While U.S. industry frets over rollout of European Union’s (EU’s) new value-added tax (VAT) on e-commerce, European Commission (EC) has acknowledged it really has no power to enforce compliance with directive. VAT on electronically supplied services (ESS), which went into effect July 1, applies to services -- including music, broadcasting and software delivered over Internet -- that are downloaded by consumers within EU. U.S. companies contend tax will discriminate against American businesses by, among other things, forcing them to try to verify customer’s location in order to collect proper amount of VAT and to submit to onerous audits in multiple countries.
Kmart is seeking to recover $49 million paid to Handleman under bankruptcy protection, distributor said Mon. Handleman said discount chain filed complaint with U.S. Bankruptcy Court, Chicago, seeking repayment of money it gave distributor as “critical trade vendor” shortly after filing for bankruptcy protection last year. Kmart, which emerged from bankruptcy protection in May, paid more than $300 million to key suppliers deemed so important that prebankruptcy bills were paid immediately. Other creditors wait until bankruptcy process is completed. Such critical vendor payments are common in bankruptcy cases, but federal judge in Chicago ruled earlier this year that Kmart should not have made them. Kmart is appealing that decision, but is continuing to seek money while it awaits final ruling. Handleman said it was confident that appeals court would rule in Kmart’s favor and it wouldn’t have to repay money. Handleman Chmn.-CEO Stephen Strome said in statement that, despite court action, company maintained “strong and continuing business relationship” with Kmart. Shortly after filing for bankruptcy, Kmart announced plan to close 283 stores, move that Handleman said at time would reduce its annual revenue by $35 million.
RIAA may run into legal, political and practical hurdles to getting music file-sharing down to manageable levels by filing hundreds of lawsuits against large-scale traders, technology lawyers we polled said Thurs.
Long battle between Interactive Digital Software Assn. (IDSA) and St. Louis County may not be over after all. Earlier this month, 8th U.S. Appeals Court, St. Louis, on constitutional grounds struck down St. Louis ordinance that had sought to ban sale of violent videogames to minors (CED June 5 p3). But IDSA said Thurs. that St. Louis County officials had submitted motion for reconsideration of ruling.
Chmn. of Senate panel said Mon. he wasn’t entirely satisfied with RIAA assurances on how responsibly trade group was conducting its fast-track subpoena blitz against music file sharers.
Disney/ABC became the last network to quit the NAB, citing a continuing dispute with some of the larger affiliate groups that came to a head with the NAB’s support of the FCC’s old 35% national network cap on audience reach. Disney Exec. Vp-Govt. Relations Preston Padden, in a news briefing Tues., said the cap itself wasn’t so much the issue as the idea that the NAB board had become dominated by a few “firebrand” affiliate groups that pitted affiliate stations against network owned & operated (O&O) stations in the name of localism.
Two weeks after receiving setback in its battle against series of laws regulating sales of violent videogames when Wash. Gov. Gary Locke (D) signed new bill into law (CED May 22 p3), Interactive Digital Software Assn. (IDSA) found much to be happy about with Tues. ruling by 8th U.S. Appeals Court, St. Louis. IDSA Pres. Douglas Lowenstein called ruling by 3-judge court striking down St. Louis County ordinance that had sought to ban sale of violent videogames to minors “a total and unambiguous affirmation of our position that videogames have the same constitutional status as a painting, a film or a book… The decision sends a powerful signal to government at all levels that efforts to regulate consumers’ access to the creative and expressive content found in videogames will not be tolerated.”
The FCC at next week’s agenda meeting will take up a long-awaited order and further notice on secondary markets for spectrum. The order, following up on a 2000 proposed rulemaking, is expected to remove the barriers erected by a 40-year-old case called Intermountain Microwave that has been interpreted to mean that a licensee must keep relatively tight hands-on control of licensed property, making spectrum leasing difficult.
WorldCom asked the FCC Wireless Bureau to rule that SkyTel and its other wireless affiliates were eligible to participate in Commission auctions. In dispute is whether SkyTel qualifies to compete in a May 13 paging band auction amid questions over the default status of 2 Multipoint Distribution Services (MDS) licenses held by Wireless One, another WorldCom affiliate. FCC rules stipulate bidders are eligible to take part in an auction only if they have satisfied outstanding installment payment defaults.
Verizon Wireless urged the FCC this week to “remove substantial uncertainty” on intercarrier compensation between mobile operators and LECs by ruling on pending proposals. The company asked the Commission to grant a petition by 3 carriers seeking a declaratory ruling that “wireless termination tariffs” violate FCC rules. Nextel, T-Mobile USA and Western Wireless had asked the agency to “reaffirm” that wireless termination tariffs weren’t the proper tool for crafting reciprocal compensation arrangements for the transport and termination of traffic. Wireless providers typically interconnect indirectly with a rural ILEC by exchanging traffic via an intermediate carrier. Companies that handle such indirect interconnections often hand off traffic under bill & keep arrangements, not interconnection pacts, for wireless-to-landline traffic. The issue received attention last year when some rural LECs filed state tariffs to collect reciprocal compensation for certain wireless traffic. Verizon Wireless said Secs. 252 and 332 of the Communications Act required LEC-Commercial Mobile Radio Service (CMRS) interconnection to be covered by negotiated or arbitrated interconnection agreements, not “unilateral rates.” FCC rules stipulate that in cases where there’s no interconnection agreement, LECs and CMRS operators must compensate each other at “reasonable” rates. “Because of widespread confusion in the marketplace, it may be necessary for the Commission to establish the range of ‘reasonable rates’ through proxy rates, much as it originally did in the first local competition order, until a more permanent solution can be reached in this docket,” Verizon Wireless said. It urged the Commission to clarify a previous decision that traffic to or from LECs and CMRS carriers that originated and terminated in the same major trading area was local and subject to reciprocal compensation rules unless it was carried by an IXC, in which case it would be subject to interstate and intrastate access charges. In related areas, Verizon Wireless said an FCC ruling on a US LEC petition had “ironically made it more difficult for CMRS carriers to negotiate access charge agreements with IXCs, despite the decision’s holding that CMRS carriers may assess terminating access charges pursuant to such agreements.” US LEC had sought a ruling that LECs were entitled to recover access charges from IXCs for providing access service on interexchange calls originating from or terminating on wireless networks.