Lobbying
Tech Groups' CEOs Reap Salary Gains As Sector Drops
by Bara Vaida, National Journal
With the Internet economy decline particularly stark between 2000 and 2002, the majority of technology-related associations in the Washington area lost revenue, but few heads of those associations paid a price. Salaries of leading executives (2000, 2002) rose by an average of 31 percent, an analysis of Internal Revenue Service (IRS) documents shows.
Eleven of the 15 associations that advocate and lobby for the high-tech and telecommunications sectors gave their senior executives a pay raise, while four cut the salaries awarded to the heads of their organization, according to research to be published in the Feb. 21 issue of National Journal magazine. Nine of the 15 associations lost an average 16 percent in revenue during that time, while six posted increases, according to an analysis of forms that the IRS requires nonprofit organizations to file annually. Every two years, National Journal examines those "990" forms.
The high-tech industry faced various challenging policy issues between 2000 and 2002, including an economic downturn.
"There was probably not a more difficult time to manage any trade association than the past three years," said AeA President and CEO William Archey, whose salary rose 31 percent, to $570,000 in fiscal 2001, while AeA's revenue declined 27 percent, to $15.9 million. "Yes, revenue went down, but we got through the time period with a net positive."
Archey noted that in following year, he took a pay cut and revenue was higher.
Other trade associations that posted revenue declines during the time period included the:
The senior executives of all but two of the above associations received higher salaries. Semiconductor Equipment and Materials CEO Stanley Myers was paid 29 percent less, at $464,410, and the salary of ITAA President Harris Miller dropped 2 percent, to $324,375.
The associations that posted revenue increases were the:
Former CTIA President Tom Wheeler, who made $2.1 million, was the highest paid of the association heads. Wheeler retired at the end of 2003, and former Rep. Steve Largent, R-Okla., replaced him. Others in the top five were USTA President Walter McCormick at $976,562, ESA President Douglas Lowenstein at $855,000, TIA President Matthew Flanigan at $702,387, and AeA's Archey at $570,000.
See the following chart for the full list of tech and telecom industry salaries.
Intellectual Property
FBI Plans Anti-Piracy Seal For Entertainment Products
by Chloe Albanesius
The FBI announced on Thursday that it will produce an anti-piracy seal to be placed on or encrypted within frequently pirated entertainment products in an ongoing effort to curtail the illegal distribution of copyrighted materials.
"The FBI will continue to work with our local, state and federal law enforcement partners, as well as private-sector alliances, to target and dismantle ... criminal organizations" dealing in stolen intellectual property, Jana Monroe, assistant director for the FBI's cyber division, said during a teleconference from Los Angeles.
Entertainment companies can choose whether to display the seal on their products and in what manner, said Chris Dowd, a special agent for intellectual property rights in the FBI's cyber-crime division. The options could vary from placing physical seals on compact discs of music or their covers, or creating "pop up" warnings on computer screens when installing software, he said.
Ken Jacobson, director of U.S. anti-piracy operations for the Motion Picture Association of America (MPAA), does not think giving companies a choice in displaying the seal will confuse consumers. "My sense is that it will be used very uniformly," he said. "We only have seven members, and I don't think it will be confusing to consumers on the motion-picture side."
"Intellectual property is our number one export and compromises more than 5 percent of the U.S. gross domestic product over that last two years," said Brad Buckles, head of the anti-piracy unit for the Recording Industry Association of America (RIAA). "It must be protected. The rampant levels of piracy ... undermines the ability and growth of these U.S. industries ... and this damage cannot be sustained."
Buckles acknowledged that the FBI seal will "probably not affect" peer-to-peer file sharing because it does not often involve physical products. The RIAA is "looking at other sort of technology solutions" to combat that problem, he said. "Really what we're trying to do [with the seal] is make sure people understand that this is a question of what's legal and illegal."
While the FBI's Monroe did not cite specific numbers on the cost of the project, she said the cyber division is "the FBI's number three priority behind terrorism and counter intelligence, so we are receiving a lot of support financially and through our manpower to address this." She confirmed that the agency has committed to devoting more resources to combating intellectual property crime.
"This should serve as a warning to those who concentrate on the theft of intellectual property," Monroe said. "The FBI will actively investigate cyber crimes and bring the perpetrators ... to justice."
Budget
Earmarks For Mobile Police Terminals Preset Spending
by Drew Clark
The Justice Department keeps proposing cuts to a program that supplies mobile data terminals to local police, but congressional earmarks in this year's omnibus spending law mean that favored police departments will receive millions of dollars in such grants.
The act provides more than $158 million for grants through the Community Oriented Policing Services (COPS) law-enforcement technology program, and the conference report includes more than 250 earmarks in that program for projects in lawmakers' states and districts. At least 25 local police departments will receive grants for the mobile terminals, while many more of the earmarks specify only that the money be spent on "law enforcement technologies."
The technology enables police officers to check criminal and automobile-licensing databases directly from their cars.
In recent fiscal years, Justice has sought to use technology grants for other purposes, too. In fiscal 2002, for example, the department funded portions of a software crime-mapping system in Lansing, Mich., that enabled police on the beat to see crime data divided street by street. The grant was made under the Making Officer Redeployment Effective (MORE) program and covered 75 percent of the cost of technology acquisition and equipment purchases.
The Lansing project "was the initial step in a related project in which the [department] made crime mapping available to the public through a countywide Web site," according to Justice.
But in fiscal 2004 and the previous fiscal year, Justice eliminated funding for the MORE program, saying that earmarks by appropriators limited the department's ability to select the most promising programs. Fiscal 2002 was the last year when discretionary funding was used for the tech grants, and the department distributed $66 million that year.
Now "the benefits of the program are channeled to those who receive the earmarks," said Gilbert Moore, a spokesman for the COPS program at Justice. Other money has gone toward systems such as those that mount cameras on the hoods or dashboards of police cars.
Grants made under MORE allowed the department to review "and determine the viability of their plans," Moore said. "We were able to get a lot more familiar with what was taking place" in local law enforcement. "With the earmarks, things are a little more predetermined."
The level of COPS earmarks has fluctuated in recent years. In fiscal 2002, Justice disbursed $154 million. The number rose to $189 million in fiscal 2003 before declining this year.
Some local police say the earmarks have enabled them to add features to pre-existing systems. The San Bernardino, Calif., police department, for instance, has used the funding to move from mobile data terminals to mobile digital computers, Lt. Frank Mankin said.
"The digital version has a full-color display with icons," allowing police to directly check remote databases without contacting dispatchers, he said. The department will receive $250,000 in fiscal 2004, a level comparable with many other departments around the country.
COPS earmark levels in fiscal 2004 range from $750,000 for the Louisville, Ky., police department to $20,000 for police in Madison Township, Ohio.
Security
Homeland Security Forms Groups To Bolster IT Security
by Ted Leventhal
Hoping to leverage the security expertise of the federal government's information technology professionals, the Homeland Security Department has created three groups of government technology officials to share information in an effort to strengthen computer security and coordinate responses to future computer attacks.
The first group is the Government Forum of Incident Response Teams, or G-FIRST. It will include federal agencies' chief security information officers and computer experts from the U.S. Computer Emergency Response Team, Pentagon and civilian federal agencies. The second group, the Chief Information Security Officers Forum, will be a venue for informal information sharing. And the Cyber Interagency Management Group will serve as a forum for defense and law enforcement officials to coordinate a response to a major cyber attack.
"These three groups were established to fill a need for information sharing in government," Larry Hale, deputy director of the department's cyber-security division, said in an interview.
G-FIRST, which Hale described as the most active of the three groups, targets officials who monitor the government's networks around the clock and allows its 100-plus members to communicate anytime over a secure Web portal.
"It has really caught on because of a strong need for a place for 24-7 incident teams to collaborate with each other," Hale said. "There's a real lively exchange of information going on around the clock using this forum."
While Congress ordered every federal agency to appoint a chief security information officer in 2003, "there was no group established for them to share information on their level," he said. Unlike the CIO group, "the security community did not have a similar venue for information sharing," he added. Here, the officers "can ask others if they're having problems with their systems, get advice and share information about getting their jobs done more effectively."
The Cyber Interagency Management Group has a different, action-oriented focus, Hale said. It was created in December as part of a Bush administration presidential directive calling on Homeland Security to coordinate with the Defense, Justice and State departments, along with the intelligence agencies, to manage the response to computer attacks.
The White House directive stipulated that Homeland Security coordinate in the event of an attack. When the department conducted the "Livewire" cyber drill last year, Hale said, "We saw the need for a special group to focus on interagency management of a response to a cyber attack."
But given the likelihood that a major cyber attack could affect physical infrastructure as well, other agencies must become involved, he said. "If it's an international incident, State may have information. If there's a law enforcement component, Justice will be involved."
Members of the Cyber Interagency Management Group meet in person every four to six weeks to discuss issues and policy, Hale said, adding that members also use a secure portal for more frequent, informal contact. "We can pull this group together in a very short period of time" to address an emergency, he said.
Spectrum
Intel Executive Urges Change To Allocation Rules
by Drew Clark
SAN FRANCISCO -- The FCC should change the rules for allocating and permit technology companies to deploy wireless, high-speed Internet devices that transmit data near frequencies currently reserved for television broadcasters, an Intel executive said on Tuesday.
A broadcasting executive speaking on the same panel at the Intel Developer Forum here disagreed with the proposal, which he said would cause interference with existing TVs. An FCC official said the agency will decide by early spring whether to consider changing spectrum rules.
The proposal would let Wi-Fi wireless devices use vacant TV channels in a given metropolitan market, said Peter Pitsch, director of communications policy at Intel. In Washington, D.C., for example, broadcasters use channels 22 and 26, but FCC regulations prohibit anyone else from transmitting on the adjacent channels 23, 24, 25 and 27.
The current rules are like "a zoning system that has artificially locked in beachfront property and has kept it off the market," Pitsch said. Even in urban areas like Washington and San Francisco, graphs of frequency use show that there are many "white holes" from which nothing is being transmitted.
"There are over five channels throughout most of San Francisco" that are vacant, he said. "This is an enormous opportunity to free up new spectrum for unlicensed use."
"We don't think in the major markets there is enough spectrum," countered Victor Tawil, senior vice president of the Association for Maximum Service Television, a broadcasting group dealing with technology issues.
"It is very difficult to find white holes," he said. Because Wi-Fi devices both receive and transmit data using the electromagnetic spectrum, they could cause interference for consumers' TVs, which are only receiving devices.
"We have seen strong support [for the proposal] from major computer interests and strong concern from broadcasters," said, Bruce Franca, deputy chief of the FCC's office of engineering and technology.
Wi-Fi is unlicensed, meaning that anyone can build or use the technology, and it currently transmits in the 2.4 megahertz (MHz) and 4.8-4.9 MHz bands of radio spectrum. Those portions are considered less desirable than the areas at less than 800 megahertz used by broadcasters.
Franca did not say whether the agency would decide to proceed from the "notice of inquiry" issued in December 2002 to a formal regulatory rulemaking. "It is a complicated problem," he said. "We are still optimistic we can make it work."
Pitsch said Intel, which has begun incorporating radio transmitters in almost all of its microprocessors, has been a strong supporter of the proposal because it could free spectrum for Wi-Fi and other data-transmission usages.
He called his presentation "Moore's Law meets Marconi's transmitter meets the FCC," referring to Intel co-founder Gordon Moore and the 19th century inventor of radio.
"Going digital is the most significant technological change in radio-frequency history," he said. "Any computing device will also communicate, and it is new-age opportunity versus age-old obstacles," including the fact that current spectrum users "block innovators to stymie competition."
Correction
Wednesday's PM edition of National Journal's Technology Daily incorrectly identified this year's cap on H1-B visas as 68,000. The cap is 65,000. In the 1990s, the cap was raised to 195,000, not 198,000.
Today's Feature: State Roundup
FCC Chairman Michael Powell is traveling to Missouri and Kansas this week to promote high-speed Internet and public-safety telecommunications services. Every Thursday, read the State Roundup by Staff Writer Chloe Albanesius.
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E-briefs
Cyber Security: The National Institute of Standards and Technology (NIST) has issued the first in a series of standards and guidelines designed to help federal agencies implement a 2002 law mandating greater government computer security. Released on Feb. 10, the standard is used to calculate the impact of a loss of integrity, confidentiality or availability of agency computer systems and data. "This starts the whole process," said Stu Katzke, a scientist with NIST's computer-security division, adding that agencies previously had to choose their own guidelines to establish security needs. Standards on security certification and accreditation for federal systems are expected to be finalized later this spring. Guidance on categorizing secure systems is expected in August and on actual security controls in December.
E-Government: Rigorous standards for e-voting machines are essential to ensure their security, the Electronic Frontier Foundation (EFF) said on Thursday. "Certification is only as good as the 'standard' it uses," the group said in its newsletter. EFF pushed for a standards update, arguing that "today's voting-machine standards were written for yesterday's technology." While the FCC's most current standard was written in 2002, most of the information is from 1990. The standards, therefore, do not address cryptography, wireless security, voter verification and other more modern subjects, EFF said. "Our certification process will continue to fail unless these standards are updated," the group concluded.
Business: Companies that use international accounting standards must start recording the value of employee stock options on their balance sheets beginning Jan. 1. "The [standard] will improve the quality of financial reporting by giving a clearer and more complete picture of an entity's activities, which will assist investors and other users of financial statements to make informed economic decisions," said David Tweedie, chairman of the International Accounting Standards Board (IASB). The board's ruling requires companies to reflect in its profits or losses and financial positions the effects of stock options, including expenses associated with options granted to employees. In a press release, the board said recent corporate scandals and the increased use of stock options have emphasized the importance of transparent financial statements. The U.S. counterpart to IASB -- the Financial Accounting Standards Board -- is expected to make a similar ruling by the end of March.
Privacy: The increasing number of jobs being sent overseas could result in more widespread identity theft, Sen. Dianne Feinstein warned CEOs on Thursday. "I am gravely concerned that consumer data is being sent overseas without proper safeguards," Feinstein, D-Calif., said in a letter to Citigroup, Bank of America, Ernst & Young, Equifax and TransUnion, companies that recently have "outsourced" some of their work to contractors and affiliates in foreign countries. The change means that workers abroad could be handling the tax returns, credit files and homeowner appraisals of U.S. citizens, Feinstein said. U.S. companies handling such information must comply with privacy laws, but some foreign countries lack such legislation. "In my view, American companies [that] are outsourcing consumer data to foreign countries must assume responsibility for the data," Feinstein wrote. If the companies Feinstein contacted do not establish adequate safeguards, she will consider legislation to protect Americans' personal data abroad.
Science: Thousands of unclassified reports covering 50 years of research in nuclear science and technology at Los Alamos National Laboratory have become publicly available again following their removal from the Internet after the Sept. 11, 2001, terrorist attacks. Los Alamos began offering online public access to the reports in 1997 as part of its "Library Without Walls" project, but the access was eliminated as part of the post-Sept. 11 purge of government Web sites, the Federation of American Scientists' Project on Government Secrecy reports. "[I]n a spectacular information-salvage operation, most of these Los Alamos documents, comprising nearly 10 gigabytes, were acquired and preserved by independent researchers Gregory Walker and Carey Sublette," who archived them before the purge, according to the project's Secrecy News. Indexes of the recovered Los Alamos reports are posted here. Selected reports of special interest will be posted in weeks and months to come.
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