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. 28||July 16, 2014|
Open Internet Comment Period Extended until Friday, July 18, at Midnight
Due to an overwhelming response to the FCC’s Notice of Proposed Rulemaking on Open Internet rules, the deadline to file initial comments has been extended until Friday at Midnight. Originally due yesterday, the Public Notice announcing the extension indicated that the “overwhelming surge in traffic” was “making it difficult for many people to file comments through [the] Electronic Comment Filing System (ECFS).”
Clients interested in filing comments should contact the firm without delay. Reply comments are due September 10, 2014.
FCC Releases Rural Broadband Experiment Order and Further Notice of Proposed Rulemaking
Yesterday, the FCC released a Report and Order and Further Notice of Proposed Rulemaking finalizing the decision to use Connect America funding for rural broadband experiments in price cap areas. The Report and Order establishes a budget for these experiments; establishes a methodology for selecting winning applications; describes the application process; and establishes a deadline for applications. Applications are due 90 days from the release of the Order, or Monday, October 13, 2104.
The FCC indicated that the Wireline Competition Bureau will implement a process for electronic submission of the formal applications similar to what was used for the Mobility Fund auctions. BloostonLaw is experienced in the Mobility Fund application process and is available to help clients apply for rural broadband experiment funding.
Budget. The FCC established a budget of $100 million for funding experiments, which will be drawn from the Connect America reserve account. The reserve account is projected to have approximately $220 million in funding as of the third quarter of 2014 that has not already been allocated to a specific program.
Support Term. The term of support will be a flat ten-year term, the same that will be available to bidders in CAF Phase II. The FCC specifically indicated it will focus the experiments on projects seeking 10 years of recurring support, rather than proposals for projects seeking one-time support or bidder-defined terms.
Area Eligibility. Proposals will be accepted at both the census tract level and the census block level. Eligible census blocks are those with a cost per location exceeding the Connect America Phase II funding threshold ($52.50), but below the extremely high-cost threshold ($207.81), and not served by an unsubsidized competitor offering voice service and Internet access providing 3 Mbps downstream/768 kbps upstream. Applicants are required to commit to serving the total number of locations in a given census block, even if that is less than the number of eligible locations.
Applicant Eligibility. All applicants must be designated Eligible Telecommunications Carriers (ETCs) within 90 days of being identified as a winning bidder.
Types of Experiments. The $100 million budget will be divided into three separate categories: $75 million for projects meeting “very high performance standards;” $15 million for projects meeting “specified minimum performance standards” which “exceed current standards;” and $10 million for projects “dedicated to serving extremely high-cost locations.”
Projects in the “very high performance standards” category must propose to deploy a network capable of delivering 100 Mbps downstream/25 Mbps upstream, while offering at least one service plan that provides 25 Mbps downstream/5 Mbps upstream to all locations within the selected census blocks. Projects in the “specified minimum performance standards” category must offer at least one service plan that provides 10 Mbps downstream/1 Mbps upstream to all locations within the selected census blocks. “extremely high-cost areas” projects must offer services delivering 10 Mbps downstream/1 Mbps upstream.
Selection Criteria. For those applications proposing to serve census blocks identified by the Connect America Cost Model as eligible for Phase II support, the FCC will compare requested amounts to model-based support amounts. For applications proposing to serve only census blocks the model identifies as “extremely high-cost,” (for which there is no model-determined level of support), the FCC will select applications based on the lowest-cost per location.
Project Limits. The FCC also established individual project limits for each experiment category: 20 million per project for “very high performance standards” projects; $7.5 million per project for “specified minimum performance standards” projects; and $5 million per project for “extremely high-cost areas” projects. Additionally, the FCC adopted an overall limit of $20 million per entity, including its affiliates, and a 25% bid credit for those seeking support for proposed experiments that serve only Tribal census blocks.
Financial Review. All winning bidders will be required to provide the most recent three consecutive years of audited financial statements, including balance sheets, net income, and cash flow, and to submit a description of the technology and system design used to deliver voice and broadband service, including a network diagram, which must be certified by a professional engineer. Winning bidders proposing to use wireless technologies also must provide a description of spectrum access in the areas for which the applicant seeks support. Winning bidders will also be required to submit a letter from an acceptable bank committing to issue an irrevocable stand-by original letter of credit (LOC) to that entity.
Funding Conditions. Funding recipients must offer service (meeting the appropriate service obligations outlined above) to at least 85 percent of the number of required locations by the end of the third year, and 100 percent of the number of required locations by the end of the fifth year.
Reporting Requirements. Recipients will be required to file an annual report pursuant to section 54.313 (also known as Form 481), though no service quality improvement plans will be required. Participants must also submit a certification with each annual report certifying that 95 percent or more of all peak period measurements (also referred to as observations) of network round trip latency are at or below 100 ms. Participants must also comply with the existing requirement for Phase II recipients of providing in their annual reports the number, names, and addresses of community anchor institutions to which the recipients newly began providing access to broadband service in the preceding year. Recipients will also be required to file build-out information with their reports, and must agree to cooperate with the Commission in any efforts to gather data that may help inform future decisions regarding the impact of technology transitions on achievement of our universal access objectives.
Clients who may be interested in applying for rural broadband experiment support should contact the firm without delay.
FCC Dedicates An Additional $2 Billion In Schools And Libraries Support For Wi-Fi Networks
The FCC adopted an Order and Further Notice of Proposed Rulemaking to "modernize" universal service support for schools and libraries by, among other things, dedicating $2 billion over the next two years in support for Wi-Fi networks, in addition to the current annual E-rate budget of $2.4 billion. (Docket No. 13-184). According to the FCC, the Order will accomplish three major goals:
- Significantly expand funding for Wi-Fi networks and distribute it fairly to all schools and libraries while recognizing the needs of the nation’s rural and poorest school districts
- Maximize the cost-effectiveness of E-rate spending through greater pricing transparency, encouraging consortia and bulk purchasing, and better enforcement of existing rules
- Streamline and simplify the E-rate application process and overall program administration
The FCC also stated that it will phase out support for non-broadband services, such as pagers and phones.
In comments, NTCA had asked the FCC not to encourage consortia purchasing, pointing out that it is not always the most efficient means of providing service and also that some consortiums unfairly exclude the smaller ILEC. NTCA provided the example of a consortium that designed a Request for Quote ("RFQ”) for broadband service that effectively excluded the rural ILEC even though the local provider had the ability to provide the school district at issue with a less costly alternative. Although the FCC states that it will encourage consortia and bulk purchasing, because it has not released its Order it is not clear entirely clear at this time how the Order addresses this point.
FCC Extends Closed Captioning Requirements to Video Clips
In an Order released July 14, 2014, the FCC extended existing IP closed captioning requirements to IP-delivered video clips of all lengths, if the video programming distributor or provider posts on its website or application (“app”) a video clip of video programming that it published or exhibited on television in the United States with captions, regardless of the content or length of the video clip. Previously, the rules only applied to IP-delivered full-length video programming.
Under the rules, a video programming distributor or provider is defined as “[a]ny person or entity that makes available directly to the end user video programming through a distribution method that uses Internet protocol.” Such entities are required to comply with the IP CC rules for video content of any length, according to the following timetable:
- For “straight-lift” clips, which contain a single excerpt of a captioned television program with the same video and audio that was presented on television, the IP closed captioning requirements will apply beginning January 1, 2016.
- For “montage” clips, a single file containing multiple straight lift clips, the compliance deadline is January 1, 2017.
- For video clips of live and near-live programming, the compliance deadline is July 1, 2017. After the deadline, such clips may be posted online initially without captions as long as they are added within 12 hours (for clips of live programming) or within eight hours (for near-live programming) after the conclusion of the television display of the associated video programming that contained the clip.
Law & Regulation
FCC Issues Erratum to Omnibus USF/ICC Order
On July 11, the FCC’s Wireline Competition Bureau released an erratum to the Omnibus Report and Order, Declaratory Ruling, Order, Memorandum Opinion and Order, Seventh Order on Reconsideration, and Further Notice of Proposed Rulemaking. The Erratum corrects an error in the Omnibus Order pertaining to the implementation of the gradual phase-in to reductions under 54.318 (b) for rates above the rate floor new $20.46 rate floor.
Commencing January 2, 2015 (reflecting rates as of December 1, 2014), and thereafter, through June 30, 2016, we waive section 54.318(b) to the extent reported lines are
less than greater than, or equal to $16. For the period between July 1, 2016, and June 30, 2017, we waive section 54.318(b) to the extent reported rates are less than greater than, or equal to $18, or the 2016 rate floor, whichever is lower. For the period between July 1, 2017, and June 30, 2018, we waive section 54.318(b) to the extent reported rates are less than greater than, or equal to$20, or the 2017 rate floor, whichever is lower.
Wheeler Announces Universal Service Fund Strike Force
Yesterday, FCC Chairman Tom Wheeler issued a press release announcing the creation of a Universal Service Fund “Strike Force,” housed within the FCC’s Enforcement Bureau and dedicated to combating waste, fraud, and abuse in the funding programs. The Strike Force will be led by Loyaan Egal, a former senior Assistant United States Attorney in the Fraud and Public Corruption Section of the U.S. Attorney’s Office for the District of Columbia.
According to the release, the USF Strike Force will focus on “safeguarding the Universal Service Fund and the other funding programs the FCC oversees.” It will investigate violations of the Communications Act, the Commission’s rules, and other laws bearing on USF programs and contributions, and coordinate with the FCC’s Office of Inspector General (OIG), the U.S. Department of Justice, and other law enforcement agencies to prosecute unlawful conduct. The Strike Force’s investigations and activities will “promote future compliance, protect those who depend on the funds for access, and safeguard contributors to the funds from the unlawful acts of others.”
Mr. Egal’s background includes nearly a decade as a federal prosecutor in the United States Attorney’s Offices for the Southern District of New York and District of Columbia, where he led complex investigations and successfully prosecuted cases involving international narcotics trafficking and money laundering, bribery and procurement fraud in connection with the U.S. military’s presence in Iraq, and campaign finance fraud concerning the City of New York’s public matching campaign funds program. While in the District of Columbia, Mr. Egal served as a lead prosecutor in an investigation that resulted in the successful prosecution of several individuals for campaign finance and tax fraud related to a scheme to influence federal, state, and local elections through illegal and unreported financial contributions.
FCC Announces Effective Date of IP CTS Rules
The FCC published a Notice in the Federal Register on July 11, 2014, announcing that the Office of Budget and Management has approved for three years the information collection requirements in the Commission’s Report and Order on Misuse of Internet Protocol Captioned Telephone Service (IP CTS). Sections 64.604(c)(10)(iv), (c)(11)(iii) and (iv), and 64.606(a)(2)(ii)(F), are effective July 11, 2014.
Sections 64.604(c)(10)(iv) provides for a hardship exception to the IP CTS default settings requirement. 64.604(c)(11)(iii) and (iv) provide specific language that must appear on any newly distributed IP CTS equipment in a conspicuous locations (or be distributed on labels to consumers who have already received IP CTS equipment that does not already bear the label), and requires IP CTS providers to maintain records of their compliance with this requirement. 64.606(a)(2)(ii)(F) requires applicants seeking certification as IP CTS providers to include with their application a description of measures taken by such applicants or providers to ensure that they do not and will not request or collect payment from the TRS Fund for service to consumers who do not satisfy the registration and certification requirements in §64.604(c)(9), and an explanation of how these measures provide such assurance.
FCC/NTIA Asks for Comment on Plan for a “Model City” for New Spectrum Sharing Technologies
In a Public Notice jointly issued on Friday (DA 14-981), the FCC and the National Telecommunications and Information Administration (NTIA) are seeking public comment on a July 2012 recommendation by the President’s Council of Advisors on Science and Technology (PCAST) that the Commerce Department establish a public-private partnership to facilitate the creation of an urban test city (called a “Model City”) for demonstrating and evaluating advanced, dynamic spectrum sharing. With PCAST having come to the conclusion that clearing and reallocation of government-held spectrum is no longer deemed to be a viable approach to spectrum policy due to the high cost, lengthy time to implement and disruption to the federal mission, the PCAST Report called for a new spectrum architecture based on spectrum sharing as an alternative to exclusive use. To bridge the gap from today’s spectrum use model to this new regime, the plan is to create an urban test facility in a major U.S. city to support rapid experimentation in spectrum management technology and practice.
The Public Notice states that the Model City program, if established could facilitate large-scale sustainable facilities for systems level testing in real-world environments across multiple frequency bands, including both federal and non-federal spectrum. The entire concept is still in its infancy; and the Public Notice asks for comments on a wide variety of topics, including basic structure, management, funding, collaboration among various stakeholders and other issues. The requested comments will help the FCC and NTIA determine whether additional actions and formal proceeding are necessary.
The Model City program potentially offers a tremendous opportunity for companies engaged in developing new spectrum sharing technologies to demonstrate the value of their products in shaping the federal government’s spectrum management policies for the immediate future.
Comments on the Model City plan are due to be filed 45 days after publication of the Public Notice in the Federal Register. We will be monitoring the Federal Register and will advise our clients of the filing due date.
Sprint, T-Mobile Reportedly Planning Joint Venture for 600 MHz Incentive Auction Bidding
According to a Bloomberg report, Sprint and T-Mobile US are planning to create a joint venture in order to bid for 600 MHz spectrum in next year’s planned broadcast incentive auction.
Further reports from the Wall Street Journal on Wednesday indicate that the companies are looking to raise a war chest of $10 billion to fund their bidding on the broadcast television spectrum. The $10 billion would be part of a larger $45 billion financing package being assembled by SoftBank to facilitate Sprint’s acquisition of T-Mobile.
Creating a JV would be a way for the companies to participate in the broadcast incentive auction while at the same time pursuing their merger. The FCC's auction anti-collusion rules prohibit applicants that have qualified for bidding in the same geographic areas from having business discussions that might impact their bids or bid strategies unless the applicants are members of a bidding consortium or other joint bidding arrangement identified on the bidder’s short-form application. One could easily argue that few matters have more of a potential impact on an auction applicant’s bids or bid strategies than plans for a $22 billion mega-merger. (One could also argue that the pledge of $10b toward the incentive auction is a not-so-subtle way to build up pressure for the approval of the companies’ proposed merger.)
The Wall Street Journal further reports that T-Mobile will be the entity responsible for managing the JV, as a concession from Sprint Chairman Masayoshi Sun. Management of the JV would be independent of the merger transaction, and the JV structure would only be needed if the transaction is still pending before regulators when short-form applications for the incentive auction are due. A formal announcement of the Sprint – T-Mobile merger is expected this summer, and review of the deal by the FCC is expected to take at least a year.
Industry analysts have speculated that Sprint and T-Mobile would be big participants in the 600 MHz broadcast incentive auction due to their relative lack of so-called “low-band” ( i.e., sub 1 GHz) spectrum holdings. T-Mobile has focused much of its 4G LTE buildout on AWS-1 (1.7/2.1 GHz) spectrum. The company received a significant amount of AWS-1 spectrum nationwide as a breakup fee from AT&T when the proposed $32 billion merger of those companies failed to receive FCC approval in late 2011. Likewise, Sprint’s network buildout up to now has been focused on broadband PCS (1900 MHz) and BRS/EBS (2.5 GHz) spectrum. Low-band spectrum (such as cellular and 700 MHz band spectrum) is widely seen as being more valuable for the provision of mobile wireless services due to favorable signal propagation characteristics resulting in greater building penetration and fewer antenna towers needed to provide signal coverage to remote/rural areas.
The FCC’s recent Mobile Spectrum Holdings Report and Order ( FCC 14-50 ) cited to the Commission’s licensing records as evidence that AT&T and Verizon together currently own or control a vast majority of the low-band spectrum, and used this as the basis for adopting a “market-based” spectrum reserve. As currently constituted, this reserve would set-aside up to 30 megahertz of the recovered 600 MHz band spectrum for licensing to entities having less than 45 megahertz of suitable and available below-1-GHz spectrum in a geographic market. The reported $10 billion in auction financing would presumably allow the Sprint/T-Mobile JV to bid at least $10 billion for this “reserve” spectrum.
AT&T has previously announced it would commit up to $9 billion to the incentive auction. If Verizon were to commit a similar amount to the auction as the Sprint/T-Mobile JV and AT&T, then bidding in the forward auction of 600 MHz Partial Economic Area (PEA) licenses nationwide could reach $30 billion, far outstripping the Commission’s previous record $19 billion from the 700 MHz band auction (Auction No. 73) which concluded in March of 2008.
Of significance to our clients, the Sprint/T-Mobile commitment, when coupled with the AT&T $9b commitment, makes it much more likely that the FCC will achieve the minimum level of bidding necessary for the incentive auction to meet Congress’ requirements that the auction raise enough money to compensate broadcasters for the spectrum they contribute, cover the cost of the auction, and raise buildout funding for the nationwide public safety broadband network (FirstNet). Thus, it is more likely that if our clients are the high bidders on auction licenses, they will indeed get their licenses. The potential downside is that Sprint/T-Mobile venture has now positioned itself as a formidable bidder for the “reserve” spectrum blocks that AT&T and Verizon likely won’t be able to win due to their below 1 GHz spectrum holdings.
AUGUST 1: FCC FORM 502, NUMBER UTILIZATION AND FORECAST REPORT: Any wireless or wireline carrier (including paging companies ) that have received number blocks—including 100, 1,000, or 10,000 number blocks—from the North American Numbering Plan Administrator (NANPA), a Pooling Administrator, or from another carrier, must file Form 502 by August 1. Carriers porting numbers for the purpose of transferring an established customer’s service to another service provider must also report, but the carrier receiving numbers through porting does not. Resold services should also be treated like ported numbers, meaning the carrier transferring the resold service to another carrier is required to report those numbers but the carrier receiving such numbers should not report them. Reporting carriers file utilization and forecast reports semiannually on or before February 1 for the preceding six-month reporting period ending December 31, and on or before August 1 for the preceding six-month reporting period ending June 30.
Jul. 18 – Comments are due on the Open Internet NPRM (extended from July 15).
Jul. 23 – Comments are due on LMCC Petition to Expand Conditional Temporary Authorization
Jul. 31 – FCC Form 507 (Universal Service Quarterly Line Count Update) is due.
Jul. 31 – Carrier Identification Code (CIC) Report is due.
Jul. 31 – FCC Form 690 (Mobility Fund Phase I Auction Winner Annual Report) is due.
Aug. 1 – FCC Form 502 due (North American Numbering Plan Utilization and Forecast Report).
Aug. 1 – FCC Form 499-Q due (Telecommunications Reporting Worksheet.
Aug. 1 – Reply comments are due on Citizens Broadband Radio Service FNPRM.
Aug. 4 – Reply comments on LMCC Petition to Expand Conditional Temporary Authorization are due.
Aug. 8 – Comments are due on the FCC’s Omnibus USF/ICC Order.
Aug. 11 – Reply comments are due on T-Mobile Data Roaming Petition.
Aug. 14 – Deadline for CAF Phase II Challenges.
Aug. 29 – Copyright Statement of Accounts is due.
Sep. 1 – FCC Form 477 due (Local Competition and Broadband Reporting).
Sep. 10 – Reply comments are due on the Open Internet NPRM.
Sep. 10 – Reply comments are due refreshing the record on the 2010 Broadband NOI.
Oct. 13 – Deadline for applications for rural broadband experiments.