FCC Serves Up a Ruling Smorgasbord

The Federal Communications Commission is no shrinking violet when it comes to putting its two cents in on emerging technologies. In a series of moves that shook up an otherwise sleepy D.C. August, the five commissioners ruled that Internet phone calls should be subject to law enforcement wiretaps and that mobile phones should be spam-free zones.

The FCC "tentatively concluded" that Internet calls "should be subject to some of the same laws that enable the government to monitor conversations of terrorists and criminal suspects with relative ease," the New York Times reported.

More from the Times: "While many crucial details remain to be completed in the months ahead as the agency begins to write new rules, the notice of proposed rulemaking issued by the commission on Wednesday was its first formal step into a subject of considerable controversy. The Justice Department and F.B.I. have been saying for months that any efforts by the commission and its chairman, Michael K. Powell, to have the new Internet-phone carriers less regulated than traditional phone companies should not allow the Internet carriers to avoid the requirements of the Communications Assistance for Law Enforcement Act. That law gives law enforcement agencies the ability to tap into phone systems by requiring telephone carriers to engineer their systems so that federal agents have easy access for surveillance. In addition, the law shifts the considerable costs of surveillance to the industry."

"Privacy advocates complained that the proposed rules could allow law enforcement to tap communications by thousands of individuals on the Internet, not just would-be criminals," the Associated Press reported, noting concerns from San Francisco-based Electronic Frontier Foundation.

USA Today said the FCC's "move is designed to resolve the Justice Department's fear that FCC plans to deregulate broadband could keep the FBI from monitoring the communications of criminals and terrorists, FCC officials say. That's not an issue for most phone calls." More from the article: CALEA "exempts 'information services.' And in 2002 the FCC ruled that cable's broadband offerings are information services. It also plans to put phone-company DSL services in that category... Internet-based phone providers, such as Vonage, as well as the National Cable & Telecommunications Association, which represents cable operators, say they don't oppose a requirement to make networks CALEA-compliant." However, Bloomberg reported that "Internet-access and phone carriers have said that they already comply with surveillance requests and that allowing the wiretap law to cover their services may raise costs and hamper progress."
• The New York Times: F.C.C Supports Surveillance Rules On Internet Calls (Registration required)
• Associated Press via washingtonpost.com: FCC Seeks Internet Phone Wiretap Access (Registration required)
• USA Today: FCC May Put Cable, Net Phones Under Wiretap Rule
• Bloomberg via the International Herald Tribune: US Targets Web Calls

Powell surely realizes he is walking the line between privacy and the needs of law enforcement, as he noted in his statement posted to the FCC Web site yesterday: "The interests of the law-enforcement community can be fully addressed for potential information services and these interests need not be an excuse for imposing onerous common carrier regulations on vibrant new services."
• Powell statement (MS Word)

Some Internet-based phone service providers see the ruling as a sign of things to come for upstart phone companies, particularly VOIP, or Voice Over Internet Protocol providers. "What the FCC is really saying to the community and the industry is to wake up and to start innovating. If all you are going to offer are replacement services, eventually they will be treated as legacy and be subject to traditional regulations," Jeff Pulver, chief executive of Internet phone company Free World Dialup, told the AP. Reuters wrote: "Technology advocates have worried that the fast-growing service, which promises to slash costs by routing phone calls over the Internet, could be harmed by excessive regulation. The ruling does not affect other pending regulatory questions surrounding VoIP service, such as how it should be taxed," according to Powell. VOIP is one of the technologies that would fall under the proposed regulation. "The proposed rules would cover providers of any type of broadband Internet-access service, including wire line, cable modem, satellite, wireless and power line, as well as managed or mediated VOIP services, the FCC said," Dow Jones said.
• Dow Jones Newswires via the Wall Street Journal: FCC Nears Ruling On Net Phone Taps (Subscription required)
• Reuters: FCC Says Net Phone Lines Can Be Tapped

To the Victor Goes the TiVo

The FCC also delivered a ruling in favor of TiVo Inc., the company whose set-top boxes record television shows for people to customize their TV viewing. Yesterday the "commission approved a proposal to permit Tivo Inc., which sells television-recording devices, to market equipment that would enable users to transmit digital television programs across the Internet. Holders of copyrighted programming, like the Motion Picture Association and the National Football League, have opposed such equipment, arguing that it would encourage the illegal distribution of their programs," the New York Times reported. "The commission's decision approved 11 other proposed new technologies for copying programs, including those offered by Microsoft, Sony and RealNetworks."
• The New York Times: F.C.C Supports Surveillance Rules On Internet Calls (Same link as above) (Registration required)

The FCC decided TiVo's "security system will be 'appropriate for use' when receiving digital TV signals broadcast over the airwaves. FCC Commissioner Kevin Martin voted to authorize TiVo but said he would have preferred imposing 'proximity controls' on consumers," CNET's News.com said. The Washington Post reported that the FCC said "the new TiVo feature has enough protections in place to prevent mass distribution of copyrighted material. The technology would allow a TiVo subscriber to download broadcasts to a computer and send copies of recorded shows over the Internet to an office or home or to a small circle of friends, as long as they are on the subscriber's registered account."
• CNET's News.com: FCC Lets TiVo Users Share Shows
• The Washington Post: Government Gives Nod To New TiVo Feature (Registration required)

The Los Angeles Times published an article in yesterday's paper on the TiVo showdown. "The studios and their allies maintain that allowing remote access to programs would undermine free local television broadcasts, the market for syndicated shows and other important elements of their business models. Hollywood also fears that viewers with high-capacity, Internet-connected recorders will have less appetite for DVD box sets of popular TV series. Under several of the MPAA-supported approaches, viewers would be able to move recordings to laptop computers and other devices that they could take on the road. TiVo, which had 1.6 million subscribers at the end of April, wants to give viewers even more flexibility: They could transfer shows from their recorder at home to any Internet-connected computer equipped with a special TiVo security device. Each owner would be entitled to transfer shows to as many as nine other recorders and specially equipped computers," the newspaper said.