E-Commerce Law Week, Issue 371

Congress Considers Re-Revising Telecommunications Law -- and Re-Regulating Broadband Providers
Given the quickening pace of technological change, perhaps there should be an equivalent of "Moore's Law for telecommunications and information policy. Say that the time to obsolescence of any statute or Federal Communications Commission ("FCC") regulation will be 1/6 of the time to obsolescence of the relevant previous enactment. The Communications Act of 1934 survived nearly 62 years until the advent of cable television and wireless telephony rendered it largely obsolete. But now, less than ten years after the Act was updated in 1996, it is already looking out of date again due to the advent of Voice over Internet Protocol ("VoIP") and broadband video. To bring U.S. telecommunications law in line with these new technologies, the House Energy and Commerce Committee on September 15 released a staff "discussion draft" of legislation aimed at "accelerating the deployment of new Internet services for consumers." Among other things, the draft bill would create a federal regulatory framework for all broadband Internet transmission service providers (including DSL, cable modem, and other packet-based broadband services), for VoIP providers that allow subscribers to connect with the regular telephone network, and for broadband video service providers.

European Commission Tosses Its Hat Into The Data Retention Ring
The debate in Europe over the retention of electronic communications traffic data has divided the institutions of the European Union. The EU Council of Ministers has until recently taken the lead on data retention proposals; the European Parliament has opposed data retention (as inconsistent with the principles of data protection); and the European Commission has argued that it (rather than the Council) has the right to initiate data retention legislation. On September 21, the Commission put its money where its mouth is, and released a proposed Directive on the Retention of Data Processed in Connection with the Provision of Public Electronic Communications Services (the "Directive"), as part of a package of measures intended to combat terrorism.  The Commission also released a detailed Impact Assessment on the proposed Directive.  The Commission proposes a uniform retention period of one year for traditional communications, and six months for "electronic communications taking place using wholly or mainly the Internet Protocol.”  This contrasts with the latest Council proposal for a standard retention period of one year, but with the right of individual EU member states to choose retention periods from six months to four years.  The Commission Directive also would require EU member states to "ensure that providers of publicly available electronic communications services … are reimbursed for demonstrated additional costs that they have incurred in order to comply with obligations imposed on them as a consequence of this Directive."

The fact that a Commission proposal has now been tabled increases the likelihood of European action on data retention sooner rather than later -- although the specifics of the Directive still need to be worked out with the European Parliament (including the foes of data retention who call it home).

Australia Joins the Chorus Decrying P2P Filesharing Programs
The summer of 2005 may be looked back on as the twilight of unfettered peer-to-peer (P2P) file-sharing.  Over the past few months the forces of "Big Content" have achieved several key victories across the globe in their quest to hold the creators of file-sharing software legally responsible for the copyright infringement that their software makes possible. First, of course, was the June decision of the US Supreme Court in MGM v. Grokster, which made software developers liable for infringement when they take "affirmative steps to foster infringement by third parties." Then there was the European Commission’s proposed directive and framework decision in July, which would criminalize both direct copyright infringement and "attempting, aiding or abetting and inciting" such infringement. And most recently, in Universal Music Australia Pty Ltd. v. Sharman License Holdings, Ltd., an Australian court ruled that Sharman Networks -- the owner and operator of the P2P file-sharing program Kazaa -- and its affiliates could be liable for copyright infringement because they (i) knew that the sharing of copyrighted files was widespread throughout the Kazaa system; (ii) refused to employ any technical measures that would curtail such sharing; and (iii) actively encouraged users to increase their illegal file-sharing.  The decision is broadly consistent with Grokster, but may be go even further as the court seemed willing to accept rather less evidence of active encouragement of infringement on the part of Kazaa than was the case in Grokster.

As VoIP Enters the Big Time, It's Meeting Big-Time Resistance
VoIP telephone services continue to proliferate, supporting not just P2P calls between computers but also calls between computers and the traditional telephone network. The business potential of VoIP -- both as an adjunct to existing online services (such as auctions, search portals, and instant messaging) and as a stand-alone telephony platform -- is attracting more and more big companies into the VoIP space.  Ebay is soon to acquire Skype, Microsoft recently purchased Teleo, Vonage is reportedly considering selling itself to another company rather than going public, and Yahoo!, Google, and AOL each have their own offerings. But as VoIP spreads, it threatens the voice revenues of traditional telephone carriers by allowing callers to bypass the carriers' networks.  While some carriers are jumping on the VoIP bandwagon themselves, others (and sometimes the same carriers) are mounting a rear-guard action to block the use of competing VoIP services over their networks in order to protect their traditional telephony business. China's state-run telecommunications company is reportedly blocking VoIP calls from providers such as Skype, blocking downloads of Skype software, and preventing users from logging into Skype's servers. In the UK, VoIP providers recently approached regulator Ofcom (Office of Communications) complaining that major wireline providers were refusing to enable calls by their customers to the "056" number range that has been made available for "new voice services" like VoIP.  Earlier this year, a rural incumbent local exchange carrier in North Carolina was investigated by the FCC for blocking its broadband customers' access to Vonage's VoIP service in an effort to protect its traditional voice revenues.  The FCC entered a consent decree whereby the company made a voluntary payment and agreed not to block VoIP calls in the future, but did not clarify whether the company was behaving unlawfully.  The question, then, is how government regulatory agencies will respond to the burgeoning growth of VoIP and to efforts by some broadband providers to discriminate against VoIP services.  While the FCC might think it has finally settled the question of how to treat wireline broadband access providers (namely as deregulated "information service" providers), the prospect of such providers' discriminating against VoIP services will likely force the Commission to figure out how to re-regulate the provision of broadband.

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