would block the tax from being applied to any Internet access service. States were prohibited from taxing Internet access by the Internet Tax Freedom Act of 1998, which will expire in 2007. To read a copy of [S. 758], see [http://thomas.loc.gov/cgi-bin/query/z?c109:S.758:].
    [Source: Library of Congress]

    Senate Committee Votes to Fund Technology Grants, Alter “Junk Fax” Rules 04.14.05 – The Senate Commerce Committee voted to approve two telecom-related bills this month, one authorizing grants for technology at certain educational institutions and one that tweaks the rules prohibiting unsolicited “junk” faxes. The Minority Serving Institutions Digital and Wireless Technology Opportunity Act of 2005 [S. 432] authorizes $250 million in grants to historically black colleges and universities, Hispanic-serving institutions, and other minority institutions for the purpose of upgrading their communications infrastructure. The bill passed the Senate unanimously during the 108th Congress. View a copy of the bill at [http://thomas.loc.gov/cgi-bin/query/z?c109:S.432:]. The second bill was the Junk Fax Prevention Act of 2005 [S. 714], which would expand the ability of businesses to send faxes to their existing clients. In 2003, the FCC ruled [FCC 03-153] that an established business relationship was not sufficient consent by consumers to receive faxes unsolicited. This bill would overturn this regulation, which took effect at the beginning of 2005. The bill passed the Senate Commerce Committee last summer as [S. 2603], but two amendments were added by Sen. Barbara Boxer (D-CA) which will allow fax recipients to opt-out of future faxes at no cost and at any time of day and will enable the FCC to limit the duration of an “established business relationship.” A copy of the bill is available at [http://thomas.loc.gov/cgi-bin/query/z?c109:S.714:].
    [Sources: Senate Commerce Committee; Library of Congress]

    Universal Service Fund Exemptions Sought to Protect E-rate 04.11.05 – The Senate Commerce Committee held a hearing on [S. 241], a bill that would exempt universal service programs (including E-rate, which provides technology funding for low-income schools and libraries) from accounting rules established by the Anti-deficiency Act. The Anti-deficiency Act (ADA) prevents executive agencies from spending more money than they are legally authorized to spend. The FCC ruled last year that the Universal Service Administrative Company (USAC), which disburses universal service payments on behalf of the FCC, was operating in violation of the ADA. Congress passed a one-year waiver of compliance for USAC in response, but that waiver will expire at the end of 2005. In a statement before the committee, Co-Chairman Daniel Inouye (D-HI) spoke about the importance of protecting the services provided through the universal service program. “While lawyers and policy makers in Washington [argue] about accounting rules and antideficiency requirements, schools, libraries, and rural health care providers across the country were faced with the dilemma of shutting down or delaying deployment of innovative educational and medical services because of unreliable funding.”
    [Statement: http://commerce.senate.gov/hearings/testimony.cfm?id=1443&wit_id=3969 ]. For more information on the hearing, see [http://commerce.senate.gov/hearings/witnesslist.cfm?id=1443]. For a copy of [S. 241], see [http://thomas.loc.gov/cgi-bin/query/z?c109:S.241:].
    [Sources: Library of Congress, Senate Commerce Committee]


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  • Regulatory Activities

    New FCC Chairman Martin Names Staff Appointments 04.29.05 – FCC Chairman Kevin Martin announced a series of staff appointments during his first open meeting as Chairman. Daniel Gonzalez, who currently advises Commissioner Martin on legal and wireline competition issues, will serve as the Commission’s new Chief of Staff. Mr. Gonzalez has worked in several divisions at the FCC and once served as a Vice President for XO Communications. Michelle Carey, who has served as Deputy Chief of the Wireline Competition Bureau since September 2004 and served over four years as Chief of the Competition Policy Division, will become Chairman Martin’s Legal Advisor for Wireline Issues. Chairman Martin also indicated he would be appointing three new Bureau Chiefs: Monica Desai in Consumer and Governmental Affairs, Kris Monteith in Enforcement, and Tom Navin in Wireline Competition. A press release with more detailed biographical sketches is available at [http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-258473A1.txt].


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  • Judicial Activities

    Court Rules University Not Forced to Disclose Identities of File-Sharers 04.27.05 – According to a ruling by U.S. Magistrate Judge Russell A. Eliason, two North Carolina universities are not obligated to reveal the identities of students accused of copyright infringement by the Recording Industry Association of America (RIAA) because the copyrighted material was not stored on the universities’ networks. Because the students’ files were located on their own computers rather than on the university’s servers, the judge ruled, the subpoena requesting students’ personal information was invalid. The universities had refused the request for information about the students’ online aliases out of respect for their privacy.

    The RIAA has filed dozens of lawsuits over the last several years against students they suspect of illegally sharing music files over the Internet from university campuses across the country. This case was one of the earlier infringement lawsuits filed by the RIAA, which has since changed its tactics. Beginning in 2004, RIAA lawyers have filed “John Doe” lawsuits against students identified only by their IP addresses, then used court subpoenas to determine the identity of those individuals. “John Doe” lawsuits have longer procedures but do allow infringers’ identities to be uncovered. The RIAA plans to continue filing lawsuits to deter filesharing. Earlier this year, the Supreme Court heard arguments in the case MGM v. Grokster, which focuses on the legality of software programs that enable peer-to-peer filesharing. A decision in that case is expected to be released sometime in June.
    [Sources: RIAA, Associated Press]


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  • Items of Interest

    Chamber of Commerce Forms Coalition Advocating Telecommunications Reform 04.11.05 – The U.S. Chamber of Commerce announced the formation of TeleCONSENSUS, a coalition of businesses advocating reform of the nation’s telecommunications laws. The “coalition for innovation, jobs, & economic growth” grew out of a study conducted by the Chamber of Commerce on the telecommunications industry and barriers to investment. The report, entitled “Sending the Right Signals: Promoting Competition Through Telecommunications Reform,” recommended a number of significant regulatory reforms, including: phasing out network-sharing rules, increasing the amount of prime spectrum available for commercial wireless services, exempting cable modem and DSL services from common carrier regulations, exempting Internet services from telephone regulations, funding universal service programs from general revenue rather than fees and surcharges, and distributing universal service funds directly to targeted customers. The TeleCONSENSUS coalition will lobby Congress and conduct an education and grassroots campaign to push for a business-friendly rewrite of the Telecommunications Act. For more information on the coalition, including links to the findings of their report, see [http://www.teleconsensus.com].
    [Source: U.S. Chamber of Commerce]


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  • Research / Reports

    Municipal Broadband Stimulates Economic Growth 04.01.05 – A new report from the economic consulting firm Applied Economic Studies finds that municipal broadband networks in rural areas can have a significant impact on economic growth. The report, written by economist George S. Ford and telecommunications lawyer Thomas M. Koutsky, examined the economic impact of a municipally-owned broadband network that served businesses, hospitals, and schools in Lake County, Florida. The authors found that Lake County’s economic growth doubled in the years after making the network available to the private sector. The authors conclude that “efforts to restrict municipal broadband investment could deny communities an important tool in economic development.” A copy of the report is available (PDF) at [http://www.aestudies.com/library/econdev.pdf].
    [Source: Applied Economic Studies]

    Satellite Subscribership Grows In All Market Types, GAO Reports 04.06.05 – Subscribership to digital broadcast satellite (DBS) services increased dramatically from 2001 to 2004, according to a new report [GAO-05-257] from the Government Accountability Office (GAO). DBS has traditionally been strongest in rural markets, where cable companies often have difficulty providing service. However, the Satellite Home Viewer Improvement Act (SHIVA) of 1999 increased the competitiveness of DBS in urban and suburban markets. The GAO examined the trends in these markets from 2001 to 2004 and found dramatic increases in all areas. Overall, as of 2004, 17% of households subscribe to DBS service, up from 13% in 2001—a dramatic increase. Within urban areas, there was a 50% increase in the number of DBS subscribers, compared to a 32% increase in suburbs and a 15% increase in rural areas. GAO found that DBS subscription was heavier when competing against basic cable service than when competing against advanced cable services. Other factors influencing DBS penetration included high prevalence of multiple-dwelling units such as apartments (lower DBS subscribership) and the offering of local broadcast channels with satellite service (higher DBS subscribership). A copy of the report is available at [http://www.gao.gov/htext/d05257.html].
    [Source: GAO]

    U.S. Drops to 16th in Global Broadband Penetration 04.13.05 – According to statistics released this month by the International Telecommunication Union (ITU), the United Nations organization that coordinates global telecom networks, the U.S. has fallen to 16th in global broadband penetration with 11.4 broadband subscribers per 100 people as of January 2005. The U.S. position relative to other countries has slid in recent years from 13th in 2004 and 11th in 2003. The highest-ranked countries are Korea and Hong Kong, China, which both have penetration rates of more than 20%. Countries that moved up significantly in 2005 include the Netherlands, which moved from 9th to 3rd, and France, which jumped to 17th place after doubling its penetration rate, just behind the U.S. and ahead of the U.K. The statistics exclude mobile cellular broadband, though this is not significant in any of the countries. Other countries in the top ten include Denmark (19.3%), Canada (17.6%), Switzerland (17%), Taiwan (16.3%), and Belgium (16%). A chart showing the top 20 countries and their penetration rates is available online at [http://www.itu.int/osg/spu/newslog/ITUs+New+Broadband+Statistics+For+1+January+2005.aspx].
    [Source: ITU]


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  • Newsletter Info

    Center for Advanced Communications Policy


    Telecom/IT Policy Highlights Volume 5.04
    April 2005
    Alan W. 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 Alan Bakowski, Research Specialist [alan.bakowski@gcatt.gatech.edu], or Paul M.A. Baker, Ph.D., Assoc. Dir. of Research [paul.baker@gcatt.gatech.edu].