BloostonLaw Telecom Update
Published by the Law Offices of Blooston, Mordkofsky, Dickens, Duffy & Prendergast, LLP
[Portions reproduced here with the firm's permission.]
| Vol. 14, No. 12|| March 23, 2011 |
Tentative Agenda For April 7 Open Meeting
The following items will be on the tentative agenda for the FCC’s April 7 open meeting:
- Pole Attachment Report and Order and Order on Reconsideration: An Order that reforms the access, rates, and enforcement rules for utility pole attachments, reducing barriers to deployment and availability of broadband and other wireline and wireless services, and promoting competition.
- Accelerating Broadband Deployment NOI: A Notice of Inquiry seeking comment on key challenges and best practices in expanding the reach and reducing the cost of broadband deployment, including by improving policies for access to government rights of way and wireless facility siting requirements.
- Data Roaming Second Report and Order: A Second R&O that adopts a rule requiring facilities-based providers of commercial mobile data services to offer data roaming arrangements to other such providers on commercially reasonable terms and conditions, subject to certain limitations.
- Signal Boosters Declaratory Ruling, NPRM, and Order: A Declaratory Ruling, NPRM and Order that helps to fill gaps in wireless coverage and expands broadband in rural and difficult-to-serve areas, while protecting wireless networks from harm.
- Structure and Practices of Video Relay Service Program: Report and Order will adopt rules to detect and prevent fraud and abuse in the provision of video relay service (VRS). Also, a Further NPRM proposes to require all VRS providers to obtain certification from the FCC under new, tighter certification procedures in order to receive compensation from the TRS Fund.
- Reliability and Continuity of Communications Networks NOI: An NOI seeking comment on existing reliability standards for communications networks, including broadband networks, and ways to further strengthen the reliability and continuity of communications networks to avoid disruptions of service during major emergencies, such as large-scale natural and man-made disasters.
INSIDE THIS ISSUE
- AT&T to acquire T-Mobile in $39 billion transaction.
- Landover LPTV project raises certain concerns.
- FCC clarifies conditional grant of renewal licenses.
- FCC announces procedures, deadlines for 700 MHz Auction 92.
- FCC says Sec. 254(g) rate integration requirement does not apply to CMRS.
AT&T To Acquire T-Mobile In $39 Billion Transaction
AT&T and Deutsche Telekom AG have announced that they have entered into a definitive agreement under which AT&T will acquire T-Mobile USA from Deutsche Telekom in a cash-and-stock transaction currently valued at approximately $39 billion. The agreement has been approved by the Boards of Directors of both companies.
But the deal requires approvals from both the Justice Department and the FCC, which obviously will take a long, hard look at combining the second- and fourth-largest carriers in the U.S. wireless market. Although this proposed transaction would offer certain network efficiencies, it would create a virtual duopoly that would not necessarily result in lower prices for consumers. Additionally, rural carriers likely will be affected by partnerships, roaming agreements, handset availability, and post-transaction divestiture requirements. Clients should watch the development of this proposed transaction carefully, and contact the firm with questions or concerns that may warrant the filing of comments.
With this proposed transaction, AT&T said it commits to a significant expansion of robust 4G LTE (Long Term Evolution) deployment to 95 percent of the U.S. population to reach an additional 46.5 million Americans beyond current plans – including rural communities and small towns. The parties tout that this would help achieve the FCC’s and President Obama’s goals to connect “every part of America to the digital age.” T-Mobile USA does not have a clear path to delivering LTE.
“This transaction represents a major commitment to strengthen and expand critical infrastructure for our nation’s future,” said Randall Stephenson, AT&T Chairman and CEO. “It will improve network quality, and it will bring advanced LTE capabilities to more than 294 million people. Mobile broadband networks drive economic opportunity everywhere, and they enable the expanding high-tech ecosystem that includes device makers, cloud and content providers, app developers, customers, and more. During the past few years, America’s high-tech industry has delivered innovation at unprecedented speed, and this combination will accelerate its continued growth.”
Deutsche Telekom Chairman and CEO René Obermann said, “After evaluating strategic options for T-Mobile USA, I am confident that AT&T is the best partner for our customers, shareholders and the mobile broadband ecosystem. Our common network technology makes this a logical combination and provides an efficient path to gaining the spectrum and network assets needed to provide T-Mobile customers with 4G LTE and the best devices. Also, the transaction returns significant value to Deutsche Telekom shareholders and allows us to retain exposure to the U.S. market.”
The proposed deal would apparently end rumors of a T-Mobile merger with Sprint that would have created a stronger third competitor vis-à-vis Verizon and AT&T. Instead, if the merger is approved, the wireless industry will be further consolidated, to the likely detriment of small, rural carriers. For instance, the merger will remove a significant source of competitive pressure on the carriers to provide a fair roaming rate to rural licensees; and AT&T will likely make itself the preferred roaming designation for T-Mobile customers, taking roaming revenues away from rural carriers.
As part of the transaction, Deutsche Telekom will receive an equity stake in AT&T that, based on the terms of the agreement, would give Deutsche Telekom an ownership interest in AT&T of approximately 8 percent. A Deutsche Telekom representative will join the AT&T Board of Directors.
This transaction would quickly provide the spectrum and network efficiencies necessary for AT&T to address spectrum shortages in certain markets driven by the exponential growth in mobile broadband traffic on its network. AT&T’s mobile data traffic grew 8,000 percent over the past four years and by 2015 it is expected to be eight to 10 times what it was in 2010. Put another way, all of the mobile traffic volume AT&T carried during 2010 is estimated to be carried in just the first six to seven weeks of 2015. Because AT&T has led the U.S. in smartphones, tablets and e-readers — and as a result, mobile broadband — it must obtain additional spectrum before new allocations of broadband spectrum will become available through future auctions. In the long term, the entire industry will need additional spectrum to address the explosive growth in demand for mobile broadband.
According to AT&T, AT&T and T-Mobile USA customers will see service improvements — including improved voice quality — as a result of additional spectrum, increased cell tower density and broader network infrastructure. At closing, AT&T will immediately gain cell sites equivalent to what would have taken an average five years to build without the transaction, and double that in some markets. The combination will increase AT&T’s network density by approximately 30 percent in some of its most populated areas, while avoiding the need to construct additional cell towers. AT&T said this transaction will increase spectrum efficiency to increase capacity and output, which not only improves service, but is also the best way to ensure competitive prices and services in a market where demand is extremely high and spectrum is in short supply.
AT&T said this transaction will directly benefit an additional 46.5 million Americans – equivalent to the combined populations of the states of New York and Texas – who will, as a result of this combination, have access to AT&T’s latest 4G LTE technology. AT&T claims that rural and smaller communities will substantially benefit from the expansion of 4G LTE deployment, increasing the competitiveness of the businesses and entrepreneurs in these areas.
The $39 billion purchase price will include a cash payment of $25 billion with the balance to be paid using AT&T common stock, subject to adjustment. AT&T has the right to increase the cash portion of the purchase price by up to $4.2 billion with a corresponding reduction in the stock component, so long as Deutsche Telekom receives at least a 5 percent equity ownership interest in AT&T.
The number of AT&T shares issued will be based on the AT&T share price during the 30-day period prior to closing, subject to a 7.5 percent collar; there is a one-year lockup period during which Deutsche Telekom cannot sell shares.
The cash portion of the purchase price will be financed with new debt and cash on AT&T’s balance sheet. AT&T has an 18-month commitment for a one-year unsecured bridge term facility underwritten by J.P. Morgan for $20 billion. AT&T assumes no debt from T-Mobile USA or Deutsche Telekom and continues to have a strong balance sheet.
The transaction is expected to be earnings (excluding non-cash amortization and integration costs) accretive in the third year after closing. Proforma for 2010, this transaction increases AT&T’s total wireless revenues from $58.5 billion to nearly $80 billion, and increases the percentage of AT&T’s total revenues from wireless, wireline data and managed services to approximately 80 percent.
The acquisition is subject to regulatory approvals, a reverse breakup fee in certain circumstances, and other customary regulatory and other closing conditions. The transaction is expected to close in approximately 12 months. Our clients that feel they will be adversely affected by the transaction should contact us as soon as possible. There will be an opportunity to submit comments on the transaction at both the FCC and Department of Justice. Certainly clients that have a roaming agreement with T-Mobile should participate in such comments.
BloostonLaw contacts: Hal Mordkofsky, Ben Dickens, Gerry Duffy, and John Prendergast.
Landover LPTV Project Raises Certain Concerns
Landover LLC has been offering rural telecom companies an opportunity to file applications for broadcast spectrum, low power TV UHF channels 14-51 (LPTV) at the FCC by engineering applications and filing them through a waiver or “rural filing window.” Landover says the costs of this application process would be significantly less when compared to prices paid for spectrum licenses auctioned in Auction 73 for 700 MHz. Landover itself holds interests in certain LPTV licenses, and wishes to establish a broadband network on this spectrum. It appears to be approaching a number of rural carriers as potential partners.
Clients interested in this opportunity should contact BloostonLaw, as there are certain concerns about the LPTV application process. For example, the FCC imposed an application freeze last fall, thereby creating significant regulatory hurdles for the grant of a waiver. The FCC is planning an “incentive auction” of the TV Band spectrum, raising a significant question as to whether the Commission will want to grant LPTV waivers ahead of such auction.
BloostonLaw contacts: Hal Mordkofsky, John Prendergast, and Cary Mitchell.
FCC Clarifies Conditional Grant Of Renewal Licenses
The FCC has issued a Public Notice clarifying its Wireless Radio Services Order, in which it directed the Wireless Telecommunications Bureau to grant applications for renewal of certain wireless radio service licenses conditioned on the outcome of the rulemaking proceeding in WT Docket No. 10-112.
On May 20, 2010, the Commission adopted a Notice of Proposed Rulemaking and Order in WT Docket 10-112. In the Notice, it proposed to harmonize the requirements for the renewal of wireless radio service (WRS) licenses for 25 geographically-licensed services and, separately, 15 services that are licensed on a site basis. BloostonLaw, on behalf of its clients, filed comments opposing many aspects of the proposed rule changes.
In the companion Wireless Radio Services Order, the FCC froze the filing of applications that are mutually exclusive with renewal applications filed during the pendency of the rulemaking proceeding. In addition, it directed the Bureau to grant currently pending applications for renewal, as well as applications for renewal filed during this rulemaking, on a conditional basis, subject to the outcome of this proceeding. On August 6, 2010, the Wireless Communications Association International, Inc. (WCAI) filed a petition for partial reconsideration of the Wireless Radio Services Order, requesting that the FCC clarify the purpose of its conditional renewal directive.
When the FCC adopted the Wireless Radio Services Order, it identified one Personal Communications Service and 149 Wireless Communications Service pending renewal applications that were subject to one or more mutually exclusive (i.e., competing) applications for the spectrum. The Bureau subsequently granted these renewal applications with the following condition: “License renewal granted on a conditional basis, subject to the outcome of FCC proceeding WT Docket No. 10-112.” This condition “preserve[s] any available legal rights of the applicants that have already filed competing renewal applications,” and memorializes the Commission’s retention of authority to process (i.e., accept for filing) the competing applications, if it determines that doing so would be appropriate and consistent with any rules and policies that may ultimately be adopted in WT Docket No. 10-112.
The Commission’s directive to grant applications for renewal conditioned on the outcome of rulemaking proceeding WT Docket No. 10-112 also applies to: (1) renewal applications pending when the FCC adopted the Wireless Radio Services Order but not subject to competing applications; and (2) renewal applications filed during the pendency of the rulemaking proceeding. The FCC has determined that to implement the Wireless Radio Services Order, the Bureau should widen its alert about the conditional nature of the grant, by placing the conditional language it uses in connection with the renewal of the licenses identified in the Wireless Radio Services Order on the face of every affected license receiving a renewal grant during the pendency of the rule-making proceeding.
Accordingly, all licenses renewed on or after May 25, 2010 (the Order’s release date) in the services enumerated in the Appendix to the Public Notice will include the following condition: “License renewal granted on a conditional basis, subject to the outcome of FCC proceeding WT Docket No. 10-112.”
The FCC clarifies that the scope of the condition does not include retroactive application of any revisions to the Commission’s substantive license renewal standards that it may adopt in the rulemaking proceeding to renewal applications filed before or during the pendency of the proceeding. Rather, as directed, the Bureau will continue to review and process renewal applications filed before or during the proceeding under the applicable renewal standards in effect on the license’s expiration date.
The purpose of the above condition is to preserve the opportunities of any party that might otherwise have sought to file a competing application during the proceeding, but could not do so because the FCC has prohibited (i.e., frozen) the filing of competing applications during the rulemaking proceeding. Thus, if the Commission determines during the rulemaking that it should retain existing rules and policies that permit the filing of competing applications in a particular wireless radio service, then it would take the steps it deems necessary and appropriate to afford such potential applicants this opportunity. As a practical matter, it appears that renewal applications that were listed on Public Notice as accepted for filing and later granted when no competing applications were filed are safe, because the public has already been accorded notice of the renewal application’s filing and has been afforded the opportunity to file a competing application.
The FCC also notes that the Commission might determine during the rulemaking that it will prohibit the filing of competing applications in a particular wireless radio service; in which case, it would accordingly remove the condition from affected licenses.
FCC Announces Procedures and Deadlines for 700 MHz Auction No. 92
The FCC issued a Public Notice last week setting forth the dates/deadlines and filing requirements for 700 MHz Auction No. 92. Short-form application deadline is May 11 and bidding starts on July 19. Interested clients should contact the firm ASAP, since the short form application requires the compilation of detailed ownership information (and financial information if bid credits are sought).
Auction 92 will include a total of 16 licenses—these include two Basic Economic Area (BEA) and 14 Cellular Market Area (CMA) licenses. These licenses were offered in Auction 73 and remained unsold or were licenses on which a winning bidder defaulted.
Applicants that are winning bidders will be required to disclose in their long-form applications the specific terms, conditions, and parties involved in any bidding consortia, joint venture, partnership, or agreement, understanding, or other arrangement entered into relating to the competitive bidding process, including any agreement relating to the post-auction market structure. Applicants must be aware that failure to comply with the Commission’s rules can result in enforcement action.
700 MHz Band licensees must operate in accordance with Commission rules to reduce the potential for interference to public reception of the signals of digital television (DTV) broadcast stations transmitting on DTV Channel 51. These limitations may restrict the ability of such geographic area licensees to use certain portions of the electromagnetic spectrum or provide service to some parts of their geographic license areas.
For clients applying for bidding credits: A bidding credit represents an amount by which a bidder’s winning bid will be discounted. For Auction 92, bidding credits will be available to small businesses and very small businesses, and consortia thereof. The level of bidding credit is determined as follows:
- A bidder with attributed average annual gross revenues that exceed $15 million and do not exceed $40 million for the preceding three years (“small business”) will receive a 15 percent discount on its winning bid.
- A bidder with attributed average annual gross revenues that do not exceed $15 million for the preceding three years (“very small business”) will receive a 25 percent discount on its winning bid.
Bidding credits are not cumulative. A qualifying applicant may claim either a 15 percent or 25 percent bidding credit on its winning bid.
|Auction Tutorial Available (via Internet)||May 2, 2011|
|Short-Form Application (FCC Form 175)|
Filing Window Opens
|May 2, 2011|
12:00 noon ET
|Short-Form Application (FCC Form 175)|
Filing Window Deadline
|May 11, 2011|
6:00 p.m. ET
|Upfront Payments (via wire transfer)||June 17, 2011|
6:00 p.m. ET
|Mock Auction||July 15, 2011|
|Auction Begins||July 19, 2011|
Available markets include:
BEA markets: Wheeling, WV-OH, and Lubbock, TX
Grand Forks, ND-MN
North Carolina 2 - Yancey
South Carolina 1 - Oconee
South Carolina 6 - Clarendon
Texas 12 - Hudspeth
Virginia 1 - Lee
Puerto Rico 2 - Adjuntas
Puerto Rico 3 - Ciales
BloostonLaw Contacts: Cary Mitchell, Hal Mordkofsky, John Prendergast
FCC SAYS SEC. 254(g) RATE INTEGRATION REQUIREMENT DOES NOT APPLY TO CMRS: The FCC has denied a Petition for Rulemaking filed by South Seas Broadcasting, Inc., in which South Seas asked that the FCC expand the implementation of Section 254(g) of the Communications Act to include wireless (e.g., cellular telephone) calls from the mainland United States to the U.S. Territory of American Samoa. The FCC found that the statutory rate integration requirement of Section 254(g) does not apply to providers of commercial mobile radio services (CMRS), such as wireless carriers. South Seas requested that the Commission extend the rate integration requirements of Section 254(g) to wireless carriers. It asserted that the Wireline Competition Bureau’s 2006 reinstatement of the overall rate integration requirement for American Samoa caused confusion, in as much as the order did not explicitly extend the reinstated requirement to wireless carriers, “a fact that was omitted in news stories about the integrated rate rule and in the customer newsletter circulated by the American Samoa Telecommunications Authority (ASTCA).” Moreover, South Seas contended that most cellular telephone carriers offered at that time various calling plans that included “domestic long distance,” but none of them notified customers that callers to American Samoa (who would be dialing what was considered a domestic telephone number under the plans) would not be eligible for the favorable domestic long distance rate. These omissions caused some residents of American Samoa mistakenly to inform friends and family on the U.S. mainland that the calling rate effectively had been lowered as a result of rate integration. These relations placed calls on their wireless phones to American Samoa and later “were shocked when they received their telephone bills.” For these reasons, South Seas argued that rate integration should apply to CMRS carriers. The FCC said Congress did not contemplate that CMRS providers would be “provider[s] of interstate interexchange telecommunications services” and, accordingly, the rate integration requirement should not apply to CMRS. The Commission added that practical considerations support this interpretation. For instance, “CMRS service areas do not follow state lines and do not coincide with local exchange carrier (LEC) ‘exchanges.’ Rather, CMRS licenses are issued by [Metropolitan Statistical Areas] and [Major Trading Areas], which frequently cover multi-state areas within which some calls might be considered inter-LATA or interexchange calls in the wireline context.” This lack of congruence between CMRS service areas and those in which wireline services traditionally have been provided impedes the application of the rate integration requirement to CMRS, insofar as the rate integration requirement applies only to “interexchange telecommunications services.” Thus, the FCC said the Section 254(g)’s rate integration requirement does not apply to CMRS. BloostonLaw contacts: Hal Mordkofsky, John Prendergast, and Bob Jackson.
CITY OF CHARLOTTE ASKS FCC TO CLARIFY “GOVERNMENT USE” REQUIREMENT APPLICABLE TO 700 MHz PUBLIC SAFETY SPECTRUM: The City of Charlotte, North Carolina, has filed a petition for declaratory ruling asking the FCC “to confirm explicitly what the rulings in PS Docket No. 06-229 and the processing of 700 MHz narrowband applications indicate implicitly: Territories, possessions, states, counties, towns or similar State or local governmental entities that qualify as 700 MHz lessees/users presumptively have as their sole or principal purpose the protection of the safety of life, health, and property and are permitted to use 700 MHz broadband spectrum for activities conducted by their personnel including, but not limited to, activities of police, fire and medical emergency first responders.” Charlotte states that it “believes that [Section 337 of the Communications Act], the accompanying legislative history, and the FCC’s decisions regarding 700 MHz matters support a conclusion that the statutory qualifier applies to the eligibility of entities and not to the scope of activities they may undertake on 700 MHz spectrum.” Charlotte further notes, however, that “discussions regarding permissible use of 700 MHz broadband spectrum by non-governmental entities have included language that arguably could be read to say that police, fire and EMS services are the only activities that may be conducted on this spectrum, even by governmental entities.” Charlotte asks the Commission to “resolve any ambiguity on this point by issuing a declaratory ruling clarifying that all governmental entities eligible under FCC Rule Section 90.523(a) presumptively have as their sole or primary mission the safety of life, health and property, and, provided that emergency personnel are utilizing a 700 MHz broadband system, non-first responder government personnel may operate on the system as well.” Comments in this PS Docket No. 06-229 proceeding are due April 11, and replies are due April 29. BloostonLaw contacts: Hal Mordkofsky, John Prendergast, and Cary Mitchell.
FCC SETS COMMENT DATE FOR 10-YEAR RFA REVIEW: The FCC has set a comment date on its Public Notice to review rules pursuant to section 610 of the Regulatory Flexibility Act (RFA). The purpose of the review is to determine whether Commission rules whose ten-year anniversary dates are in the year 2009 should be continued without change, amended, or rescinded in order to minimize any significant impact the rules may have on a substantial number of small entities (BloostonLaw Telecom Update, March 9). Upon receipt of comments from the public, the Commission will evaluate those comments and consider whether action should be taken to rescind or amend the relevant rule(s). Comments in this CB Docket No. 09-229 proceeding are due May 17. There is no opportunity for reply comments. In reviewing each rule in a manner consistent with the requirements of section 610 the FCC will consider the following factors:
(a) The continued need for the rule;
(b) The nature of complaints or comments received concerning the rule from the public;
(c) The complexity of the rule;
(d) The extent to which the rule overlaps, duplicates, or conflicts with other Federal rules and, to the extent feasible, with State and local governmental rules; and
(e) The length of time since the rule has been evaluated or the degree to which technology, economic conditions, or other factors have changed in the area affected by the rule.
BloostonLaw contacts: Hal Mordkofsky, Ben Dickens, Gerry Duffy, and John Prendergast.
FCC SETS COMMENT CYCLE ON NPRM TO REINSTATE & MODIFY VIDEO DESCRIPTION RULES: The FCC has established a comment cycle on its second Notice of Proposed Rulemaking (NPRM), related to the “Twenty-First Century Communications and Video Accessibility Act of 2010” (CVAA), that seeks comment on reinstatement and modification of the video description rules originally adopted by the Commission in 2000 (BloostonLaw Telecom Update, March 9). Comments in this MB Docket No. 11-43 proceeding are due April 28, and replies are due May 27. Video description is the insertion of audio-narrated descriptions of a television program's key visual elements into natural pauses in the program's dialogue. This feature makes television programming more accessible to people who are blind or visually impaired by providing them with essential information that is otherwise conveyed to the audience only visually. This NPRM would reinstate the Commission’s video description rules that were previously overturned by a federal appeals court more than a decade ago. The FCC said the enactment of the CVAA provided the Commission with ample authority for the reinstatement of these rules. As directed by Congress in the CVAA, the proposed rules would require:
- Large-market broadcast affiliates of the top four national networks and large multichannel video programming distributors (MVPDs) to provide video description;
- These broadcasters to provide 50 hours per quarter of video-described primetime or children’s programming, with affected MVPDs providing the same amount on each of the five most popular non-broadcast networks; and
- All network-affiliated broadcasters and all MVPDs to “pass through” any video description included in network or broadcast programming they carry. Live or near-live programming would be exempt from the proposed rules.
BloostonLaw contacts: Hal Mordkofsky and Gerry Duffy.
FCC GRANTS 6-MONTH SUBSTANTIAL SERVICE EXTENSION TO EBS INDUSTRY (BUT NOT BRS INDUSTRY): The FCC’s Wireless Telecommunications Bureau (WTB) has granted a blanket 6-month extension for Educational Broadband Service (or EBS) licensees to complete their post-transition substantial service buildout. The Bureau’s action came in response to a request filed in early February by the National EBS Association and the Catholic Television Network to extend the substantial service deadline for EBS licensees from May 1, 2011 to November 1, 2011. Comments on the joint NEBSA/CTN request were filed in WT Docket No. 11-22. In granting the extension, the Bureau reasoned that a significant number of EBS licensees may be unable to comply with the EBS educational use requirements by May 1, 2011 because the substantial service deadline comes at the end of the school year. It also cited carrier reports that deployment of EBS service has been hampered by lack of equipment and engineering expertise, lack of full 4G signal availability, difficulties in obtaining middle-mile and backhaul facilities, and permitting delays that have slowed cell siting efforts. These factors were particularly evident for licensees in smaller markets. The Bureau concluded that blanket relief was appropriate in the case of EBS licensees because they are similarly situated, and because it would be unduly burdensome to require all EBS licensees to devote scarce resources at the end of the school year to the preparation and filing of individual waiver requests. A total of 17 commenters filed in support of the extension and no commenters opposed the NEBSA/CTN request. The Bureau’s ruling provides significant relief to many commercial 2.5 GHz Band operators, and it is a significant win for Clearwire Corp., since that company has significant EBS lease holdings and construction obligations in connection with those leases. Our firm’s clients should be advised that the EBS buildout extension does not in any way change or amend the May 1, 2011 substantial service deadline applicable to all Broadband Radio Service (BRS) licenses. Likewise, the ruling should not be read as an indication of the Bureau’s willingness to grant BRS buildout extensions. As a related matter, all BRS Basic Trading Area (BTA) licensees subject to the May 1, 2011 substantial service deadline must file a notification of completion of construction by Monday, May 16, 2011. BRS incumbent licensees (holders of non-BTA based BRS licenses) are required to demonstrate substantial service as part of their applications for renewal of license. The deadline for BRS incumbent licensees that expire on May 1, 2011 to file their renewal applications falls on Monday, May 2, 2011. Applications filed after the deadline will need to be accompanied by a request for waiver of the applicable deadline, along with a justification for a waiver. Request for extension of time to demonstrate substantial service must be filed before the deadline. BloostonLaw Contacts: Hal Mordkofsky, Cary Mitchell, Richard Rubino
FCC APPROVES QWEST-CENTURYLINK MERGER: The FCC has approved the merger of CenturyLink Inc. and Qwest Communications International Inc., but it imposed protections against the risk of harm to competition and said it ensured the merged entity will live up to its commitments to significantly expand its network and launch a major broadband adoption program for low-income consumers. The transaction is expected to close soon after the companies have obtained their final state approval. Based on the companies’ agreement to certain conditions, the FCC found that the potential public interest benefits of the merger are likely to outweigh the potential harms. Binding and enforceable conditions include:
1. Broadband adoption program for low-income consumers
- Launch major broadband adoption program focused on connecting the millions of low-income consumers in the combined company’s 37-state territory.
- Offer qualifying households broadband starting at less than $10 per month and a computer for less than $150, and keep the window open for five years for qualifying consumers to sign up.
- Make a significant annual commitment to marketing, outreach, and digital literacy training, and include detailed reporting on outcomes and an independent analysis of the program’s effectiveness.
2. Broadband deployment
- Significantly increase the capacity of the Qwest network, bringing broadband with actual download speeds of at least 4 Megabits per second (Mbps) to at least 4 million more homes and businesses, and at least 20,000 more anchor institutions, such as schools, libraries, and community centers.
- Significantly increase availability of higher-speed broadband: The company will more than double the number of homes and businesses that can get 12 Mbps broadband, and more than triple the number that can get 40 Mbps broadband.
3. Advancing Universal Service Fund reform
- Phase down three forms of support designed for smaller companies, which the company currently receives from the federal Universal Service Fund.
4. Protection against potential transaction-related harms
- No increase in enterprise service prices for 7 years in a few dozen buildings where the companies currently compete (Minneapolis, Minn., and Olympia, Wash.).
- Safeguards for smooth transition of operations support systems, to protect wholesale customers.
- Ensuring the merger does not harm interconnection agreements with competing phone carriers.
- Maintenance of wholesale service quality.
Monroe, Louisiana-based CenturyLink offers voice, video, and data services in 33 states, serving approximately 7 million access lines and 2.2 million broadband customers in its region. CenturyLink also operates as a competitive local exchange carrier in certain local and regional markets. Denver, Colorado-based Qwest operates as a local exchange carrier serving 10.3 million lines in a 14-state region; has 3 million broadband customers; and sells wireless, video, and extensive wholesale services through its subsidiaries. Under the deal, Qwest will operate as a wholly owned subsidiary of CenturyLink. BloostonLaw contacts: Hal Mordkofsky, Ben Dickens, Gerry Duffy, and John Prendergast.
This newsletter is not intended to provide legal advice. Those interested in more information should contact the firm.