NEC America agreed to pay a $20.6 million criminal fine, civil settlement and restitution, after the Justice Dept. (DoJ) charged the company with defrauding the E-rate program. The DoJ said NEC allocated contracts and rigged bids for E- rate projects at 5 separate school districts in Mich., Wis., Ark, and S.C. NEC was also charged with wire fraud for inflating bids and submitting false documents to the E-rate program and San Francisco school district. The DoJ said NEC filed the fraudulent documents in an effort to hide the fact that it planned on installing ineligible items. DoJ said NEC agreed to donate “free” items that it planned to bill the E- rate program and submitted false and fraudulent documents to defeat inquiry into the legitimacy of the funding request. The plea agreement calls for a $4.7 million criminal fine for bid rigging and wire fraud. “This conduct deprived the E- rate program of fair and competitive prices, caused the program to pay for unnecessary and ineligible items, and as a result, prevented the funding of projects at other needy schools,” said DoJ antitrust chief Hewitt Pate. The House Commerce Committee is investigating the E-rate program for fraud. Also, the Atlanta Journal-Constitution reported that $20 million in E-rate funds for the Atlanta school district has been frozen while the Universal Service Administrative Co., which distributes E-rate funds, investigates mishandling of that district’s funds.
Senate Commerce Committee Chmn. McCain (R-Ariz.) scheduled a hearing June 2 for 6 Bush administration nominees, including 2 each to the FTC and the Commerce Dept. Deborah Majoras, picked to succeed FTC Chmn. Timothy Muris, will appear with Jon Leibowitz, chosen to replace Comr. Mozelle Thompson. Muris and Thompson will stay on until the Senate confirms replacements. Sen. Wyden (D-Ore.) has placed a “hold” on Majoras’ nomination, which blocks a floor vote. Wyden wants assurances Majoras would target rising gas prices before he lets her “collect a $145,000 salary.” Majoras ran the antitrust div. of the Justice Dept. Leibowitz worked for the Senate Judiciary Antitrust Subcommittee for Sen. Kohl (D- Wis.) before joining MPAA. Also to be considered for the Commerce Dept. are Benjamin Wu, for asst. secy. for technology policy, and Brett Palmer, for asst. secy. for legislative and intergovernmental affairs. The hearing is 2:30 p.m., Rm. 253, Russell Bldg.
Michelle O'Neill promoted to Commerce Dept. deputy undersecy.-technology… John McGuire, ex-Starz Encore, named vp-business & legal affairs, Jim Henson Co… Meredith Corp. promoted John Zieser to vp-corp. development… George Munoz of Munoz Investment Banking joins Anixter board… Frank Dunn resigns from Nortel board.
Dan Caprio, ex-FTC, moves to Commerce Dept. June 1 as deputy asst. secy.-technology policy… ABC News promoted Kate O'Brian to vp, NewsOne… Discovery promotes Ken Ripley to vp-national sales mgr., overseeing newly created New Business Development Group… Patrick Whittingham, ex-Sony Bcst., joins Azcar board.
Gregory Rohde, E911 Institute exec. dir., said there has been some talk among senators and staff to tie the stalled E911 bill (S-1250) to the stalled spectrum relocation trust fund bill (HR-1320). Rohde said after a press briefing that funds left over from govt. spectrum relocation could be used to fund E911 deployment. “The trust fund bill may need something like 911 to get it to the floor,” Rohde said. After the House passed its E911 bill (HR-2898) last year, the Senate version has been stalled for several months after it passed the Commerce Committee earlier this year. One issue of concern is the price difference, as the Senate devotes $500 million a year to the issue, while the House bill’s price tag is just $100 million a year. With a recent General Accounting Office (GAO) report predicting $8 billion would be needed for E911 rollout, Rohde said Senate sponsors may not see $100 million as adequate. However, Rohde said it appeared timing, as opposed to funding, was the issue causing the delay. A busy Senate schedule is causing some of the hold-up, he said. While the funding is higher in the Senate bill, Rohde said it was only an authorization figure and appropriators can give less if they're uncomfortable with the higher figures. Also Fri, the Dept. of Homeland Security (DHS) announced the E911 Institute would be a partner in DHS’s Citizen Corps. The partnership will result in a series of events across the U.S. Rohde said the events -- where House and Senate members would meet with local leaders on 911 and other public safety issue -- would hopefully help spur interest in E911 at the local level. Rohde also said the meetings would help members “understand the situation in their own districts.” “By using the status and power of members of Congress, we hope to draw more attention to the issue,” he said. Suzanne Mencer, DHS dir.-office of state & local preparedness, said 911 and other public safety issues had largely been local issues in Sept. 11, when they became national issue. Many members of Congress are still getting up to speed on local public safety issues, she said. “There’s great value in connecting local leaders with members of Congress,” she said.
Sen. Sununu (R-N.H.) told us Tues. that the spectrum relocation trust fund (HR-1320) was being delayed over “questions around the structure of the funding.” The bill passed the Senate Commerce Committee after Sununu successfully added controversial language that would have given spectrum to Northpoint Communications. With that spectrum now auctioned, Sununu said the amendment was “moot” and said there’s been agreement to have the legislation include an evaluation of spectrum policy instead. Sununu said movement of the bill was now up to Commerce Chmn. McCain (R-Ariz.) and Appropriations Chmn. Stevens (R-Alaska). McCain told us Tues. that the bill was “important,” but he didn’t comment on the specifics of what’s delaying the bill. Before the House passed the bill last June (CD June 12 p1), some appropriators raised concerns about spending oversight, since the bill would allow govt. spectrum users -- namely the Defense Dept. -- to spend from a trust fund to cover relocation costs. Some appropriators raised concerns about the process, but House leaders convinced them there were appropriate oversight measures in place. Both NTIA and TIA have recently written letters to Congress pushing for the adoption of the bill (CD April 23 p5). Industry sources have said NTIA has stepped up efforts to get the bill passed before the congressional session ends. One industry source said the Administration wants to put another technology- centered bill on the President’s agenda before the election.
TCL -- merging TV operations with Thomson (CED Nov 4 p1)-- will move production to Mexico and Thailand as it seeks to counter anti-dumping duties imposed on sets imported from China.
The U.S. International Trade Commission (ITC) found that direct-view color TVs imported from China “materially injured” the U.S. set manufacturing industry, setting the stage for duties ranging 4-24%. The 5-0 vote Fri., which sends the case back to the Commerce Dept. for final action May 26, surprised some observers, who had expected Comr. Stephen Koplan to vote against imposing the duties. Chmn. Deanna Okun abstained.
Jeffrey Chester of the Center for Digital Democracy said he would try to raise awareness about the nomination of Deborah Majoras to be chmn. of the FTC (CD May 13 p14). FTC Chmn. Timothy Muris said Mon. he would resign his chairmanship this summer and Majoras, a former Justice Dept. antitrust official, would be appointed to replace him as chmn.. Chester said Majoras supported the abandoned plan of the FTC and DoJ to allocate industries between them for merger reviews. DoJ would have gotten all media and telecom merger reviews. The plan was abandoned after some senators - - particularly Senate Commerce Committee ranking Democrat Hollings (S.C.) (then chairman) -- raised concerns. Hollings argued that the FTC was more likely to challenge media mergers while the DoJ would be more likely to approve them. Chester cited an April 2002 speech Majoras, then a DoJ attorney, gave to the Houston Bar Assn. She said the plan was the right thing to do to avoid costly and time-consuming “turf fights” between DoJ and FTC. Chester said he was concerned about the prospect of an FTC chairman who had argued in favor of reducing the agencies jurisdiction. Muris also supported the plan.
“If we have the most competitive broadband market in the world we'll have the best broadband market in the world,” said John Kneuer, counselor to the Dept. of Commerce and chief of President Bush’s broadband initiative, during a Heritage Foundation panel Thurs. Kneuer pushed for little or no economic regulation of broadband and emerging VoIP technologies, but said “we don’t want to let go of social regulation,” like e-911. Former Congressman David McIntosh, who headed Vice President Dan Quayle’s telecom deregulation task force, drew the distinction between “industrial policy,” in which govt. sets prices, prefers certain providers, and creates the rules, and larger initiatives to set national technology goals. “Avoid subsidies. They don’t work,” he said. Both McIntosh and Intel’s Peter Pitsch said some govt. investment may become politically necessary to allow for broadband penetration in costly, investor-unfriendly areas. Pitsch, also former FCC chief of staff, called for a “more aggressive” FCC on long-term spectrum reform. Former FCC Comr. Harold Furchtgott-Roth was most vocal in his support for Bush’s initiative, framing the initiative in terms of the Nov. election. “We should be claiming victory on broadband,” he said, adding that Democratic nominee John Kerry and his telecom advisor Reed Hundt have a program that’s “less effective and millions more costly.” “We already have universal broadband” thanks to the President’s policies, Furchtgott-Roth said, and called it a myth that “the government needs an ambitious broadband agenda.”