March 2010

Treasury Department says broadband stimulus capital expenditures will not be counted as taxable gross income

The Treasury Department has told the National Telecommunications & Information Administration that some broadband grants will be tax deductible, and others won't.

Generally, a corporation's gross income includes all income, including governmental grants, absent any exclusion. But there is an exclusion for grants for capital expenditures to be used solely for acquiring capital assets to expand the business and that also meet other criteria -- be used for working capital rather than compensation for service and be of commensurate benefit to the size of the grant. In that case, the grant is not counted as taxable gross income. But grant money used for operating expenses is taxable as gross income grant recipients will be able to deduct business expenses, operating losses and other deductions.

FCC Has Legal Obligation to Preserve Free TV

What if you started a voluntary spectrum reclamation program and everyone came? [Like you never asked yourself that before.]

What if the Federal Communications Commission allowed broadcasters to give up their spectrum and every station in market decided to do so? FCC broadband plan spokesman Mark Wigfield says the commission, by law, has to ensure that some level of over-the-air service remains in each market. That means the commission, at least under current law, can't clear the broadcast band. It also means that not everyone who wants a buyout may get it.

Disney May Pull ABC From Bigger Cable Rivals Next

Walt Disney, fresh from a dispute with Cablevision, may be about to do it again with bigger cable operators, analysts said.

Disney's agreement with Time Warner Cable ends in August. Time Warner Cable has already put its 13 million viewers on alert, noting in an e-mail to subscribers yesterday that they haven't lost access to the signal "yet." Larger rival Comcast Corp., whose contract for ABC isn't up this year, also will face off with CBS Corp. at the end of 2010 as more broadcasters seek payment for channels that used to be free. "As the broadcast networks are less able to get advertising revenue, they're turning to the cable guys to make up for that shortfall," said Todd Mitchell, an analyst with Kaufman Brothers. "For the cable guys, these programming costs are vastly outstripping their subscription pricing, so we're getting to the point of showdowns."

FCC Tackles Backlog of Indecency Inquiries

After a hiatus of what numerous attorneys say is close to two years, the Federal Communications Commission has begun to follow up on some of the one million-plus indecency complaints it has acknowledged are in its pipeline, including one concerning a Dr. Phil episode that aired four years ago.

This development will require broadcasters to once again hunt down old show tapes, and accrue documents and other materials -- along with new lawyers' fees -- to defend their own or their networks' programming decisions. Two communications attorneys who spoke on background acknowledged that they are aware of at least three letters of inquiry sent out by the FCC in the last two months. After a complaint is filed, the letter is essentially the FCC's first step in following up on a complaint if the Enforcement Bureau deems that it merits further inquiry. It is a step the FCC has heretofore been reluctant to take. The letters come after a period of court-enforced-or at least prompted-inactivity on that front, the attorneys said. That hiatus was due to the court decisions, including the FCC's indecency findings against the Super Bowl halftime and swearing on Fox, that initially went against the FCC.

Buzz + Latitude = A Minefield for Google

Google is looking to integrate its Latitude and Buzz offerings which means Buzz's privacy problems may be about to get even bigger.

Latitude, which launched last year, enables users to find friends and broadcast their whereabouts to others. Those aren't revolutionary features, of course — Loopt and Useful Networks are just two that have gained some traction with similar friend-finding offerings. But Latitude's tracking functionality is potentially more invasive than Buzz, which requires users to check in every time they want to update their location. And Google a few months ago sparked controversy by adding location alerts and history, features that inform users when their fellow Latitude friends are nearby and allowing users to see where they've been. Integrating Latitude features with Buzz — which has millions of users — will further complicate a service that for some is already too confusing and who are likely to inadvertently broadcast their location information to Buzz-using friends even if Google does a good job of informing them that the two offerings sometimes work as one. Unless Google first makes Buzz much simpler, CEO Eric Schmidt will have a lot more opportunities to blame users for misunderstanding the service.

Consumers weigh in on top 10 meaningful use arguments

The Consumer Partnership for eHealth (CPeH), a coalition led by the National Partnership for Women and Families, has collected consumer and employer perspectives on the top 10 arguments concerning meaningful use. And with only a week left before the public comment period on meaningful use comes to a close, the Office of the National Coordinator for Health Information Technology is urging the public to weigh in with their own thoughts. While the healthcare provider community's concerns with the government's proposed definition of "meaningful use" of healthcare IT are well-documented in the media, less attention has been paid to the consumer and employer perspectives.

Family Physicians urge changes to meaningful use rule

Although the American Academy of Family Physicians agrees with many of the stated goals of the proposed meaningful-use criteria for receiving federal subsidies for health IT investments, the CMS needs to "significantly modify the proposed rule," said Ted Epperly, board chairman of the group, in a seven-page letter to acting CMS Administrator Charlene Frizzera.

This new set of 'Meaningful Use' regulations shares a similar vision and objectives with AAFP policy, and we are excited about the potential health IT progress made possible with these regulations," Epperly wrote. "We are especially encouraged by the focus on care coordination, quality, and patient-centeredness. It is our hope that we can move the health care system rapidly toward more patient-centered, coordinated, and reliably high quality care." That said, Epperly then went on to note several details in the proposed rule that the AAFP found "unworkable, excessive, or redundant, and will actually impede the very goals of the legislation." The letter said that the administrative burden of reporting computerized physician order entry measures "is excessive to the point of being unachievable for most eligible providers." Another concern was that the rule could require manually entering results from laboratories that don't have an interoperable interface with the physician's electronic health record.

IT adds 25,000-plus jobs so far in 2010

IT employment grew by 0.37 percent, or 14,000 jobs, in February, one of the strongest month-to-month gains since 2008, according to the TechServe Alliance, an IT services industry group that analyzes U.S. Labor Department unemployment data.

In January, IT employment increased by 12,900 jobs, TechServe Alliance reported. While IT employment still remains some 200,000 jobs below its 2008 peak of 4 million jobs, this statistical climb out of the hiring abyss is backed anecdotally. "I am seeing a lot more demand out there," said Scott Archibald, managing director of Bender Consulting, a Houston-based management consulting firm. "As a general trend, I would believe what the numbers are saying at this point."

Treasury Issues New General License to Boost Internet-Based Communication, Free Flow of Information in Iran, Sudan and Cuba

The Department of the Treasury's Office of Foreign Assets Control (OFAC) amended the Iranian Transactions Regulations, Sudanese Sanctions Regulations, and Cuban Assets Control Regulations to ensure that individuals in these countries can exercise their universal right to free speech and information to the greatest extent possible.

The amendments add general licenses authorizing the exportation of certain personal Internet-based communications services - such as instant messaging, chat and email, and social networking - to Iran, Sudan and Cuba. The amendments also permit the exportation of related software to Iran and Sudan. The new general licenses authorize exports from the United States or by U.S. persons to persons in Iran and Sudan of services and software related to the exchange of personal communications over the Internet, including web browsing, blogging, email, instant messaging, and chat; social networking; and photo and movie sharing. Today's amendments also provide that specific licenses may be issued on a case-by-case basis for the exportation of services and software used to share information over the Internet that not covered by the general licenses.

Justice Department Requires Key Divestiture in Election Systems & Software/Premier Election Solutions Merger

The Department of Justice announced March 8 that it will require Election Systems & Software (ES&S) to divest voting equipment systems assets it purchased in September 2009 from Premier Election Solutions Inc. in order to restore competition.

The assets to be divested include the means to produce all versions of Premier's hardware, software and firmware used to record, tabulate, transmit or report votes, including the Assure 1.2 system, and a license to better serve disabled voters. The department said that today's settlement will restore competition in voting equipment systems in the United States and that, without the divestiture, the acquisition would result in higher prices, lower quality and a reduced incentive to innovate.

The Department of Justice's Antitrust Division, along with nine state attorneys general, filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., alleging that the transaction harmed competition. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the department's competitive concerns. The state attorney general offices are: Arizona, Colorado, Florida, Maine, Maryland, Massachusetts, New Mexico, Tennessee and Washington.

Under the terms of the settlement, ES&S must divest all of the intellectual property associated with all versions-past, present and in development-of the Premier voting equipment systems to another company. ES&S also must divest all Premier tooling and fixed assets, as well as inventory of parts and components. In order to allow the divestiture buyer to better serve disabled voters, ES&S must also grant a fully paid-up, irrevocable, perpetual license to use the AutoMARK, ES&S's ballot marking device for which Premier had a limited license prior to the acquisition. The buyer of the divestiture assets will have the right to modify and improve both Premier products and the AutoMARK.

ES&S must sell the divestiture assets to a buyer approved by the department. The settlement prohibits ES&S from bidding on new voting equipment system contracts using the Premier equipment. The department also required that ES&S grant the divestiture buyer an opportunity to compete to provide services to Premier customers currently under contract with ES&S, giving customers the option to switch to the divestiture buyer or to remain with ES&S. The department said that this option addresses customer concerns that an outright divestiture of service contracts would disrupt the administration of upcoming primaries and general elections. ES&S also must provide access to knowledgeable Premier employees and agree to offer a supply agreement to allow the divestiture buyer time to establish its own manufacturing of voting equipment systems.

The proposed settlement, if approved by the court, would be in effect for 10 years.