Volume 62; 2009-2010 • Issue 3

Articles

Vertical Separation of Telecommunications Networks: Evidence from Five Countries
by Robert W. Crandall, Jeffrey A. Eisenach, and Robert E. Litan

The widespread adoption of mandatory unbundling in telecommunications markets has led to growing interest in mandatory “functional separation,” i.e., separation of upstream network operations from downstream retail operations. Since 2002, vertical separation has been implemented in five OECD countries: Australia, Italy, New Zealand, Sweden, and the United Kingdom. In 2008, the International Telecommunications Union noted “a tremendous amount of interest” in functional separation around the world; and, in April 2009, the European Parliament held its second reading on a new regulatory framework that embraces functional separation as an “exceptional measure.” While the U.S. does not currently require unbundling of broadband telecommunications networks, at least one influential group is advocating both unbundling and vertical separation for U.S. network operators. In this context, this study examines mandatory vertical separation in telecommunications markets from both a theoretical and an empirical perspective. The theoretical case against vertical separation is very strong, predicting in particular that mandated separation will discourage innovation and investment in new technologies. The empirical evidence tends to confirm these predictions, suggesting that overall, vertical separation is likely to impose significant costs without measurably increasing broadband penetration.

Thwack!! Take That, User-Generated Content!: Marvel Enterprises v. NCSoft
by Carl Michael Szabo

Comic-book heroes show us how to be valiant, how to fight for those less fortunate, and, in some circumstances, how to combat those who break the law. Such is the situation in the case of Marvel Enterprises, Inc. v. NCSoft Corp., a battle between user-generated content and the copyright violations that resulted.

While the issue of copyright liability has been seen in hundreds of comments and notes from courts and attorneys alike, the issue of copyright liability on the internet remains an open question that if not addressed, could endanger the protection afforded to authors. Federal and state suits have tried to eliminate this problem through tort actions; perhaps a simpler system exists.

Perhaps, taking another note from comic-book heroes, the best way to solve a problem is not to fight through it, but instead find an acceptable middle ground so that all benefit. This note proposes such a middle ground, an economic solution that will charge user-generated content websites for their use of copyrighted content allowing such websites to remain viable and provide their services while providing copyright holders the financial compensation they deserve.

Comment

FCC v. Fox Television Stations and the FCC’s New Fleeting Expletive Policy
by Jerome A. Barron

This Article focuses on the Supreme Court’s decision in FCC v. Fox Television Stations, Inc., 129 S. Ct. 1800 (2009). In that case, the Supreme Court upheld an important change in the FCC indecency regulation. In the past, the FCC’s policy had been that the broadcast of a single expletive did not violate FCC indecency policy. In order for such fleeting expletives to be actionable, the FCC required that they had to be repetitive and gratuitous. But in 2004, in response to the use of some expletives by entertainers during the Golden Globe Awards, the FCC changed its policy and ruled that a single expletive could be actionable.

The broadcasters affected by this change in policy petitioned the United States Court of Appeals for the Second Circuit for review of this change in policy on both constitutional and statutory grounds. A three-judge panel of the Second Circuit held, per Judge Pooler, two to one, that the FCC’s reversal of its fleeting expletives policy was arbitrary and capricious under the Administrative Procedure Act. Fox Television Stations, Inc. v. FCC, 489 F.3d 444 (2d Cir. 2007). Since the panel’s holding was based on a violation of a federal statute, the panel declined to rule on the First Amendment arguments of the broadcasters. But Judge Pooler’s opinion for the panel expressed sympathy for those arguments.

The Supreme Court, per Justice Scalia, reversed and remanded the Second Circuit decision. The Supreme Court ruled, five to four, that the FCC’s change of policy had met the standard set by the Supreme Court in Motor Vehicle Manufacturers Association v. State Farm, 463 U.S. 29 (1983) for changes in administrative policy. Justice Scalia declined to pass on the First Amendment issues presented by the broadcasters although he observed that fleeting expletives were on the “periphery of First Amendment concern.”

This Article analyzes Justice Scalia’s majority opinion, the concurrences of Justices Kennedy and Thomas, and the dissents of Justice Stevens for the indications they provide for ascertaining the Supreme Court’s position if the First Amendment validity of the FCC’s new fleeting expletive policy does come before the Court. This Article contends that behind Fox Television Station’s administrative law veil there is an intense First Amendment debate going on among the Justices concerning whether the FCC’s new policy on fleeting expletives violates the First Amendment. The Article concludes that a majority of the Court probably would support the FCC’s prior fleeting expletive policy which it describes as a sensible one. The Article also suggests the Court would probably uphold FCC indecency regulation in general despite its attendant vagueness and chilling effect infirmities. But he believes the First Amendment future of the FCC’s new fleeting expletive policy is more problematic.

Notes

The Sound of Money: Copyright, Royalties, and Creative “Progress” in the Digital Music Revolution
by Armen Boyajian

Academics and popular critics alike want to distill, reform, or altogether destroy U.S. copyright law as we know it. Much of this stems from animosity toward the old-guard record industry’s alleged practices of overcharging consumers, underpaying royalties to artists, and suing teenagers and grandmas. But what those calling for reform all seem to neglect is a tiny but inevitable fact: for the first time in history, composers and recording artists can keep their copyrights.

Tangible media sales are being replaced by P2P file sharing, retail downloads, and streaming Webcasts. Digital technologies and wireless networks have opened prime channels for music production, marketing, and distribution. Everything that used to be done by corporate middlemen like record labels and music publishers can now be accomplished either by the artist or for a reasonable professional service fee. As a result, artists can finally retain their constitutionally mandated copyright protections and control the way they license and derive royalties from their original works.

Given these considerations, the administration, the Congress, and the courts should recognize that our existing “strong” copyright laws can benefit and incentivize artists in unprecedented ways. Instead of entertaining suggestions for massive copyright reforms such as rewriting our copyright statutes, adding more compulsory license provisions, imposing levies on technology, and expanding the fair use doctrine, let us rather embrace a simpler national innovation policy–one which protects artists’ incentives through “strong” copyright laws and promotes the practice of licensing. Ensuring that artists have the most flexible options to license their works will result in maximized creation and dissemination of original works to the public. And what better way to strive toward the constitutional objective of cultural creative “Progress” than by stimulating proliferation of more original works?

Derailed by the D.C. Circuit: Getting Network Management Regulation Back on Track
by Edward B. Mulligan V

As the Internet continues to play a more central role in the daily lives of Americans, concerns about how Internet service providers manage their networks have arisen. Responding to these concerns and recognizing the importance of maintaining the open and competitive nature of the Internet, the FCC has taken incremental steps to regulate network management practices. Perhaps the most significant of these steps was its August 2008 Memorandum Decision and Order in which the FCC condemned Comcast Corporation’s network management practices as “discriminatory and arbitrary.” In that Order, the FCC required that Comcast (1) adopt new practices that complied with federal Internet policy and (2) disclose the specifics to its customers and the FCC. Comcast responded by adopting a new practice and, in the alternative, filing an appeal with the United States Court of Appeals for the D.C. Circuit challenging the FCC’s authority to regulate network management practices.

On April 6, 2010, the D.C. Circuit issued its much-anticipated decision. In a narrow opinion, it vacated the Order, holding that the FCC had neither express nor “ancillary” authority to regulate network management practices. In the wake of the D.C. Circuit’s decision is uncertainty about the path forward. The FCC has, however, reaffirmed its commitment to promote federal Internet policy. The first step to getting Internet regulation back on track is to “reestablish” jurisdiction. As this Note discusses, there are a number of ways in which the FCC can accomplish this. However, jurisdiction is merely the first step. After taking a closer look at whether Comcast’s post-2008 Order network management practices actually complied with the FCC’s Order, this Note recommends that the next step is to adopt clear rules for network management, backed by monitoring procedures and real consequences designed to ensure long-term compliance.

Music as Speech: A First Amendment Category unto Itself
by David Munkittrick

Perhaps the most ubiquitous of art forms, music accompanies daily activities from shopping to jogging. Music permeates modern society, and there is little question it constitutes an integral mode of expression. Despite recognition of music’s worth, however, there is little explanation of music in First Amendment jurisprudence. A rationale for First Amendment protection begins with analysis of the particular medium of speech. Through a foray in musical aesthetics and the history of musical censorship, this Note discusses the role of music in political, societal, and individual experience. Music has had an important role in political events, from the fall of the Berlin Wall to 9/11. Often a collective experience, music integrates a group of performers with a group of listeners. Yet music is also essentially private; it develops individual experience and identity. Music functions in all these realms in different ways, so no single theory of free speech adequately explains protection for music. Instead, multiple theories are explored to fashion a comprehensive notion of music as a fully protected mode of expression, vital to First Amendment principles.