Washington Update

As the temperatures rise in a typical Washington summer, so grows the pressure on some online advertising firms. 

Yesterday the House Energy and Commerce Committee’s Telecommunications and the Internet Subcommittee held a hearing on the questionable methods for advertising currently being used by some Internet service providers (ISPs).  The hearing was entitled, “What Your Broadband Provider Knows About Your Web Use: Deep Packet Inspection and Communications Laws and Policies.”   Panelists included: Bob Dykes, the CEO for NebuAd, David Reed, an early Internet pioneer and professor at MIT, Alissa Cooper, the Chief Computer Scientist for the Center for Democracy and Technology, Scott Cleland, President of Precursor, LLC, and Bijan Sabet, a General Partner at Spark Capital. 

Yesterday, the Senate Judiciary Committee's Antitrust Subcomittee and the House Judiciary Committee's antitrust task force questioned representatives from Google, Yahoo, and Microsoft about the proposed Google-Yahoo advertising partnership. (Google and Yahoo signed the agreement, which allows Google to assist with Yahoo's targeted ads, on June 12.) Both House and Senate members have expressed concerns about competition and consumer privacy issues. In Tuesday's hearings, they wanted to learn more about the deal by speaking directly with the players involved.

Microsoft attempted to enter into a partnership with Yahoo, but Google ultimately won approval from Yahoo's board. In testimony before the House and Senate Judiciary Committees, Microsoft senior Vice President and general counsel warned that the Google-Yahoo deal would result in Google dominating 90% of the online search advertising market. He said Google currently controls 70% of this market, while Yahoo has 20%.

In a letter that was delivered yesterday, EDUCAUSE and several other groups have asked that Congress pass S. 1492, the Broadband Data Improvement Act, and H.R. 3919, the Broadband Census of America Act, before the 110th Congress ends.  The groups say this legislation "would improve information-gathering about current broadband deployment and assist in targeting resources to areas in need of such services."  The letter was sent to leadership offices in the House and Senate, as well as members of both the House Energy and Commerce and Senate Commerce Committees. The letter specifically says that a national broadband policy could have "dramatic and far-reaching economic impacts."

Currently, S. 1492 and H.R. 3919 are awaiting consideration in the Senate.  H.R. 3919 previously passed the House on November 13, 2007. 

Released one day before the Senate Commerce Committee held its hearing on the privacy implications of online advertising, a new report says targeted ads may involve practices that violate state and federal wiretap laws.

On Tuesday, the Center for Democracy and Technology (CDT) issued a memo, saying Internet service providers (ISPs) that allow an advertising network to copy [their] customers' Web traffic contents are defying "reasonable consumer expectations and may [be violating] communications privacy laws."

Currently, some ISPs are working with third party advertising agencies, which are copying consumer data in order to target specific ads at users. One such firm, NebuAD, testifed before the Senate Commerce Committee yesterday. NebuAd claims it does not violate any laws because they do not collect personally identifiable information. Some, though, argue that any collection of data can ultimately be tied to an individual and disagree with NebuAd's assertion that privacy is completely protected. CDT's memo says the practice most likely violates legal protections provided in the Electronic Communications Privacy Act.

Today the Senate Commerce, Science, and Transportation Committee held a hearing on privacy concerns related to online advertising. In what will probably be the first of several hearings, the committee asked panelists about their thoughts on privacy threats vis-a-vis online advertising. Chairman Dorgan noted that no Internet Service Providers (ISPs) wanted to participate at today's hearing, but he hoped to address this issue with them at another hearing in the future. Panelists at this well-attended event included Lydia Parnes of the Federal Trade Commission, Chris Kelly of Facebook, Leslie Harris of the Center for Democracy and Technology, Jane Horvath of Google, Robert Dykes of NebuAd, Mike Hintze of Microsoft, and Clyde Wayne Crews of the Competitive Enterprise Institute.

HIGHLIGHTS:

The European Commission in Brussels announced that it is granting Germany 141 million euros (~US $224 million) and Italy 7 million euros (~US $11 million) for rural broadband development efforts. The Commission says these subsidies will help the two countries support access to broadband connections for rural people who might not otherwise have any options. Italy, which received roughly the same amount from Brussels last year, will use the money for broadband expansion in the country's northern Alto Adige region. Germany will address the disparity that exists between its urban and rural citizens. While almost all German city dwellers have access to broadband, only a little over half have access in more rural areas.

"I am pleased that this public investment will put ... citizens and businesses in rural areas on an equal footing with those in urban areas as regards broadband access," said European Competition Commissioner Neelie Kroes.

In efforts to support a "fast, affordable and open" Internet, EDUCAUSE recently joined forces in creating and promoting InternetforEveryone.org. This coalition, which consists of public interest organizations, industry groups, and concerned citizens, is devoted to the notion that citizens should have access to an open Internet. The official launch date for the campaign was June 24.

Yesterday, popular culture commentator and "cyberpunk" Douglas Rushkoff gave a talk on "Open Source Reality" at the Library of Congress in Washington, DC. This lecture was a fourth in a series on understanding the culture and practices of Digital Natives, or the generation who has been raised with the computer as a central part of their lives.

Rushkoff, who teaches media theory at New York University's Interactive Telecommuncations Program, said the Internet is allowing people to more easily gather information and participate in discussions and debates. He said the open source applications that have emerged from universities in past years have greatly helped by stirring innovation and encouraging dialogue. Rushkoff says that while previous generations were focused on competition and the individual, he believes the Internet has provided a powerful vehicle for networking and building ideas within communities. Indeed, he says today's digital natives are much more attuned to collaboration, whether in school or at work, due to the Internet's collaborative atmosphere.

With the proposed Yahoo/Google advertising partnership in the news, some on Capitol Hill have expressed concerns about the Internet being vulnerable to a lack of competition. House Regulations Subcommittee Chairman Charles Gonzalez said Wednesday that he believes it is "unhealthy" for individual Internet firms to dominate the market. Internet businesses, however, responded that too much government regulation stifles growth and innovation.

(Read Google's announcement on their deal with Yahoo on the Google blog: http://googleblog.blogspot.com/2008/06/our-agreement-to-provide-ad-technology.html)

CongressDaily reports:

Internet business owners told the House Small Business Regulations Subcommittee Wednesday that Congress to should use a light touch on their industry, saying such an approach is vital to the industry's health.

The hearing comes in the wake of Yahoo unveiling a proposed advertising partnership with Google.

In a letter last month, Congressmen Ed Markey and Joe Barton of the House Energy and Commerce Committee asked that Charter refrain from using technology that would allow the cable company to profile its customers for targeted ads and content. After meeting with the congressmen, Charter announced yesterday it will delay using this technology in order to address privacy concerns.

According to CongressDaily, Markey and Barton argued "that federal law bans firms offering cable services from disclosing subscribers' personal information without prior consent."

In a statement, Charter said they "will continue to take a thoughtful, deliberate approach with the goal to ultimately structure an advertising service that enhances the Internet experience for our customers and addresses questions and concerns they've raised."

Because the issue if not fully resolved, Markey asked that other Internet service providers hold off on using such technology while privacy concerns remain.

(source: CongressDaily)

The U.S. Conference of Mayors, which is holding its 76th annual meeting in Miami, voted yesterday in favor of a resolution calling for a national broadband policy. The resolution is as follows:

Today EDUCAUSE President Diana Oblinger spoke about the pressing need for a national broadband policy at an event hosted by the New America Foundation (NAF). Held in the Senate Hart Building in Washington, DC, the event also featured FCC commissioners Michael Copps and Jonathan Adelstein, e-NC Authority Executive Director Jane Smith Patterson, Jim Baller of the Baller Herbst Law Group, and Michael Calabrese, the Vice President of the Wireless Future Program at the NAF. This event, which was titled Broadband Revolution, was the first in a series on national broadband policy being sponsored by NAF.

"In the same way that railroads, highways, electricity and telephones grew our economy and benefited our society, broadband is the infrastructure that will take us into the next century," said Oblinger. "We can either sit on the sidelines or we can get it done, and I think it is about time."

After delaying consideration of S. 2913, the Senate Judiciary Committee finally took up and passed a bill that would reform copyright law relating to "Orphan Works." The bill, which passed the Judiciary Committee by voice vote on May 15, relates to those works that may be protected by copyright, but whose owners cannot be identified or located. These works may include writings, images, musical tracks, or videos.

Senator Patrick Leahy, the lead sponsor, says the legislation will help potential users of orphan works find the owners and consequently, help the owners receive compensation. The bill sets the rules for how potential users must conduct a good faith search for owners before they use a work. Leahy says this is not "a license to infringe." If it is determined that a user has not conducted a regulated search, he or she could be held liable for statutory damages amounting to as much as $150,000.

"More creative works will be used, contributing to our cultural and artistic heritage, and more creators will receive compensation for use of their work," said Leahy in a press release.

EDUCAUSE joined the American Council on Education (ACE) in comments to respond to a Notice of Proposed Rulemaking regarding the Family Educational Rights and Privacy Act (FERPA). The EDUCAUSE contribution addressed the proposed rules treatment of Social Security Numbers (SSN's), Student ID Numbers, and Student User ID's in the context of "directory information." The comments state:

CongressDaily PM reports:

"The Senate Judiciary Committee punted on a bill today that would rework a portion of U.S. copyright law. Republican members needed more time to review the measure, which was new on the agenda, a GOP aide said after the brief markup. The legislation would change a statute that governs "orphan works," which are musical tracks, writings, images, videos or other content whose owners cannot be easily located. Judiciary Chairman Patrick Leahy said he had hoped the panel would approve the bill, which is co-sponsored by Sen. Orrin Hatch, R-Utah, a day after companion legislation passed the House Judiciary Courts, the Internet, and Intellectual Property Subcommittee."