Telecom
High Court's Decision Creates Legal Limbo On Line Sharing
     The Supreme Court this week refused to stop a decision by the federal D.C. Circuit Court of Appeals that favored the regional Bell telephone companies in a telecommunications industry dispute about sharing networks. The ruling means that FCC rules requiring the Bells to share their networks with competitors at deep discounts expired but left no clear roadmap for what federal and state regulations will replace them and when. Each of the four Bells has pledged not to immediately raise the rates they charge competitors. The decision, however, leaves few legal avenues available to competitors like AT&T and MCI -- and to state regulators. FCC Chairman Michael Powell said his commission will rewrite the rules and is "prepared to consider interim, transitional protections to bridge the gap" until new rules are finalized.

Telecom
Lawmakers Cite Puerto Rico As Model Of E-Rate Failures
     More than $100 million collected from telephone ratepayers through a fund designed to bring telecommunications services to rural areas was wasted in Puerto Rico, legislators said, and the FCC's inspector general testified that it was "the very tip" of the problem. FCC inspector Walker Feaster told the House Energy and Commerce Oversight and Investigations Subcommittee that the waste in Puerto Rico was emblematic of failures in the universal service fund's e-rate program, which connects schools and libraries to the Internet. He said 32 percent of 122 e-rate beneficiaries that his office investigated had misused the fund and that another 17 percent were not compliant with the FCC's procedures governing the fund.

E-Commerce
FTC Report Counsels Against A 'Do Not Spam' Registry
     The FTC recommended against creating a national "do not spam" registry to combat unsolicited commercial e-mail, saying that people and companies who send such e-mails would use the registry to get addresses and inundate citizens with even more unwanted e-mails. The agency instead recommended that Internet service providers increase efforts to create an authentication standard that would let them determine the origins of e-mails so spam could be identified and blocked. FTC Chairman Timothy Muris said authentication might pave the way for a do-not-spam registry later or eliminate the need for it altogether. Any such registry, if ever pursued, would require congressional legislation and funding and is years away, he added.

Porn
Proliferation Of Online Porn Prompts Call For New Rule
     The proliferation of pornography on Internet computer sites and services has prompted the nation's attorney general to propose a new rule crafted to ensure that minors do not appear in material created by producers of sexually explicit media. Attorney General John Ashcroft offered a rule that would update record-keeping requirements for such producers. Under a 1998 law, they must record the correct names of their performers; more details would be required under the new proposal. The text of the proposed rule says the "growth of Internet facilities in the past five years, and the proliferation of pornography on Internet computer sites or services, requires that the regulations be updated."

Crime
International Cyber-Crime Treaty To Move In Senate
     Years after negotiations concluded, an international convention on crime involving computer networks finally may be moving toward ratification in the Senate, but not without renewed resistance. The Senate Foreign Relations Committee held a hearing on the Council of Europe Convention on Cyber Crime, which would criminalize various willful, malicious activities on the Internet, such as hacking and fraud. Parties to the treaty agree to prohibit the activities under their domestic laws, adopt improved procedures for investigating computer crimes, and cooperate in investigations. Committee Chairman Richard Lugar, R-Ind., said he hopes the pact will be addressed sometime this summer. No senators expressed concern about the treaty, but privacy and civil-liberties advocates said it lacks "meaningful" safeguards for citizens.

Budget
Passenger System Becomes Target In Spending Debate
     Congress is using its power of the purse to target a controversial security program that would collect information on airline passengers. West Virginian Robert Byrd, the ranking Democrat of the Senate Homeland Security Appropriations Subcommittee and full committee, successfully added to the bill a provision that would prohibit the department from implementing the Computer-Assisted Passenger Prescreening System until certain privacy criteria are met. Both the subcommittee and full committee approved the bill, which would appropriate $33.1 billion to the department. The House Judiciary Committee, meanwhile, approved a new formula for distributing homeland security grants to the nation's "first responders" to emergencies.

Security
'Catch-22' Of Federal, State Laws Hinders Security Aid
     Conflicts between federal and state finance laws are impeding the dissemination of homeland security grants to states and localities, according to a report from the Homeland Security Advisory Council. The 1990 Cash Management Act requires the federal government to reimburse localities for grant money spent rather than provide the money for projects in advance. Many cities and towns, however, have rules that prevent purchase orders unless they have the money. "It's the ultimate Catch-22," said Massachusetts Gov. Mitt Romney. The report recommends that certain grants be exempt from the federal law for fiscal 2005.

Taxes
House GOP Leaders Take Gamble To Pass Corporate Tax Bill
     The House passed on a 251-178 vote a bill that would repeal a tax break for U.S. exporters while also delivering $145 billion in other tax relief to U.S. companies over 10 years. Republican leaders' decision to call the vote despite a large group of undecided GOP lawmakers paid off, as individual members' concerns faded with the reality of the vote. A key purpose of the bill is to eliminate the tax break for exporters, which was ruled an illegal subsidy by the World Trade Organization, a decision that triggered European Union sanctions against certain U.S. products. The White House urged passage of the bill to overturn those sanctions but reiterated its preference for a less costly measure.

On The Hill
House Panel Votes To Expense Top-Level Stock Options
     The House Financial Services Committee approved a measure that would require a company's top five officials to document the value of their stock options as expenses. The vote conflicts with a decision by the Financial Accounting Standards Board to require such expensing of stock options for all employees. Also on Capitol Hill this week, a House Energy and Commerce subcommittee approved a bill designed to protect computer users from "spyware" interlopers who secretly monitor Internet transmissions. The Senate Judiciary Committee approved a bill that would extend for five years the authority for satellite carriers to make secondary transmissions of "distant" network and superstation television programs. The House Science Committee approved a manufacturing technology measure. And that panel's Energy Subcommittee approved a bill to bolster supercomputing activities.

Telecom
Regulatory Break For Internet Telephony Faces Criticism
     Lawmakers speaking at a Senate Commerce Committee hearing derided legislation that would exempt Internet telephone service from regulation. Technology and telecommunications firms touted the bill. But Democratic Sens. Ernest (Fritz) Hollings of South Carolina and Ron Wyden of Oregon called the bill premature. Republican Conrad Burns of Montana voiced reservations about whether the measure would adequately address the ability to pinpoint callers who contact 911 by Internet telephony. And Sen. Ted Stevens of Alaska said the legislation would pose problems for the universal service fund that provides funding for rural phone consumers.