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. 20 | May 21, 2014 |
Retransmission Consent Rule Effective
June 18, 2014 On May 19, 2014, notice of the FCC’s Report and Order revising the retransmission consent rules appeared in the Federal Register, establishing an effective date for the revised rules of June 18, 2014. The revised retransmission consent rules make joint negotiation by stations that are ranked among the top four stations in a market a violation of the statutory duty to negotiate retransmission consent in good faith. Headlines
FCC Releases Open Internet Notice of Proposed Rulemaking
On May 15, 2014, the FCC adopted and released a Notice of Proposed Rulemaking (NPRM) seeking comment on how to re-implement and expand its 2010 Open Internet (a/k/a. Net Neutrality) rules in light of the D.C. Circuit’s January 2014 decision vacating portions thereof. Comments are due July 15, 2014, and reply comments are due September 10.
As we reported in the January 15, 2014 edition of the BloostonLaw Telecom Update, the 2010 Open Internet rules regarding blocking and discrimination were vacated for impermissibly applying common carrier regulation to Internet service providers, while the initial transparency rule was upheld. The NPRM proposes to enhance the transparency rule while re-adopting the anti-blocking rule with a revised rationale and developing a new anti-discrimination rule based upon commercially reasonable practices. While the anti-blocking and anti-discrimination rules are attracting most media attention, the proposed “enhanced” transparency rule may have a major impact upon rural telephone company affiliates and other small Internet service providers (ISPs). The FCC is proposing that broadband providers help end users make informed choices regarding their purchase and use of broadband services by disclosing specific: (a) network practices (e.g., data caps, traffic exempted from data caps, consumption monitoring, tethering restrictions, service tiers, and actual achieved results);
(b) performance characteristics ( e.g., effective download speeds, upload speeds, latency and packet loss); and
(c) terms and conditions of service.
The FCC is also proposing to ensure that edge providers have access to broadband provider network information necessary to develop new applications and services, and is exploring ways to disclose useful information to edge providers, start-ups, content delivery networks, and cloud services. Finally, the FCC is proposing to inform the overall Internet community and the FCC itself about broadband practices and conduct that may impact Internet openness, including: (a) changes to network practices;
(b) instances of blocking, throttling, and pay-for-priority arrangements;
(c) parameters of default or best efforts service; and
(d) the source, location, timing, speed, packet loss, and duration of network congestion.
Whereas some of this information is currently required to be provided on ISP websites, the “enhanced” transparency proposals appear to require much more detailed and continuous monitoring of conditions and updating of the information on websites and in reports. Clients may want to respond to the FCC’s questions whether the “enhanced” requirements create major costs and burdens that are likely to affect the pace of innovation, investment and growth. With regard to the no-blocking rule, the Court suggested that it may not have amounted to per se common carrier regulation if the FCC had “establish[ed] a lower limit on the forms that broadband providers’ arrangements with edge providers could take, [but] nonetheless [left] sufficient ‘room for individualized bargaining and discrimination in terms.” The FCC now proposes to do just that: to establish a minimum level of service that service providers must offer all customers while leaving them free to negotiate individual agreements for service levels above the minimum. Accordingly, the FCC also seeks comment on where to set such a minimum service level, and provides three specific suggestions: - Best Efforts. Under the best efforts approach, best-effort delivery would represent the “typical” level of service for that type of traffic—in effect, routing traffic according to the “traditional” architecture of the Internet. Broadband providers would be free to negotiate “better than typical” delivery with edge providers, and would be prohibited (subject to reasonable network management) from delivering “worse than typical” service in the form of degradation or outright blocking.
- Minimum Quantitative Performance. Under a minimum quantitative performance approach, the FCC would promulgate specific technical parameters for a required minimum level of access, such as speed. The FCC also sought comment on what parameters would be appropriate for use.
- Reasonable Person Standard. Under the reasonable person approach, the minimum level of access would the level that satisfies the reasonable expectations of a typical end user. For example, a typical end user may reasonably expect the ability to access streaming video from any provider, place and receive telephone calls using the VoIP service of the end user’s choosing, and access any lawful web content. By meeting this standard, the provider would be considered to be in compliance with the no-blocking rule.
With regard to the no-discrimination rule, the D.C. Court suggested that it may have withstood judicial scrutiny if it had preserved some flexibility by including a specific set of factors to consider on a case-by-case basis. Again taking its cue from the court, the FCC proposes to prohibit only “commercially unreasonable” practices, as determined on a case-by-case basis that necessarily takes into account a specific set of factors. The FCC is also seeking comment on which factors it should consider, such as impact on competition; impact on speech and civic engagement; technical characteristics; good faith negotiation; industry practices; and any other factors that may be relevant. The FCC is also seeking comment on whether and how these requirements should apply to mobile carriers. In their original iteration in 2010, only the transparency requirement applied equally to both fixed and mobile broadband. The no-blocking rule applied a different standard to mobile broadband Internet access services, and mobile Internet access service was excluded entirely from the no-discrimination rule. Finally, the FCC is seeking comment on what legal authority it should rely upon to implement its Open Internet rules: Section 706 (which authorizes the FCC to “encourage the deployment” of advanced telecommunications capability by promoting competition in the telecommunications market and removing barriers to infrastructure investment), or Title II. Relying on Title II authority would require the FCC to revisit its classification of Internet access as an information service, which would enable it to impose the common carrier-type requirements that the D.C. Circuit Court rejected. It would also sweep the provision of Internet service into all of the other common carrier requirements embodied in the Communications Act – anti-discrimination, interconnection, universal service, intercarrier compensation, and of course, numerous reporting requirements. As such, the FCC also seeks comment on whether it should also forbear from applying certain Title II regulation to reclassified Internet service provision. The Title II question has already met with stiff opposition from both the legislation and the industry. House Energy and Commerce Committee Republican leaders Fred Upton (R-Mich.), Marsha Blackburn (R-Tenn.), Greg Walden (R-Ore.) and Bob Latta (R-Ohio) sent a letter to Chairman Wheeler expressing their “grave concern” that the FCC is considering reclassifying Internet broadband service as a Title II common carrier service. “Simply raising the prospect of such stifling regulation harms broadband providers, the American Economy, and ultimately broadband consumers,” wrote the representatives. Verizon, AT&T, USTelecom, NCTA, CISCO, and American Consumer Institute have all also filed letters already opposing Title II classification. Common themes in these letters included the archaic nature of Title II regulation and thinly veiled promises of eternal litigation. Our read is that the FCC is likely using the prospect of Title II regulation to reduce opposition to, and increase the likelihood of judicial and legislative support for, its effort to adopt and implement Open Internet rules under Section 706. Title II is a two-edged sword that could clarify the Section 251/252 interconnection rights of small ISPs that are not offered peering relationships, as well as certain Section 201 and 202 protections against unjust and unreasonable practices of larger providers, but that could also impose substantial new pricing and other regulations upon ISPs. Whereas a vigorous pro-Title II and anti-Title II debate may take place, it does not appear at this time that the FCC will take on major segments of the Congress and the industry, and that it is most likely to adopt a version of its proposed Open Internet rules under the authority of Section 706 alone.
Carriers interested in filing comments in the proceeding should contact the firm without delay. FCC Adopts Rules for 600 MHz Broadcast Incentive Auction At last Thursday’s Open Meeting, the FCC adopted rules for its first ever broadcast television incentive auction. The two-sided auction will use market forces to recover spectrum from television broadcasters who voluntarily choose to give up some or all of their spectrum usage rights in exchange for incentive payments (the “reverse” auction). The FCC will then “repack” the remaining broadcast operations into a smaller portion of the broadcast band, and auction new 600 MHz licenses to the highest bidders (the “forward” auction) for the provision of advanced wireless services. Due to the greater efficiency of digital broadcasting, licensees are able to deliver programming using just a portion of their licensed 6 megahertz channel. This creates the opportunity for broadcasters to return all or a portion of their spectrum rights and, if desired, to enter into channel sharing arrangements with other broadcasters in their area to reduce their operating costs. Success of the incentive auction will first depend on whether a sufficient number of broadcasters in each market choose to participate, a prospect that some believe is far from certain. The FCC is betting that the prospect of large auction payout will entice broadcasters to take the deal. A full text of the Commission’s Incentive Auction Report and Order has not yet been released, but industry reporting and a summary of the item prepared by the Incentive Auction Task Force give us a good idea of what to expect, although like all matters from the FCC, the devil is in the details. Good news for our law firm’s clients is the Commission’s decision to license the 600 MHz band using Partial Economic Areas (or “PEAs”) rather than larger Economic Areas (EAs) that were favored by nationwide carriers. Smaller geographic licenses that do not include urban areas should create more opportunities for small and rural carriers to bid and have a realistic shot at winning spectrum rights for their primary areas of interest in the “forward auction” portion of the proceeding, currently scheduled for the summer of 2015. While it is unclear pending review of the Commission’s Order, we believe the FCC has adopted a map of PEA boundaries that was developed this spring as a consensus among the Blooston Rural Carriers and other rural advocacy groups. A last minute proposal by Verizon sought changes to the consensus PEA proposal in a way that could impact some PEAs that are near urban markets, and it is possible that the FCC made some tweaks to ensure Verizon’s support. At the same time, the FCC may have acted on its own to modify or combine PEAs that it deemed too small. To ensure that no one or two carriers can “run the table” and dominate the bidding in the incentive auction, the FCC also adopted spectrum aggregation limits in a separate Mobile Spectrum Holdings proceeding that reserve up to 30 megahertz of spectrum in each market for carriers that currently hold less than one-third of the available spectrum below 1 GHz in a market. This “set aside” effectively prevents any carrier with 45 megahertz or more of low-band spectrum ( e.g., attributable interests in a 25 megahertz cellular license and 20 megahertz or more of 700 MHz Band spectrum) from being able to bid on the reserved spectrum. Pending review of the fine print in the new rules, this provision will likely restrict nationwide carriers from obtaining all of the spectrum, but apparently will not impact smaller carriers. With respect to small business bid credits, the Commission adopted the same size-based credits for the forward auction as it used for the 700 MHz band auctions: 15 percent for small businesses (defined as entities with average annual gross revenues for the preceding three years not exceeding $40 million) and 25 percent for very small businesses (defined as entities with average annual gross revenues for the preceding three years not exceeding $15 million). The Commission intends to initiate a separate proceeding to review the Part 1 designated entity rules. As part of that proceeding, the Commission will consider whether any revisions made to the rules should apply to the incentive auction. Forward auction applicants will be subject to the existing Part 1 competitive bidding rules. Other decisions relevant to the “forward” licensing of the 600 MHz band include “flexible use” service rules (allowing the provision of fixed and/or mobile voice and data services), and a band plan with specific paired uplink and downlink bands, comprised of five megahertz “building blocks.” The specific uplink and downlink bands will support Frequency Division Duplex (FDD) technologies that the FCC deemed as “best suited” for the new 600 MHz Band at the present time in light of current technology, the Band’s propagation characteristics, and potential interference issues present in the Band. New licensees will be required to build out to 40 percent of the population (as opposed to geography) in their service areas within six years and to 75 percent of the population by the end of their initial license terms of 12 years. This is an improvement over the Auction 73 requirement to cover a large percentage of geography, without regard to whether there were inhabitants to be served. Also, to avoid a problem that contributed to delay in the deployment of 700 MHz services in rural markets, the FCC has adopted a requirement that all mobile devices in the 600 MHz band must be fully interoperable. The Incentive Auction Report and Order will also make additional prime spectrum from the 600 MHz Band guard bands available for unlicensed devices nationwide. This should create opportunities for manufacturers of unlicensed devices and providers of unlicensed band services. Depending on the amount of spectrum repurposed through the incentive auction, a total of 14 to 28 megahertz of guard band spectrum will be available for unlicensed use. In addition, the Commission will make an additional six megahertz of spectrum available by allowing unlicensed use of channel 37 at locations where it is not in use by channel 37 incumbents, subject to the development of the appropriate technical parameters to protect the incumbent medical telemetry and radio astronomy users from harmful interference. TV Band White Space devices may continue to operate on channels allocated and assigned for primary television services, consistent with current FCC rules. The Commission has said it plans to initiate a rulemaking proceeding soon to consider changes to its existing Part 15 rules to facilitate unlicensed use of the television bands, 600 MHz Band guard bands and channel 37. The FCC approved the incentive auction rules in a 3-2 vote split along party lines, with Democrats in the majority. FCC Adopts Revised Mobile Spectrum Holdings Policies Designed to Promote Competition In an effort to ensure access to mobile spectrum for both large and small service providers, and in particular low-band spectrum (i.e., spectrum below 1 GHz), the FCC last Thursday adopted a Report and Order revising its mobile spectrum holdings policies. A text of the item was not yet available as we went to press, and the following report is based on FCC News Releases and industry reporting:
The Commission’s decision addressed mobile spectrum policies in three related areas,
- proposed transactions,
- transactions involving low-band spectrum, and
- policies for the upcoming AWS-3 and 600 MHz Broadcast Incentive Auction.
First, with respect to review of proposed transactions, the Commission added and removed spectrum from its current competitive spectrum aggregation “screen” to reflect spectrum that is currently suitable and available for mobile broadband. If a proposed transaction would result in a wireless provider holding approximately 1/3 or more of available spectrum licenses in a given market, that transaction will continue to trigger a more detailed, case-by-case competitive analysis by the Commission. The FCC's spectrum screen previously covered a total of roughly 453 megahertz of spectrum and would kick in if a carrier seeks to acquire more than one-third of that total (150 megahertz) in a given market. If a carrier is seeking spectrum that would push it over the screen in a given market, the FCC would review the transaction more carefully and could move to block it. Under the new polices, the screen reportedly includes a total of 582 megahertz of spectrum (due to the addition of the AWS-4, H-Block, and BRS-EBS bands) and thus would kick in if a carrier acquired more than 195 megahertz (around one-third) of the spectrum in a given market. Second, with respect to transactions involving low-band spectrum, which is relatively scarce and has properties that allow service across longer distances and through barriers such as walls and foliage, the Commission will continue to use a case-by-case review of these transactions. Aggregation of approximately 1/3 or more of available low-band spectrum will be an “enhanced factor” in the competitive analysis of a proposed transaction. According to an FCC Fact Sheet, Verizon and AT&T hold a combined share of approximately 70% of all low-band spectrum licenses, while Sprint and T-Mobile hold a combined share of approximately 15% of all low-band spectrum licenses. Third, with respect to auctions, the Commission set policies for the upcoming AWS-3 and 600 MHz Broadcast Television Spectrum Incentive Auction. Specifically, the Commission refrained from setting auction-specific spectrum aggregation limits for qualified bidders in the AWS-3 auction, regardless of their existing spectrum holdings. To promote competition in the Broadcast Incentive Auction, the FCC adopted rules establishing a market-based reserve of up to 30 MHz of spectrum targeted for providers that hold less than 1/3 of available low-band spectrum in a license area. As a practical matter, this means that any nationwide carrier with 45 megahertz or more of low-band spectrum (e.g., a 25 MHz cellular license and 20 MHz or more in 700 MHz holdings) would be precluded from bidding for reserved 600 MHz spectrum. In this regard, Verizon holds 22 megahertz of Upper 700 MHz Band C-Block spectrum nationwide, and AT&T holds at least 24 megahertz of 700 MHz spectrum in geographic markets where it holds Lower B & C-Block CMA licenses. Modifications to the spectrum screen could lead to additional regulatory scrutiny and delay for proposed transactions involving Sprint, because that carrier holds an average of 201 megahertz in the nation’s top 100 markets, largely due to its vast 2.5 GHz BRS-EBS holdings. This compares to an average of 105 megahertz of spectrum held by Verizon, an average of 129 megahertz of spectrum held by AT&T and an average of 78 megahertz of spectrum held by T-Mobile in the nation's top 100 markets. While the exact details and nuances of the Mobile Spectrum Holdings Report and Order are not yet known, an FCC Fact Sheet released upon adoption of the item explains the application of the new mobile spectrum holdings policies on the Broadcast Incentive Auction as follows: - Any nationwide provider that holds approximately 1/3 or more of available low-band spectrum in a license area would be able to bid on all unreserved spectrum in that area, but would be ineligible to bid on any reserved spectrum.
- Any provider that holds less than 1/3 of available low-band spectrum in a license area would be able to bid on all unreserved spectrum, AND all reserved spectrum in that license area.
- Non-nationwide providers will be able to bid on both reserved and unreserved spectrum in all license areas.
The Commission clarified that these rules were based on current market structure, and it reserved the right to modify the rules based on significant market changes, including proposed transactions. The item was adopted on a 3-2 vote, with Republican Commissioners Pai and O’Reilly dissenting. INS Withdraws IP Transition Proposal, Authorization Unnecessary On May 15, 2014, Iowa Network Services, Inc. (INS) filed a letter with the FCC officially withdrawing its Application for authority to conduct a service-based experiment concerning the TDM-to-IP transition for Centralized Equal Access ("CEA") service. According to the letter, INS’ consultation with FCC staff confirmed that no additional authority was necessary for INS to go forward with the broadband IP experiment as proposed in its application. As detailed in the original application, INS sought authority from the FCC to conduct a limited service-based experiment to study the impact on customers and rural communities as INS' voice communications convert from a CEA network based on TDM circuit switched service to a CEA network using IP technologies, and to collect data to further inform the transition to an all-IP based network. FCC Schedules AWS-3 Auction to Begin November 13, 2014; Seeks Comment on Auction Procedures The FCC has issued a Public Notice (DA 14-669) announcing plans for an auction of 1,614 licenses in the 1695-1710 MHz, 1755-1780 MHz, and 2155-2180 MHz bands (collectively, the “AWS-3” bands) to commence on November 13, 2014. Issuance of this Public Notice also provides an opportunity for interested parties to submit comments on the Commission’s proposed competitive bidding procedures for the AWS-3 auction, which will be known as Auction No. 97. Comments on the FCC’s proposals are due by June 9, 2014 with Reply Comments due by June 23, 2014. We urge interested clients to contact us with questions or if there are any particular issues they would like to address. The AWS-3 Auction will provide small and rural telephone companies and entrepreneurs with an opportunity to obtain paired channel licenses for spectrum that is particularly well suited for the provision of mobile and/or fixed wireless services, and which is contiguous with and complimentary to AWS-1 band licenses that were auctioned in 2006. With Partial Economic Area (PEA) licensing slated for the broadcast incentive auction, currently scheduled for the summer of 2015, Auction 97 may also be one of the last opportunities in the foreseeable future for our clients to obtain wireless spectrum for geographic areas as small as Cellular Market Areas (CMAs). A variety of paired and unpaired AWS-3 channel blocks will also be available for bidding on an Economic Area (or “EA”) basis. The AWS-3 frequencies will be licensed in five and ten megahertz blocks, with each license having a total bandwidth of five, ten, or twenty megahertz. In an AWS-3 Report and Order (FCC 14-31) adopted this past March, the FCC established technical and service rules for AWS-3 operations (which will be regulated under Part 27 Rules), and concluded that its standard formula for small business and very small business bid credits should apply to the AWS-3 band. In this regard, businesses that have average gross revenues for the preceding 3 years not exceeding $40 million will be eligible for a 15% bidding credit; and businesses that have average gross revenues for the preceding 3 years not exceeding $15 million will be eligible for a 25% bidding credit. License buildout requirements for AWS-3 band will require licensees to provide reliable signal coverage and offer service to at least forty (40) percent of the population in each of its license areas within six (6) years of an initial grant; and to provide reliable signal coverage and offer service to at least seventy-five (75) percent of the population in each of its license areas by the end of the initial license term i.e., within twelve (12) years. Failure to meet the interim buildout requirement will accelerate the initial license term (and 75% coverage requirement) by two years (i.e., from 12 years to 10 years). In the event a licensee fails to meet the AWS-3 Final Build-out Requirement for any licensed area, the license for each licensed area in which it fails to meet the build-out requirement shall terminate automatically without Commission action. This means that the entire license is terminated, not just unserved portions of its license area, as was the case with 700 MHz licenses from Auction No. 73. To promote the rapid buildout of AWS-3 networks by all licensees, the Commission also adopted rules that require AWS-3 band equipment to be fully interoperable and to operate on all AWS-1 band frequencies.
Illustrations of the AWS-3 band plan and license allocation are shown below. The 1695-1710 MHz band will be licensed in an unpaired configuration for low-power mobile transmit ( i.e., uplink) operations. The 1755-1780 MHz band will be licensed paired with the 2155-2180 MHz band, with the 1755-1780 MHz band authorized for low-power mobile transmit (i.e., uplink) operations and the 2155-2180 MHz band authorized for base station and fixed (i.e., downlink) operations.
A complete list of licenses available for bidding and the required Upfront Payment and Minimum Opening Bid amounts for each is provided HERE . Figure 1: 1695-1710 MHz Band Plan (unpaired channels) 
Figure 2: 1755-1780 and 2155-2180 MHz Band Plans 
Table 1: AWS - 3 License Summary | Block | Frequencies (MHz) | Total Bandwidth | Paring | Geographic
Area Type | Number of Licenses | | A1 | 1695-1700 MHz | 5 MHz | unpaired | EA | 176 | | B1 | 1700-1710 MHz | 10 MHz | unpaired | EA | 176 | | G | 1755-1760/2155-2160 MHz | 10 MHz | 2 x 5 MHz | CMA | 734 | | H | 1760-1765/2160-2165 MHz | 10 MHz | 2 x 5 MHz | EA | 176 | | I | 1765-1770/2165-2170 MHz | 10 MHz | 2 x 5 MHz | EA | 176 | | J | 1770-1780/2170-2180 MHz | 20 MHz | 2 x 10 MHz | EA | 176 |
Incumbency in the AWS-3 Band Licenses in the 1755-1780 MHz band are being made available on a shared basis with a limited number of Federal incumbent indefinitely (requiring commercial licensees in proximity to certain protection zones required to coordinate with Federal entities), while many Federal systems will over time relocate out of the band. A portion of auction proceeds will be set aside to reimburse eligible Federal agencies for their relocation or sharing costs. To implement these temporary and indefinite sharing of the bands by Federal incumbent users and commercial licensees, the Bureau has proposed to require applicants for Auction No. 97 to submit with its short-form application a signed statement acknowledging that the applicant’s operations the 1755-1780 MHz band may be subject to interference from Federal systems in certain geographic zones, that the applicant must accept interference from such Federal systems in those zones, and that the applicant has considered these risks before submitting any bids for applicable licenses. Proposed Auction Design Consistent with past practice, the FCC Wireless Bureau has proposed to conduct Auction No. 97 using its standard simultaneous multiple-round format, and limited information disclosure or “anonymous” bidding. Thus, the Bureau will withhold, until after the close of bidding, public release of (1) bidders’ license selections on their short-form applications (FCC Form 175), (2) the amounts of bidders’ upfront payments and bidding eligibility, and (3) information that may reveal the identities of bidders placing bids and taking other bidding-related actions. Application and Upfront Payment Deadlines While the Auction 97 Public Notice has proposed that the AWS-3 auction begin on November 13, 2014, and established proposed auction upfront payment and minimum bid amounts for each license that, the Bureau has not yet established short-form application and upfront payment deadlines. We expect these to be set when the FCC adopts its final procedures for the AWS-3 auction this summer. Please contact us if you would like us to provide you with further information about the AWS-3 auction and spectrum that will be available for bidding. We are available to help clients that wish to explore joining forces to bid in the auction, through the creation of partnerships or other joint entities. Our clients in the midst of negotiating transactions and agreements with third parties will need to be cognizant of the “anti-collusion” rules that will kick in upon the short-form filing deadline, likely to be in late August or September. Law & Regulation
US Supreme Court to Hear Dispute over Procedures for Denying a Cell Tower Permit The U.S. Supreme Court has agreed to hear a wireless facilities siting case brought by a unit of T-Mobile USA that will decide whether a state or local government’s simple denial of an application for a construction permit, without providing reasoned explanation, satisfies the Communications Act requirement that such denial be “in writing.” The case involves T-Mobile South, LLC and the City of Roswell, Georgia, and review of a decision by the Eleventh Circuit Court of Appeals which upheld the city’s ability to deny T-Mobile’s application to construct a 108-foot cell tower without any discussion or explanation, just two days after a lengthy city council meeting on the application. Section 332 (c)(7) of the Communications Act requires that any local government’s denial of an application for the placement, construction, or modification of a personal wireless facility “must be in writing and supported by substantial evidence contained in a written record.” A federal trial judge sided with T-Mobile and directed the City to issue the permit, ruling that the City had violated the Communications Act. However, the Eleventh Circuit overruled the trial court and said that the city met the federal requirement by issuing a general denial letter and attaching a transcript of the hearings that led to the denial. In its petition, T-Mobile argues that there is a split between federal courts on what is sufficient to fulfill the “in writing” obligation, with the Eleventh Circuit (which has jurisdiction over federal cases originating in the states of Alabama, Florida and Georgia) and Fourth Circuit (which has jurisdiction over federal cases originating in the states of Maryland, Virginia, West Virginia, North Carolina, and South Carolina) holding that a denial letter need only advise the applicant of the fact that the permit has been denied. A majority of other federal appeals courts (including the First, Sixth, Seventh and Ninth Circuits) have held that a ruling denying an application must be separate from the administrative record and contain a sufficient explanation of the reasons to allow a reviewing court to evaluate the evidence in the record supporting those reasons. “In particular, under the Eleventh Circuit’s approach, applicants will be forced to engage in the costly and time-consuming process of filing suit to ferret out the underlying reasons for permit denials; and judicial review will be vastly complicated as courts are required to sift through sometimes hundreds or thousands of pages of hearing minutes, transcripts and correspondence simply to discover the threshold question of the grounds of the local government’s decision,” T-Mobile said in its petition. For its part, the City of Roswell argues in its brief that the “in writing” requirement is merely a procedural requirement, and that the circuit courts are reaching a consensus on what the “in writing” requirement should mean. “Indeed, the telecommunications industry has nothing to lose in this alleged conflict, but it undoubtedly has everything to gain,” the City’s brief argues. “If the court granted the petition and decided that the Eleventh Circuit was wrong as to the interpretation of these four words, it is the local governments who would be harmed, as they would be forced to allow cellular towers based upon a mere technicality, without regard for the merits of their decisions.” The case will be heard during the next Supreme Court term, which begins in October. FCC Application Processing Fees to Increase June 6 Effective June 6, 2014, the FCC’s application filing fees will be increased to reflect the change in the Consumer Price Index-Urban (CPI-U). The increase in the CIP-U over the past two years was 8 percent, which resulted in an increase of 17.369 index points, as calculated from October 2009 through October 2013. It is important to note that for those services where the filing fee includes both the annual regulatory fee and the application filing fee ( e.g., microwave, BETRS/Rural Radio, Part 90 private land mobile), the FCC is only increasing the application component of its filing fees and that this fee increase will be effective 30 days following publication in the Federal Register. Title II Fees Domestic Section 214 Applications increased from $1,050.00 to $1,130.00; International Section 214 Applications increased from $1,050.00 to $1,130.00; Tariff Filings increased from $845.00 to $910.00; and Petition for Waiver fees (Parts 69, 32, 43, 64 & 65) increased from $7,990.00 to $8,635.00. Title III Fees For typical paging applications, the fee will increase from $395.00 to $430.00 for new facilities, major modifications and license renewals while for BETRS/Rural Radio, the fee will increase from $180.00 to $195.00 for new facilities, major modifications and license renewals. For minor modifications, the fees will increase from $60.00 to $65.00. For the Part 90 Private Land Mobile Radio Services (shared use below 470 MHz), aircraft and ship stations, the fee will increase by $5.00 from $60.00 to $65.00. Most applications for marine coast and aviation ground stations will increase from $120.00 to $130.00 while typical microwave fees will increase from $270.00 to $290.00 for facilities based applications. Filing fees for transactional applications such as license assignments and transfers of control will also increase. If you have an application filing that has been sent to you for review and signature, we recommend that you return it to us by June 4, 2014 for filing with the FCC in order to minimize the potential that the higher filing fee will apply. Sprint To Pay $7.5M for Unwanted Marketing Calls, Texts in Record Do-Not-Call Settlement On May 19, 2014, the FCC’s Enforcement Bureau announced that it had entered into a Consent Decree with Sprint Corporation requiring it to pay $7.5 million to resolve an Enforcement Bureau investigation of the mobile wireless company’s failure to honor consumer requests to opt-out of phone and text marketing communications. According to the FCC, this represents the largest Do-Not-Call settlement ever reached by the agency. In addition to the $7.5 million voluntary payment to the U.S. Treasury, Sprint will implement a two-year plan to ensure compliance with FCC requirements designed to protect consumer privacy and prevent consumers from receiving unwanted telemarketing calls and text messages. This follows a previous 2011 Enforcement Bureau settlement with Sprint arising from complaints that Sprint made telemarketing calls to consumers who had requested to be placed on Sprint’s Do-Not-Call list. “We expect companies to respect the privacy of consumers who have opted out of marketing calls,” said Travis LeBlanc, Acting Chief of the Enforcement Bureau. “When a consumer tells a company to stop calling or texting with promotional pitches, that request must be honored. Today’s settlement leaves no question that protecting consumer privacy is a top enforcement priority.” In its Consent Decree with the Enforcement Bureau, Sprint has agreed to: - Make a voluntary contribution of $7.5 million to the U.S. Treasury;
- Develop and put into action a compliance plan designed, among other things, to help ensure future compliance with the FCC’s rules requiring companies to maintain internal Do-Not-Call lists and honor consumers’ requests;
- Develop operating procedures and policies specifically designed to ensure that Sprint’s operations comply with all company-specific Do-Not-Call rules;
- Designate a senior corporate manager as a Compliance Officer to ensure that Sprint complies with the terms and conditions of the compliance plan and the consent decree;
- Implement a training program to ensure that Sprint employees and contractors are properly trained as to how to record consumers’ Do-Not-Call requests so that the company removes their names and numbers from marketing lists;
- Report to the FCC any noncompliance with respect to consumers’ Do-Not-Call requests; and
- File with the FCC an initial compliance report within 90 days and annual reports for two years.
In the previous 2011 case, Sprint paid $400,000 to the U.S. Treasury as part of a Consent Decree resolving an investigation into consumer complaints that Sprint had made marketing calls to consumers who had asked to be placed on Sprint’s internal Do-Not-Call list. Since 2003, Americans have been able to opt out of receiving most telemarketing calls by putting their phone numbers on the National Do-Not-Call Registry. Consumers can register their phone numbers on the Do-Not-Call registry for free, and they will remain on the list until the consumer removes them or discontinues service — there is no need to re-register numbers. The Do-Not-Call registry does not prevent all unwanted calls. It does not cover the following: - Calls from organizations with which the customer has an established business relationship;
- Calls for which the customer has given prior written permission;
- Calls which are not commercial or do not include unsolicited advertisements;
- Calls by or on behalf of tax-exempt non-profit organizations.
Subscribers may register their residential telephone number, including wireless numbers, on the national Do-Not-Call registry by telephone or by Internet at no cost. The Consent Decree is available at: http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-14-527A1.docx . FCC Cites California Online Retailer for Importing and Marketing Illegal Smartphones On May 20, 2014, the District Director of the Los Angeles Office of the FCC Enforcement Bureau’s Western Region issued a “Citation and Order” citing Panasystem Corp., a California-based online electronics retailer, for importing and marketing counterfeit smartphones marked with unauthorized or invalid labels falsely indicating that the devices were certified by the FCC. The investigation which led to the Citation was prompted by inquiries from the United States Department of Homeland Security concerning the devices. “We will not tolerate the importation and marketing of counterfeit devices,” said Travis LeBlanc, Acting Chief of the Enforcement Bureau. “The trafficking of these devices not only robs the intellectual property of legitimate manufacturers, it harms consumers by failing to provide them with safe and certified smartphones that comply with the FCC’s equipment authorization process.” The FCC investigation identified the smartphones imported by Panasystem as counterfeit Samsung models “Galaxy S Duos” and “Galaxy Ace.” Although these devices were labeled with seemingly-valid Samsung FCC Identifiers, the investigation showed that Samsung neither manufactured the devices nor authorized the FCC Identifier labels. The investigation also revealed that another set of smartphones imported by Panasystem contained counterfeit BlackBerry Model 9790 devices. These smartphones were labeled with invalid FCC Identifiers, which rendered them illegal for sale in the United States. Federal law requires smartphones, and all other wireless devices and phones, to be certified in accordance with FCC technical standards before they can be marketed in the United States. Certified smartphones, and other wireless devices and phones, are labeled with a unique FCC Identifier that may not be placed on devices without authorization. The FCC Identifier is comprised of a three to five character grantee code that is assigned permanently to a manufacturer for use on all of its authorized devices, and a longer product code that the manufacturer assigns to a particular model. The FCC Identifier must be permanently stamped, etched, or otherwise printed on the device and be readily visible to consumers. Smartphones and other wireless devices and phones labeled with invalid or unauthorized FCC Identifiers are illegal to import into the United States, and the FCC has stated that it will impose significant fines on companies marketing uncertified devices to U.S. consumers. The FCC Enforcement Bureau’s Citation notifies Panasystem that: (1) it must take immediate steps to come into compliance and discontinue the importation and marketing of uncertified radio frequency devices, such as smartphones; (2) if it continues to import and market uncertified devices, it may be subject to penalties of up to $16,000 for each model per day for each violation, up to $122,500 for any single act or failure to act; and (3) subsequent violations of the FCC’s marketing rules may also result in seizures of uncertified equipment as well as criminal sanctions, including imprisonment. The Citation contains the ominous warning that the conduct which has already occurred could lead to the assessment of a monetary penalty. Because Panasystem is not regulated by the FCC, the agency was required to issue a Citation before the Enforcement Bureau can issue a Notice of Apparent Liability for Forfeiture. Panasystem has thirty days within which to respond to the Citation, under penalty of perjury. The response must describe “the specific action(s) taken or plans to cease the importation and marketing of uncertified radio devices and preclude recurrence of the violations, and also a timeline for completion of any corrective action(s).” The Citation issued to Panasystem Corp. is available at: http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-14-658A1.pdf Industry
AT&T Purchases DirecTV for $49 Billion; Commits to Bid at Least $9 Billion in 2015 Incentive Auction AT&T and DirecTV announced on Sunday that they have entered into a definitive agreement under which AT&T will acquire the US and Latin American pay TV provider in a stock-and-cash transaction worth $48.5 billion. The merger will create a new telecom and television behemoth and strengthen AT&T’s competitive position against Verizon and Comcast, which earlier this year announced a $45 bid for Time Warner Cable. Upon approval of the proposed transaction, AT&T has made a conditional commitment to bid at least $9 billion in next year’s broadcast incentive auction and to extend broadband service within four years to 15 million customer locations, mostly in rural areas where AT&T does not provide high-speed broadband service today. The merger has been approved by the boards of directors of both companies is now subject to approval by DirecTV shareholders and review by the FCC and Department of Justice, as well as Latin American regulators. The transaction is expected to close within twelve months. “This is a unique opportunity that will redefine the video entertainment industry and create a company able to offer new bundles and deliver content to consumers across multiple screens — mobile devices, TVs, laptops, cars and even airplanes. At the same time, it creates immediate and long-term value for our shareholders,” said AT&T Chairman and CEO Randall Stephenson. Through its subsidiaries and affiliated companies in the US and Latin American countries including Brazil, Mexico, Puerto Rico, Argentina, Colombia, Venezuela and Ecuador, DirecTV provides digital television services to over 20 million customers in the US and more than 18 million customers in Latin America. DirecTV also owns 4G wireless network operating licenses in Latin American countries including Brazil and Colombia. Consumer groups and legislators were quick to raise concerns about the mega-transaction and its potential harm to competition. “There is a lot of nervous energy in the media business,” said Harold Feld of consumer advocacy group Public Knowledge in an interview on NPR. “It’s like trying to find a date before the prom. The more people get picked off, the more desperate everybody else becomes to find somebody they can go to the dance with.” Sen. Al Franken (D-Minn), a vocal critic of the Comcast-Time Warner Cable deal, said he was skeptical of the AT&T-DirecTV combination as well. "We're moving toward an industry with fewer competitors — where corporations are getting bigger and bigger and gaining more and more control over the distribution of information," said Franken. "This hurts innovation, and it's bad for consumers, who have been getting squeezed by higher bills."
To facilitate regulatory approvals, AT&T has made a number of voluntary commitments upon closing of the deal:
- AT&T will extend broadband service within four years to 15 million customer locations, mostly in rural areas where AT&T does not provide high-speed broadband service today, utilizing a combination of technologies including fiber to the premises and fixed wireless local loop capabilities.
- For customers who only want a broadband service and may choose to consume video through an over-the-top (OTT) service like Netflix or Hulu, the combined company will offer stand-alone wireline broadband service at speeds of at least 6 Mbps (where feasible) in areas where AT&T offers wireline IP broadband service today at guaranteed prices for three years after closing.
- DIRECTV’s TV service will continue to be available on a stand-alone basis at nationwide package prices that are the same for all customers, no matter where they live, for at least three years after closing.
- Continued commitment for three years after closing to the FCC's Open Internet protections established in 2010, irrespective of whether the FCC re-establishes such protections for other industry participants following the DC Circuit Court of Appeals vacating those rules.
- AT&T intends to bid at least $9 billion in connection with the 2015 incentive auction, provided there is sufficient spectrum available in the auction to provide AT&T a viable path to at least a 2x10 MHz nationwide spectrum footprint.
With the FCC’s revised mobile spectrum holdings policies now set, analysts believe that Dish Network might also be a target for acquisition. Dish recently paid $1.564 billion in the FCC's H Block auction as the only bidder, and it also holds 45 megahertz of mid-band downlink spectrum that could be used to supplement terrestrial LTE operations. "I know there are reports out there that we are talking to Dish," said Verizon CEO Lowell McAdam during an investor conference in Boston. "I can tell you now, that is someone's fantasy. There were not, and there are not, discussions going on with Dish." Frontier Communications Plans Emergency-Only Landline Service for Rural Areas Telecompetitior is reporting that Frontier Communications is planning to launch an emergency-use-only landline phone service in rural areas in the second half of this year. According to the report, Frontier believes there is a market for emergency-only landline phones to help shore up some of the unreliability of residential VoIP service, which does not operate in the event of a power outage without an external source of back-up power. Frontier CEO Maggie Wilderotter announced the initiative at the J.P. Morgan Global Technology, Media, and Telecom Conference on May 19, but did not provide details about the upcoming VoIP offering the emergency-only service is meant to compliment. Calendar At-A-Glance
May
May 23 – Comments are due on 2014 TRS Payment Formulas and Funding Requirements.
May 29 – Comments are due on the short form Tariff Review Plans.
May 31 – FCC Form 395 (Employment Report) is due. June
Jun. 3 – Reply comments are due on 2014 TRS Payment Formulas and Funding Requirements.
Jun. 6 – FCC Application Filing Fees increase.
Jun. 16 – Connect America Fund ICC Data Filing (Access Recovery Charge changes) is due.
Jun. 16 – ILEC Tariff filings made on 15 days’ notice are due.
Jun. 18 – Retransmission consent rules become effective.
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. July
Jul. 1 – FCC Form 481 (Carrier Annual Reporting Data Collection Form) is due.
Jul. 1 – FCC Form 690 (Mobility Fund Phase I Auction Winner Annual Report) is due.
Jul. 15 – Comments are due on the Open Internet NPRM.
Jul. 31 – FCC Form 507 (Universal Service Quarterly Line Count Update) is due.
Jul. 31 – Carrier Identification Code (CIC) Report is due. September
Sep. 10 – Reply comments are due on the Open Internet NPRM. | 
David George and Bill Noyes
