Lobbying
Tech, Defense Industries Decry 'Burdensome' Security Rules
by Ted Leventhal
Companies seeking liability protection from the Homeland Security Department for security technologies face burdensome disclosure requirements and poor safeguards for protecting sensitive corporate information, according to some technology and defense trade groups.
Homeland Security developed the regulations to implement a 2002 law limiting the insurance risk and litigation costs for manufacturers of anti-terrorism technologies used by federal agencies. Rules drafted by the department require companies to submit extensive corporate data before protection is granted.
Industry representatives argued in filings with the federal government that such data is too intrusive and too time-consuming to compile. They also said Homeland Security has not crafted a plan to protect the critical data from unauthorized disclosures.
"We are concerned that the massive scope of scientific, business and insurance/risk data to be required on applications to the department is so burdensome that even the largest information technology companies will need to assemble massive internal teams to comply with the requirement," wrote the Information Technology Association of America (ITAA). The group said Homeland Security's application process is "daunting in its scope, without justification in its detail and without statutory support in its wide-ranging data requirements."
ITAA attacked the need for market forecasts for specific technologies. "This information may very well not be available to the applicant, and even if it is, [it] amounts to the most highly confidential and proprietary information to a corporation," the group argued.
Brendan Peter, ITAA's senior director for enterprise solutions, said Homeland Security has underestimated the amount of time required by companies to compile the information.
"They say 36 to 108 hours, but we think it's more like 1,000 hours on par," he said, noting that such a demand is an especially daunting task for a small- or medium-sized business to achieve. "It could lead to good technologies not being put on the table."
The National Defense Industrial Association also expressed concerns over the lack of assurance in protecting sensitive data, adding that the significant amount of information required "is sure to chill an applicant's willingness to assemble and provide that information especially knowing that third parties will have access to such information."
The Aerospace Industries Association also lambasted the interim rules, saying that they contain too many administrative requirements and too few protections of intellectual property, and that the highly confidential data and paper workload is "significantly underestimated."
"We think the data burdens should be reduced significantly," Peter added. "[Homeland Security] should require only the minimal information needed ... and the final rules need to espouse a comprehensive plan on how to protect information from unauthorized access or disclosure."
Raymond Biagini, a partner with McKenna Long & Aldridge, who helped draft portions of the law, concurred. "In my opinion, they may have cast the net a little too broadly in terms of data needed," he said. "The real question is how many companies have been dissuaded from applying due to disclosure requirements."
Homeland Security officials did not return calls by press time.
Intellectual Property
Plan Would Boost Nations' Standard On Rights Protection
by William New
Language in a tariff bill before the Senate would force countries that receive special access to the U.S. market to elevate their protection of intellectual property to a level above current international standards in order to reflect new technologies such as the Internet.
The provision would raise the standard for protecting intellectual property rights in various programs under which the United States offers lower or no tariffs for certain products entering the United States from least-developed and developing countries.
The proposal would affect: the Generalized System of Preferences, which involves imports from about 40 least-developed nations, mostly in Africa; the Andean Trade Preference Act, and the Caribbean Basin Economic Recovery Act.
The language is part of legislation, S. 671, that would change the tariffs on numerous products. No Senate action has occurred despite what an aide called widespread support for the measure. Last month, Senate Judiciary Committee Chairman Orrin Hatch, R-Utah, and the panel's ranking Democrat, Patrick Leahy of Vermont, re-introduced the language as a stand-alone bill, S. 1911.
Hatch's plan would change existing rules that require beneficiaries of the trade programs to provide "adequate and effective" means to enforce exclusive intellectual property rights. That phrase has come to be interpreted as rules meeting the standard of the World Trade Organization's Agreement on Trade-Related Aspects of Intellectual Property (TRIPs).
The new standard would require eligible countries to provide "adequate and effective" protection for intellectual property rights "notwithstanding the fact that the foreign country may be in compliance" with TRIPs. Some have referred to that standard as "TRIPs-plus," and it is the standard that U.S. negotiators now seek in trade agreements with individual countries. It was in the agreements with Chile and Singapore signed in August, for instance.
The language would confirm that the same test exists for all unilateral trade-benefits programs as is used by the U.S. Trade Representative under a law known as Section 301, said Eric Smith, president of the International Intellectual Property Alliance. TRIPs, negotiated in the early 1990s, does not reflect the Internet and the rapid changes in technologies, he said, and good intellectual property protection should be evolutionary and flexible.
The Hatch bill also would make it easier for the U.S. Trade Representative to designate countries as "priority watch list" countries under its Special 301 process without triggering a WTO dispute case. The list identifies nations whose intellectual property enforcement raises U.S. concerns.
The House has passed the broader tariff legislation three times and added the change to the Special 301 process in its most recent version, which was passed as part of a tax bill, H.R. 3521.
The changes to the benefits programs encountered resistance in the House, however. A House Democrat said there is concern that the new language would be a "moving target" that could be interpreted differently a year from now.
The source also disagreed with a piecemeal approach to updating the preference programs.
On The Hill
Senate GOP's Tech Chief Outlines Top Priorities For 2004
by Teri Rucker
Stopping an effort to mandate that employee stock options be counted as expenses and focusing on intellectual property issues are among next year's top priorities for the chairman of the Senate Republican High-Tech Task Force, who was in Silicon Valley last week to talk about his agenda and get input from the technology community on its goals.
"Stock options is priority number one," according to an aide to John Ensign, the Nevada Republican who heads the task force. Based on conversations that the lawmaker had with executives, the tech industry will vigorously seek support for legislation that would prevent the Financial Accounting Standards Board from mandating stock-option expensing, the aide said.
The lawmaker hopes the Senate quickly will address legislation to permanently ban certain Internet-related taxes. Once that is out of the way, the aide said, Ensign plans to introduce legislation that would temporarily ban taxes on music downloads as a way to "get the ball rolling and get people to buy music instead of stealing it."
Ensign also will fight to retain a tax break on foreign-earned income that is brought into the United States when the House and Senate reconcile their versions of an international tax bill.
He may introduce a bill similar to House legislation that would bar companies from bundling software that tracks individual users without obtaining their consent first.
Ensign is optimistic about passage of legislation that would create a fund to reimburse government users of spectrum who move their services to different airwaves in order to make way for commercial users. Senate action on that bill was delayed after it was amended to give spectrum rights to Northpoint Technologies.
The plan is to wait for the FCC's mid-January auction of the spectrum band that Northpoint is eyeing, Ensign's aide said, and once that swath is allocated to the highest bidder, "the last nail is in the coffin" of Northpoint's bid. "Pretty much everybody loves that spectrum bill, and that provision is the only sticking point in the Senate," he said.
Ensign met with officials from about 20 different companies, including Hewlett-Packard, eBay and the trade group TechNet, and at each meeting, the aide said Ensign encouraged the industry "to come up with their best thinking" on how to improve the education system.
"At the university level, we have a pretty good education system and it could be that much better if the first year-and-a-half wasn't used teaching kids stuff they should have learned in high school," he said. Ensign is fond of the voucher system, the aide said. "Ensign really believes if you introduce competitiveness into the education system, it will improve for everyone."
Tech industry leaders also can help educators understand the kind of skills that students need, the aide said, and executives like eBay CEO Meg Whitman and HP Chairwoman and CEO Carly Fiorina can be role models for young women considering tech careers. "There is still pretty big disparity between males and females, especially at higher levels," he said.
Budget
Tech Chief For Washington, D.C., Has Big Plans For Aid
by Greta Wodele
The District of Columbia is spending substantial amounts of money on technology projects to become the best in innovation, according to its chief technology officer (CTO).
"We've moved from the worst to first," CTO Susan Peck said in an interview about her plans to spend money that Congress is set to provide the District in fiscal 2004. Peck said that when she joined the administration of Mayor Anthony Williams five years ago, she crafted a plan to build "sweeps of integrated systems" for the city.
In fiscal 2004, the District earmarked $90 million of local funds for those multi-year projects. The House on Dec. 8 approved the money, along with the District's entire budget and additional federal funds, as part of an omnibus spending package that encompasses the budgets of numerous departments and agencies. The Senate is set to consider the bill when lawmakers return Jan. 20.
With the responsibility of overseeing every D.C. agency's technological needs, Peck has a full agenda for spending the $90 million next year.
The District is building its own voice-and-data network for 911 telephone calls and other emergency services, which is estimated to cost $93 million over the next five years.
Peck also plans to spend $116 million over the next seven years for a unified communications center, which is slated to open in late spring 2005. She called it the "regional command center" for Virginia, Maryland and the District. The city budgeted $10 million in fiscal 2003 and $8 million for next year.
The money also would go toward integrating administrative, health, motor and regulatory services, as well as to create the "next generation" of law enforcement officers in the District. And the city would continue to develop data centers, wide-area networks, information technology security and e-government initiatives.
To build those "major enterprise application systems," Peck has hired 115 technologists -- the majority of which she said used to work at Fortune 50 companies.
Under the bill, the District also would receive federal funding for emergency response and preparedness efforts. The Washington region would receive a total of $60 million, and a leadership team from the three areas is deciding how to allocate the funding, she said.
However, the amount would be significantly less than what the city received in fiscal 2003 in federal emergency dollars.
Peck said the District has the advantage of being "Congress' first responders," which means that in fiscal 2003 lawmakers appropriated $156 million in emergency federal funding. Of that amount, $45 million covered technologies, she said.
Peck said $40.5 million was used to complete the "best" push-to-talk, wireless radio system. The remaining money went toward securing the city against cyber attacks by protecting access to the city's Internet system and all its data and communications ports.
Peck also put the funds toward building an Internet portal that the city used feverishly during Hurricane Isabel in September, as well as toward building a digital-mapping evacuation system available to citizens on that portal.
Broadband
FCC Reports Show More High-Speed Internet Adoption
by Teri Rucker
A flurry of year-end reports released by the FCC on Monday show no new major trends in the telecommunications industry but the continued adoption of high-speed Internet services and the slow, steady growth of competitors to the Bell telecom firms.
At the end of June, 23.5 million residents and businesses had broadband access, an 18 percent increase during the first half of the year and a 45 percent jump for the full year ending June 30. The FCC measures high-speed lines at 200 kilobits per second (kbps) in one direction and advanced services at 200 kbps in both directions, a designation that has been widely derided by the technology industry as far too slow.
Of the high-speed lines, cable-modem service continues to win, with 13.7 million customers, up 20 percent during the first six months of the year and 49 percent for the year ending in June.
The digital-subscriber-line technologies used by the Bells gained ground, now with 7.7 million customers, an increase of 19 percent during the first half of the year and a boost of 50 percent for the full year.
Advanced services grew 16 percent in the first six months of the year and 49 percent from June 2002 to June 2003.
"The trends we have seen in the past reports continue apace," an FCC spokesman said in characterizing the report.
The same can be said of the statistics on local telecom competition. The numbers are compiled from data provided by telecom providers, and they revealed that about 95 percent of U.S. households have a choice for local phone service, with at least one Bell competitor offering service in 73 percent of the nation's ZIP codes.
Competitors continue to use the "unbundled network elements" (UNEs) platform to provide service. The Bells have long complained that the system, which lets competitors access specific portions of the Bell networks at regulated prices, provides inadequate compensation and discourages telecom investment. Competitors argue that the UNE platform is a temporary step as they build strong customer bases and their own networks.
At the end of June, carriers such as the Bells reported providing 27 percent more UNE loops that have switching capability to unaffiliated carriers and 1 percent fewer UNE loops that lacked such switching capability. However, the FCC ruled that state public-utility commissions could remove switching from the list of available services in certain markets, which could affect competition in those markets, one source noted.
During 2002, the universal service fund that seeks to guarantee all Americans access to affordable communications service provided $5 billion in support, with the vast majority of the fund, or 57.1 percent, going to the so-called high-cost fund that supports areas where it is expensive to provide telecom service. In addition, 29.7 percent of the money went to the schools and libraries fund, also known as the e-rate.
Meanwhile, the revenue base that supports the fund continued to shrink, falling to $232 billion from $236 billion in 2001. Money in the fund comes from a fee on long-distance phone revenue.
Intellectual Property
Norwegian Court Acquits Johansen Of Computer Crime
by Drew Clark
A Norwegian appeals court on Monday acquitted Jon Johansen of criminal charges for creating a computer program that decrypts the scrambling of digital videodiscs so they can be run on the Linux computer-operating system.
The unanimous decision by a seven-judge panel in Oslo upheld Johansen's January acquittal by a lower court in Oslo. The decision is a defeat for the Motion Picture Association of America (MPAA), which had urged the government to prosecute Johansen under part of the Norwegian criminal code that makes it illegal to break into another person's locked property to access data.
"After four years, Johansen has now been acquitted twice after two full trials," said Johansen's attorney, Halvor Manshaus of the Schjodt AS law firm in Oslo. He said the government has two weeks to decide whether to appeal to the Norwegian Supreme Court.
In the United States, Hollywood studios have sued individuals and companies who have decrypted the DVD Content Scrambling System (CSS) or posted that software code on the Internet. They have been charged with violating a decryption ban in the 1998 Digital Millennium Copyright Act (DMCA). Norway has no similar law.
In a November 2001 decision by the U.S. 2nd Circuit Court of Appeals, Universal Studios won such a case against Eric Reimerdes, Eric Corley and Roman Kazan, who run a Web site called 2600. Those three were not involved in the development of the software, called DeCSS, although Johansen was. Johansen, 20, said he collaborated in the development of the program as a 15-year-old in the fall of 1999 because he wanted to watch his DVDs on his Linux-based computer.
Under U.S. law, in order to run DVDs on computers or electronic devices, the manufacturers must license CSS and pay the DVD Copy Control Association, a consortium controlled by studios and technology companies.
Testifying in the Norwegian appeals court, Warner Home Video Executive Vice President Marsha King said Johansen's actions were like "taking our key and breaking into our house and stealing what we've made," according to Reuters.
But Robin Gross, executive director of the nonprofit organization IP Justice, said, "Jon [Johansen] was not violating any laws simply by trying to watch a DVD that he lawfully purchased on equipment the studios don't approve of."
"Criminally prosecuting a DVD owner for 'breaking into' a DVD he owns was always ridiculous," added Cindy Cohn, legal director of the Electronic Frontier Foundation.
In an interview, Manshaus said the appeals court agreed that Johansen's action did not meet the definition of computer hacking. The decision "states that as an individual you can make private copies for your own personal use," he said. "You are still entitled to make a copy" even when movie studios deploy anti-copying technologies.
"We believe this decision encourages circumvention of copyright," MPAA spokesman Rich Taylor said. "If the present decision is the courts' final word on the matter, we hope that the Norwegian legislature will move quickly ... to correct this apparent defect in Norwegian law."
Today's Feature:
Issue of the Week
The year 2003 was not great for the technology industry on policy issues aimed specifically at the industry, but the bright spots included the enactment of broader legislation that benefits the industry, such as a tax-cut package, trade agreements and education reform.
Every Monday, read the Issue of the Week by Technology Daily staff.
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E-briefs
Telecom: Seven senators last week expressed concern about a proposal that would limit support from the universal service fund for telecommunications service support to primary telecom lines. "Our biggest concern is that a primary line restriction would be a major step backward that would thwart the essential purpose of universal service," the senators said in a letter to FCC Commissioner Kathleen Abernathy and the Universal Service Joint Board's state chairwoman. Rural businesses rely on having affordable access to second lines or wireless phones, the senators wrote, and the restriction would force rural customers to pay "exorbitant rates for second lines" and flaunt the goals of the program, which is designed to ensure affordable and comparable communications service across the nation. Such a policy also could halt investment in rural areas, the lawmakers said. Senators from South Dakota and Montana, including Minority Leader Thomas Daschle, were among those who signed the letter.
Lobbying: As part of the ongoing debate over telecommunications deregulation, a group advocating industry competition has gone on the air to voice a complaint against the "Bell cartel." In its new "Entrée" advertisement, Nationaljournal.com reports that the CompTel/ASCENT Alliance tells viewers that "the CEOs of the Bell phone cartel held a secret dinner in Washington to plot the death of local phone competition." A mock dinner invitation on the screen from the U.S. Telecom Association advertises a "secret CEO dinner featuring SBC, Verizon and BellSouth" at Washington's St. Regis Hotel on Oct. 20. According to a spokesman for the group, "Entrée" originally aired Nov. 20 in West Palm Beach, Fla., cable stations then aired Dec. 10 on Phoenix broadcast networks and Dec. 16 on Washington-area broadcast and cable stations.
Science: The National Nanotechnology Infrastructure Network, a consortium of 13 university research facilities, will begin operating in January as an integrated system to support research and education in nanoscale science, engineering and technology. The network will be led by Cornell University and initially run for five years with a $70 million investment from the National Science Foundation (NSF). The network will replace the five-university National Nanofabrication Users Network that ended 10 years of operation this month. Nanotechnology is the study of materials at the molecular and atomic levels. "By assembling and offering to share our specialized resources with any and all qualified users, we have created the world's largest, most comprehensive and accessible nanotechnology laboratory," said Sandip Tiwari of Cornell, the network's director. NSF plans to hold future competitions to add new sites and capabilities to the network.
Science: The first around-the-world computer network ring connecting the research and science organizations in China, Russia and the United States became operational Monday, also marking the first-ever fiber-optic connection between Russia and China. The network, called Little GLORIAD and funded in part by a $2.8 million U.S. National Science Foundation grant, connects facilities with the National Science Foundation, a consortium of Russian ministries and science organizations, and the Chinese Academy of Sciences at 155 megabits per second. It seeks to enable cooperative research on issues such as joint responses to natural and manmade disasters, safeguards against nuclear material, the human genome and space exploration. It also will enable cooperation among universities and local schools.
Crime: Two North Carolina residents accused of sending millions of illegal unsolicited e-mails waived extradition and surrendered to Virginia authorities on Friday. Jeremy Jaynes and Richard Rutkowski were indicted last week on four felony counts of using fraudulent means of sending bulk, unsolicited e-mails, which is illegal under Virginia's anti-spam law. Jaynes posted $125,000 bond, and Rutkowski posted $60,000 in bond. The two will next appear in court Feb. 13. "Spam has a direct, negative impact on the efficiency and effectiveness of the free-enterprise system and individuals' e-mail accounts," Virginia Attorney General Jerry Kilgore said. "As criminal spammers, Mr. Jaynes and Mr. Rutkowski are a part of this problem and have properly surrendered to Virginia authorities." Both face one to five years in prison, fines of up to $2,500 or both.
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