Cisco Government Affairs E-Update

Volume 2, Issue 12

18 March 2002

Brought to you by Cisco Government Affairs Online: http://www.cisco.com/gov

This Week@Cisco in Government Affairs

Cisco's E-Update keeps you up to date on the major policy news of the week. Focusing on broadband, education and e-government areas, but covering high-tech and telecom in general, the E-Update is a great source of information for state, federal and international policymakers. To subscribe, send a message with “subscribe” in the subject line to “Subscribe-eUpdate@cisco.com

This update is generally issued on Friday.

This Week@WASHINGTON, DC

FCC CLASSIFIES CABLE MODEM SERVICE AS "INFORMATION SERVICE".   The FCC adopted another major rulemaking, part of a series of actions, designed to promote widespread deployment of broadband services.  http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-220835A1.doc; http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-220835A1.pdf (Adobe file)

SUPPORTING STATEMENT OF FCC CHAIRMAN MICHAEL POWELL - http://www.fcc.gov/Speeches/Powell/Statements/2002/stmkp204.html

SUPPORTING STATEMENT OF FCC COMMISSIONER KATHLEEN ABNERNATHY - http://www.fcc.gov/Speeches/Abernathy/Statements/2002/stkqa209.html

DISSENT FROM FCC COMMISSIONER MICHAEL COPPS - http://www.fcc.gov/Speeches/Copps/Statements/2002/stmjc210.html

STATEMENT OF NCTA - http://www.ncta.com/press/press.cfm?PRid=241&showArticles=ok

STATEMENT OF USTA - http://media.usta.org/pr/pressRelease.cfm?id=98

STATEMENT OF SBC - http://www.sbc.com/press_room/1,5932,31,00.html?query=20020314-1

FCC DECLARES CABLE INTERNET AN INFORMATION SERVICE - The Federal Communications Commission (FCC) defined cable Internet services as an "information service" on Thursday, potentially placing cable Internet on the same regulatory footing as high-speed Internet services offered by phone companies.  The definition is preliminary, and open for public comment for the next 60 to 90 days. The FCC also ruled in its monthly open meeting at FCC headquarters in Washington, D.C., that cable Internet broadband services travel across state lines, establishing the legal framework for federal regulation.  Last month, the FCC issued a notice of proposed rule-making for DSL technology and other high-speed data services offered over phone lines, tentatively classifying them as information services.  http://www.nwfusion.com/news/2002/0314fccis.html

MORE: FCC SAYS NO EXTRA BROADBAND RULES FOR US CABLE GROUPS - US cable television companies should not face extra regulations over their broadband services, the Federal Communications Commission ruled on Thursday.  The decision, which echoes a similar ruling last month that promised to free the Baby Bell telecommunications companies from the more stringent regulatory regime that applies to their DSL services, would help to stimulate wider adoption of broadband, the FCC said.  However, the decision came under immediate fire from consumers' groups, which claimed that it would allow cable companies to limit their customers' access to rival ISPs (internet service providers.)  http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3ITBOYSYC&live=true&tagid=FTDDMJNIFEC

STRAIGHT TALK ABOUT STOCK OPTIONS  - by John Doerr and Rick White - Amid the fallout from the Enron fiasco, politicians and commentators are hungry for reform, and rightly so. But in their eagerness to prevent future balance-sheet abuses, some have made the mistake of setting their sights on employee stock options. Far from being a culprit in the Enron mess, stock options are an innocent bystander. More than that, they are a critical factor in fueling entrepreneurial innovation and economic growth, embodying a principle that Enron does nothing to diminish: that workers and management alike should have a financial stake in, and financial responsibility for, the companies they build.  http://www.washingtonpost.com/wp-dyn/articles/A11062-2002Mar11.html

PIRACY, OR INNOVATION? IT'S HOLLYWOOD VS. HIGH TECH - Leaders of two of the nation's most prominent industries, entertainment and technology, have begun publicly sniping at each other over how to stop consumers from illegally copying digital movies, music and television programs.  The feud grows out of Hollywood's frustration with the illicit flow of copyrighted works over the Internet. Despite courtroom victories against Napster and others deemed to contribute to Internet piracy, millions of people continue to download free digital copies of everything from Jennifer Lopez's latest hit single to the Disney movie "Monsters, Inc." http://www.nytimes.com/2002/03/14/technology/14PROT.html (Free registration required)

CAL SENATOR: HOLLYWOOD OVER TECH - Sen. Dianne Feinstein may come from Northern California but she's siding with Hollywood instead of Silicon Valley.  Feinstein suggested recently that Congress might need to intervene in what has become a highly visible tussle between content owners worried about online piracy and tech firms that fear intrusive new regulations. And since the two-term senator chairs a technology subcommittee, she's in a position to turn her views into law. http://www.wired.com/news/politics/0,1283,51072,00.html

SENATE WON'T ACT ON DIGITAL CONTENT BILL  - Congress will not pass legislation to prevent digital piracy until the entertainment and technology industries come up with solutions that protect content owners without restricting consumers' fair use rights, a key Senate lawmaker said today.  "Until the differences are resolved, certainly no legislation will pass this year," Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., said today at a hearing with chief executives from AOL Time Warner and Intel, among others. "The entertainment industry has not fully made their case, but the high-tech industry hasn't either."  http://www.washtech.com/news/regulation/15666-1.html

OMB SOON TO OUTLINE E-GOV PROJECT ACTION ITEMS - A report exposing the real guts of the Office of Management and Budget’s 24 e-gov initiatives—outlining project specific goals, objectives and action items—is scheduled to be released by March 31, according to senior administration officials.  OMB soon to outline e-gov project action items  - OMB chief technology officer Norman Lorentz said at an Industry Advisory Council meeting yesterday that Mark Forman, OMB associate director for IT and e-gov, is meeting with every lead agency and going through each part of the final outline. http://www.gcn.com/vol1_no1/daily-updates/18139-1.html

HIGH TECH: THE NEXT STEEL? - The industry's new eagerness to beg politicians for favors repeats an Old Economy blunder. Innovation, not access, is the key - Is high tech turning itself into the 21st century version of the steel industry? Given tech's growing wish list from Washington and the White House's recent decision to impose tariffs to protect steel from imports, the question seems worth asking. I fear that New Economy businesses are in danger of getting so hooked on government handouts that they risk losing their way in the real marketplace.  Through most of the '80s and '90s, tech was a hotbed of free enterprise. Its life-changing products not only made money but sparked an unparalleled economic and productivity boom. Sadly, that positive energy is waning as tech risks becoming just another hog at the government trough. Businesses that prided themselves on winning fierce competitions for ideas and markets in software, Net access, and wireless communications now elbow their way to the head of the subsidy line. Companies that once ridiculed lawmakers now wine and dine those they disdained.  http://www.businessweek.com/bwdaily/dnflash/mar2002/nf20020311_2874.htm

This Week@INTERNATIONAL

U.K.: TEMPTING PEOPLE TO BROADBAND - As the cost of high-speed net access falls in the Britain, the next big hurdle will be convincing users that they cannot live without broadband.  Broadband in the UK looks set to have a much higher profile with BT lowering the cost and launching a huge marketing campaign to promote its ADSL service.  While ISPs can now offer ADSL services for about £30 a month, analysts believe that the price would have to fall to about £20 a month to attract mass take-up. That is unless providers can come up with some killer content that users simply cannot resist.  http://news.bbc.co.uk/hi/english/sci/tech/newsid_1862000/1862757.stm

EU: WEBSITE ON DIGITAL RIGHTS MANAGEMENT - Digital Rights Management Systems (DRMS) are technologies that describe and identify digital content protected by intellectual property rights, and enforce usage rules set by right-holders or prescribed by law for digital content. DRMs are thus an important complement to the legal framework. http://europa.eu.int/information_society/topics/multi/digital_rights/index_en.htm

UN: TELEPHONE ACCESS GAP NARROWS - The explosion in mobile telephone networks around the world has dramatically narrowed the gap in telecommunications access between rich and poor nations, the International Telecommunication Union said in a report published on Sunday.  However, the United Nations agency warned that the "digital divide" in the availability and quality of internet access appears to be widening, not just because of inadequate infrastructure but also reflecting education levels and mastery of the English language that dominates the internet.  http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3XHKXAXYC&live=true&tagid=ZZZPCGI2B0C

FRANCE: CHIRAC CHATS ONLINE TO SHOW VOTERS HE'S SWITCHED ON - French President Jacques Chirac tried to woo voters ahead of spring elections with an Internet chat session last week, seeking to project a funky, with-it image and shrug off charges he is too old for office. Popular myth says conservative Chirac, 69, once used the word for fieldmouse for the mouse used on a computer and was keen to prove he was now au fait with the modern world. "The fieldmouse incident was a farce. I'm not an expert but I use the Internet a lot," was his typed-out reply in response to one question. http://story.news.yahoo.com/news?tmpl=story&cid=582&u=/nm/20020313/wr_nm/chirac_chat_dc_1016056007

KOREA: FOREIGNERS TO GET EASY ACCESS TO INTERNET - The Ministry of Information and Communication (MIC) said on March 14 that it has begun to improve the Internet environment for

foreigners, by enabling them to easily access domestic websites, through cooperation with the Ministry of Justice.  "So far, foreigners have been unable to subscribe to domestic websites such as chatting, e-mail or other community services, due to an inability to recognize their identification system," said Kim Joon-ho, an official of the ministry.  Many foreigners have encountered difficulties with Internet usage in South Korea, despite the world¡¯s highest broadband Internet penetration, because most websites didn''t technically allow membership by foreigners.  http://emb.dsdn.net/english/frame.htm

JAPAN: JAPAN'S 3G RACE TO HEAT UP WITH KDDI LAUNCH - Competition over advanced third generation mobile phone services is set to intensify after KDDI, Japan's second largest telecoms group, on Monday said it aimed to ship 7m advanced service 3G handsets. KDDI said its 3G service, due to launch next month and which uses a technology developed by Qualcomm, CDMA2000 1X, would be available in most major cities. It will start with 70 per cent population coverage and expand to 90 per cent by the end of the year.  http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3SDD6HOYC&live=true&tagid=ZZZPCGI2B0C

This Week@US STATES

ENGLER OKS BILL TO SPEED WEB ACCESS ACROSS STATE - Move is part of a plan to create jobs, establish an edge in global economy - Landing a significant victory in his drive to make Michigan a high-tech showcase, Gov. John Engler signed into law a package of bills Thursday aimed at speeding the deployment of broadband Internet access across the state.  "The fast lane to new jobs, new investment and new opportunities is now open," said Engler, who had made the package one of the top priorities of his final year in office. "Let's get on it and get Michigan connected."  Citing a study he commissioned from the Gartner Group, a high-tech consulting firm, Engler said the legislation will create an additional 500,000 jobs during the next decade and will increase Michigan's economic output by $440 billion.  http://www.freep.com/money/tech/mwend15_20020315.htm

ENGLER'S PUSH TO BOOST BROADBAND WIDENING - More Net access could help lure business to state - Jamie Steinbrenner of Owosso began using broadband as a student at Michigan State University. To her, it's worth the $40 a month she pays her cable company for faster Internet service.  As a telecommunications major, she often worked on projects that included PowerPoint presentations. Until she got broadband, Steinbrenner used campus computers because her home dial-up service was slow.  "Image files are huge. It would take forever," she said. "With broadband, it only takes a minute."  Expanding broadband Internet access throughout Michigan is a top priority for Gov. John Engler in his final year in office.  He wants to streamline permit processes and offer financial incentives so broadband providers expand - something he says is critical to the state's economic future.

http://www.lsj.com/news/capitol/020311_broadband_1a-5a.html

CALIFORNIA LEGISLATORS AND STAFF VISIT SILICON VALLEY - On Thursday March 14, Cisco Systems along with other high tech companies co-sponsored the 2002 California Legislative High Tech Tour.  Staff members from the California Legislature toured Silicon Valley with visits to Cisco, Solectron, IBM, and Intel to get a better understanding of the major policy initiatives in the technology community.  While visiting Cisco, legislative staff were given a demonstration by Jim Grubb, Cisco’s Chief Demonstration Officer, on the advantages of broadband technology.  The tour concluded at Cisco for an evening reception which was attended by event co-sponsors California State Senator Byron Sher and Assemblymember John Dutra.  Cisco would like to thank our partners at Senator Sher’s office, Assemblymember Dutra’s office, AeA, the Silicon Valley Manufacturing Group, TechNet, Solectron, IBM, and Intel for making the tour such a success.

AUDITOR RECOMMENDS SMARTER COMPUTER SPENDING - As state spending on computers and other information technology nears $70 million annually, Vermont’s auditor of accounts says the state needs to watch those investments more closely.  In a report issued Thursday, Auditor Elizabeth Ready recommended creating a special information technology board consisting of private sector and government experts on computers to oversee large projects.  “Since fiscal year 1999, information technology spending has almost doubled,” Ready said. “It’s a real significant investment the state is making. We’re basically saying it is a big investment, and we need to manage it the way we do other assets, like pension funds or buildings and grounds.”  Ready’s office estimates the state will spend $67.6 million on vendors and salaries related to information technology in state government. That money should be spent carefully, she said, because Vermonters are increasingly relying on technology to reach their government.  http://rutlandherald.nybor.com/News/State/Story/44054.html

LOCALS LOOK TO IT IN HOMELAND PLAN - State and local officials called the federal government's release of a Homeland Security Advisory System March 12 a good first step to enhance communication, but expressed concern that local agencies may not have the technology to make the system useful. http://www.fcw.com/geb/articles/2002/0311/web-home-03-13-02.asp

WEST VIRGINIA HOPES BIOMETRICS HELPS IT SHED BACKWOODS IMAGE - West Virginia is betting the farm that the war on terrorism will be its ticket to a 21st-century economy.  Six months after the horror of Sept. 11, state leaders think the nation's newfound passion for security will live on and ignite the biometrics industry -- the high-tech business of identifying people by their fingerprints, hand shape, faces, irises or voices. They are hoping the Mountain State, which got its start in biometrics through old-style pork-barrel politics, will rise above its backwoods reputation, attract out-of-state entrepreneurs and become, in the words of one booster: "Silicon Holler."  The state's powerful and parochial senator, Democrat Robert C. Byrd, set the ball rolling a decade ago by forcing the Federal Bureau of Investigation to locate its huge fingerprint facility in Clarksburg. That led to a West Virginia University biometrics program and a small testing lab for the Pentagon, where technicians use and abuse palm- and face-recognition devices that don't yet pass military muster. http://online.wsj.com/article_print/0,4287,SB1015798127831224440,00.html

OTHER TECH STORIES OF THE WEEK

SATELLITE SPEEDS INTERNET TO THE FIELD - A new satellite system that provides up to 2 megabit/sec data rates and offers true broadband Internet service in remote locations is expected to be formally introduced this month and has already been used by firefighters in rural California.  The firefighters used the system, from San Diego-based Tachyon Inc., to access Web applications for planning logistics and operational strategies across the many teams fighting a 5,700-acre fire that ignited in the southern California community of Fallbrook in early February.   http://www.fcw.com/geb/articles/2002/0311/web-band-03-12-02.asp

THE FUTURE OF FIBER - Small news was good news for the telecommunications industry early this year when Corning--the world's biggest maker of fiber-optic cable--brought four of its manufacturing plants back on-line after a three-month hiatus. A full recovery may not come until late-2002 or even 2003, but industry optimists hope that Corning's move signals a reawakening of demand for telecom gear and the beginning of the end for a stubborn fiber glut.  To get a better feel for the future of fiber optics--and an informed opinion about broadband's ability to transform the Internet--Tom French, a director in McKinsey's Boston office, and Somu Subramaniam, a director in the New York office, recently spent some time with Wendell P. Weeks, president of Corning Optical Communications, discussing forecasts, business models and the value of high-quality connections.  http://news.com.com/2009-1033-861747.html

DSL PROVIDERS ANTE UP MORE FOR BROADBAND - Getting into the broadband game is more expensive for telcos than their rival cable providers in the coming years, according to a report released by Insight Research. The Parsippany, N.J. analyst firm estimates North American telcos will spend $4.8 billion between 2001 and 2007 to upgrade their networks for digital subscriber line and broadband access service. Most of that financial burden is in buying the necessary DSL access multiplexers (DSLAMs) needed to control the modems.  In contrast, the report found MSOs will spend only $661 million in that time period. Most of the largest U.S. cablers are nearing the end of their network upgrade work, but the study notes cable networks do not require as many expensive hardware additions as the telco plant.  http://www.broadbandweek.com/newsdirect/0203/direct020306.htm#3

EARTHLINK TO OFFER SERVICES ON AT&T BROADBAND LINES - Earthlink, the second-largest internet service provider in the US, will offer high-speed online services across AT&T Broadband's cable lines, under terms of an agreement announced on recently.   Earthlink and other internet providers are scrambling to offer their services across high-speed systems now that growth in dial-up access is slowing. The agreement with AT&T Broadband could become even more significant if Comcast gains approval to buy the cable group.  AT&T Broadband has 13.6m customers, but Earthlink's first rollout under the agreement will be limited to Boston and Seattle. Further launches aren't expected until next year.  http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3SFUFDQYC&live=true&tagid=FTDDMJNIFEC

CEOS PLAN NETWORK TO LINK THEM IN ATTACK - Nationwide System To Speed Response - Leaders of the nation's largest corporations are designing a new communications network that would alert them immediately to a terrorist attack and enable them to instantly talk with one another and government officials about how to respond. The system would enable competitors in one field, such as telecommunications, to work with one another as well as with their counterparts in other industries. It would help private companies respond more quickly to disaster scenes and improve their chances of keeping the economy running after catastrophes, officials said. http://www.washingtonpost.com/wp-dyn/articles/A16827-2002Mar12.html

HATCH: NO LID ON ONLINE MUSIC - Sen. Orrin Hatch, Utah Republican and songwriter, told music retailers Monday that the federal government will be the driving force in deciding the future of online music distribution.  "Politics is going to determine whether this business succeeds or fails," Hatch told an audience of several hundred people at the annual conference of the National Association of Recording Merchandisers NARM.  http://www.wired.com/news/mp3/0,1285,50972,00.html

CASE STUDY: CISCO SYSTEMS VENTURES INTO THE LAND OF REUSABILITY - Here's how Cisco Systems transferred its instructor-led Career Certification courses into an e-learning format to better streamline lessons, allow thousands of employees to learn at their own pace, and arm its closest learning partners with reusable learning objects they could repurpose into customized course offerings. http://www.learningcircuits.org/2002/mar2002/maddocks.html

NCTA STUDY SHOWS INCREASE IN BROADBAND INTERNET DEMAND - In a study, the National Cable and Telecommunications Association (NCTA) said that cable companies signed up 875,000 new Internet subscribers in the fourth quarter of 2001. Currently there are 7.2 million cable Internet subscribers in the U.S., representing 17 percent of the 70 million households that could connect via cable systems. "Deployment of, and demand for, advanced broadband services continued to experience growth during the fourth quarter of 2001, despite general economic uncertainties, the bankruptcy of Excite At Home and the related conversion of its customers to cable-provisioned networks," said Robert Sachs, the NCTA's top executive, in a written statement. http://www.newsbytes.com/news/02/175144.html

VERIZON CO-CHIEF EXECUTIVE STEPS DOWN EARLY - Verizon, the US telecommunications company, said Charles Lee would relinquish his position as co-chief executive three months earlier than scheduled.  The move leaves Ivan Seidenberg (pictured) as the sole CEO of the company as of April 1.  Verizon said it was making the transition based on the recommendation of Mr Lee. Mr Lee cited as his reason for leaving the successful integration of GTE and Bell Atlantic, which merged in 2000 and was renamed Verizon.  Mr Lee, who was chairman and CEO of GTE, will remain with Verizon as a non-executive chairman until June 30, 2004. http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3DCA6HOYC&live=true&tagid=ZZZPCGI2B0C

WILL SPEEDY CONNECTIONS IMPROVE LIFE? - The trip to the doctor's office could be the exception one day. A wearable sensor or a digital camera may provide the physician all that's needed to get you a diagnosis online. Likewise, programming your home VCR from the office could become commonplace. So could turning up the heat remotely as you drive home.  Such are the promises of high-speed Internet access: Improvements in education, health care, entertainment and much more.  For now, that's just what they are, promises. Beyond speed of delivery, broadband access in the home currently affords users not much more than what dial-up modems offer.  http://story.news.yahoo.com/news?tmpl=story&u=/ap/20020311/ap_on_hi_te/broadband_promise_3

FACTS AND STATS:

WORLD BUSINESSES BRANCHING OUT ONLINE - According to a recent survey from Taylor Nelson Sofres (TNS) Information Technology, more companies in the US (93%), Japan (60%), Singapore (61%), Denmark (75%), France (36%) and the UK (86%) are using the internet to deal with customers than they are for internal purposes. http://www.tnsofres.com/features_item.cfm?news_ID=25

ECOMMERCE REVENUES UP IN SINGAPORE - Ecommerce revenues rose in Singapore over the first three quarters of last year but slowed in the last quarter, reports the South China Morning Post.  http://www.nua.com/surveys/index.cgi?f=VS&art_id=905357725&rel=true

PCS BECOME ENTERTAINMENT CENTERS - New research from the Yankee Group indicates that home PCs are increasingly being used for entertainment purposes, particularly in broadband households.  http://www.nua.com/surveys/index.cgi?f=VS&art_id=905357714&rel=true

BUSINESS TO DOMINATE BROADBAND MARKET - New research from ARC Group indicates that the residential broadband market will grow sevenfold in the next five years, reaching USD80 billion by 2007.  http://www.nua.com/surveys/index.cgi?f=VS&art_id=905357720&rel=true

BROADBAND USERS WANT MORE SERVICES - Many broadband subscribers in the US are interested in paying for extra broadband services but say their providers have not offered them such services.  This is according to research from broadband software firm BroadJump and Mindwave Research.  Twenty percent of DSL subscribers were interested in long distance and wireless telephony services, but had not been offered them. Twenty-five percent of cable subscribers were interested in digital cable, premium channels and cable telephony, but had not been offered them.  http://www.nua.com/surveys/index.cgi?f=VS&art_id=905357717&rel=true

For Facts and Stats on the New Economy, visit our Facts and Stats page.  Also, see our special State of the Internet report on this page. For daily, topical Facts and Stats visit our Hot In Tech page.

CISCO GOVERNMENT AFFAIRS@2001

Cisco’s top policy focuses for 2001 are the areas of Education, Broadband Deployment and eGovernment.  To read or listen to our thoughts on these issues, please visit our Government Affairs home page or our visit our multimedia section . http://www.cisco.com/gov/multimedia/index.html

E-UPDATE ARCHIVE

To view past issues of Cisco’s Government Affairs E-Update, visit our E-Update Archive page . http://www.cisco.com/gov/archive/eupdates/index.html

DISCLAIMER

Positions in articles and papers from outside sources are in no way endorsed by Cisco Systems' Office of Government Affairs.  We offer articles on topics of interest to our audience to further the debate on the issues that are important to high-tech.  To view our positions on the policy matters that we care about, please visit our Government Affairs homepage. – http://www.cisco.com/gov

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