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. 16, No. 12 | April 10, 2013 |
Headlines Senate Subcommittee Hearing Explores State of Rural Communications On April 9, 2013, the U.S. Senate Committee on Commerce, Science and Transportation's Subcommittee on Communications, Technology, and the Internet conducted a hearing on the "State of Rural Communications" to examine the challenges facing companies serving rural customers. Four witnesses testified: John Strode, Vice President of External Affairs of Ritter Communications; Steven Davis, Executive Vice President of CenturyLink, Inc.; Patricia Jo Boyers, President and CEO, BOYCOM Cablevision, Inc. (a cable operator serving rural areas in Missouri); and Leroy T. Carlson, Jr. the Chairman of the Board of U.S. Cellular. The witnesses focused on the challenges faced by small companies in bringing broadband to sparsely populated rural areas, many of which have been exacerbated by FCC actions on funding issues. Mr. Strode of Ritter Communications testified that the FCC's reduction in funding for rural telephone companies in the Connect America Fund Order would jeopardize broadband deployment in sparsely populated areas because, in addition to establishing unreasonably low funding levels, funding would no longer be predictable and consistent. He also noted that the FCC's regression analysis and mapping data contain many errors, and that the FCC's new funding standards are not responsive to the needs of rural carriers. In his view, the FCC should: 1) reevaluate the USF caps and formulas, and ideally eliminate the caps so that broadband will actually be provided to sparsely populated rural areas; 2) refrain from implementing additional funding cuts; and 3) develop a realistic path forward for affordable, sustainable rural broadband. He also decried the heavy burdens (in terms of time and money) faced by small companies in connection with preparing and filing the numerous reports required by the FCC. Mr. Davis of CenturyLink also emphasized the need for truly adequate government funding to serve low population density areas, where an independent business case cannot be made for broadband deployment. He noted that CenturyLink has invested over $4 billion to bring affordable broadband to most of its service area, but that extending the service to additional areas would require at least some federal funding. He stated that extending the service to these other areas is not economically feasible, absent federal financial assistance. His guiding principles were to target support to areas where and independent business model cannot be made to provide a level of service reasonably equivalent to that found in urban areas. He stated that the funding benchmarks used in the Mobility Fund Phase I auction were too low to expand broadband into the highest cost unserved areas. He agreed with the statement that funding generally should not go to areas with an unsubsidized broadband competitor. Mr. Carlson testified that broadband deployment will cover 80% of U.S. Cellular's service area by end of 2013. In his view, the FCC must structure spectrum auctions to assure a sufficient amount of spectrum for the wireless industry generally. He further stated that the auctions should be structured so that small carriers will not be foreclosed by larger carriers from obtaining licenses. To this end, he recommended that small-size market areas should be used in the auctions (presumably Cellular Market Areas); that package bidding be prohibited; that interoperability across spectrum bands be assured so as to promote intercarrier roaming and reduce anti-competitive action by large carriers; and that regulations should be adopted to achieve these goals before the 600 MHz Band auction is conducted. He further noted that the FCC's Mobility Fund fails to allocate sufficient funds to wireless; and that the economics of nationwide wireless broadband deployment are unworkable without more government funding. When asked whether small carriers experience a level playing field vis-à-vis large carriers, Mr. Carlson was quite emphatic in stating that they do not. He emphasized that large carriers basically have de facto control over the activities of handset manufacturers and, by extension, over the availability of necessary handsets to small carriers. According to Mr. Carlson, the absence of suitable handsets has prevented many rural 700 MHz licensees from constructing their facilities. Ms. Boyers was the only witness representing the views of small cable operators. She testified that her company provides unsubsidized broadband service, and that the government should not subsidize broadband in areas where there is an unsubsidized competitor. She identified cost issues as a major concern for small, unsubsidized broadband providers serving rural areas. She emphasized that the government must address the costs associated with middle mile transport facilities to internet backbones, and pole attachment rates (which she characterized as excessive, at least in some cases) as core issues for cable deployment of broadband. She also identified programming costs as diverting funds that could be otherwise used for broadband deployment; and noted that her company has shut down 13 of its cable systems due to high costs. In prepared remarks, Ranking Member Senator John Thune (R-SD) expressed disappointment that no representative of the satellite industry was testifying because for "many [rural] households, satellite is their only option for video and Internet services." The hearing record will remain open until April 23, 2013 for the acceptance of additional written presentations.
Law & Regulation Comment Sought on Bundled Component Eligibility under Schools and Libraries Program In a Public Notice released on April 9, 2013, the FCC sought comment on a proposal to eliminate the ability of service providers to offer bundled ineligible components as E-rate eligible, even if they are available to other classes of subscribers. Comments will be due 30 days after the Public Notice appears in the Federal Register, and reply comments will be due 15 days after that. By way of background, each year the FCC releases a list of products and services that are eligible for E-rate support. If an E-rate applicant submits a request for support for a product or service that includes both eligible and ineligible components, the applicant must allocate the costs accordingly. However, in 2010 the FCC released the Gift Rule Clarification Order, which allowed under limited circumstances the bundling of ineligible end-user devices and equipment without cost allocation. According to the FCC, this resulted in a wave of requests for clarification, ultimately leading to the present Public Notice in which the FCC proposes to eliminate the exemption, citing concerns that open ended interpretation and widespread use and expansion of this exception could lead to further strain on the E-rate fund, which is capped and already over-subscribed.
Industry ATC Companies Request Corrections to National Broadband Map Alma Telephone Company and its affiliate ATC Broadband, LLC filed a letter on April 3, 2013 with the FCC notifying it that broadband availability in the companies' ILEC and CLEC service territories is misrepresented on the National Broadband Map. The FCC used the National Broadband Map in identifying potentially eligible unserved census blocks for Connect America Fund Phase I, and has indicated it is considering using the Map again for CAF Phase II and the Remote Areas Fund. Since the FCC has repeatedly adopted a no-support-for-served-areas policy, clients should consider updating the Map as well in order to prevent potential competitors from receiving unjust support.
FCC Issues Steep Fines to Crack Down on Businesses Operating Illegal Cell Phone Jammers In its first-ever forfeiture actions against the use of cell phone signal jammers, the FCC yesterday found an Alabama company and a Louisiana company apparently liable for willful and repeated violation of the Communications Act and the Commission's Rules and proposed fines in excess of $100,000 against businesses that had operated illegal cell phone jammers at their workplace. The businesses in question — a manufacturer of military and law enforcement equipment known as The Supply Room, and a petroleum industrial services company known as Taylor Oilfield Manufacturing — were each found to have violated Sections 301, 302(b), and 333 of the Communications Act, as well as Sections 2.803(g) and 15.1(c) of the Commission's rules. Separate orders (FCC 13-46 and FCC 13-47 ) found the companies liable for proposed forfeitures of $144,000 and $126,000, respectively. Agents from the FCC's Atlanta and New Orleans Field Offices conducted investigations of each company in response to anonymous complaints received in the spring of 2012. Using direction finding techniques, agents determined that strong wideband emissions in the cellular bands were emanating from The Supply Room's warehouse in Oxford, Alabama, and Taylor Oilfield's property in Broussard, Louisiana. In a discussion with Field Agents, the general manager of Supply Room acknowledged that his company had purchased five cellular jammers online (which were shipped from overseas) and had operated four jammers in its warehouse for over two years. Likewise, Taylor Oilfield's manager admitted that Taylor Oilfield had purchased cellular jammers online and had operated them at the worksite for a few months. The manager also claimed that Taylor Oilfield utilized the jamming devices to prevent its employees from using their cellular phones while working, apparently following a near-miss industrial accident that allegedly was partially attributable to employee cell phone use. Signal jamming devices operate by transmitting powerful radio signals that overpower, jam, or interfere with authorized communications. While these devices have been marketed with increasing frequency over the Internet, they are illegal in the US. Jammers are not only designed to impede authorized communications and thereby interfere with the rights of legitimate spectrum users and the general public, but they are inherently unsafe. For example, jammers may disrupt critical public safety communications, placing first responders like law enforcement and firefighting personnel — as well as the public they are charged with protecting — at great risk. Similarly, jammers can endanger life and property by preventing individuals from making 9-1-1 or other emergency calls. The FCC's actions come two years after the Enforcement Bureau announced it would step up its education and enforcement efforts against signal jamming and released two Enforcement Advisories ( DA 11-249 and DA 11-250 ) on cellphone and GPS jamming in February of 2011. What is Prohibited? Federal law prohibits the manufacture, marketing, and operation of jammers in the United States. As to operation, section 333 of the Communications Act prohibits "willful or malicious" interference to authorized radio communications, and thus prohibits the operation of jammers. As to manufacture and marketing, section 302(b) of the Communications Act and section 2.803 of the Commission's rules prohibit the manufacture, import, sale, offer for sale, or shipment of devices that do not comply with the FCC's rules. In turn, the FCC prohibits the marketing of radio frequency devices in the United States unless the devices are properly authorized or meet other applicable requirements. Jammers, by definition, can never be authorized because they are designed to interfere with authorized radio communications. Therefore, they cannot be marketed in the United States (except in the very limited context of authorized use by the U.S. government). What Should Manufacturers and Retailers Do to Comply? Manufacturers and retailers of electronic equipment should take the following steps: - Immediately stop marketing within the United States any equipment that is designed to block, jam, or otherwise interfere with authorized radio communications.
- Decline to sell or ship such jamming devices to addresses in the United States and its territories (except in the case of permitted sales to the U.S. government).
- Ensure that any jamming devices manufactured in the United States are available solely for export and are not for sale domestically except to the U.S. government. U.S. manufacturers should be aware that jammers may be unlawful in other countries.
- The FCC has emphasized that use of disclaimers that purport to place the sole burden on the buyer cannot absolve the manufacturer or retailer of liability.
What Penalties Apply? Unlawfully marketing jammers in the United States may result in monetary forfeitures of up to $16,000 for each violation or each day of a continuing violation, and up to $112,500 for a single violation, seizure of the unlawful equipment, and criminal sanctions including imprisonment.
Calendar At-A-Glance Apr. 12 – State Commissions must notify the FCC of their intent to file shapefile study area boundary maps on behalf of Incumbent Local Exchange Carriers (ILECs). Apr. 12 – Reply Comments on Service Obligations and Challenge Procedures for CAF II are due. Apr. 16 – Comments on Petition filed by a group of competitive carriers asking the FCC to Reverse Forbearance for Special Access are due. Apr. 22 – Reply Comments for Interstate Inmate Calling Rate Proceeding are due. Apr. 26 – Paperwork Reduction Act comments due on FCC Form 481 (Annual ETC Report). Apr. 29 – State Commissions can begin submitting shapefiles on behalf of ILECs. Apr. 29 – ILECs may begin submitting shapefiles on their own behalf. Apr. 29 – Comments on Health Care Connect Fund Forms 460, 461, 462 and 463 are due. May 1 – FCC Form 499-Q, Telecommunications Reporting Worksheet is due. May 8 – Electronic filing deadline for Form 497 for carriers seeking support for the preceding month and wishing to receive reimbursement by month's end. May 9 – Short Form Application to Participate in Auction 95 (Lower and Upper Paging Bands Spectrum) is due. May 10 – Comments on Tribal Mobility Fund Phase 1 Auction Scheduled for October 24, 2013 are due. May 13 – Comments on Options for Disposition of UHF T-Band (470-512 MHz) are due. May 13 – Reply Comments on Health Care Connect Fund Forms 460, 461, 462 and 463 are due. May 23 – Final deadline for ILECs to have shapefiles submitted and certified. May 24 – Reply Comments on Tribal Mobility Fund Phase I Auction are due. May 31 – FCC Form 395, Employment Report, is due. May 31 – Reply Comments on Petition filed by a group of competitive carriers asking the FCC to Reverse Forbearance for Special Access are due. June 8 – Electronic filing deadline for Form 497 for carriers seeking support for the preceding month and wishing to receive reimbursement by month's end. June 11 – Reply Comments on Options for Disposition of UHF T-Band (470-512 MHz) are due. June 28 – Deadline for State Commissions to submit and certify the data included in shapefiles. Jul. 1 – Annual High Cost ETC Report Due under Rule 54.313. | 
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