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. 3 || January 29, 2014 |
New 911 Service Provider Requirements Clarified by FCC Staff
In meetings with the FCC staff, it has been clarified that the class of entities covered by the new rules and certification requirements — i.e. "Covered 911 Service Providers" — is limited. Entities that merely provide the capability for customers to originate 911 calls are generally not subject to the new 911 requirements. Rather, covered entities are limited to those that directly serve a Public Safety Answering Point (PSAP). The FCC expects that most wireless carriers will not qualify as "Covered 911 Service Providers" at this time. RLECs and CLECs may or may not qualify, depending upon whether they directly serve a PSAP (covered), or whether another carriers sits between them and the PSAP and provides the call routing, ALI/ANI and connecting lines.
Covered 911 Service Providers should begin complying with the new 911 requirements by February 18. This means either: (a) adopting and implementing the best practices referenced in the FCC order; (b) developing reasonably sufficient alternative practices that are more appropriate to the particular facts and circumstances of their network; or (c) demonstrating that a particular practice is not applicable to their network. Likewise, as of February 18, Covered 911 Service Providers will have to begin providing the required new telephone and email notifications to PSAPs of 911 outages within 30 minutes of the discovery of the outage, plus the required follow-up notifications as more damage and recovery information becomes available. Clients needing help determining whether they are "covered", or desiring assistance in preparing the necessary best practices program if they are covered, should contact us ASAP.
FCC Appears to Urge Rural Electric Utilities to Participate in IP Transition, Offer Broadband
On December 17, 2013, the Rural Broadband Council ("RBC"), an independent operating unit of the Utilities Telecom Council ("UTC"), issued a press release declaring that the FCC's plan to support IP transition experiments "strikes a positive step towards promoting rural broadband deployment by [electric] utilities." The RBC's Chairman stated that the RBC "seeks to establish a strategic, comprehensive, and nationally-organized effort to deploy broadband covering all of rural America."
More recently, on January 16, 2014, the RBC held a webinar entitled "Building the Gigabit Utility – The FCC's Role in Promoting Broadband Access in Rural America." The promotional material for the webinar declared that the "FCC has asked RBC to encourage its members and prospective members to submit Expressions of Interest (EOI) to participate in rural trials as part of a larger set of 'experiments' by the FCC Technology Transitions Policy Task Force." It indicated that the "FCC stated in a meeting last week that it 'very much wants UTC's members to participate in these rural trials' in order for the FCC to gauge the level of interest and dedication among utilities for bringing the benefits of real broadband to unserved and underserved rural America." It advised electric utilities that "while the submission of an EOI opens the door for you to participate in the process of gaining access to your share of the up-to $4.5 billion, it does not create a financial commitment for your utility."
At its January 30 open meeting, the FCC is scheduled to initiate a proceeding addressing AT&T's proposed TDM-to-IP "experiments," and establishing procedures for the filing and consideration of proposals from other entities for IP experiments. Some of the latter experiments may involve limited grants or universal service support from the FCC (rumored to be in the neighborhood of $1 billion) to defray some or all of the associated increased capital investment in broadband infrastructure.
Careful attention must be paid to how the FCC defines "unserved" and "underserved" areas for purposes of the contemplated IP experiments. It may be that the FCC views electric utility experiments as a means of discouraging the abandonment of rural wireline service by AT&T and others, or as a substitute for wireline broadband service in abandoned or never-served price cap areas. It is also possible that the FCC sees electric utilities as more likely than RLECs and CATV companies to deploy high-speed fiber-to-the-home networks along their existing rural rights-of-way, and/or as more likely to deploy broadband without continuing need for ongoing universal service support for their operating expenses. However, even if the FCC initially limits electric utility experiments to wholly unserved areas, the program may well whet the appetites of electric utilities to expand their broadband services into other price cap and rate-of-return areas.
Industry press reflects that many electric utilities have been interested in "smart home" technologies to increase the profitability of their power distribution business. Broadband over power line (BPL) alternatives have been discussed for years without much in the way of concrete results. It is quite possible that many electric utilities will not want to deal with the very different regulatory requirements imposed by federal and state authorities upon telecommunications carriers and broadband service providers. In fact, it is not clear what authority (if any) the FCC would have to provide universal service dollars to electric utilities that are not eligible telecommunications carriers, even for limited or temporary "experiments."
Because electric utilities serve virtually all of rural America and have poles, conduits and rights-of-way that are often more extensive than those of CATV companies, electric utilities may be positioned to be a force in the provision of broadband services. On the one hand, these entities may pose a potential competitive threat to traditional RLECs; but they may also present opportunities for partnerships and other joint ventures that may enable RLECs to expand their service areas, services and revenues.
It bears examination as to whether the proposed IP "experiments" and additional support dollars may also present significant opportunities for RLECs themselves to expand their broadband deployment and services.
Chairman Wheeler Speaks on Net Neutrality Decision, Advocates Case-by-Case Approach
At the annual State of the Net conference in Washington D.C. this week FCC Chairman Tom Wheeler said that, in the face of the U.S. Court of Appeals for the District of Columbia Circuit's recent decision striking down parts of the net neutrality regulations, he favors a case-by-case approach to dealing with the concerns net neutrality was intended to address. "Case-by-case is a dynamic approach rather than 'Well, everybody's got to go through the eye of this needle,'" said the Chairman during the discussion.
As reported in the January 15, 2014 edition of the BloostonLaw Telecom Update, the court upheld the disclosure rules adopted in the FCC's 2010 Open Internet Order, but vacated the anti-Blocking and anti-Discrimination rules adopted therein, i.e., the heart of the FCC's "net neutrality" principle.
The National Journal reports that during the conference, Wheeler noted that the court upheld a broad FCC authority to regulate the Internet, and further reasoned that the FCC could use that broad authority to punish flagrant net neutrality violations even in the absence of the Open Internet Order. Chairman Wheeler also reportedly indicated that he does not take issue with cellular carriers discriminating between different kinds of sites and services. "[The net-neutrality order] clearly allows and encourages in fact this kind of thing. We believe that markets should be innovative. And at the same point in time, we are not reticent to say, 'Excuse me, that's anticompetitive. Excuse me, that's self-dealing. Excuse me, this is a consumer abuse.' "
AT&T Files IP Trial Ex Partes
AT&T filed a series of ex parte notices that further explain its "IP trial" proposals that will be considered at the January 30, 2014 open meeting. According to its filings, AT&T met with Commissioner Pai's Chief of Staff and Wireline Legal Advisor on January 16, 2014, to discuss its efforts to prepare a detailed plan for service-based IP transition experiments, and on January 21, 2014 to proposed a two-stage process for IP transition trials.
The January 16 ex parte did not contain specific details, but indicated that AT&T was currently planning to identify all TDM services to be discontinued in a trial location and map those services to successor services, propose dates for the grandfathering and ultimate discontinuance of those TDM services, and provide notice to affected customers.
In the January 21 ex parte , AT&T proposed that the FCC consider a two-stage process for IP transition trials. In the first stage, which would reportedly be "largely voluntary" for customers, participating carriers would file detailed plans that identify their existing TDM services, the replacement products for those services, and when those services would be available. Carriers would then file Section 214 Petitions for the interstate TDM-based services they seek to discontinue, but could grandfather existing customers during this phase of the trial and could require all new orders for service to be provisioned using IP-based and wireless replacement services. During Phase 2 of the trial, participating carriers could file a second Section 214 application to withdraw the grandfathered TDM services for existing customers. According to AT&T, this would allow the FCC the opportunity to evaluate the results of the first phase of the trial before granting participating carriers approval to proceed with the withdrawal of TDM services for existing customers.
Further Letters Filed in the Tenth Circuit on the D.C. Circuit Open Internet Decision
Two more letters were filed since our article in the January 23, 2014 edition of the BloostonLaw Telecom Update arguing that the U.S. Court of Appeals for the District of Columbia Circuit's decision in Verizon v. FCC, striking down parts of the FCC's Open Internet Order, supports arguments made in the Tenth Circuit proceeding on the FCC's USF/ICC Reform Order.
On January 22, 2014, Cellular Network Partnership and Cellular South (C Spire Wireless) filed a letter arguing that the D.C. Circuit found in Verizon v. FCC that the FCC would violate either § 153(51) or § 332(c)(2) of the Communications Act if it regulated wireline or wireless broadband service providers as common carriers, which is the same argument Cellular Network Partnership and C-Spire made in the Wireless Petitioners' USF Brief and Reply Brief. According to the letter, by imposing duties on ETCs to offer broadband service that meets FCC-prescribed performance requirements upon their customers' reasonable request, and to provide broadband at rates that are reasonably comparable to those charged in urban areas, the FCC regulated broadband under Title II and subjects broadband providers, in the words of the D.C. Circuit, "to common carrier treatment" and obligates them "to act as common carriers."
On January 27, 2014, the FCC filed a letter in response to this letter, and to the letter filed by Cellular South, Inc. and the Rural Independent Competitive Alliance (RICA) on Jan. 16, 2014. In its response, the FCC argued that the D.C. Circuit held that FCC rules prohibiting all broadband providers from blocking or discriminating against certain content, services, and applications offered over the Internet imposed an unlawful common carriage obligation; but by contrast, the broadband public interest obligation at issue in the USF/ICC Reform Order is conditional. That is, under the USF/ICC Reform Order, broadband providers may decline to sell broadband service to any customer, and a broadband provider only has to offer broadband service to a customer if the provider seeks designation as an ETC and requests federal subsidies. The FCC also claimed that RICA's reliance on §214(e)(3) — which allows the FCC or a state commission to designate an ETC in an unserved area — to argue that the broadband public interest obligation is involuntary has been waived because it was not raised in the opening brief.
FCC Acting General Counsel Sallet Addresses Competition Policy
On January 22, 2014, Jon Sallet, FCC Acting General Counsel, spoke at a Conference on Competition and IP Policy in High-Technology Industries in Stanford, California. Mr. Sallet's speech focused on how the FCC can best formulate and apply a competition policy.
Mr. Sallet advocated FCC action informed by competition principles that look to the impact of practices on consumers, not just on competitors, and cited the FCC's ability to act in anticipation of a problem, rather than waiting for harm to occur and then reacting.
Reciting Chairman Wheeler's statement: "Where competition does exist, we will protect it. Where competition can exist, we will incent it. And where private markets cannot be expected to deliver what the public needs, then we will proceed in a transparent manner to fill that void," Sallet went on to discuss the ways the FCC will attempt to uphold that mantra. This included setting out rules that spur networks by removing barriers to deployment; preventing competitive markets from being transformed artificially into non-competitive markets through anti-competitive actions or transactions; ensuring that multiple carriers have access to needed airwaves; and more.
He closed with an open invitation to take part in this conversation with the FCC about its competition policy: "From your perspective, what are the critical competitive questions around communications networks? Do you see bottlenecks? Are old categories obsolete? Are networks being effectively interconnected? Are certain kinds of services, like special access, competitive or non-competitive?"
Law & Regulation
FCC Issues Agenda for January Open Meeting
On January 23, 2014, The FCC issued the official agenda for its Open Meeting on January 30, 2014. The meeting is scheduled to commence at 10:30 a.m. in Room TW-C305, at 445 12th Street, S.W., Washington, D.C, and can be viewed live over George Mason University's Capitol Connection for a fee.
At the meeting, the FCC will consider an Order, NPRM, and NOI that invites diverse technology transitions experiments; a Policy Statement and FNPRM on enabling nationwide text-to-911 service; an update on the project plan for the broadcast television incentive auction; and a presentation on FCC Process Reform.
FCC "Guidance" Not Binding—Court Dismisses DISH Network TCPA Challenge
The U.S. Court of Appeals for the District of Columbia Circuit's issued a decision dismissing a petition by DISH Network, LLC (DISH) that challenged the FCC's "guidance" on the interpretation of agency law in the context of the Telephone Consumer Protection Act of 1991, 47 U.S.C. § 227 ("TCPA"). In a May 9, 2013 Declaratory Ruling, the FCC held that a seller could be held vicariously liable for a telemarketer's TCPA violations if the telemarketer acted as an agent of the seller under the federal common law of agency. The FCC also provided "guidance" to the courts, including hypothetical examples, regarding how the common law of agency might apply to such cases. DISH sought review solely of the "guidance," arguing that the FCC exceeded its authority and acted arbitrarily and capriciously in stating how the common law of agency should apply in the telemarketing context.
The Court dismissed DISH's petition, finding that the FCC's "guidance" is not a final order ripe for judicial review. According to the Court, "[a]n agency action that merely expresses a legal view 'that has force only to the extent the agency can persuade a court to the same conclusion'" is not a final order subject to review. The Court also stated that the FCC agreed in its brief and at oral argument, "that the 'guidance' in question has no binding effect on courts, that it is not entitled to deference under Chevron U.S.A. Inc. v. NRDC, Inc., 467 U.S. 837 (1984), and that 'its force is dependent entirely on its power to persuade.' The court, therefore, concluded that it lacked jurisdiction to review the guidance.
As a result of the D.C. Circuit's decision, questions of agency in the context of TCPA violations will be litigated in individual cases and courts should not afford the FCC's guidance special deference.
Comment Sought on Waiver of Periodic Inspection of Marking and Lighting Alarm System Rules
American Tower has filed a request for permanent waiver of Section 17.47(b) of the Commission's Rules, which requires owners of antenna structures that have been registered with the FCC to conduct quarterly inspections of all automatic or mechanical control devices, indicators or alarm systems that are used to monitor and verify the proper operation of obstruction lighting devices that have been mounted on an antenna structure. Comments are due February 14, 2014 and reply comments are due one week later, on February 21, 2014.
Because American Tower installed sophisticated monitoring equipment, the FCC previously granted American Tower a partial waiver of this rule by permitting American Tower to make these inspections on an annual, rather than a quarterly, basis. American Tower now seeks a permanent waiver from the requirement. American Tower claims that its use of a robust, continuous remote tower monitoring system justifies the waiver. Additionally, American Tower has taken the position that a grant of this waiver would provide an incentive for other tower owners to implement similarly advanced monitoring systems — which would serve the public interest by ensuring the safety to air navigation.
Technology & Telecom Vendors Spend Millions Lobbying the Federal Government
InfoWorld has published some interesting numbers obtained from lobbying disclosure forms filed with the Office of the Clerk of the U.S. House of Representatives showing just how much technology and telecom firms spent on Capitol Hill lobbying during 2013. From a humorous point of view, the numbers show that these organizations know how things get done on the Hill; and the results achieved show that they know which lobbyists to hire.
- Comcast – $20.7 million (up from $14.7 during 2012; and ranking fifth among all organizations lobbying on Capitol Hill);
- National Cable and Telecommunications Association — $19.9 million;
- AT&T — $15.9 million (an 8% decrease from 2012);
- Google — $14.4 million (a 14.7% decrease from 2012, a year when it was under an antitrust investigation by the Federal Trade Commission);
- Verizon — $13.4 million (a decrease of 10.5% from 2012);
- Microsoft — $10.5 million (up 29.7% from 2012);
- Facebook — $6.4 million (up 61.2% from 2012);
- Apple — $3.4 million (a 71.7% increase from 2012);
- Amazon — $3.5 million (a 38.3% increase from 2012);
- Intel — $4.4 million (an 18.2% increase from 2012); and
- IBM — $7.1 million (a 45.6% increase from 2012).
With this much money dumped into the Great National Hog Trough of Lobbying, the K Street lobbyists will not be experiencing a recession any time soon. (Alas, we are located on L Street)
Study Finds Dominant Wireless Broadband Providers Overcharge Consumers $15 Billion Per Year
The Consumer Federation of America (CFA) has released a report indicating that dominant incumbent wireless broadband providers may be overcharging customers by about $15 billion per year for wireless service.
The report was issued by the CFR in an effort to demonstrate that a recent analysis of broadband prices and services from the Phoenix Center and the Information Technology and Innovation Foundation (ITIF) is "fundamentally flawed and purposefully misleading." A copy of the report, titled "Abuse of Market Power for Broadband Internet Access Service: Blind Theory and Bonehead Analysis Can't Hide the Problem," can be found here .
According to the report, AT&T and Verizon have enjoyed a per subscriber cash flow that is $7 higher than their closest competitor, T-Mobile. Even if the difference in CAPEX between AT&T and Verizon and the non-dominant providers is subtracted, the excess cash flow is still over $6 per month per subscriber. Assuming 210 million subscribers at $6, per month, the CFA report argues that this amounts to excessive charges imposed by the dominant providers on American wireless consumers of over $15 billion per year.
The report also indicates that, utilizing data from a New America Foundation global survey of rates, terms and conditions of wireline and wireless service, the CFA also found that U.S. providers charge more, offer slower speeds and, in the case of mobile broadband, have lower caps and more onerous penalties for exceeding those caps than their non-U.S. counterparts.
Wireless Price War, Cash Flow, And Broadband Deployment
At the same time that the CFA is reporting that dominant wireless carriers are charging too much, the Washington Post reported on January 29, 2014, that AT&T failed to meet its targets for fourth-quarter wireless subscriber growth and free cash flow. The Post also reported that AT&T's cash flow targets for 2014 and 2015 are down from 2013. The Post reports that according to Moffett-Nathanson analyst Craig Moffett, this implies that most of AT&T's cash flow will be needed for paying dividends.
The Post article also reported that a wireless price war is brewing and that AT&T's cash flow position "doesn't leave much room for a price war."
The same edition of the Post reported that Verizon's shareholders have approved a $130 billion deal to buy the 45 percent stake in its wireless division owned by Vodafone.
One wonders if these announcements will have an impact on the ability of Verizon and AT&T to invest in wireless broadband in the near term.
Feb. 1 – FCC Form 499-Q is due.
Feb. 1 – FCC Form 502 (Number Utilization and Forecast Report) is due.
Feb. 10 – Electronic filing deadline for Form 497 for carriers seeking support for the preceding month and wishing to receive reimbursement by month's end.
Feb. 14 – Comments are due on Use of Mobile Wireless Devices on Airborne Aircraft.
Feb. 14 – Comments due on American Tower Petition for Waiver of Periodic Inspection of Marking and Lighting Alarm System Rules.
Feb. 18 – Effective date for new 911 reliability requirements.
Feb. 21 – Reply comments due on American Tower Petition for Waiver of Periodic Inspection of Marking and Lighting Alarm System Rules.
Feb. 28 – PRA comments on Rural Call Completion are due.
Mar. 3 – Copyright Statement of Account Form for cable companies is due.
Mar. 3 – FCC Form 477 (Local Competition & Broadband Reporting) is due.
Mar. 3 – Annual CPNI Certification is due.
Mar. 10 – Electronic filing deadline for Form 497 for carriers seeking support for the preceding month and wishing to receive reimbursement by month's end.
Mar. 17 – Reply comments are due on Use of Mobile Wireless Devices on Airborne Aircraft.
Mar. 31 – FCC Form 525 (Delayed Phase-down CETC Line Counts) is due.
Mar. 31 – FCC Form 508 (ICLS Projected Annual Common Line Requirement) is due.
Apr. 1 – FCC Form 499-A (Telecommunications Reporting Worksheet) is due.
Apr. 1 – Annual Accessibility Certification is due.