June 2015

The E-Rate Overhaul in 4 Easy Charts

Big changes to the E-rate program made by the Federal Communications Commission over the past 18 months are showing up in dramatic ways in 2015's requests for telecommunications-related funding by schools and libraries. The biggest shift: Huge demand -- and support -- for internal wireless connectivity. According to new data provided to Education Week by the FCC, applications for E-rate discounts to help purchase the equipment and services needed for internal wireless networks were up 92 percent compared to 2014-15. And for the first time in three years, those requests are likely to actually be granted. The FCC says it expects to make funding commitments for all of those so-called "Category 2" applications deemed eligible.

The price tag could rise as high as $1.6 billion. That money will be available because of a policy overhaul adopted by the FCC in summer 2014, as well as its historic vote in early 2015 to increase the annual E-rate spending cap from $2.4 to $3.9 billion. The new E-rate is directing resources "where schools and libraries need the most help: getting access to robust broadband," FCC Chairman Tom Wheeler wrote in a recent blog post. The changes will be widely felt on the ground, and soon. Historically, for example, a relatively small handful of large urban districts ate up whatever limited E-rate funds were available to support internal connections, leaving most schools and libraries with nothing. By instituting a new cap on the per-pupil amount that any one applicant could request, however, the FCC ensured that in 2015, all eligible applicants will share in the newly available funds for wireless. More than $238 million in commitments have already gone out. Not everything is roses: Many districts and libraries may face new holes in budgets resulting from the FCC's phase-down of support for older telecommunications technologies, which begins in 2015. But overall, Chairman Wheeler wrote, "we're thrilled that modernization is working as projected."

'Bitlicense' rules regulating bitcoin released

It's official: Companies dealing in cybercurrecy bitcoin now have to get a bitlicense to operate in New York state -- a rule that could spread to other states if successful. Just weeks before he is set to leave his regulatory role for private practice, Ben Lawksy, head of New York's Department of Financial Services (DFS), released rules outlining what bitcoin peddlers need to do to obtain and retain a "bitlicense" to operate in state. DFS has regulatory oversight over dozens of NY licensed banks and insurance companies, including Goldman Sachs, MetLife and Barclays. As head of DFS, Lawsky has has made it his mission to regulate cybercurrencies, which have been tied to some high-profile drug cases and other illegal activity. The 44-page document of final rules explains such details as cost of an application ($5,000) for a license, as well as what the license will allow companies to do.

Extremists using digital ‘call to arms’ in US

Counterterrorism officials are ramping up their concerns about the ability of foreign extremists to turn Americans into terrorists via the Internet. The attack at a “Draw Mohammed” event in Garland (TX) in May “exemplifies the call to arms approach employed by ISIL, along with the power of viral messaging,” Michael Steinbach, the FBI’s top counterterrorism official, told members of Congress. “Social media is yet the latest tool exploited by terrorists,” he added. For months, The group’s social media prowess -- which includes the use of slick marketing and the sophisticated ability to latch onto trending topics -- has helped direct foreigners to launch “lone wolf” attacks from thousands of miles away.

Ahead of the May Texas attack, for instance, an ISIS supporter posted a link to an article with information about the event, in which people were asked to draw the Prophet Mohammed. Muslims consider depictions of Mohammed deeply offensive. One of the Americans involved in that Texas attack then reached out to the ISIS supporter and appeared to advertise their violence mere hours before the attack, using the hashtag “#TexasAttack.” “This event highlights the growing threat our nation faces from a new generation of terrorist, often operating from afar, who use social media to find like-minded individuals within our borders,” deputy director of the National Counterterrorism Center, John Mulligan, said during the hearing in the House Homeland Security Committee.

Rep Speier: Tech knows more about trade deal than Congress does

The technology industry knows more about the Trans-Pacific Partnership (TPP) trade deal that many members of Congress, Rep Jackie Speier (D-CA) said. Rep Speier, who opposes President Barack Obama's plan to fast-track the deal through Congress, has lamented the secrecy surrounding the draft text of the trade agreement. "This process has been going on for a long time without our benefit. I was sitting in a meeting with tech execs from the valley who knew more about the TPP than I did," she said. "Because they're the ones drafting it.""I think we've got to go back to you know a Democratic process to forge a deal that will provide for TPP and the kind of transparency that we expect," she added. The Senate passed the fast track trade promotion authority in May but it faces opposition from most Democratic Representatives and some Republican Representatives in the House.

A FOIA quid pro quo

Vice News' Jason Leopold, revealed during a House Oversight Committee hearing a stunning instance where a government agency agreed to release information on certain terms. Leopold said he had sent a Freedom of Information Act request to the Office of Net Assessment (ONA), the Pentagon’s in-house think tank, which puts together reports on anything from futuristic warfare to what the situation in the Middle East is going to look like with regards to oil. "I asked for those reports. I filed a FOIA request; they refused to comply with my FOIA request. They said it was too broad. I narrowed it, they still said it was too broad. I sued them. Recently they said that ‘We’ll give you some documents as long as you promise to never file a FOIA request again and don’t have anyone else file a FOIA request on your behalf,'" Leopold said.

"How is that legal?" asked Rep Mark DeSaulnier (D-CA). "I don’t know but they put this in writing and I’m really looking forward to the day when I write this story up," Leopold said, adding that he did not agree to the terms. Leopold said that the ONA reports he was seeking are not classified, but that regardless, the agency can't even find them. Earlier in the hearing Leopold slammed the Pentagon for its FOIA practices, saying they have purposely "delayed and politicized" the process.

Hollywood In EU Spotlight as TV Probe Said to Escalate

Hollywood studios including 20th Century Fox as well as some of the European Union’s biggest pay-TV companies face an EU antitrust complaint over movie-licensing deals that regulators claim thwart cross-border competition. Apparently, EU regulators may send a so-called statement of objections to five studios and five broadcasters as soon as July. The move would escalate a 2014 probe into how contracts with EU broadcasters, including United Kingdom-based Sky Plc and its German and Italian units, curb the sale of movies and TV programs outside their home markets. Other film companies involved are Time Warner Inc.’s Warner Brothers unit, Sony Pictures, Comcast Corp.’s NBCUniversal Media and Viacom Inc.’s Paramount Pictures.

The EU has made competition in the digital market place one of its top priorities. Aside from clashing with Google over alleged abuse of market power, antitrust chief Margrethe Vestager opened an industrywide investigation into barriers that block access to Internet-based services and content -- including films and TV shows -- across the 28-nation EU. Apparently, France’s Vivendi SA and Spain’s DTS Distribuidora de Television Digital SA may also get the EU complaint. The EU case into so-called absolute territorial protection clauses was triggered by a ruling from the bloc’s top court in 2011 that the English Premier League’s geographic restrictions limiting where TV channels can show its soccer matches breached competition law.

Madeleine Findley for Deputy Chief of the FCC’s Wireline Competition Bureau

Chief of the Federal Communications Commission's Wireline Competition Bureau, Matthe DelNero, announced that he intends to appoint Madeleine Findley as a Deputy Bureau Chief. Findley will oversee a range of competition-related and other complex policy issues facing the Bureau. In the Office of General Counsel, Findley has served as Associate General Counsel since
April 2014, where she provided expert legal counsel on multiple high-profile proceedings, including the FCC’s decision in February 2015 to preempt laws restricting community broadband in Tennessee and North Carolina. Prior to joining the FCC, Findley was a partner with Wiltshire & Grannis LLP (now Harris, Wiltshire & Grannis LLP), where she practiced communications and privacy law, and was an associate at Sidley Austin LLP.

Reps Eshoo, Pallone Will Oppose FCC Reform Bill

House Communications Subcommittee Ranking Member Anna Eshoo (D-CA), has signaled she can accept an Federal Communications Commission reform bill with a delay on a provision letting more than two FCC commissioners meet outside of public meetings, but can't accept it if it includes Republican-backed amendments she has already said she opposes. That came in prepared text for her opening statement for a markup of HR 2583, the FCC Process Reform Act in the House Commerce Committee June 3. Ranking Member Eshoo had been a co-sponsor of the bill, but apparently wanted her name off it to avoid having to vote against her own bill, which has the Republican votes to be amended to include their proposals. Those include requiring the FCC to publish texts of draft decisions when they are circulated (customarily three weeks before a vote), to publish its decisions within 24 hours of a vote, and to publish 48 hours beforehand for decisions granted on delegated authority.

Ranking Member Eshoo said while she continued to support the underlying bill, even with the delay on commissioners meeting, she also suggested the above requirements were essentially poison pills. House Commerce Committee Ranking Member Frank Pallone (D-NJ) concurred. "While I support HR 2853 in its current form, I have been clear that I cannot support the other Republican drafts I anticipate will be added as amendments during markup," Ranking Member Pallone said. "Experts have said, quite simply, that it would result in confusion, litigation, and delay. So I will oppose those bills and any final bill that includes its provisions."

Senate Judiciary Committee considers key changes to patent overhaul

Bipartisan senators pushing for broad patent reform are adding a whole new section to their bill to placate industries that have been wary of congressional action. Senate Judiciary Chairman Chuck Grassley (R-IA) and other sponsors of the Patent Act unveiled a managers' amendment to the bill that will be taken up at June 4th's markup. The overall legislation is aimed at combating what industry groups say is growing abuse of the legal system, with so-called patent trolls buying up patents solely to extract settlements.

The bill makes a number of changes to the legal procedures of patent trials. But industries like biotechnology and pharmaceuticals have raised concerns about a different kind of alleged abuse taking place at the trial-like proceedings in the US Patent and Trademark Office (PTO), which were set up after Congress last passed a patent bill in 2011. Those proceedings at the PTO -- known as post grant and inter partes reviews -- were meant to offer a faster and cheaper way to challenge the validity of a patent. Supporters say the proceedings are important to weed out weak or vague patents. But critics and some lawmakers have said those proceedings are skewed too far against patent owners. They have also claimed that hedge funds use the proceedings to short stocks. The amendment would also make a number of changes to the underlying text, including to a contentious provision on fee shifting. The amendment is meant to relieve some of the burden on universities, inventors and commercial lenders -- who could be left on the hook for trolls' legal bills.

Two US Senators explain why Congress must unite around PATENT Act

[Commentary] In May, members of Congress from across the political spectrum found common ground on a piece of legislation to ensure that our patent system benefits true innovators rather than those who abuse it. Just a year after it first convened in April of 1790, the United States Congress passed legislation to promote the progress of science and the useful arts, giving American inventors the rights to the products they created. The bill would be the first of many to help foster an environment that both encouraged and protected our young nation’s innovators. Unfortunately, 225 years later, the patent landscape for today’s tinkerers, small retailers, and tech innovators alike is a hostile one.

For years, abusive actors have been taking advantage of a system meant to drive innovation, and have instead stifled job creation and threatened businesses around the country. The PATENT Act provides consensus solutions that would usher in significant reform and ease the burden on countless American companies and inventors. Our bipartisan bill shifts the legal burden back onto those who seek to game the patent system at the expense of businesses that are playing by the rules. The PATENT Act would put the responsibility on the plaintiff to explain the substance of the claim when filing an initial suit. It would also curb the practice of sending abusive demand letters that con people into paying settlement fees for unsubstantiated infringements. And it would limit costly discovery while preliminary matters in a case are resolved. Finally, our legislation would bring flexibility and transparency to patent litigation proceedings, discouraging frivolous lawsuits by shifting the responsibility for the cost of litigation to the losing party if the case was not objectively reasonable. Real patent reform enjoys strong bipartisan support in Congress and is something President Obama has said he wants to accomplish. We firmly believe the PATENT Act’s sensible reforms are the best way to deter those who abuse the system while also protecting access to justice for patent holders with legitimate claims of infringement. It’s time for Congress to unite around a bill that protects American entrepreneurs and safeguards our country’s culture of innovation.

Benton

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