Cisco Government Affairs E-Update

Volume 2, Issue 24

14 June 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

STOCK OPTIONS DISCUSSION – “QUESTION OF THE MONTH” – JOIN THE COVERSATION - Got an opinion on the stock options debate? Add it in Cisco Government Affairs High-Tech Community. There are plans in Washington and beyond which would make companies expense stock options, which for many companies could fundamentally change the way options are issued to all employees. Many companies (including most high-tech companies) and entrepreneurs have used stock options as productivity drivers as well as a way for employees to "own" the company they work for, rather than just "rent." What are your views on the stock options debate? http://forums.cisco.com/eforum/servlet/HtCom?page=main

STOCK OPTIONS POLL – See the answers of this informal poll on the distribution of stock options. Do you have stock options? Do you wish you had stock options? Take the poll. http://forums.cisco.com/eforum/servlet/HtCom?page=main

STOCK OPTIONS NEWS: President Bush, Senate Majority Leader Daschle and now California Governor Gray Davis oppose the expensing of stock options.

CALIFORNIA GOVERNOR DAVIS BACKS TECH FIRMS ON OPTIONS - Davis said he opposed any accounting changes that would force businesses to record stock options as an expense that could hurt company profits, the room burst into applause. "Stock options should not be treated as a business expense," Davis told the Silicon Valley Manufacturing Group at a board meeting in San Jose. Washington, D.C., he added, needs to "understand the value that stock options played in this economy." Clearly, Davis struck a chord with the audience of 100 company representatives, including 55 CEOS and top executives. Though many companies use stock options around the country, no one holds them more dear than tech companies along Highway 101, which have long used stock options in lieu of higher salaries to attract and reward employees. http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2002/06/13/BU147915.DTL&type=business

This Week@WASHINGTON, DC

BUSH PROMISES 'AGGRESSIVE' EXPANSION OF BROADBAND - President Bush told high-tech executives on Thursday that federal regulators would take steps to expand high-speed Internet access but offered few details about the administration's plans. "It's time for us to move with an agenda," said Bush, who has come under pressure from industry groups and lawmakers to outline a national strategy for making broadband Internet access more widespread and more affordable. Republicans and Democrats have made broadband policy a priority, courting support from the high-tech industry, which, even in hard times, is an important source of campaign contributions ahead of the November congressional elections. While lawmakers in both parties say bringing broadband to more Americans would spur economic growth and raise living standards, they disagree over how to change regulations to stimulate competition and boost consumer demand. "This country must be aggressive about the expansion of broadband," Bush told executives at a high-tech forum held next to the White House. While he credited his administration with "doing a pretty good job of working to eliminate hurdles and barriers to get broadband implemented," Bush said he expected the Federal Communications Commission (FCC) to do more. "A lot of the action is going to come through the FCC," Bush said. "I'm confident that the chairman and the board is focusing on policies that will bring high-speed Internet service, will create competition, will keep the consumers in mind." http://story.news.yahoo.com/news?tmpl=story&u=/nm/20020613/wr_nm/tech_broadband_bush_dc_1

VIEW OR READ PRESIDENT BUSH’S REMARKS AT HIGH-TECH SUMMIT –

View - http://www.whitehouse.gov/news/releases/2002/06/20020613-11.v.smil

Read - http://www.whitehouse.gov/news/releases/2002/06/20020613-11.html

BUSH'S HIGH-TECH FORUM PRESIDENT TOUTS AID TO INDUSTRY - With billions of fresh federal dollars flowing to the military and homeland security -- and many more expected to follow -- nearly 130 high-tech executives gathered at the White House on Thursday to tout technology's role in combating terror. Silicon Valley heavyweights Gordon Moore, co-founder of Intel Corp., and Carly Fiorina, chief executive officer of Hewlett-Packard, along with AOL's Steve Case, AT&T's Mike Armstrong and others came at President Bush's invitation to the administration's "21st Century High Tech Forum." At the gathering, Bush praised the industry's role in the war on terror and touted his administration's efforts to aid the industry by cutting taxes, expanding trade and reforming education. Bush was vague on a key industry priority, the promotion of a high- speed communications network that would improve consumer access to music, video, data and other information provided through the Internet. While many executives have pressed the administration to take a more aggressive approach to promoting a broadband communications network, Bush said that issue will be left largely to the Federal Communications Commission. Many tech executives and members of Congress believe removing regulatory barriers to broadband is vital to pulling the industry out of its slump and maintaining the U.S. lead in high technology. While Bush said, "It is time for us to move with an agenda" on broadband, he failed to offer one, saying only that he favors the aggressive expansion of broadband. http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2002/06/14/BU95396.DTL,

FILL POTHOLES ON AMERICA'S INFO HIGHWAY - The Bush administration has largely ignored the nation's $700-billion telecommunications industry's free fall, a costly mistake for the U.S. economy. Stock prices are down 75%, and telecom companies are expected to reduce their capital spending for the second year in a row. President Bush should use today's White House high-tech industry forum to announce a national broadband strategy. U.S. broadband usage--the number of households that use high-speed Internet connections--is stalled at less than 10%. This delays the productivity-enhancing new applications that require faster connections and puts us well behind South Korea, where more than 50% of households use broadband. The administration has yet to develop a broadband strategy and has slowly unraveled rules granting entrepreneurs access to the network. http://www.latimes.com/news/printedition/opinion/la-000041475jun13.story (registration required)

BROADBAND LETTER TO BUSH FROM GEPHARDT/DASCHLE - Senate Majority Leader Daschle and House Minority Leader Gephardt sent a letter to President Bush this week explaining that a broadband was a "national imperative" and that he must show leadership on this issue. They say that broadband is a key to our nation's economic growth. They encourage promoting capital investment in broadband infrastructure, stimulating broadband demand, enabling wireless broadband and investing in research and development of new technologies. If you would like a copy of the letter, please respond to this e-mail and I will send it to you. (Adobe format)

HIGH-TECH GROUP GIVES BUSH ADMIN HIGH MARKS, INCOMPLETES - A trade group for high- technology companies is giving the Bush administration some high marks - and some incompletes - for its positions on policies affecting the sector. The Information Technology Industry Council on Thursday released its scorecard on the administration's activity on 10 of the group's key policy initiatives. President Bush got high marks for aggressively pursuing the passage of Trade Promotion Authority, enacting landmark education reform legislation, and reforming the Export Administration Act. It also won praise for signing a two-year extension on the Internet Tax Moratorium, enacting a stimulus package with 30% accelerated depreciation legislation, opposing the expensing of stock options, and increasing resources to benefit E-Government information sharing and security. But the group said the administration has yet to take a position that the high-tech community has advocated on three other issues: creating incentives for broadband deployment, opposing government-created tech mandates, and updating antiquated export controls. http://online.wsj.com/article/0,,BT_CO_20020613_005975.djm,00.html

ITI PRESS RELEASE - http://www.itic.org/2002prs/020613.htm
ITI SCORECARD - http://www.itic.org/vote_guide/bscore_020613.pdf

TAUZIN URGES FCC TO FOLLOW TELECOM-COMPETITION RULING - The chairman of a powerful House committee overseeing telecommunications on Wednesday urged regulators to follow the lead of a recent court decision that has been seen as a setback to upstart local phone companies. A letter from Rep. Billy Tauzin, a Republican from Louisiana, continues the jockeying over the May 24 appeals court decision, which has yet to take effect. The court sharply questioned federal rules meant to speed entry of "competitive local exchange carriers," or CLECs, into markets dominated by the Baby Bells by requiring the Bells to lease, or "unbundle," elements of their networks to these competitors at deep discounts. The court also overturned and ordered a review of a rule mandating that the Baby Bells allow competing providers of high-speed Internet service to piggyback on the Bells' ubiquitous voice line to the home. http://online.wsj.com/article/0,,SB1023907627330706080.djm,00.html (Paid subscription required)

TAUZIN LETTER TO FCC - http://energycommerce.house.gov/107/letters/061102.htm

GETTING A LOCK ON BROADBAND - Author Jeffery Benner warns that the Federal Communications Commission is quietly handing over control of the broadband Internet to a handful of massive corporations. In recent months the FCC has ruled that cable companies do not have to open their networks to competing Internet service providers, or ISPs, and a proposal to extend the same exemption to DSL service is pending. If approved, the proposal will allow local phone companies, now down to four "Baby Bells," to deny other DSL providers access to local phone networks. The trend profoundly concerns consumer advocates and some Internet policy experts, who fear that media conglomerates will use their control over broadband pipes to restrict access to content, information, or technologies that compete with their own content or otherwise threaten their interests. "The path the FCC is currently on will change the Internet that you know," said Cheryl Leanza of the Media Access Project (MAP), a public interest telecommunications law firm. "Currently, rules prevent phone companies from controlling content in any way. There is no content protection for cable, and the FCC has proposed to take away the protections on content discrimination for DSL. The impact will be breathtaking." http://www.salon.com/tech/feature/2002/06/07/broadband/print.html

ASSISTANT SECRETARY NANCY J. VICTORY TESTIMONY ON SPECTRUM MANAGEMENT -

Nancy J. Victory, Assistant Secretary for Communications and Information testified before the Committee on Commerce, Science and Transportation on ways to balance the spectrum management needs of commercial and government interests. She discussed the major problems identified at April's two-day Spectrum Summit as well as goals that emerged from the discussions. The Summit brought together the National Telecommunications and Information Association (NTIA), the Federal Communications Commission (FCC) and the State Department. Victory includes her thoughts on achieving spectrum efficiency, how to streamline policies that may hinder innovation and ways to accommodate new wireless technologies. http://www.ntia.doc.gov/ntiahome/congress/2002/specman6112002.htm

TELECOMMUNICATIONS: HISTORY AND CURRENT ISSUES RELATED TO RADIO SPECTRUM MANAGEMENT, by Peter F. Guerrero, director, physical infrastructure issues, before the Senate Committee on Commerce, Science, and Transportation.GAO-02-814T, June 11. http://www.gao.gov/cgi-bin/getrpt?GAO-02-814T

HOMELAND FORMULA DEPENDS ON I.T. EXPERIENCE - The ultimate success or failure of the Homeland Security Department will be determined by the intelligence and information technology plan that's proposed and the person selected to lead that effort, according to a congressional fellow who advises the Executive Office of the President on technology. Speaking June 11 at the Armed Forces Communications and Electronics Association's TechNet International 2002 in Washington, D.C., Eileen Preisser, also director of the Defense Department's Homeland Defense Technology Center, said the key will be getting the new department to organize and share information horizontally, instead of vertically in the usual stovepipes. http://www.fcw.com/fcw/articles/2002/0610/web-fail-06-12-02.asp

AT&T CHIEF URGES REGULATORS TO LET COMPETITION WORK - The chairman of AT&T Corp. said this week it will be able to offer competing local phone service to more than half of the Bell companies' residential customers by the end of 2002 if state regulators continue to pursue pro-competitive policies. C. Michael Armstrong said regulators in such states as Michigan , Illinois , Indiana , and Ohio have taken steps recently to cut the rates that AT&T and others pay to lease parts of the Bell networks. And regulators in California reduced the rate to lease unbundled network elements by more than 40%. "That's why if conditions remain as they are today, AT&T will be in the local residential market in California by the third quarter of this year," said Armstrong, speaking at the American Enterprise Institute, a think tank. Armstrong recalled a speech early last year in which he declared the 1996 Telecommunications Act wasn't working. But in some states, competition is starting to intensify. "The Telecom Act is now beginning to work," he said. "Now is not the time to change the rules. Misguided legislation or ill- conceived regulatory action would return us to the cold, noncompetitive climate we left six years ago." http://biz.yahoo.com/djus/020611/200206111115000422_1.html;

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1023676037133&p=1012571727260

This Week@EMEA

INTERNATIONAL BENCHMARKING STUDY OF INTERNET ACCESS (DIAL UP AND BROADBAND) at www.oftel.gov.uk/publications/research/2002/benchint0602.htm,

International benchmarking study of mobile services at -www.oftel.gov.uk/publications/research/2002/benchmob0602.htm,

International benchmarking study of fixed services at - www.oftel.gov.uk/publications/research/2002/benchfix0602.htm

LOW PRICES BOOST “BROADBAND BRITAIN DREAM” - The vision of a 'Broadband Britain' received a boost on Wednesday as Oftel revealed that prices paid by UK consumers for broadband services were among the lowest in Europe. A survey conducted by the telecoms regulator found that typical costs of broadband high speed internet access services in the UK are now around £26 a month compared to £27 a month in Germany and £35 monthly in France. Some companies in the UK offering broadband from as little as £20 a month. David Edmonds, director general of Oftel, said: "Oftel's latest benchmarking research shows that the UK is moving up in the broadband league. The UK is as cheap or cheaper for consumer broadband than all countries surveyed except Sweden." http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1023858925423&p=1012571727248;

PACE QUICKENS FOR U.K. BROADBAND ROLL-OUT - http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1023676059310&p=1012571727260

UNBUNDLING OF THE LOCAL LOOP: COMMISSION CALLS PUBLIC HEARING - The Commission is following with close attention the issue of access to the last mile of telephone lines into European homes or, as specialists say, the unbundling of the local loop (ULL). The Commission's Competition Directorate-General is calling a public hearing in Brussels on 8 July 2002 to fully analyse the remaining difficulties in the implementation of ULL and the progress of competition in the provision of broadband access and services. http://europa.eu.int/rapid/start/cgi/guesten.ksh?p_action.gettxt=gt&doc=IP/02/849|0|RAPID&lg=EN

BOEING INTERNET PROJECT GETS NEW CUSTOMER - Boeing's troubled project to bring high-speed internet access to aircraft cabins received a major boost on Thursday when it secured British Airways as its second trial customer. The UK airline will begin a three month trial of the system, known as Connexion by Boeing, onboard a 747 jumbo jet next February, a month after the aerospace company's only other customer Lufthansa commences testing. The expansion of the trials will give Boeing renewed hope that it can get Connexion - one of three new areas it hopes to turn in to high-growth businesses - back on track. http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1023858976044&p=1012571727248

DEBT TROUBLES DOG EUROPEAN TELECOM GIANTS - There may be many differences between France Telecom and Deutsche Telekom, but the two operators have one crucial similarity - neither has tackled the debt mountains built up through acquisitions and expensive third-generation mobile phone licences in Europe. By now, their debts should have been falling. Instead, they have risen and could increase further, not least from a mounting interest bill. The burden is heavy and shares in both companies are touching all-time lows. "France Telecom and Deutsche Telekom are the only operators that have not yet resolved their debt problems," says Laura Winchester, telecommunications analyst at Barclays Capital. "There is a feeling in the market that both may need to do something to prevent things getting worse." At the end of last year, France Telecom had net debt of €60.7bn ($57bn); now it is closer to €67bn. Deutsche Telekom had net debt of €63.5bn in December, which hit €67.3bn by the end of March. http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1023995339203&p=1012571727260

EU DISCUSSES SECONDARY TRADING FOR COSTLY MOBILE-PHONE LICENSES - The European Commission began talks Wednesday with national telecommunications regulators and industry officials that could help debt-laden operators win permission to sell off wildly expensive mobile phone licenses. European Union Commissioner Erkki Liikanen stressed that only national authorities can change conditions of already existing licenses. But he added that the groups of experts convening Wednesday to draft new, harmonized rules for 2003 are also "available" to help governments assist the struggling sector. Currently, the only way for a telecom to transfer radio-spectrum rights is through a merger or by handing it back to the government to resell. Mr. Liikanen said the European Commission, the EU's executive body, believed that "in principle" current licenses should not be changed to guarantee stability in the market. "Only when circumstances have changed unpredictably" should changes be considered, he said, adding they should then be made in a nondiscriminatory and harmonized way. http://online.wsj.com/article/0,,SB1023893632860890680.djm,00.html (Paid subscription required)

MR ERKKI LIIKANEN, MEMBER OF THE EUROPEAN COMMISSION, RESPONSIBLE FOR ENTERPRISE AND THE INFORMATION SOCIETY, "3G COMMUNICATION" - In March last year, the European Commission issued the Communication "The Introduction of Third Generation Mobile Communications in the European Union: State of Play and the Way Forward." One year later, and following the request of the Barcelona European Council, the Commission has produced an analysis of the situation of 3G today. I will focus today on the new developments that have taken place since last year and on the future: 1. The technology works and there are encouraging signs of demand for mobile data based services; 2. A new regulatory framework has been agreed at EU level. The focus is now on how this will be applied in practice. It is important that new 3G services are not subject to unnecessary regulation. 3. The issue of secondary trading of spectrum has become an issue and is now on the agenda for discussion; 4. The attention has shifted from technology to services and applications. Requests have been made by industry and others to ensure that future 3G networks are open. In addition, there is new focus on the fact that Governments can stimulate 3G demand by eGovernment applications and services; and 5. There is growing attention to obstacles to the roll-out of 3G networks such as environmental and local planning issues and health concerns. http://europa.eu.int/rapid/start/cgi/guesten.ksh?p_action.gettxt=gt&doc=SPEECH/02/281|0|RAPID&lg=EN

TRANSPORT AND TELECOMMUNICATIONS COUNCIL (Luxembourg, 17 & 18 June 2002) - The Transport and Telecommunications Council to be held in Luxembourg next Monday and Tuesday will be chaired by the Spanish Minister for Internal Development, Francisco Álvarez Cascos, and the Minister for Science and Technology, Anna Birulés. In the field of telecommunications, the Council should inter alia approve the review of the guidelines for the trans-European telecommunications networks. It will discuss management of the Internet and the eEurope 2005 Action Plan and will examine various dossiers to be submitted to the Seville European Council. http://www.ue2002.es/DetalleNewsletters.asp?idioma=ingles&opcion=1&subopcion=1&id=2171

VAT: NEW COMMISSION ON-LINE VALIDATION SERVICE SAVES TIME AND COSTS FOR BUSINESSES - From today, it will be easier for businesses across Europe to check the validity of their customers' VAT identification numbers on the Internet. The Commission has launched an online service which gives businesses access to certain parts of the system of electronic information exchange used between tax authorities, known as the "VAT Information Exchange System" or "VIES". The new service will save time and administrative costs both for businesses and tax administrations. http://europa.eu.int/rapid/start/cgi/guesten.ksh?p_action.gettxt=gt&doc=IP/02/864|0|RAPID&lg=EN

SOUTH AFRICA STICKS TO PLAN TO CONTROL INTERNET NAMES - South Africa's parliament gave initial approval on Friday to a law designed to expand access to the Internet, but which critics say could force the network to shut down in the country. The Electronic Communication and Transactions Bill adopted by the National Assembly gives legal status to Internet communications, contracts and trades. But it also proposes to take over the administration of South African Internet domains, identified by the ".ZA" suffix in addresses, without seeking the approval of the international authority that administers the Internet roadmap. Nkenke Kekana, chairman of the parliamentary committee that approved the draft, told legislators the management of the Internet could not be left to individuals. "Change is imperative...We need a stable, representative and democratic model of domain naming and allocation in our region," he said. http://story.news.yahoo.com/news?tmpl=story&cid=582&582&e=12&u=/nm/20020607/wr_nm/tech_internet_safrica_dc_1

KENYAN ENTREPRENEURS SEE ONLINE COFFEE AUCTION AS WAY TO GET BETTER PRICES, FAST PAYMENTS - While people in America, Europe and Japan pay a premium for arabica Kenyan coffee, Kenyan farmers often struggle to make a profit from their crops. Two Kenyan entrepreneurs, Titus Gitau and Stephen Njukia have harnessed the power of the Internet to get better prices and prompt payment for eastern African farmers. Gitau said, "The essence of our plan is to create the premier Internet commodity exchange to support trade in African soft-commodities such as tea, coffee, cocoa and macadamia." The two organized the first online auction in April on africanlion.com in conjunction with the Specialty Coffee Association of America. Ueshima Coffee Co. of Japan paid $106 more for the coffee than would have been earned on the traditional Nairobi trading floor. Gitau said, "Burundi has really top quality specialty coffee, but who knows about Burundi? The Internet works to let small but discriminating roasters know what's out there." http://www.siliconvalley.com/mld/siliconvalley/news/editorial/3455999.htm

This Week@Americas/International

IN A REMOTE TOWN MEXICAN, INTERNET BRINGS HIGHER EDUCATION TO A NEW CLASS -

In a town where one phone line serves 1,400 people, 18 computers and a satellite link are giving this community a vibrant connection to the world. Housed in the town's only high school, students use the computer center to pursue degrees from the Virtual University, a program of Tec de Monterrey University. Community members also use the computers to send e-mail, shop, and read news. Since January 2001 Mexico's government has been working on the "e-Mexico" project that seeks to put federal government services online. The e-Mexico project has established 47 digital community centers with a goal of constructing 10,000 centers by 2006. The Virtual University project is available at 5 sites with 88 enrolled students. A major benefit of the rural university branches is how they enable many students to stay in their communities. Nestor Rojo who hopes to build businesses in the area said, "There is a lot of poverty, and there are a lot of needs...I probably would have been yet another migrant to the United States. But not now. Now I'm here." http://www.siliconvalley.com/mld/siliconvalley/news/editorial/3435611.htm

BRAZIL'S DANCE WITH THE INTERNET - Charles Cooper points out that "the fact that the Internet is no longer a big deal for many Brazilians is a big deal indeed." Cooper comments on the enormous leaps it has taken for Brazil to enter the Internet age. The country is cursed with extreme poverty, making Brazil's Internet diffusion slow and far behind that in wealthier nations. Said one teacher, "The problem is money. It's not like in America where computers and Internet access is relatively cheap. For most people, these are still expensive items." Nevertheless, as a frequent visitor to Brazil, Cooper has seen the Internet become a regular part of the social scene. Middle class schools are getting wired and lower-income children are gaining access to computers and the Internet. As the presidential race nears, Cooper is heartened that candidates are remarking on the need to build Internet infrastructure. Even if they cannot immediately act on this, at least it's a step forward in solving the challenge posed by the global digital divide. http://news.com.com/2010-1074-934820.html

This Week@Asia/Pac

SONY CHIEF IN BROADBAND WARNING TO US - Japan and other Asian countries could overtake the US in broadband technology over the next decade if the US government does not formulate a clear broadband strategy and rules for intellectual property protection, the chairman of Sony warned on Wednesday. "I think [Japan] should be a leader in broadband," Nobuyuki Idei said. "The American government is today busy fighting against other things." The US government appeared content to leave the development of the industry to market forces, Mr Idei said. Such free market policies were not going to help the US become a leader in the new broadband era. "The rule of the government is quite important when technology changes," Mr Idei said. However, the FCC (the US telecommunications regulator), had so far failed to take any action to draw up rules for new technologies. http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1023858925389&p=1012571727251

JAPAN MINISTRY SAYS IP CHANGES TELECOM COMPETITION RULES - Japan 's telecom regulator said Thursday that revisions to be made to the nation's Telecom Business Law will prompt a new wave of competition and offer consumers a much greater variety of affordably priced services. Last week, the Ministry's special committee drafted an initial report. The committee will deliver a final report to the telecom minister in August, and the Ministry is hoping to submit a bill to the Diet for consideration early next year. "This will be the most drastic change of the telecom industry's regulatory framework since the Telecom Business Law came into effect 17 years ago," said Yasuhiko Taniwaki, senior telecommunications policy adviser at Ministry of Public Management, Home Affairs, Posts and Telecommunications, at a press briefing. With the industry in flux, and network structures rapidly moving toward Internet Protocol (IP)-based systems, it's necessary to "get rid of all

the unnecessary regulation," he said. http://biz.yahoo.com/djus/020613/200206130546000228_2.html

TAIWAN RELAXES TELECOM RULES - Taiwanese legislators have raised the island's limit on foreign direct ownership of leading local telecommunications companies from 20 per cent to 49 per cent, a move that should help local service providers raise funds abroad and forge alliances with international competitors. The Legislative Yuan, or parliament, gave final approval for the long-delayed liberalisation on Friday. However, a 60 per cent limit on total foreign direct and indirect investment will remain in place, and the liberalisation does not affect Chunghwa Telecom, Taiwan's former telecoms monopoly. http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1023101585476&p=1012571727260

INDIA'S TIES TO BAY AREA STILL STRONG ECONOMIC EXCHANGES DESPITE SOUTH ASIA TENSION - At a time when tensions are rising in South Asia, the economic ties between the Bay Area and India have never been stronger. Silicon Valley firms depend on engineers in Bangalore, and sari shops and Indian markets sprout in the suburbs. Indian entrepreneurs and engineers flock here for opportunity, while local companies eye the subcontinent's vast markets. The business relationship between the two regions continues to grow. "India is one of the great economic stories of the decade," said Richard Carlson, chairman of Spectrum Economics, a Bay Area consulting firm. "Silicon Valley and our technologies played a major role in kicking things off for India." http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2002/06/10/BU70598.DTL

This Week@US STATES

CISCO TEAMS WITH LEADERS TO SPOTLIGHT BROADBAND ACCESSIBILITY IN RURAL TEXAS - Cisco Systems has teamed with the technology community in Texas to highlight the opportunities that high-speed, always-on broadband Internet access offers for rural and other small communities. Rural Texas communities now have access to a new online tool kit - www.LoneStarbroadband.org -- for bringing broadband to under-served areas. LoneStar Broadband, which was sponsored by the Public Utility Commission (PUC) of Texas, is an ongoing policy research project and web site designed to serve as a connectivity toolkit for under-served communities in Texas. The site is the work of graduate students at the Lyndon B. Johnson School of Public Affairs at the University of Austin at Texas. http://newsroom.cisco.com/dlls/ts_061102.html

http://www.austin360.com/statesman/editions/today/business_9.html

NEW!!!! EDUCATION AND TECHOLOGY VIDEO – Cisco Video on California Digital Project and the importance of technology in education. http://tools.cisco.com/cmn/jsp/index.jsp?id=17148

BROADBAND TALKS TO ADDRESS NEW STRATEGIES - Summit to focus on new strategies - US Representative Edward J. Markey is siding with state and federal regulators who see no crisis in the availability of high-speed Internet service, but a failure of broadband providers to offer compelling, affordable services. In an ongoing effort to find ways to bring broadband Net services to pockets of the state that still lack them, the Massachusetts Software & Internet Council and the Massachusetts Technology Collaborative are convening a wide-ranging collection of state and local officials and telecom and Net executives to find new strategies to promote faster broadband rollout. http://www.boston.com/dailyglobe2/161/business/Broadband_talks_to_address_new_strategies+.shtml

CALIFORNIA GOVERNOR DAVIS BACKS TECH FIRMS ON OPTIONS - Davis said he opposed any accounting changes that would force businesses to record stock options as an expense that could hurt company profits, the room burst into applause. "Stock options should not be treated as a business expense," Davis told the Silicon Valley Manufacturing Group at a board meeting in San Jose. Washington, D.C., he added, needs to "understand the value that stock options played in this economy." Clearly, Davis struck a chord with the audience of 100 company representatives, including 55 CEOS and top executives. Though many companies use stock options around the country, no one holds them more dear than tech companies along Highway 101, which have long used stock options in lieu of higher salaries to attract and reward employees. http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2002/06/13/BU147915.DTL&type=business

REPORT: CALIFORNIA CENTER OF US WIRELESS INDUSTRY - California has emerged as the center of the U.S. wireless communications industry, with almost twice as many workers in the sector as Texas, its nearest rival, according to a report released on Wednesday. California has the most headquarters of publicly listed wireless companies, representing more than 28 percent of the industry, according to the report by O'Melveny Consulting LLC and the San Diego Regional Technology Alliance. The state, the nation's most populous, also hosts more than 2,000 wireless companies, nearly double the 1,100 in Texas, which has the second highest concentration among U.S. states, the report said. California also has more than 60,000 wireless-sector workers, nearly double the 34,000 in Texas, representing a total payroll of $3.5 billion. http://story.news.yahoo.com/news?tmpl=story&cid=581&581&e=11&u=/nm/20020612/tc_nm/telecoms_wireless_california_dc_1

2 COMPANIES CONTROL LOCAL PHONE SERVICE, REPORT SAYS – California state regulators said that the traditional regional telephone monopolies continue to dominate the market for local phone service in California, despite recent gains by rivals. In a lengthy report, the California Public Utilities Commission found that Pacific Bell and Verizon Communications still controlled 98 percent of local residential phone lines and 94 percent of the business lines as of last year. "Competition for local telephone service remains very limited," concluded the report to the state Legislature. But Pacific Bell complained the report highlighted old data and buried the growth of competitors. Pac Bell said rivals picked up 150,000 customer lines last month alone -- and now control more than 12 percent of the market. http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2002/06/11/BU205386.DTL

MASSACHUSETTS, WASHINGTON TOP HIGH TECH SURVEY - In a recent survey The Progressive Policy Institute measured all 50 states on everything from the prevalence of high-tech jobs to the percentage of farmers with Internet access. Topping the list of states poised for success in the "new economy" of information technology were Massachusetts, Washington, California and Colorado. Maryland, New Jersey and Connecticut were noted to have a high percentage of "knowledge jobs". Report author Robert Atkinson said, "The New Economy was neither an epochal and dizzying transformation nor a slogan generated by some dot com companies looking to inflate their IPO prices. Rather it was and is the kind of profound transformation of all industries that happens perhaps twice a century." The report stressed that the most important success factor was access to skilled workers and states were encouraged to invest in worker training. http://www.siliconvalley.com/mld/siliconvalley/news/editorial/3440392.htm