News from the States

This online newsletter is a product of NCSL's Communications, Technology and Interstate Commerce Committee

Summer 2004 edition

In this Issue:

Committee News
Secure ID Systems
State Legislatures Address Use of RFID Technology
Federal Officials Study Transition to VoIP
Circuit Court Invalidates New FCC Rules
Recycling Cellular Telephones in California
Cellular Telephone "Bill of Rights"
Legislative Web Sites on the Go
Information Technology (IT) Investment Boards

click here for past issues.

Salt Lake City Committee Program

Join the Committee at the 30^th NCSL Annual Meeting in Salt Lake City, Utah. Committee programs begin on Monday, July 19^th with a tour of two local high tech firms. At Comcast's Head End Facility see the latest razzle-dazzle technologies and integrations that provide video, conferencing, Internet access and other programs to businesses and residences. Sorenson Media is a world leader in imaging, medical device manufacturing, telecommunications and bio-genetics. This tour will demonstrate systems used to provide translation services (similar to TDD communications) and state of the art communications systems for those who cannot use standard telecommunications devices. Space is limited-contact Jo Anne Bourquard at NCSL 303-364-7700 to sign-up.

The Committee will sponsor sessions on high-speed broadband, Internet fraud, telecommunications tax reform, education technology, radio frequency IDs (RFIDs), and identification security. In addition, the Committee members will discuss expiring policy statements on 21^st Century Telecommunications and The Internet and Electronic Commerce, and they will consider action calendar resolutions on telecommunications taxation. Here's a link to the full Committee agenda.

Members of the Executive Committee Task Force on State and Local Taxation of Telecommunications will hold meetings on Sunday, July 18^th and Monday, July 19^th. For more information, contact Neal Osten.

For information about the Committee, contact NCSL Committee staff, Jo Anne Bourquard or Neal Osten.

Secure ID Systems

NCSL's ID Security Project will host several sessions to explore the policy and technology issues involved with ID security during the NCSL Annual Meeting in Salt Lake City. The Making Sure It's You concurrent session Wednesday July 21^st at 1:15 pm will discuss the importance of identification systems and the consequences when they fail. A Technology Focus session featuring demonstrations of systems and technologies used to support ID systems-facial scanning, digital palm and fingerprint recognition, smart cards, watermarks, and holograms-will follow. The project will hold a business meeting at 4:15 pm to discuss common principles and standards for identification systems. For more information, contact Jo Anne Bourquard.

State Legislatures Address Use of RFID Technology

Radio Frequency Identification (RFID) technology can be thought of as a next-generation bar code. A simple RFID tag consists of a microchip and antenna which when stimulated by a remote "reader" sends back information via radio waves. Like a bar code, an RFID tag identifies the product it is attached to for inventory or purchasing purposes; but an RFID tag can do even more. For example, the microchip can hold information related to the expiration date of the product, so a "smart" refrigerator could warn you that your milk is old before you even take a drink. Further, by employing a series of readers, an RFID-tagged product can be tracked as it moves in commerce. In more advanced and expensive applications, the RFID tag can not only be read, but can also be written to, so that for example, when combined with other sensors, RFID tags can record whether the product has been exposed to radiation, or excessive heat. As both the size and cost of RFID tags have decreased, their use has become more widespread, but paradoxically less noticeable-RFID tags are now about the size of a grain of sand.

Privacy concerns arise when information in RFID tags is combined with personally identifiable consumer information and used to track an individual's purchases, movements, and other behavior. In some cases, like the EZ-Pass system, the RFID tag identifies the consumer directly and therefore identifying and recording the consumer's behavior is inherent in the transaction. The advantage of such a system is that paying a toll can be seamlessly accomplished at 45 m.p.h., but the privacy concern is that information collected by the system could be used to monitor the movements of the individual.

Legislators in several states, recognizing privacy concerns about the use of this technology, have introduced bills that seek to respond to the increasingly rapid adoption of RFID technology. Three states-Maryland (H.B. 32), Utah (S.J.R. 10) and Virginia (H.B. 1304)-have introduced bills designed to study the issue in more depth and to provide recommendations for future legislation. Two states-Missouri (S.B. 867) and Utah (H.B. 251)-have introduced legislation that would require all products containing RFID tags, to be appropriately labeled. Utah (H.B. 314) has introduced another bill that requires instructions to be provided on how to disable the RFID tag, or a notice that the tag will remain active after purchase. Finally, California (S.B. 1834) has introduced a bill that outlines when it is permissible to use or record personally identifiable information in the context of an RFID transaction. Three states-New York (A.B. 6073), Virginia (H.B. 151, S.B. 107, S.B. 148) and Washington (H.B. 1019)-also have introduced bills that make personally identifiable information collected by automatic toll systems (like EZ-Pass) confidential.

On June 21, 2004 the Federal Trade Commission hosted an all-day workshop in Washington, DC on the future of RFID technology. The FTC's workshop explored current and anticipated uses of RFID as well as the associated consumer privacy and security concerns. Brit Wood of the Retail Industry Leader's Association noted that the retail industry is excited about the new technology because it allows retailers to cut down on in-store safety stock and may lead to a reduction in product theft. Dr. Paul Rudolf, a senior advisor with the U.S. Food and Drug Administration, suggested that his agency is looking at RFID as a solution to combating counterfeit drug distribution within the U.S.. Privacy advocates, while appreciating the benefits RFID holds for consumers, took issue with the type of information RFID technology can track. Deirdre Mulligan, a professor at the UC-Berkeley Boalt Hall School of Law, expressed concern that RFID technology currently in place in public libraries to help keep better tabs of books could also be used to identify patron reading interests.

- Submitted by Joshua Nelson and Nick Steidel

Federal Officials Study Transition to VoIP

Some predict that Voice-over-Internet-protocol (VoIP), the standard in Internet telephony over the past several years, will soon overtake plain old telephone service (POTS) as the unquestioned leader in voice communication. However, numerous questions regarding the proper regulatory framework and jurisdiction at the federal level remain unanswered. Recently, the Federal Communications Commission (FCC), Congress, and the Justice Department took action.

The Senate Commerce Committee held a hearing on the merits of Senator John Sununu's (R-NH) VOIP Regulatory Freedom Act (S. 2281), which he drafted to promote the development and growth of VoIP service by freeing it from traditional state and local taxation and regulation. Laura Parsky, a Justice Department official, testified before the Committee that Senator Sununu's legislation raises concerns that the level of wiretapping capabilities currently enjoyed by the Department and used to investigate potential terrorism and criminal activities would be diminished if the bill were enacted.

The FCC issued a notice of proposed rulemaking in February 2004 seeking comment on possible classification and jurisdiction of IP-enabled services such as VoIP. In April, the FCC issued an order finding AT&T's VoIP service for calls originating and terminating on circuit switched public switched telephone network systems a telecommunications service subject to interstate access charges. However, the April order comes on the heals of a February Petition for Declaratory Ruling that declared Pulver.com's Free World Dialup is neither telecommunications nor a telecommunications service.

Other issues related to VoIP include whether VoIP companies should pay into the Universal Service Fund, what is the recommended E911 capacity for the service, and what are the access requirements for the disabled.

- Submitted by Nick Steidel

Washington, D.C. Circuit Court Invalidates New FCC Rules; Supreme Court Refuses to Hear Appeal

The amount one telephone company charges another one to use its network is known as a wholesale telephone rate. The maximum rate is currently established by state public utility commissions. For example, SBC currently charges competitors $12.50 per month to use one of its lines. SBC recently attempted to increase this amount to $21 per line. However, the Illinois Commerce Commission authorized a smaller amount-an increase of about $4 per month. This regulatory scheme, in use in all 50 states, may get a radical makeover unless the Supreme Court overturns a recent Washington, D.C. court ruling.

A March 2^nd Washington, D.C Circuit Court ruling invalidated a new set of Federal Communications Commission (FCC) rules on wholesale telephone rates. The court ruled that state public utility commissions cannotset wholesale telephone rates. Regulators from Arizona, California and Michigan joined the National Association of Regulatory Utility Commissioners in petitioning the Supreme Court to extend the wholesale telephone rate rules and reverse the decision of the federal appeals court. Connecticut, Michigan, Rhode Island and West Virginia recently joined in the confrontation and support extension of the rules. And, on June 9, the competitive local exchange carriers (CLECs) and the state public utility commissioners (PUCs) petitioned the U.S. Solicitor General to step in and seek Supreme Court review of the lower court ruling, but that request fell on deaf ears. The Supreme Court was asked to stay the lower court's ruling, but by June 15 no action was taken.

The FCC is now in the process of drafting interim rules to alleviate the difficult switch from current wholesale rates, with the Bush administration supporting a one-year transition period. In the meantime, AT&T has suggested that it will stop seeking new customers in seven states where it currently provides service in anticipation of the higher rates and the perceived anticompetitive environment.

Submitted by Nick Steidel and Bob Boerner

Recycling Cellular Telephones in California

A distinctive measure A.B. 2901 being considered by the California Legislature prohibits retailers of cellular telephones from selling the telephones unless they first provide for a system of disposal or recycling of used cellular telephones. The Cell Phone Recycling Act of 2004 provides that the cost associated with the handling, recycling and disposal of used cellular telephones be the responsibility of the producers and consumers, and not government or their service providers or taxpayers. As used in the measure, "cell phone" means a wireless telephone device that is designed to send or receive transmissions through a cellular radiotelephone service. A cell phone does not include a wireless telephone device that is integrated into the electrical system of a motor vehicle.

- Submitted by Bob Boerner

A New York Cellular Telephone "Bill of Rights"

New York citizens may have a cellular telephone "bill of rights" if a recently-introduced bill A.B. 10072 is passed. The measure establishes rights of users who misplace or have lost their cellular telephones and whose telephones malfunction or become defective. The measure also permits subscribers to suspend their contract for up to thirty days and requires sellers to offer a warranty. Under the measure, cellular telephones would be required to audibly indicate when the telephone service enters roaming mode. And, the bill prohibits text message advertisements and allows civil actions for violations.

- Submitted by Bob Boerner

Legislative Web Sites on the Go

Millions of Americans own personal digital assistants (PDAs)-small handheld computers that help users stay organized and in touch. Simple models have calendar functions and address books, but increasingly sophisticated models can combine the organizing functions with wireless features that can send and receive e-mail and view Web pages. PDAs are commonly used in state legislatures, and a small but growing group of states are purchasing and supporting these devices for legislators.

At least five states-Louisiana, Michigan, South Carolina, Texas and Virginia- are providing special Web content for anyone with a PDA. South Carolina and Virginia provide web pages specially designed for the small screen size of a PDA. Anyone with a wireless device that allows direct Internet access can retrieve this Web content anytime. Texas provides House and Senate meeting information and bill status inquiries for wireless Internet mobile phones. For those who don't have wireless PDAs, all five states provide legislative information for PDA users who synchronize their PDAs with their computer using the free AvantGo service. This allows them to download information, such as a weekly schedule of meetings or a list of legislator contact information, to their handheld device.

- Submitted by Pam Greenberg

Information Technology (IT) Investment Boards

A recent report by the National Association of State Chief Information Officers indicates states spent more than $8 billion on information technology in fiscal year 2003. With increasing reliance on IT to support government operations and corresponding state expenditures, states are looking for ways to ensure the best return on their investments.

In 2003, Virginia passed legislation creating an IT Investment Board, which is responsible for planning, budgeting, acquiring, using, disposing, managing, and administering information technology in the Commonwealth. This supervisory board is responsible for reviewing and approving IT appropriations requests. Other states have created investment boards with similar budgetary or appropriations power. Georgia established the Georgia Technology Authority, which administers a technology empowerment fund. Iowa established the Information Technology Council, which reviews and approves annual budget recommendations for the Department as proposed by the Director. The KentuckyCIO Advisory Council works to identify opportunities and joint planning for shared services implementation, sourcing, investments, and cost recovery. Maine's Information Systems Policy Board is responsible for developing and approving rules, policies, and fees. In Minnesota, the Technology Enterprise Board reviews projects submitted for grant money from the Technology Enterprise Fund and makes recommendations to the full commission as to which projects should be granted funding using the Board's formal review and ranking process. In 2001, Montana established the Information Technology Board, which advises the Department of Administration on major information technology budget requests. New Hampshire established the Information Technology Management Advisory Board, which is responsible for budgeting and resource allocation for information technology. In North Carolina, the Information Resource Management Commission oversees and approves the general direction and application of information technology resources and services. Washington established the Information Services Board, which approves IT acquisitions or sets rules that delegate acquisition authority.

- Submitted by Andrea Lindemann

CTIC Committee