Volume 52; 1999-2000 • Issue 2

Table of Contents

Masthead

Editor’s Note

Articles

WHO’S TAKING WHOM: SOME COMMENTS AND EVIDENCE ON THE CONSTITUTIONALITY OF TELRIC
By David Gabel & David I. Rosenbaum
The FCC requires that the price of unbundled network elements be equal to the total element long-run incremental cost of production plus a reasonable contribution to common and joint costs. This pricing standard has the potential of making the telecommunications market more competitive. TELRIC prices, however, are set independently of historic costs and therefore may not compensate investors for incurred costs. Hence, incumbent local exchange carriers have been fighting its implementation. In all probability, the U.S. Supreme Court will become involved in the debate over its adoption. The Supreme Court has looked at changes in valuation methods in the past. In the abandonment of the fair value doctrine, the Court established criteria to allow a paradigm shift. This Article argues that the same conditions may now exist for TELRIC pricing. Furthermore, the Article presents data that indicates that, to date, no taking has resulted from the use of TELRIC pricing. Hence, the Court is likely to find TELRIC as a viable alternative to historic rate of return pricing.

A HISTORY AND ANALYSIS OF THE FEDERAL COMMUNICATIONS COMMISSION’S RESPONSE TO RADIO BROADCAST HOAXES
By Justin Levine
Courts have long held that the government can punish an individual for falsely shouting “Fire!” in a crowded theater. But what is a government agency to do when the venue is none other than a theater of the imagination heard throughout the nation? Ever since the broadcast of Orson Welles’s War of the Worlds, the FCC has struggled to find a balance in preventing harmful broadcast hoaxes while still encouraging radio to develop vibrant, imaginative programming. What defines a hoax deemed harmful to the public interest versus one that constitutes mere playful entertainment? This Article details the major events and debates throughout the decades which have led up to the current FCC regulations concerning broadcast hoaxes. The Article analyzes the current regulations in terms of its goals and likely effectiveness in helping to solve a problem that has continually dogged the FCC virtually since its inception.

PROGRESS AND REGRESS ON INTERLATA COMPETITION
By David M. Mandy
At this writing, the FCC has denied Bell Operating Company applications for entry into in-region interLATA (long-distance) markets in Oklahoma, Michigan, South Carolina, Louisiana, and on a reapplication in Louisiana; approved one application for New York; and is currently considering an application for Texas. Thus, almost four years elapsed from the passage of the Telecommunications Act of 1996 until any Bell Company received relief from the line-of-business restriction, and even now relief has been received in only one state. This Article briefly reviews the economics of Bell Company entry into interLATA markets; summarizes the reasons given by the FCC for its extant orders and the resulting slow pace of interLATA entry; and compares these decisions with the law and economics of Bell Company entry. This Article concludes that the FCC has largely adopted sound policies regarding checklist compliance and safeguards, but that the positions taken on Track compliance and public interest issues are troubling.

STRATEGIES TO PROMOTE ADVANCED TELECOMMUNICATIONS CAPABILITIES
By Bob Rowe
Section 706 instructs both the FCC and state public utility commissions to promote deployment of advanced telecommunications capabilities. Much policy discussion of broadband access to date has focused on rearguing preexisting telecommunications policy debates, and has not produced significant incremental deployment of ATCs. ATC issues are much more diverse and specific than is commonly assumed, potentially requiring a menu of strategies to resolve. The “cooperative federalist” structure of the Telecommunications Act provides important context and guidance for implementing section 706. A Federal-State Joint Conference or task force would be a cooperative federalist vehicle for identifying ATC issues, developing strategies to address them, and involving all the concerned parties in resolving them.

Notes

COPYRIGHT AND ANTITRUST: THE EFFECTS OF THE DIGITAL PERFORMANCE RIGHTS IN SOUND RECORDINGS ACT OF 1995 IN FOREIGN MARKETS
By Connie C. Davis
The licensing of copyrighted nondramatic works by performance rights societies has long been recognized as a potential source of antitrust violations. In 1995, the Congress passed the Digital Performance Rights in Sound Recordings Act in an effort to deal with the licensing problems associated with nondramatic musical works. The DPRSRA created a right in sound recordings to perform the copyrighted work publicly by means of a digital audio transmission as well as establishing compulsory licensing scheme. However, the DPRSRA failed to address the problem of licensing of nondramatic works in foreign markets. This Note identifies the anticompetitive licensing scheme practiced in many foreign markets and advocates the extension of the DPRSRA to foreign markets-eliminating the anticompetitive effects of the licensing by foreign performance rights societies.

DON’T TALK TO STRANGERS: AN ANALYSIS OF GOVERNMENT AND INDUSTRY EFFORTS TO PROTECT A CHILD’S PRIVACY ONLINE
By Dorothy A. Hertzel
Studies indicate that nearly two-thirds of children use the Internet. Children online users have created unique concerns for Internet providers and lawmakers. The collection, storage, and sale of a child online user’s personal information without the child or parent’s knowledge or consent has elicited much concern. Such a practice is commonplace in the world of the Internet. Congress, through the Child Online Privacy Protection Act, and the Internet industry have addressed how to curb this practice. In addition to these efforts, technological tools are currently available that block the transfer of personally identifiable information from the user to the computer. Despite these efforts, concerns still remain. This Note attempts to answer the question: Who is in the best position to properly and effectively protect a child’s privacy online? By examining the flaws of both Internet efforts and the COPPA, this Note concludes that inviting parents to take responsibility for their children’s online safety is necessary in order to secure the future of a child online’s privacy. Once Congress and the Internet industry inform parents about the online dangers their children face, parents are in the best position to protect a child’s privacy online.

ONLINE AUCTION FRAUD: ARE THE AUCTION HOUSES DOING ALL THEY SHOULD OR COULD TO STOP ONLINE FRAUD?
By James M. Snyder
In April 1998, the FTC released a consumer alert pertaining to the increasing problem of online auction fraud. As the number of online auction participants increased, online auction fraud was becoming more prevalent. The FTC requested comments regarding methods that would be appropriate for curbing the increase in consumer deception. Many in the online auction industry proposed voluntary self-regulation. This Note exposes the inadequacy of industry self-regulation by analogizing online auction abuse with the misuse and near downfall of the 900-number industry. This Note proposes that only a regime of strict industry guidelines that the FTC initiates will halt online industry abuse.

Comments

THE GAME OF RADIOPOLY: AN ANTITRUST PERSPECTIVE OF CONSOLIDATION IN THE RADIO INDUSTRY
By Sarah Elizabeth Leeper
The Telecommunications Act of 1996 eliminated nationwide radio ownership restrictions and liberalized local ownership caps. As a result of this deregulation, the radio industry has experienced mass consolidation. Faced with an unprecedented number of proposed mergers, the federal antitrust enforcement agencies play an increasingly important role in the outcome of media mergers. The Horizontal Merger Guidelines, the primary vehicle of antitrust enforcement, address primarily economic factors to prevent anticompetitive mergers. Despite the healthy revenues generated through economies of scope and scale, it is questionable whether a sufficient regulatory mechanism exists to ensure diversity of voices. Although it is still too early to know the full effects of deregulation, consolidation may endanger content diversity and preclude the participation of smaller players.