Selected portions of the BloostonLaw Telecom Update, and/or the BloostonLaw Private Users Update — newsletters from the Law Offices of Blooston, Mordkofsky, Dickens, Duffy & Prendergast, LLP are reproduced in this section with the firm's permission.
| BloostonLaw Telecom Update || Vol. 17, No. 16 || April 23, 2014 |
Mobility Fund Phase II Developments
Given that Verizon has completed its 4G LTE roll-out, and AT&T will complete its 4G LTE roll-out by the end of 2014, the Further Rulemaking will re-evaluate Phase II of the Mobility Fund. In particular, the FCC will consider whether it should focus on the 2% of the U.S. population that will not have access to LTE, and, if so, how a re-focused Mobility Fund should work. The FCC will also consider whether and how the phase-down of competitive eligible telecommunications carrier ("CETC") identical support should be adjusted.
We reiterate that the Open Meeting discussions and New Release were relatively general, and that some of the expected decisions and proposals may have changed as a result of internal FCC discussions and negotiations during the Sunshine Period. BloostonLaw will be watching carefully for the release of the actual FCC document, and will update this report as soon as possible thereafter.
Parties Discuss Upcoming Report, Order, and FNPRM on USF/ICC Reform
In the days leading up to today's open meeting, during which the FCC will consider a report, order, and further notice of proposed rulemaking (FNPRM) in the USF/ICC reform proceeding, a number of parties met with the FCC to discuss various issues related thereto.
On April 11, AT&T met with Wireline Competition Bureau (WCB) staff to argue that the eligible telecommunications carrier (ETC) rules that applied in the legacy USF environment must be changed at the same time that Phase II of the Connect America Fund (CAF) is implemented, and that ETC designations and obligations must be limited only to areas eligible for support and to those providers who willingly accept and receive that support.
On April 14, representatives from Frontier, Windstream, Verizon, AT&T, CenturyLink, Hawaiian, FairPoint and USTelecom met with Chairman Wheeler's legal advisor and with Wireline Competition Bureau staff, where they discussed concerns about a possible increase in the broadband speed requirements for CAF Phase II, and provided suggestions on how to compensate for any such potential increase. That same day, representatives from ITTA and TDS met separately with legal advisors for Chairman Wheeler and Commissioner Rosenworcel to express similar concerns.
On April 15, NTCA met with Chairman Wheeler's legal advisor to encourage the FCC to implement updates to the existing high-cost rules for areas served by rural, rate-of-return-regulated local exchange carriers as soon as possible. Specifically, NTCA discussed how updates must ensure recovery for both prior investments and future investments; and discussed its previously-submitted proposal to update legacy universal service rules in response to consumer demands for broadband.
On April 16, CenturyLink met with Commissioner Rosenworcel's legal advisor to voice concerns about a potential increase in broadband speed requirements for CAF Phase II. Also on April 16, Charter Communications met with staff for Commissioners O'Rielly and Pai to oppose a proposal to make partially served census blocks eligible for CAF Phase II funding.
The report, order, and FNPRM will not be available in time for review before this edition of the BloostonLaw Telecom Update goes to press, but carriers should look for these issues to be addressed when it comes out.
FCC Adopts Proposal to Allocate 150 MHz of Spectrum to "Citizens Broadband Radio Service"
The Federal Communications Commission today set forth its proposal to provide more spectrum for general consumer use, carrier-grade small cell deployments, fixed wireless broadband services, and other innovative uses, through the creation of a new Citizens Broadband Radio Service. The Commission is proposing rules for the Citizens Broadband Radio Service in a Further Notice of Proposed Rulemaking (FNPRM) (FCC 14-49) that advances the Commission's efforts to meet the growing demand for spectrum by proposing to make 150 megahertz available in the 3.5 GHz Band.
The FNPRM proposes innovative spectrum sharing techniques to unlock the value of the spectrum between 3550 MHz and 3650 MHz, and seeks comment on extending the proposed service to the 3700 MHz band. Specifically, the FNPRM proposes a three-tiered access and sharing model comprised of federal and non-federal incumbents, priority access licensees, and general authorized access users. Together, the proposals seek to promote flexibility and innovation by leveraging advancements in technology to facilitate sharing between different users and uses, including incumbent government uses.
Federal and non-federal incumbents would be protected from harmful interference from Citizens Broadband Radio Service users. Targeted priority access licenses would be made available for a variety of uses, including mobile broadband. General authorized access use would be permitted in a reserved amount of spectrum and on an opportunistic basis for a variety of consumer or business-oriented purposes, including advanced home wireless networking.
Access and operation within the 3.5 GHz band would be managed by a spectrum access system, a dynamic database or databases that incorporates technical and functional requirements necessary to manage access and operations across the three tiers. In addition, the FNPRM seeks comment on technical, auction, and allocation rules.
We will provide additional information about the FCC's proposal once the text of the Further Notice of Proposed Rulemaking is released.
Small Company Coalition Updates Summary of Alternative Universal Service Broadband Proposal
On April 21, 2014, the Small Company Coalition (SCC) filed an updated summary , in the form of a PowerPoint presentation, of its alternative universal broadband service proposal. The SCC said its proposal works similar to the previous HCLS-algorithm but includes broadband-centric cost study categories that would result in cost recoveries via CAF-related broadband funding.
The stated goal of the proposal is to "create an explicit, efficient and fair funding mechanism that incents the deployment of broadband networks and the transition to IP networks while providing carriers with revenues that are sufficient to enable recovery of capital and operating costs, including a reasonable return on investment, incurred to provide universal broadband services to rural consumers at rates and conditions comparable to those charged to consumers in urban areas." More specifically, the goals of the proposal are:
- No Retroactive Rulemaking. Ensure that Rate-of-Return (RoR) carriers have the opportunity to recover properly incurred capital and operating costs prior to a date certain.
- No Unfunded Mandates. Funding for new investment must be commensurate with any obligations imposed.
- Predictable and Sufficient Funding. Any new broadband recovery mechanism should clearly define how funding for new investment will be recovered and ensure that funding is sufficient to recover the cost to be supported under the plan.
- Understandable Mechanisms. Any proposed industry plan should be transparent, relatively simple in concept and mechanics, and quantifiable as to its impact on carriers.
- Comparable and Affordable Services for Rural Consumers. The plan should seek to ensure rural areas have access to broadband at terms, rates and conditions comparable to urban areas within the budget parameters of the Universal Service Fund.
The SCC proposal includes:
- A Broadband High Cost Loop Fund that provides a comprehensive solution for RoR carriers;
- A RoR carrier-specific funding model that develops a rate of return average cost per loop by state;
- A broadband high cost loop adjustment to identify and quantify the support attributed to broadband equipment categories, which is reduced from the Part 69 interstate special access rate element and added to the Broadband High Cost Loop Fund in a manner similar to the way line port costs are shifted in the MAG adjustment; and
- Support would only be available to 1) build-out to customers without adequate availability to broadband service from a competitor, and/or 2) maintain a broadband-centric network, thereby insuring efficient use of fund resources.
The updated summary also includes an outline of the mechanics of SCC's proposal, as well as a discussion of the proposed capping mechanism.
Wireless Associations Ask FCC to Halt Phase-Down of USF support for High-Cost Wireless Carriers
Because of substantial delays in implementing Mobility Fund Phase II, both the Competitive Carriers Association (CCA) and the Rural Wireless Association (RWA) have requested the FCC to clarify that it will not phase-down USF support for high-cost wireless carriers as of July 1, 2014.
In an April 14, 2014 letter to FCC Chairman Tom Wheeler, RWA asked that the FCC immediately halt its planned phase-down of USF support for high-cost wireless carriers, citing to the substantial likelihood that Phase II will not be "operational" or "implemented" by June 30, 2014. The Commission's rules currently state that the phase-down of legacy USF support will halt if the Mobility Fund Phase II has not been implemented by June 30, 2014. Language in the USF/ICC Transformation Order also states that the phase-down will be halted if Phase II is not "implemented" by June 30, 2014.
"Continuing the phase-down without an opportunity to access funds through a Mobility Fund II mechanism is inconsistent with the universal service principles of Section 254—including the directive that the Commission provide "specific, predictable and sufficient" support," wrote RWA.
Likewise, the CCA sent a letter to Chairman Wheeler on April 15, 2014, asking that he enforce the Commission's prior decision to pause the phase-down of legacy support for wireless providers at 60 percent on June 30, 2014, until the Mobility Fund II is operational.
"Continuing the phase-down without an opportunity to access funds through a Mobility Fund II mechanism is inconsistent with the universal service principles of Section 254—including the directive that the Commission provide "specific, predictable and sufficient" support," wrote CCA.
As part of the same filing, CCA also urged the FCC to eliminate a right-of-first-refusal ("RoFR") for price-cap carriers in the CAF Phase II, which it views as discriminatory. If the RoFR is not eliminated, CCA said the Commission should prohibit price-cap carriers who decline the RoFR from having a second chance at competing for the funding as wireless providers. CCA said as voice and broadband customers continue to migrate to wireless platforms, the continued evisceration of USF support for wireless providers will exacerbate the growing digital divide between urban and rural areas, putting rural consumers at risk of receiving lower-quality and less affordable services.
Law & Regulation
Supreme Court Hears Landmark Case on Copyright Issue
The U.S. Supreme Court, on Tuesday, heard oral argument in ABC et al. v. Aereo , a case that could have far-reaching implications for the entertainment industry.
Aereo is a small start-up based in New York City, founded by its CEO, Chet Kanojia, in 2012. Its technology uses multiple tiny antennas that pick up over-the-air broadcast signals which are then fed to a digital video recorder (DVR). Each of its subscribers is temporarily assigned an antenna and a virtual DVR which then streams the program of the subscriber's choosing to a TV, smartphone, tablet or computer for viewing contemporaneously or at a later time. The technology is, in effect, cloud based in that the TV programming is stored online and then viewed by the subscriber over the Internet. Aereo's service is currently being provided in 13 urban markets for about $8 a month.
TV broadcasters claim that this constitutes infringement of their copyrighted program material, plain and simple. They rely on Congressional action in enacting the Copyright Act of 1976, bestowing on copyright holders an exclusive right over transmissions of their work to the public "by means of any device or process, whether the member of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times." This, claim the broadcasters, makes it clear that Congress meant to include services like those provided by Aereo, which deliver TV programming to the public, even though individual subscribers may receive those transmissions at different times and places.
Not so fast says Aereo, which claims that the subscriber is simply using his or her own cloud-based antenna to receive free broadcast programming and then recording that on a cloud-based DVR. Recording free TV broadcasts was given the green light in the famous Sony Betamax case in 1984 in which the Supreme Court upheld the use of video cassette recorders to record programming for viewing at a later time. So, the only remaining question, according to Aereo, is whether the transmission from the subscriber's own virtual DVR to a TV, smartphone, tablet or computer should be considered a "public performance" that copyright holders have the right to control or, as Aereo claims, a private performance since the final transmission occurs only if and when determined by the subscriber for strictly private viewing.
This is the question currently before the Supreme Court. At the oral argument on Tuesday, several of the justices appeared skeptical questioning whether Aereo had come up with an engineering achievement or merely a technical workaround to bypass the copyright laws. The justices questioned the parties at length about the definition of public and private performances in copyright law and how Aereo differs from cable, satellite and other video suppliers that pay broadcasters retransmission and other license fees.
The Court's decision in the case could have far-reaching implications. The broadcast industry will likely lose out on a lot of revenue if Aereo is allowed to avoid paying retransmission fees and more of the public start watching TV on Aereo instead of on cable. Likewise, other suppliers of cloud-based services are concerned about the effect a decision might have on their businesses.
The Court's decision in the case is expected in June.
Wireline Competition Bureau Announces Availability of CAF Phase II Cost Model
On April 17, the Wireline Competition Bureau issued a Public Notice announcing the availability of Version 4.1.1 of the Connect America Fund Phase II Cost Model. According to the Notice, CAM v4.1.1 incorporates "minor corrections" to the model's broadband coverage and a number of technical changes that "do not have a material effect on the funding levels previously released by the Bureau."
Specifically, CAM v4.1.1 corrects the broadband coverage for approximately 5400 census blocks to reflect the fact that these census blocks are not served by a fixed wireless provider. CAM v4.1.1 also contains updates to the TelcoMaster table to incorporate corrections to certain holding company names. Finally, CAM v4.1.1 modifies certain headers and field descriptions on two CAM reports.
CAM v4.1.1 is available at http://www.fcc.gov/encyclopedia/caf-phase-ii-models or https://cacm.usac.org/ . However, according to the Notice, parties must execute the relevant acknowledgement of confidentiality, licensing, and nondisclosure documents in order to access the model at either site.
Georgia Struggles with Broadband Implementation Legislation
The State of Georgia is struggling through a process that may play out in many states, namely, trying to figure out the best way to facilitate the rapid deployment of wireless broadband, including the need for more towers to accommodate the intensive use of spectrum caused by smartphones, tablets and other broadband devices. Members of the Georgia State legislature drafted the" Mobile Broadband Infrastructure Leads to Development (BILD) Act" (HB 176), which would streamline the approval process for broadband deployment, particularly where collocation on an existing antenna structure is involved. A shot clock would be imposed on zoning and other processing of new facility applications, and an even shorter deadline on processing of collocations. Limits would be placed on the amount of information that can be required of applicants. The bill justifies its proposed measures as necessary to spur economic through the deployment of broadband, and to create broadband infrastructure that will benefit the public safety community. However, the bill failed to come up for a vote in this session of the Georgia legislature.
Rep. Don Parsons (R-Marietta), the bill's primary author, vows to continue working for its passage. First, he must overcome the opposition of the Georgia Municipal Association (GMA), which is made up of local government entities, some of which fear the effort to smooth the way for broadband deployment will erode their authority over land use decisions. It is reported that overt opposition comes from only three of Georgia's 159 counties, but this opposition (bolstered by input from the GMA) has been enough to stall the bill so far. Interviews by AGL Bulletin magazine have shed some light on the battleground between wireless carriers and local governments:
"We will address the city and county governments [concerning the bill] right after the session is over and make sure they have the factual information," Parsons told AGL Bulletin magazine, noting that Georgia has many communities that need wireless infrastructure to support economic development.
"HB 176 … would seriously impair the ability of local governments to protect the public from the siting and expansion of towers in locations that are not ideal, or even appropriate, for towers," according to a GMA talking points paper. GMA also argues that the bill contains a false promise it will not adversely impact local control of the tower zoning. "By limiting what zoning boards and local governments can consider, HB 176 would override the standards used by communities to determine whether a particular use is appropriate on that property and compatible with surrounding uses," according to GMA. "While HB 176 says it would allow zoning to apply, it doesn't. HB 176 is special treatment, not equal treatment."
Parsons is skeptical of the motives of the municipalities, noting that they have a vested interest in drawing out lease negotiations city-owned property: "The longer they can draw out the negotiation process, the more leverage they have to drive up the rental fee for their property".
Opposition also came from the County of Fulton, which has sent a resolution to the Georgia legislature stating that the legislation would take away its decision-making capability.
"HB 176 would eliminate the zoning protections cities currently have to regulate the size of existing towers. For instance, a small cell tower could be dramatically increased in height and width without any zoning oversight," Fulton said. "HB 176 would prevent a city from imposing height limitations on a new tower. A city would not be permitted to request that the applicant build two lower towers rather than one higher tower." This objection seems to ignore language in the bill that applies the streamlined approval process only to situations where the broadband deployment would not increase the height of a previously approved tower, or the size of the "equipment compound."
The bill's sponsors have already made changes in the bill aimed at addressing municipalities' concerns. For example, they removed a passage that would have required them negotiate a price [to lease the land] based on fair-market value. The twists and turns of the Georgia bill could inform similar efforts in other states, as wireless carriers seek to keep up with competition and respond to consumer demand by deploying their broadband facilities as quickly as possible.
Former Chairman Julius Genachowski Joins Syniverse Board of Directors
Telecompetitor is reporting that former FCC Chairman Julius Genachowski (2009-2013) has joined the Board of Directors of Syniverse, a company that provides a cloud-based platforms and services for mobile service providers, ISPs and app providers. Genachowski is currently a Managing Director in the Carlyle Group's U.S. Buyout team, where he focused on acquisitions and growth investments in global technology, media and telecom, including Internet and mobile.
Syniverse President and CEO Jeff Gordon said he looks forward to working with Genachowski and believes his extensive experience overseeing mobile and telecom initiatives will benefit Syniverse greatly. Genachowski, who has held senior leadership positions in the private sector for more than a decade, said he is honored to join the Syniverse board.
Netflix Emerges as Vocal Opponent of Comcast / Time Warner Cable Merger
After recently paying an undisclosed sum to internet service provider Comcast in order to "interconnect" and thereby better serve its streaming video customers, the Washington Post is reporting that Netflix has come out in opposition of the upcoming Comcast / Time Warner Cable merger.
In a recent letter to shareholders, Netflix CEO Reed Hastings and CFO David Wells wrote that the merger would create "a single company with too much power over the broadband Internet market. Combined, Comcast and Time Warner Cable could control as much as half of all broadband Internet subscriptions, with most of those homes having no alternative options for broadband service providers."
"Comcast is already dominant enough to be able to capture unprecedented fees from transit providers and services as Netflix," continued the letter. "The combined company would possess even more anti-competitive leverage to charge arbitrary interconnection tolls for access to their customers. For this reason, Netflix opposes this merger."
In a statement, Comcast spokeswoman Jennifer Khoury, a senior vice president, responded: "Netflix's opposition to our Time Warner Cable transaction is based on inaccurate claims and arguments. There has been no company that has had a stronger commitment to openness of the Internet than Comcast."
Apr. 23 – Reply comments are due on Extension of Freeze of Separations Category Relationships and Cost Allocation Factors.
Apr. 25 – Comments are due on Grain Management, LLC Petition for Clarification.
May 1 – FCC Form 499-Q, Telecommunications Reporting Worksheet is due.
May 9 – Reply comments are due on Grain Management, LLC Petition for Clarification.
May 29 – Comments are due on the short form Tariff Review Plans.
May 31 – FCC Form 395, Employment Report, is due.
Jun. 16 – ILEC Tariff filings made on 15 days' notice are due.
Jun. 23 – Petitions to suspend or reject tariff filings made on 15 days' notice are due.
Jun. 24 – ILEC tariff filings made on 7 days' notice are due.
Jun. 26 – Replies to petitions to suspend or reject tariff filings made on 15 days' notice are due.
Jun. 26 – Petitions to suspend or reject tariff filings made on 7 days' notice are due.
Jun. 27 – Replies to petitions to suspend or reject tariff filings made on 7 days' notice are due.
Jul. 1 – FCC Form 481 (Carrier Annual Reporting Data Collection Form) is due.
Jul. 1 – Mobility Fund Phase I Auction Winner Annual Report is due.
Jul. 31 – FCC Form 507 (Universal Service Quarterly Line Count Update) is due.
Jul. 31 – Carrier Identification Code (CIC) Report is due.