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Executive Summary


House Panel Intensifies FCC Probe

The House Energy and Commerce Committee has intensified its months-long investigation of the FCC and informed the agency this week that it considers allegations of regulatory mismanagement to be credible. Committee leaders from both sides of the aisle -- House Energy and Commerce Chairman Dingell, ranking member Joe Barton, R-Texas, and two other members -- requested exhaustive documentation of the FCC's policymaking and internal decisions dating back to January 2005, two months before Republican Kevin Martin was named commission chairman. The agency was instructed to respond by March 26. "We look forward to continuing to cooperate with the committee," FCC spokeswoman Mary Diamond responded. In their letter, the lawmakers said they are examining allegations raised by current and former employees and other sources "believed to be credible," but they need "additional information and records to determine whether these allegations can be substantiated." Martin has been accused of using heavy-handed negotiating tactics to push through a controversial relaxation of the nation's media rules and of trying to saddle cable operators with new regulations as punishment for refusing to adopt per channel pricing. He has repeatedly denied the allegations and insists his actions have been responsible and transparent. Meanwhile, a new GAO report found the FCC processes 95 percent of the citizen complaints it receives but does a poor job of tracking how it resolves them. The report said the FCC "needs to improve how it collects and analyzes data on complaints received, investigations conducted and enforcement actions taken to better manage its enforcement program.'' FCC officials disputed the report's methodology and several of its findings, according to the Associated Press.



Barton Crafting Bill To Overhaul Universal Service

House Energy and Commerce ranking member Joe Barton, R-Texas, one of the fiercest critics of the $7 billion universal service program, is quietly drafting legislation to permanently cap the federal fund, which subsidizes telecom and Internet connections for citizens, hospitals, libraries and schools in rural- and low-income areas. Committee staffers said the bill is intended to spark debate and influence any legislative action on the topic in 2009 after a new administration takes control. They did not say when the bill might be introduced. Barton is preparing his bill as the FCC grapples over revisions to the fund and Energy and Commerce Telecommunications and the Internet Subcommittee Chairman Edward Markey, D-Mass., plans hearings later this year on revamping universal service. The FCC is seeking to impose a temporary cap, but Barton would go further with a permanent ceiling, a move certain to draw the ire of the fund's many proponents on Capitol Hill, particularly on the Senate Commerce Committee. The USF has expanded by $1 billion in recent years, largely due to its increased support of wireless carriers. "He's looking to stem the rapid growth of the fund," a committee staffer said about Barton. The measure will call for reverse auctions, which award subsidies to carriers who agree to receive the lowest amounts of support. At present, multiple wireline and wireless carriers often qualify for USF assistance in the same area. In addition, Barton would base USF fees on phone numbers, which critics warn could mean higher rates for some consumers, particularly the low-income and elderly. The fees are now based on long-distance revenue, which means lower charges for customers making few calls. FCC Chairman Kevin Martin endorses both approaches.



Judiciary Panel Focuses On Net Neutrality

Antitrust law is the best way to preserve a free, open Internet and correct market distortions, House Judiciary Chairman Conyers said this week as his panel's Antitrust Task Force examined calls for Congress to stop communications giants from potentially blocking or degrading competing content carried on their high-speed Internet networks. But lawmakers should proceed cautiously and only if "we've clearly documented the existence of a problem that needs regulating," he said. Rep. James Sensenbrenner, R-Wis., said the committee must continue to exercise its jurisdiction on the issue. Conyers and Sensenbrenner sponsored a bill in the last Congress that would have amended the Clayton Antitrust Act with respect to competitive and nondiscriminatory access to the Internet. A Conyers' aide said the chairman is considering offering a similar bill this year. Energy and Commerce Telecommunications and the Internet Subcommittee Chairman Edward Markey, D-Mass., introduced a bill that would require the FCC to examine the issue. Rep. Steve Chabot, R-Ohio, ranking member of the panel's Antitrust Task Force, said legislation "could deter investments in innovation that would enable networks to advance in the future." Network neutrality advocates Michele Combs of the Christian Coalition of America and the American Civil Liberties Union's Caroline Fredrickson urged members to pursue legislation to set a national, nondiscrimination policy.

Homeland Security

Before Passage, Leaders Delay FISA Bill Vote For Rare Secret Session

Amid heated partisan debate over rewriting the nation's wiretapping laws and whether it should be done in open or closed session, House Democratic leaders late this week delayed a vote on legislation overhauling the Foreign Intelligence Surveillance Act until Friday –- when the measure narrowly passed, 213-197, on a largely party-line vote. The delay resulted from an agreement the Democrats made with Republican leaders to have the House convene in an hour-long secret session Thursday night for the first time in nearly 25 years. The deal did not sit well with several Democrats, who questioned why consideration of the FISA bill could not be done in the open. The session was requested by House Minority Whip Blunt, who said he had information he wanted to convey to members before they voted on FISA legislation. House Intelligence Chairman Reyes said he was not aware of any new information that Blunt might have. Even before the House passed its version of the bill Friday, President Bush had threatened to veto it – because it does not include a provision protecting from lawsuits telecommunications companies that allowed the federal government to eavesdrop on customers without a court order following the Sept. 11, 2001 attacks. "We do not want to empower [Republicans] to say, 'We have critical info and the Democrats didn't even want to hear it,'" said one top aide, explaining why top House Democrats agreed to the secret session. House Democratic Caucus sources said House Speaker Pelosi and Majority Leader Hoyer secured the support of a significant number of the Democratic members of the conservative-to-moderate Blue Dog Coalition by promising to work with Senate leaders on a compromise on the telcom company immunity issue. The Senate has passed its own version of the FISA bill that includes the immunity provision on which Bush is insisting. Privately, House Democratic leadership aides acknowledged that the House bill has no real chance of Senate passage – but that Friday’s vote ensured liberal Democrats had the chance to throw their support behind FISA reform legislation.

Homeland Security


FBI Abuses May Require New Legislation, Leahy Warns

Senate Judiciary Committee Chairman Leahy is warning that legislative action may be needed to correct the FBI's abusive issuances of national security letters, administrative subpoenas that allow agents to analyze telephone, computer and bank records in suspected terrorism cases without court warrants. His remarks come after the issuance of a Justice Department report intended to update a 2007 investigation that highlighted numerous improper and possibly illegal uses of the administrative subpoenas from 2003 through 2005. The report outlines additional abuses in 2006, which underscore years of "systemic failure throughout the FBI," Leahy said, adding that he intends to "seek accountability and adherence to the rule of law, which was evaded before 2007."

Justice Inspector General Glenn Fine's report found 49,425 security letter requests were made by the FBI in 2006 -- a 4.7 percent increase over 2005. Fine said the FBI and Justice Department have made progress in implementing measures to address the problems he cited, but he said it is still too early to tell whether the steps will fully eliminate problems because only a year has passed since his initial report and solutions are still being implemented. But former FBI agent Michael German, who now works for the American Civil Liberties Union, said the agency has "flagrantly put aside the rule of law and its internal guidelines time and again."

Intellectual Property

Judiciary Leaders Offer Amendments To Patent Bill

Senate Judiciary Chairman Leahy, ranking member Arlen Specter, R-Pa., and Sen. Orrin Hatch, R-Utah, this week unveiled more than a dozen proposed amendments to a bill aimed at overhauling the U.S. patent system, which the Senate may consider after its two-week recess. Most were minor changes or technical in nature and did not address the legislation's most controversial provisions. Critics have complained that months of closed-door negotiations have not adequately addressed their concerns, particularly language that would alter the standard for calculating damages in infringement lawsuits. Proponents of the patent bill, which was introduced by Leahy and Hatch in April, said circulating the batch of amendments was a big step toward passage of the legislation because it cleared the way for final deliberations on the few remaining issues. One possible amendment would codify a 2007 standard set by the U.S. Court of Appeals for the Federal Circuit, in which the specialized patent panel said proving willful infringement in patent cases should require at least a showing of "objective recklessness" on the part of an alleged infringer. Language that would eliminate the requirement that applicants must disclose the "best mode" of use for their invention also is part of the package. A spokesman for the Innovation Alliance, whose members oppose the bill's current version, said none of the contentious issues are addressed in the committee's changes. The group also criticized proposed changes offered by a group of firms that back the bill. In a letter this week to Senate leaders, the alliance said the proposed language from the Coalition for Patent Fairness, which includes Cisco Systems, News Corp., Time Warner and others, "is anything but a compromise."

Intellectual Property

House Panel Aims To Take Up 'Orphan Works' Bill

The House Judiciary Courts, the Internet and Intellectual Property Subcommittee tried to make progress this week on a proposed update to laws governing "orphan works," or copyrighted content whose owners cannot be easily identified. Courts, the Internet and Intellectual Property Subcommittee Chairman Howard Berman, D-Calif., acknowledged objections by some stakeholders but said his intention is to move forward with a bill that will find a practical way to address their concerns. Legislation proposed in the last Congress was condemned by photographers and illustrators who rejected language to protect those who use content after conducting unsuccessful, "reasonably diligent" searches for the owners of the copyrighted material. They argued that users would not actually engage in meaningful searches and would infringe on images, music and video anyway. During a hearing this week on the issue, Victor Perlman, general counsel for the American Society of Media Photographers, pointed out that most shutterbugs have "limited resources and no backup [and] rely on revenue from licensing and selling prints." And technologies for identifying digital images are only moderately helpful because "far more copyrighted images are in analog print form," he said. Textile and home goods manufacturers have joined the chorus of criticism, arguing that altering the law would make their products more susceptible to infringement. A representative for textile and fabric trade groups said the onus should be on the Copyright Office to create a fully searchable image database to keep tabs on protected content - an idea the Register of Copyrights Marybeth Peters said would be expensive and burdensome for her office. She urged Congress to pursue legislation to help alleviate the problem while setting a "willing buyer, willing seller" standard for occasions when an owner emerges.


Industry Calls For More Visas For High-Skilled Foreigners

Immigration lawyers are warning companies seeking foreign high-tech workers that the 65,000 H-1B visas available April 1 will likely be exhausted that day, repeating last year's scenario. Those workers will not be allowed begin work until Oct. 1 because the six-year visas are set to begin in FY09. According to Compete America, a coalition of businesses seeking an increase in the H-1B cap, this will be the fourth year in a row that available H-1B visas have been exhausted before the start of the corresponding fiscal year. An additional 20,000 H-1B visas will be available for foreign graduates of U.S. universities with advanced degrees. Last year, those visas were exhausted a few months after they became available. Businesses have been clamoring for an increase in H-1B visas ever since the annual cap fell from 195,000 to 65,000 in 2004, but they have been stymied by lawmakers on both sides of the aisle. Some Democrats and unions argue that H-1B visas take jobs from skilled U.S. workers and exploit foreign workers, while some Republicans say Congress should focus on enforcing illegal immigration before making it easier for new immigrants to enter the country. Legislation that would boost H-1B and other employer visas is likely to get tied up in thorny debates about enforcing the border and the illegal population, making it unlikely anything more than limited, temporary measures can pass this year. American Electronics Association President Christopher Hansen said while it might be difficult to get a measure passed during an election year, he added that, "At the very least, what we're doing is laying the predicate for something that will happen in 2009."


Gates: U.S. 'Must Act Decisively' To Maintain Edge

The United States' position as a global leader in innovation is at risk and Congress, the Bush administration and the next president "must act decisively" to maintain the momentum, Microsoft Chairman Bill Gates told the House Science and Technology Committee this week. Gates's appearance at the standing room-only hearing was likely his last congressional testimony before leaving his job at Microsoft in the summer to work full time for his foundation. Science and Technology Chairman Gordon said he worried the country is "on the cusp of another Sputnik moment" where the United States must to play catch-up as it did with Russia during the space race of the late 1950s. Gates said one of the most critical steps Congress can take is to fully fund the America Competes Act. The measure, signed into law last year, authorizes a doubling in funding for the National Science Foundation, National Institute for Standards and Technology and the Department of Energy's Office of Science by 2010. Neither appropriators nor the White House have kept pace with the ambitious schedule authorized by the law. "Our country is at a crossroads," said Gates, who also urged lawmakers to overhaul math and science education and immigration policies. "For decades, innovation has been our engine of prosperity and without leadership from Congress and the president and the commitment of the private sector to do its part, the center of progress can shift to other nations that are more committed to the pursuit of innovation." On the immigration front, wrongheaded visa restrictions are impacting top foreign scientists and engineers' decisions to "stay here and come in the first place," Gates said in urging an increase in H-1B visas for skilled foreign workers.


Bush Ratchets Up Pressure On Colombian Trade Deal

President Bush and the White House ratcheted up pressure on Democratic leaders to act on a free-trade agreement with Colombia, with an administration official saying the White House will try to force a vote by transmitting the proposal to Congress shortly after lawmakers return at the end of March from their spring recess. Forcing the issue might shatter the spirit of cooperation on trade that the administration and congressional Democrats have had since last year. But Trade Representative Schwab said the administration had tried to do everything Congress had asked. Bush warned this week that if Congress rejects the deal, "We would cripple our influence in the region and make other nations less likely to cooperate with us in the future." Bush also said the deal would increase exports to Colombia, and he offered to sign legislation assisting workers harmed by trade. U.S. labor officials oppose the deal with Colombia, citing continued violence against Colombian labor leaders and President Alvaro Uribe's anti-union policies. Once the Colombia agreement is formally sent to Congress, lawmakers have 90 days to act under "fast-track" trade promotion authority rules. However, House Speaker Pelosi dismissed any chance for a vote on the U.S.-Colombia free trade agreement until more is done legislatively to address the needs of workers that could be harmed by the deal. "Until and unless we have a robust Trade Adjustment Assistance bill to help the people affected, I don't see any chance for the Colombia Free Trade agreement," she said, a view shared by Senate Finance Chairman Baucus. The House passed a TAA bill last year but President Bush threatened to veto it, arguing it was too costly and covered too many additional workers without commensurate reforms. Baucus is trying to fashion a bipartisan TAA bill with Finance ranking member Charles Grassley, R-Iowa.

Homeland Security

Lawmaker, GAO: More Work Needed On Cybersecurity

More than five years after the enactment of a law aimed at strengthening data security across the federal government, agencies "might be falling into the trap of complacency and just checking boxes," Senate Homeland Security and Governmental Affairs Federal Financial Management Subcommittee Chairman Thomas Carper, D-Del., said at a hearing this week. The hearing followed release of an annual report to Congress by OMB that showed progress is being made by some agencies under the Federal Information Security Management Act but deficiencies remain. Karen Evans, OMB's e-government administrator, said the effectiveness of FISMA "all depends on how the agency goes about doing the work." If an agency is "doing the work because OMB says it has to do it, it's a paperwork exercise," she said. If an agency uses FISMA with security in mind, the law is a more reliable measurement tool, she said. The departments of State, Treasury and Defense as well as NASA have taken significant steps to meet key security measures in 2007 and 92 percent of all agencies operated with complete certification and authentication of systems, OMB found. However, GAO's Greg Wilshusen said that 20 of 24 major federal agencies continue to experience data security troubles. According to GAO, most did not implement controls for limiting system access or guarding against intrusion, nor did they regularly configure devices to fix vulnerabilities, said Wilshusen, who agreed with Cyber Security Industry Alliance President Tim Bennett that legislation to enhance FISMA is needed. While the House is considering a bill to boost security, Carper's staff is in the process of consulting with experts to determine whether the law needs to be changed, an aide said. Evans cautioned against major FISMA modifications because "agencies understand it, [and] the framework is a sound framework."


EU Clears Google-DoubleClick Deal

The European Commission gave final approval this week to Google's acquisition of Internet advertising firm DoubleClick. The commission, the European Union's regulatory arm, said that its investigation found that the merger "would be unlikely to have harmful effects on consumers, either in ad serving or in intermediation in online advertising markets" and therefore it would not hinder competition within the European Union. Some consumer groups have raised concerns that combining the two firms could have privacy implications. U.S. privacy watchdogs the Electronic Privacy Information Center and Center for Digital Democracy released a joint statement saying that by failing to impose safeguards, European regulators "have helped strengthen a growing digital colossus that will now be in a dominant position to shape much of the global future of the Internet and other online media." But the commission noted that Google and DoubleClick are still required to abide by EU privacy laws regarding the use of personal data about EU citizens.

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