Archive: June 2011

1
FTC Launches Antitrust Investigation Against Google
2
Supreme Court Strikes Down California Law Prohibiting the Sale of Violent Video Games to Minors
3
Live Webcast Examines Controversial Pole Attachment Rules and Right-of-Way Access [UPDATED 6/21/11]
4
FCC Working Group Releases Future of Media Report
5
FCC Proposes to Extend Outage Reporting Rules to Internet-based Services [Updated: 6/9/11]
6
Spectrum Auction Legislation Passes Senate Commerce Committee
7
House Committee Launches Data Security and Electronic Privacy Review

FTC Launches Antitrust Investigation Against Google

By Ryan Demotte

Last week Google acknowledged in an SEC filing that the Federal Trade Commission has launched a formal antitrust inquiry into the company’s search and advertising business practices, issuing a subpoena and notice of a civil investigative demand to the company. According to news reports, FTC lawyers have been informally gathering information for several months concerning the way Google orders search results and advertising. By taking this step, the FTC can compel Google to turn over a wide range of internal information concerning its business. Rivals argue that Google engages in anticompetitive conduct by using its dominance in the search market to favor its own services and reduce web traffic to competing services. Google already faces a similar investigation by European regulators.

In a response posted on its official blog, Google provided a preview of what may be its core defense to any antitrust allegations – that competition in the search engine market is “only one click away,” and that users are free to use any of a variety of alternatives to Google. 

Using Google is a choice – and there are lots of other choices available to you for getting information: other general-interest search engines, specialized search engines, direct navigation to websites, mobile applications, social networks, and more.   

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Supreme Court Strikes Down California Law Prohibiting the Sale of Violent Video Games to Minors

The Supreme Court today concluded that video games qualify for the same First Amendment protections afforded to books, plays, and films. The Court’s 7-2 opinion in Brown v. Entertainment Merchants Assoc. upheld the 9th Circuit decision overturning a California statute which applied to video games containing the “killing, maiming, dismembering, or sexually assaulting an image of a human being” and punished violators with fines up to $1,000. 

Although this decision is the first time the Supreme Court addressed whether video games deserve the protection of the First Amendment, it concerns a 2005 state law that is already somewhat dated due to its focus on retail sales of disc-based games. Much of the recent growth in video game industry has shifted to games that operate online or over mobile wireless networks where access restrictions based on age or parental consent are more difficult to enforce.

Writing for the majority, Justice Scalia determined that the California law failed both prongs of the applicable “strict scrutiny” standard of review: 1) California did not demonstrate a compelling governmental interest in limiting minors’ access to violent games and 2) the state did not choose narrowly tailored means to implement the ban. On the first element, Justice Scalia found the purported connection between video games and increased violence in children unpersuasive, writing “[a]ny demonstrated effects are both small and indistinguishable from effects produced by other media. Since California has declined to restrict those other media, e.g., Saturday morning cartoons, its video-game regulation is wildly under-inclusive, raising serious doubts about whether the State is pursuing the interest it invokes or is instead disfavoring a particular speaker or viewpoint.” On the second element, the opinion noted that the video game industry already offers a voluntary rating system which can guide concerned parents. The Court distinguished its findings from the facts of Ginsberg v. New York, which involved the sale of “obscene” content to children, by remarking that the violence contained in the video games fell outside the Court’s traditional definition of obscenity.

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Live Webcast Examines Controversial Pole Attachment Rules and Right-of-Way Access [UPDATED 6/21/11]

Last week’s “Poles and Holes” webcast, carried live on Broadband US TV, sparked a lively debate among panelists representing the telecom sector on the one hand, and utility and local governmental interests on the other. The program featured FCC Wireline Competition Bureau Chief Sharon Gillett who talked with co-hosts Marty Stern of K&L Gates and Jim Baller of The Baller Herbst Law Group about the scope and application of the FCC’s new pole attachment rules, including the rules’ controversial new telecom rate formula and the first-time requirement that incumbent telephone companies get the benefit of regulated pole attachment rates.

The panel discussion highlighted the strong disagreement between telecom industry interests and utilities over the Commission’s new telecom rate formula, new deadlines on completing attachments, and whether revised rules were needed at all. On rights-of-way access and facilities siting matters involving local governments, there was also significant disagreement over the extent to which particular local governments have been a hindrance to deployment. One industry panelist suggested, particularly as to wireless deployments, that “it’s a real fight” in too many cases. Joanne Hovis, President-elect of NATOA, bristled at that notion, stressing the interest of governments in working cooperatively and collaboratively with providers to facilitate broadband deployment, and argued that the industry is trying to “short-circuit localism” and asking the FCC for relief. Hovis, instead, offered that industry should “come to us and we will work with you. If you have a problem with one of our members, we will work with them as well.”

The webcast may be viewed here (registration required).

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FCC Working Group Releases Future of Media Report

The FCC Working Group on the Information Needs of Communities delivered a comprehensive report yesterday addressing recent fundamental changes in the media landscape. The “Information Needs of Communities” report, produced by a group of journalists, scholars, media entrepreneurs, and government officials, reached a number of conclusions indicating that while technological advancements have improved public access to information, major deficiencies exist in contemporary news coverage. Specifically, the report found:

  • An explosion in Internet-based reporting on “hyperlocal” news directed by citizen journalists. The report expects further public reliance on Internet news sources as these non-traditional outlets proliferate. The Working Group pushed for rapid universal broadband deployment to expand access to these new media sources in rural and underserved communities. 
  • A marked decline in “local accountability reporting” from tradition news organizations. The Working Group noted that the recent increase in media outlets failed to result in more stories focused on community issues. The report warns that the dearth of local overage will result in less government accountability, greater corruption, wasted taxpayer dollars, and other community detriments. As a result, the study recommends policymakers craft incentives for media organizations to establish a “state-based C-SPAN” system and allocate more of the federal government’s $1 billion advertising budget for local media outlets.
  • Enhanced collaboration between commercial and non-profit media organizations, with synergies growing across media sectors. The report discovered increased diversification in non-profit media offerings, which the Working Group suggested should be supported through favorable tax reforms.
  • The FCC should take action to put media disclosure information online for easier public access. The Working Group advocated streamlining programming disclosures and eliminating burdensome disclosure rules. The report also advised the agency to take steps to discourage “pay-for-play” arrangements where TV stations allow advertisers to influence content. The report calls for the online disclosure of these arrangements.
  • The media industry would benefit from the repeal of the Fairness Doctrine and the termination of the FCC’s localism proceeding. The report also suggested the FCC re-assess the efficacy of the current satellite TV set-aside for educational programming.

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FCC Proposes to Extend Outage Reporting Rules to Internet-based Services [Updated: 6/9/11]

Update [6/9/11]:  The FCC’s Notice of Proposed Rulemaking extending outage reporting requirements to interconnected VoIP and broadband-based services was published in today’s Federal Register.  Comments are due by AUGUST 8, 2011 and reply comments are due by OCTOBER 7, 2011.  As we previously noted, the proposed rules raise a number of the same jurisdictional issues as the FCC’s net neutrality order and other Commission initiatives extending various regulatory requirements to IP-based services, and will likely be hotly contested. 

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The FCC believes Internet-related outages are a growing problem for which providers lack sufficient accountability and consumers lack appropriate notice. To address these issues, yesterday the FCC adopted a Notice of Proposed Rulemaking which would require interconnected VoIP, broadband Internet, and broadband backbone providers to report service outages lasting longer than 30 minutes. The proposal would impose reporting obligations similar to those currently borne by wireline and wireless carriers, cable operators, and certain satellite providers, and represents the latest example of FCC efforts to layer traditional carrier regulations on VoIP and broadband providers. The Commissioners voted 4-0 in favor of the proposed rules (Commissioner Meredith Baker recused herself following her announced upcoming departure from the FCC to join NBC/Universal). Citing the recent natural disasters affecting Japan and the Midwest and Southern states of the United States, Chairman Julius Genachowski stated the reporting obligations would provide the FCC with the data necessary to rapidly respond to emergency situations.

Leading Internet service and VoIP providers immediately criticized the proposed new rules, arguing that regulations designed for traditional circuit switched phone service are ill-suited for Internet-based technologies. By contrast, public service commissions of states like California and New York hailed the proposal as an effective means of improving local emergency communications.

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Spectrum Auction Legislation Passes Senate Commerce Committee

With wireless Internet traffic expected to increase 26-fold over the next few years, the Senate Commerce Committee yesterday approved the Public Safety Spectrum and Wireless Innovation Act, sending the divisive legislation on to the full Senate for consideration. The bill further stokes the ongoing battle across industry sectors over how best to apportion spectrum and who should bear the burden of reallocation, addressing in one bill issues surrounding both the public safety D-Block spectrum and broadcast spectrum reallocation.

The cornerstone of the new legislation is the establishment of controversial “incentive auctions,” where television broadcasters and other licensees will voluntarily cede some of their existing spectrum inventory to the FCC in exchange for a share of the auction proceeds. The Act would also compensate broadcasters that retain their spectrum but agree to be “repacked” to adjacent channels, potentially freeing up new swaths of spectrum for public use. Auction income would be used to fund the construction and maintenance of a nationwide wireless broadband network dedicated to public safety services. Any surplus revenue obtained from the auctions would go to the U.S. Treasury targeted for deficit reduction. The Act further allocates 10 megahertz of spectrum known as the D-Block for the creation of the public safety broadband network and would permit public safety officials to lease capacity on their network subject to certain restrictions.

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House Committee Launches Data Security and Electronic Privacy Review

In the wake of recent high-profile data breaches suffered by major companies that exposed over 100 million customer records to identity theft, the House Energy and Commerce Committee announced plans to conduct a sweeping review of the data security and privacy issues affecting American consumers and businesses. The Committee will divide the review into two phases by first surveying current security measures used to protect personal information online before turning to bolstering privacy protections for Internet users. Committee Chairman Rep. Fred Upton (R-MI) noted that the recent rise in cyber attacks seeking access to personal data necessitates a reassessment of the security standards used by companies that collect customer information. Communications and Technology Subcommittee Chairman Rep. Greg Walden (R-OR) echoed Sen. Upton’s concerns and stated that the review aims to produce policies which will strike a balance between protecting consumer information and maintaining innovation.

The Committee’s review will likely serve as a launching point to evaluate existing cybersecurity proposals and develop new data protection legislation. In April, Sen. John Kerry (D-MA) and Sen. John McCain (R-AZ) introduced the “Commercial Privacy Bill of Rights Act” to establish federal consumer privacy protections that would apply across industry sectors and level stiff civil penalties against companies that mishandle or lose customer information. To protect the privacy of young social media users, Rep. Joe Barton (R-TX) and Ed Markey (D-MA) proposed the “Do Not Track Kids Act,” which would establish a “Digital Marketing Bill of Rights for Teens,” require companies to erase personal information upon request, and prohibit the storage of user geolocation data. The storage of geolocation data garnered recent media attention following reports that Apple’s iPod and iPad operating systems tracked user movements through a software “bug” which the company later removed. States such as California have also attempted to force social media providers to afford customers more control over their online privacy settings, facing staunch opposition from many major Internet companies.

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