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. 18, No. 38 | September 30, 2015 |
REMINDER Initial 911 Reliability Certification Due October 15, 2015. Covered 911 Service Providers are reminded that an Initial Reliability Certification pursuant to the FCC's 911 reliability rules is due October 15, 2015. (PS Docket Nos. 13-75, 11-60) Covered 911 Service Providers may submit their certifications through the Commission’s online portal at https://apps2.fcc.gov/rcs911/ . The certification requirement applies to “Covered 911 Service Providers.” The Commission’s Rules define this as any entity that provides 911, E911, or NG911 capabilities such as call routing, ALI, ANI, or the functional equivalent of those capabilities, directly to a PSAP, statewide default answering point, or appropriate local emergency authority, or that operates one or more central offices that directly serve a PSAP. The definition does not include any entity that constitutes a PSAP or governmental authority to the extent that it provides 911 capabilities; or offers the capability to originate 911 calls where another service provider delivers those calls and associated number or location information to the appropriate PSAP. The Commission not intend for the certification requirement to apply to wireless providers, VoIP providers, backhaul providers, Internet service providers (ISPs), or commercial data centers based on the functions they currently provide in 911 networks, assuming they do not otherwise provide the functions of a Covered 911 Service Provider under the definition. Clients who would like assistance in preparing and filing an Initial 911 Reliability Certification or who would like guidance on whether the certification requirement applies to them should contact the firm. Headlines
Comments Sought on Section 214 Discontinuance Criteria and Process On August 6, 2015, the FCC released a Report and Order, Order on Reconsideration, and Further Notice of Proposed Rulemaking, promoting the transitions from networks based on time-division multiplexed circuit-switched voice services running on copper loops to all-Internet Protocol networks using a variety of physical infrastructure. (GN Docket No. 13-5, WC Docket No. 05-25, RM-10593, RM-11358)
The date for comments and reply comments on the Further Notice of Proposed Rulemaking (FNPRM), which asks whether the FCC should revise its rules concerning the 214 application process and proposes specific criteria for the FCC to use in evaluating applications to discontinue retail services pursuant to section 214 of the Act, have now been set. Comments will be due on or before October 26, 2015, and reply comments will be due on or before November 24, 2015. In the FNPRM, among other things, the FCC proposes that a carrier seeking to discontinue an existing retail service in favor of a retail service based on a newer technology must demonstrate that any substitute service offered by the carrier or alternative services available from other providers in the affected service area meet certain criteria in order for the section 214 application to be eligible for an automatic grant pursuant to section 63.71(d) of the Commission’s rules. The criteria proposed by the FCC are as follows: (1) Network capacity and reliability- the FCC proposes that any adequate substitute test should evaluate whether the replacement or alternative service will afford the same or greater capacity as the existing service and afford the same reliability as the existing service even when large numbers of communications take place simultaneously. This means that communications are routed to the correct location; connections are completed; connection quality does not deteriorate under stress; and connection setup does not exhibit noticeable latency. The FCC proposes to adopt metrics for jitter, packet loss and through-put. The FCC asks whether it should adopt a 100-millisecond latency metric. The FCC asks how reliability can be measured and seeks comment on a proposal that reliability for voice communications should mean the ability to access a dial tone within three seconds 98% of the time during the busy season-busy hour. (2) Service quality- the FCC proposes that one criterion should be that the replacement or alternative service meets the standards set by the state commission. If the state commission does not have applicable standards, the FCC what standard it should apply. (3) Device and service interoperability, including interoperability with vital third-party services (through existing or new devices)- the FCC proposes that one criterion should be that the carrier demonstrates that its replacement service or alternative services allow for as much or more interoperability of both voice and non-voice devices as the service to be retired. (4) Service for individuals with disabilities, including compatibility with assistive technologies. (5) PSAP and 9-1-1 service- the FCC asks whether a VoIP service that will not function during a loss of commercial power or that provides only a limited amount of battery backup for CPE, serves as an adequate substitute to reach 9-1-1 in an emergency. However, the FCC concludes that it should not include criteria in the 214 process concerning operability during emergencies, including power outages, because this issue is being addressed by the FCC in the 911 proceeding (PS Docket No 14-174). (6) Communications security- the FCC proposes that one criterion in the adequate substitute test should be that the carrier demonstrates that a substitute service or alternative services offer comparably effective protection from network security risks. The FCC asks what factors it should consider in assessing whether a substitute service offers comparably effective protection from network security risks. The FCC asks whether it should consider the extent to which a proposed substitute service exposes users to a higher risk of spoofed calls or man-in -the-middle attacks that compromise a user's ability to communicate or put person information at risk. The FCC asks whether it should consider the vulnerability of a proposed substitute service to physical risks, like weather damage, or human risks, like insider threats. (7) Service functionality- The FCC proposes that any adequate substitute test should require the carrier to demonstrate that any replacement service or alternative service permit similar service functionalities as the service for which the carrier seeks discontinuance. The FCC seeks comment on whether similar functionalities as those provided by legacy services, such as medical alert monitors and credit card processing, are feasible with new technologies and whether new end-user equipment would be required. (8) Coverage- the FCC proposes that one criterion in any adequate substitute test should be that the substitute service will remain available in the affected service area to the persons to whom the discontinued service has been available.
The FCC proposes that once a carrier certifies in its application that it satisfies all of these criteria, then the application will be eligible for automatic grant pursuant to section 63.71(d) of the rules. However, if the carrier is unable to file such a certification or if comments or objections call into question whether a substitute or alternative service satisfies all of the criteria, then the application would not be automatically granted and the applicant would be required to submit information demonstrating the degree to which it meets or does not meet each factor. The FCC asks whether one replacement or alternative service must satisfy every criterion or whether it is sufficient that multiple alternative services are available which collectively satisfy all of the adopted criteria. The FCC proposes that the existence of an adequate substitute service can be a service the carrier offers or an existing service offered by third parties. Please contact the firm if you are interested in filing comments in this proceeding. Enforcement Alert: Failure to Make Appropriate Felony Disclosures Could Result in Enforcement Action In response to a petition for reconsideration, the FCC has reiterated that applicants must ensure that appropriate disclosures of felony convictions are made. Depending upon the circumstances, felony convictions of corporate entities as well as shareholders, officers and directors may be necessary. A failure to make this disclosure could lead to a finding that the applicant deliberately tried to misrepresent material facts to the FCC – which could lead to dismissal of the application, loss of licenses and possible fines. For the wireless services, the FCC asks whether the applicant, any party to the application or any party directly or indirectly controlling the applicant has ever been convicted of a felony by any state or federal court. Because of the way that the FCC asks this question, there is no time-limit on the look-back. Thus, convictions that might be 100 or more years old would still be deemed relevant despite the remoteness in time. Additionally, in order to determine the proper answer to this question it may be necessary not only to look at shareholders with control, but also officers/directors/managers, etc. who have the capability to exert control over the licensee – whether part of the licensee itself or up the ownership chain. Clients with questions regarding felony disclosures should contact our office as soon as possible. **Filing Fee Payment Method Change Effective Immediately ** As part of the FCC’s efforts to reduce paper and move towards a paperless environment, the FCC is no longer accepting checks for the payment of regulatory fees, including small regulatory fees that are “bundled in with an application filing fee such as a fee for a new station or license renewal. This announcement was made last year in the context of the annual regulatory fees, and the FCC continued to accept checks for the 5-year payment of regulatory fees that is built into the renewal application fee for most private radio and microwave licenses. However, the FCC’s Managing Director has decided to make the “no checks” policy applicable to the small regulatory fees that are bundled in with application filing fees, effective immediately. What does this mean to you? It will depend upon whether the regulatory fee is embedded in the application filing fee for new stations and license renewals. Thus, for the Common Carrier services, clients filing applications in the Rural Radiotelephone Service/BETRS and the Common Carrier Fixed Point-to-Point Microwave Service will have to use credit cards or ACH payments to pay the filing fee and associated regulatory fee since the FCC will no longer accept checks for payment of these fees. Thus, it will be necessary to provide us with credit card information or information for an ACH payment. In order to pay by credit card, we will need the following information: (a) credit card number, (b) expiration date, (c) three or four digit security code and (d) name on credit card. In order to pay by ACH from your bank account, we will need the following information: (a) name of account holder, (b) type of bank account (business checking, personal checking, savings, etc.), (c) routing number, (d) account number and (e) check number. So we can ensure that the fee payments can be made in a timely manner, it will be critically important for our clients to provide us with their FCC Registration Number (FRN) and password where we do not already have it. We anticipate that at some point in the future, the FCC may also stop accepting credit cards for payment of regulatory fees – although no date has been announced for that change. Law & Regulation
Sprint Discontinuance of Long Distance Service Granted over Objections from Tribe Over the objection of the Oglala Sioux Tribe Utility Commission (OSTUC) and a small number of customers, the Wireline Competition Bureau (WCB) has granted the application of Sprint Communications Company L.P. (Sprint), seeking permission pursuant to section 214(a) of the Communications Act of 1934, as amended (the Act) to discontinue certain wireline consumer long-distance services in each of the United States, the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands. (WC Docket No. 15-186, Comp. Pol. File No. 1230). The OSTUC requested that the FCC delay action on Sprint’s application until Sprint demonstrated that it has met its obligations to the OSTUC and suggested that Sprint’s proposed discontinuance could adversely affect the public convenience and necessity because Sprint failed to comply with all applicable requirements for discontinuance of service, including those on the Pine Ridge Indian Reservation (PRIR). Among other things, the OSTUC stated that Sprint is subject to its jurisdiction and is required to comply with certain obligations, including 1) informing customers prior to termination of service that they may file a complaint with the OSTUC and 2) reporting quarterly, within 30 days of the end of each quarter, the number of service terminations, the reason for termination of service, the terms and conditions for termination, and the requirements for reconnection. In spite of the objections, the WCB granted Sprint’s request to discontinue services based on its finding that the concerns raised by the customers were addressed through Sprint’s direct efforts to assist these customers with the successful transition to alternative services. As for the objections of the OSTUC, the WCB found that Sprint complied with all of the FCC requirements, under its rules to discontinue services. The WCB also found that the issues raised by the OSTUC do not bear directly on the criteria by which discontinuance applications are reviewed. According to the WCB, "[n]othing in the OSTUC’s comments indicates that the notice required under our rules was not provided, nor is there any indication that customers will be left without alternative service on the PRIR. The record indicates that Sprint complied with the Commission’s notice requirement under section 63.71(a) by sending notice of the proposed discontinuance to each existing customer, including its one residential customer living on the PRIR. Sprint’s reply comments also confirm that there are alternative providers on the PRIR." Accordingly, the WCB found that grant of Sprint’s application will not adversely affect the public convenience and necessity and, therefore, it was granted. Comment Sought on Declaratory Ruling That Telemarketing Rules do not Apply to Government Calls The FCC Consumer and Governmental Affairs Bureau (Bureau) is seeking comment on a petition for declaratory ruling filed by Broadnet Teleservices, LLC (Broadnet), requesting that the FCC declare that the Telephone Consumer Protection Act (TCPA) and the Commission’s implementing rules do not apply to calls made by or on behalf of federal, state, and local governments, including calls made by legislative, judicial, and executive bodies, and those who act on behalf of such government entities, when such calls are made for official purposes. (CG Docket No. 02-278) According to the Bureau, Broadnet states that the declaratory ruling is necessary because otherwise, "consumers who 'rely on their wireless phones as their primary, or only, means of telephone communication will be deprived of important opportunities to engage with their government as wired citizens currently enjoy' and that these individuals deserve the same access to democracy and the same engagement with policymakers that is currently only possible for individuals with access to landline phones." Broadnet also contends that the plain language of the TCPA demonstrates that it does not apply to calls made by government entities because the Act defines a “person” as an “individual, partnership, association, joint-stock company, trust or corporation” and governmental entities fall outside of that definition. Comments on the Petition are due by October 29, 2015 and reply comments are due by November 13, 2015. Additional Companies Provisionally Selected for Rural Broadband Experiment Support The Wireline Competition Bureau (WCB) has announced that it is ready to authorize rural broadband experiment support for provisionally selected bids submitted by BARC Electric Cooperative in Virginia and Northeast Rural Services, Inc. in Oklahoma for 292 census blocks for a total of $2,821,652.85 in support. (WC Docket Nos. 10-90 and 14-259) To be authorized to receive support, the provisionally selected bidders are required to submit at least one acceptable irrevocable stand-by letter of credit (LOC) and Bankruptcy Code opinion letter from their legal counsel by October 14, 2015. After reviewing the LOCs and opinion letters submitted by the provisionally selected bidders, the WCB will authorize support for the specific provisionally selected bidders for which all requirements, including submission of the LOC(s) and opinion letter(s), have been met. Public Safety Support Center Opened, Will Play Role in Policing Telecom Carriers The Public Safety and Homeland Security Bureau announced the opening of its Public Safety Support Center (PSSC) at https://www.fcc.gov/public-safety-support-center . The PSSC is a web-based portal that, according to the Bureau, "enables Public Safety Answering Points (PSAPs) and other Public Safety entities to request support or information from the Bureau and to notify it of problems or issues impacting the provision of emergency services." The PSSC will handle notifications of service outages, complaints related to carrier provision of location information, and requests on issues such as E911 Location Accuracy, Text-to-911 Service, Fraudulent/Non-Service Initialized 911 Calls, Update to Master PSAP Registry, Interference to Public Safety Services or Devices and Tower Lighting Outages. The FCC’s Consumer Complaint Center will continue to handle consumer inquiries and complaints, including consumer complaints about access to 911 emergency services. Industry
Sprint Announces it will Not Participate in FCC’s 600 MHz Auction Over the weekend, Sprint Corp surprised the wireless industry and investors when it announced that it will not participate in the upcoming 600 MHz incentive auction, scheduled to begin next March 29. Sprint’s share price fell 7.4% to $3.98 on Monday. A brief statement issued by the company says that “after thorough analysis” Sprint believes that its spectrum holdings are sufficient to meet its current and future customers’ needs. “Sprint’s focus and overarching imperative must be on improving its network and market position in the immediate term so we can remain a powerful force in fostering competition, consumer benefits and innovation in the wireless broadband world,” stated Sprint CEO Marcelo Claure. “Sprint has the spectrum it needs to deploy its network architecture of the future.” The statement goes on to describe Sprint’s ongoing efforts to increase coverage and capacity by densifying its network and increasing the number of cell sites using its existing spectrum. The Company also explained that it is already deploying new technologies, such as carrier aggregation, designed to take advantage of the Company’s strong 2.5 GHz spectrum position. Until now, Sprint had been viewed a likely bidder in the incentive auction because of its relatively shallow “low-band” spectrum holdings. The company has also been an active participant in the FCC’s incentive auction docket, with comments and ex parte filings as recently as late June urging the Commission, among other things, to establish auction procedures that would promote a greater distribution of low-band spectrum among competitive wireless broadband providers. A statement by FCC Commissioner Ajit Pai used Sprint’s announcement as an opportunity to criticize the Commission’s decision to reserve a portion of the 600 MHz spectrum in certain markets for carriers other than Verizon and AT&T. Critics of the FCC’s mobile spectrum holdings policies believe a spectrum reserve will reduce auction proceeds with no guarantee that competing bidders will deploy service. “Sprint’s decision not to participate in the incentive auction highlights the folly of the FCC’s attempt to pick winners and losers before the auction begins,” wrote the Republican commissioner. An unstated factor likely contributing to Sprint’s decision was a recent downgrade of the company’s Corporate Family Rating (CFR) by Moody’s Investors Service. On September 17th, Moody’s downgraded Sprint’s CFR from “B1” to “B3,” its probability of default rating from “B1-PD” to “B3-PD,” its senior unsecured rating from “B2” to “Caa1” and its speculative grade liquidity rating from “SGL-3” to “SGL-4.” All the ratings received a “negative outlook.” “We believe that a balanced mix of spectrum is critical for operators to compete effectively and profitably in the US over the long-term,” wrote the credit ratings company. “Consequently, we believe Sprint may need to reconsider its reluctance to sell some of its very deep holdings of 2.5GHz spectrum.” New Media Wins Another Round in the Battle between Pandora Radio and ASCAP The FCC recently denied ( FCC 15-129 ) a petition for reconsideration of a ruling that found Pandora Media (an Internet radio service with a widely dispersed group of shareholders) could have aggregate foreign ownership in a South Dakota FM radio station, subject to certain conditions. Pandora’s eligibility to own broadcast facilities had been challenged by the American Society of Composers, Authors and Publishers, a 100-year-old music licensing group better known as ASCAP. When Pandora reached its $600,000 deal to buy KXMZ-FM in Rapid City in 2013, the company said that owning a terrestrial station would give it access to industry deals for cheaper songwriting royalties. Pandora, which competes with radio stations for listeners and advertising, has long complained that it pays much more in total royalties than radio stations do. A 2014 federal court ruling in a lawsuit between Pandora and ASCAP affirmed a royalty rate of 1.85 percent of revenues that Pandora must pay ASCAP to use is music. Pandora had wanted the slightly lower rate that radio broadcasters pay (1.7 percent of revenue); ASCAP, envious of the (much) higher royalties that record companies make from Pandora, had wanted the rate to gradually increase to 3 percent. So neither side got what it wanted in that proceeding. Pandora argued in court that its service, which customizes a stream of music for each user, is a form of radio. ASCAP’s lawyers disputed this, noting that Pandora plays far more music each hour than most radio stations and lacks telltale radio features like disc jockeys and news. But in her 136-page ruling Judge Cote sided with Pandora. With the FCC’s decision affirming ASCAP’s lack of standing to challenge Pandora’s radio station purchase, this chapter of the Pandora-ASCAP dispute seems to be put to bed. Pandora closed on its deal to acquire Station KXMZ on June 9, 2015. The Pandora ruling also added fuel to the fire between Republicans and Democrats on the Commission. In a statement that accompanied the FCC’s May 2015 declaratory ruling on Pandora’s foreign ownership (which applied a 49.99% limit and requires Pandora to undertake a comprehensive monitoring regime to ensure that it stays within that limit), Commissioner Ajit Pai issued a strong criticism of the agency, since it allows foreign entities to own majority stakes in cable operators, wireless carriers, “Internet backbone providers” and other major media companies. “Yet the commission has tied itself (and Pandora) in knots trying to determine whether foreign interests own more than 25 percent of Pandora stock,” wrote Commissioner Pai, “and if so, whether Pandora should be able to own a single FM station in a small South Dakota town.” “This is absurd,” he added. Deadlines
SEPTEMBER 30: FCC FORM 396-C, MVPD EEO PROGRAM REPORTING FORM. Each year on September 30, multi-channel video program distributors (“MVPDs”) must file with the Commission an FCC Form 396-C, Multi-Channel Video Programming Distributor EEO Program Annual Report, for employment units with six or more full-time employees. Users must access the FCC’s electronic filing system via the Internet in order to submit the form; it will not be accepted if filed on paper unless accompanied by an appropriate request for waiver of the electronic filing requirement. Certain MVPDs also will be required to complete portions of the Supplemental Investigation Sheet (“SIS”) located at the end of the Form. These MVPDs are specifically identified in a Public Notice each year by the FCC. OCTOBER 15: INITIAL 911 RELIABILITY CERTIFICATION. The Commission’s rules require Covered 911 Service Providers to take “reasonable measures” to provide reliable service with respect to 911 circuit diversity, central office backup power, and diverse network monitoring, as evidenced by an annual certification of compliance with specified best practices or reasonable alternative measures. The Initial Reliability Certification requires covered providers to demonstrate “substantial progress” toward meeting the requirements of the full Annual Reliability Certification, which is defined as compliance with standards of the full certification in at least 50 percent of the Covered 911 Service Provider’s critical 911 circuits, central offices that directly serve public safety answering points (PSAPs), and independently monitored 911 service areas. OCTOBER 26: COMMENTS DUE ON SECTION 214 DISCONTINUANCE CRITERIA AND PROCESS. The FCC is seeking comments on a Further Notice of Proposed Rulemaking (FNPRM) which asks whether the Commission should revise its rules concerning the 214 application process and proposes specific criteria for use in evaluating applications to discontinue retail services pursuant to section 214 of the Act. OCTOBER 29: COMMENTS DUE ON APPLICABLITY OF TELEMARKETING RULES TO GOVERNMENTS. A petition for declaratory ruling (CG Docket No. 02-278) asks the FCC to find that the Telephone Consumer Protection Act (TCPA) and the Commission’s implementing rules do not apply to calls made by or on behalf of federal, state, and local governments, including calls made by legislative, judicial, and executive bodies, and those who act on behalf of such government entities, when such calls are made for official purposes. NOVEMBER 1: FCC FORM 499-Q, TELECOMMUNICATIONS REPORTING WORKSHEET. All telecommunications common carriers that expect to contribute more than $10,000 to federal Universal Service Fund (USF) support mechanisms must file this quarterly form. The FCC has modified this form in light of its decision to establish interim measures for USF contribution assessments. The form contains revenue information from the prior quarter plus projections for the next quarter. Form 499-Q relates only to USF contributions. It does not relate to the cost recovery mechanisms for the Telecommunications Relay Service (TRS) Fund, the North American Numbering Plan Administration (NANPA), and the shared costs of local number portability (LNP), which are covered in the annual Form 499-A that is due April 1. Calendar At-A-Glance
September
Sep. 30 – FCC Form 396-C (MVPD EEO Program Annual Report). October
Oct. 15 – 911 Reliability Certification.
Oct. 26 – Comments on Section 214 Discontinuance Criteria and Process.
Oct. 29 – Comments on Applicability of Telemarketing Rules to Government Calls
Oct. 30 – PRA Comments on the 2015 Lifeline Second Reform Order are due. November
Nov. 1 – FCC Form 499-Q (Quarterly Telecommunications Reporting Worksheet) is due.
Nov. 13 – Reply Comments on Applicability of Telemarketing Rules to Government Calls
Nov. 24 – Reply Comments on Section 214 Discontinuance Criteria and Process.
| BloostonLaw Private Users Update | Vol. 16, No. 9 | September 2015 |
**Filing Fee Payment Method Change Effective Immediately ** As part of the FCC’s efforts to reduce paper and move towards a paperless environment, the FCC is no longer accepting checks for the payment of regulatory fees , including small regulatory fees that are “bundled in with an application filing fee such as a fee for a new station or license renewal. This announcement was made last year in the context of the annual regulatory fees, and the FCC continued to accept checks for the 5-year payment of regulatory fees that is built into the renewal application fee for most private radio and microwave licenses. How-ever, the FCC’s Managing Director has decided to make the “no checks” policy applicable to the small regulatory fees that are bundled in with application filing fees, effective immediately. What does this mean to you? It will depend upon the type of application you are filing and whether or not the application requires frequency coordination. - For applications that require frequency coordination, the filing fee and associated regulatory fee will continue to be included in the check that is made payable to the frequency coordinator.
- For applications for new stations and license renewals that do NOT require frequency co-ordination and Private Microwave stations, it will be necessary to provide us with credit card information or information for an ACH payment. In order to pay by credit card, we will need the following information: (a) credit card number, (b) expiration date, (c) three or four digit security code and (d) name on credit card.
In order to pay by ACH from your bank account, we will need the following information: (a) name of account holder, (b) type of bank account (business checking, personal checking, savings, etc.), (c) routing number, (d) account number and (e) check number. In order to ensure that the fee payments can be made in a timely manner, it will be critically important for our clients to provide us with their FCC Registration Number (FRN) and password where we do not already have it. We anticipate that at some point in the future, the FCC may also stop accepting credit cards for payment of regulatory fees – although no date has been announced for that change. Year End Reminder: Ownership Changes May Require FCC Approval We want to remind our clients that many types of reorganizations, estate planning and tax savings activities and other transactions require prior FCC approval; and given the frequent need to implement such transactions by the end of the year, companies engaging in such transactions should immediately determine whether they must file an application for FCC approval, and obtain a grant, before closing on a year-end deal. Transactions requiring prior FCC approval include (but are not limited to) : - The distribution of stock to family members in connection with estate planning, tax and other business activities, if there are changes to the control levels discussed above; Any sale of a company that holds FCC licenses;
- Any sale, transfer or lease of an FCC license;
- A change in the form of organization from a corporation to an LLC, or vice versa, even though such changes are not regarded as a change in entity under state law.
- Any transfer of stock that results in a shareholder attaining a 50% or greater ownership level, or a shareholder relinquishing a 50% or greater ownership level;
- Any transfer of stock, partnership or LLC interests that would have a cumulative effect on 50% or more of the ownership.
- The creation of a holding company or trust to hold the stock of an FCC license holder;
- The creation of new classes of stockholders that affect the control structure of an FCC license holder.
- Certain minority ownership changes can require FCC approval (e.g., transfer of a minority stock interest, giving the recipient extraordinary voting rights or powers through officer or board position).
- The conversion of a corporate entity or partnership into another form of organization under state law – e.g., from corporation to LLC or partnership to LLP and vice versa.
Fortunately, transactions involving many types of licenses can often be approved on an expedited basis. But this is not always the case, especially if bidding credits and/or commercial wireless spectrum are involved. Also, in some instances Section 214 authority may be required, especially in the case of wireline and other telephony services. Clients planning year-end transactions should contact us as soon as possible to determine if FCC approval is needed Illegal RoboCalls Results in $2.96 Million Fine Our clients using robocalls, faxes or texts need to conform their practices to new restrictions. The FCC recently announced the imposition of a $2.96 million dollar fine against Travel Club Marketing for illegal robocalls – the largest fine for robocall violations to date. As we have reported over the years, the FCC and the FTC have taken strong positions against perceived consumer rights abuses, including violations of Do-Not-Call Lists, Fax Spamming and the use of auto-dialer robocalls to landline and wireless phones. In reviewing the complaints against Travel Club Marketing, the FCC noted that the company had made or initiated over 185 unsolicited prerecorded robocalls to over 142 consumers who had not consented to receive such calls. In fact, the vast majority had previously placed their phone numbers on the National Do-Not-Call Registry. For those clients that engage in telemarketing, or use of automatic messages for other business purposes – whether it is for their internal business or as a service to others, we recommend that you ensure that your systems are updated regularly, as required by the FCC and the FTC so that you comply with applicable consent requirements and do not inadvertently include any phone numbers that are on the National Do-Not Call Registry. Over the past several months, industry sources have noted an increasing number of prerecorded phone calls being made to wireless phones under the guise of a past business relationship – even where the relationship did not exist. Because many of these types of phone calls can come from fraudsters, the FCC and the FTC are especially attuned to the issue – as evidenced by the record fine that was imposed against Travel Club Marketing. Clients with any questions or concerns should contact our office. Citation Issued for Interference to Sprint Cellular System The FCC has cited Jian Chang, the owner of a building in Queens, New York, for causing harmful interference to Sprint’s 1900 MHz cellular system. The FCC determined that the source of the interference was an unlicensed “Part 15” device that was being operated on Mr. Chang’s property. When the FCC field inspectors came to his property, Mr. Chang refused the FCC access and refused to allow an inspection of any Part 15 devices in his possession. It is important to note that the FCC’s Rules require users of Part 15 devices to cooperate with FCC field inspectors. This is due in part to the fact that even though Part 15 devices do not require an FCC license, users of these devices may not cause harmful interference to licensed operations and must accept interference from other devices. Such devices can include innocuous off-the-shelf devices such as garage door openers, baby monitors and walkie-talkies. A growing number of business communications systems incorporate unlicensed devices into their design, taking advantage of WiFi and other capabilities. FCC Dismisses 450 MHz Application in order to Protect Power Plant Operations The FCC has granted a petition filed by Consolidated Edison Company of New York to dismiss an application by Specialized Mobile Radio, Inc. (SMR) for various Part 90 private land mobile facilities in the 450 MHz band in the New York/New Jersey metropolitan area. Under the FCC’s rules, any frequency coordinator may coordinate applications for frequencies that were previously allocated to the Railroad, Power, Petroleum or Automobile Radio Services. However, where the proposed station’s interference contour overlaps any incumbent co-channel licensee’s service contour, the frequency coordinator is required to obtain the written concurrence of either the relevant industry-specific coordinator or the affected licensee itself. The FCC’s rules permit the frequency coordinator to deny a request for concurrence, provided that it provides a written statement that details the technical basis for the denial. In this regard, the FCC notes that contour overlap itself does not provide a sufficient basis to refuse concurrence. Here, SMR filed an application to construct and operate facilities on four UHF frequency pairs that had previously been allocated to the Power Radio Service. The application was submitted to the former frequency coordinator for the Power Radio Service, who declined coordination because the proposed facilities were “too close to critical infrastructure and there were overlaps on each channel.” SMR filed the application without frequency coordinator concurrence and requested that the FCC resolve the matter. Upon review of the application, the FCC gave SMR a partial grant of its application. Consolidated Edison filed a petition for reconsideration of the partial grant and provided information regarding how SMR’s proposed facilities would impact its “man-down” safety radio system. Based upon Consolidated Edison’s demonstration, the FCC concluded that SMR’s proposed operations would cause harmful co-channel interference to Consolidated Edison’s licensed facilities in the New York metropolitan area that are used for emergency communications. As a result, the FCC dismissed the SMR application in its entirety. Enforcement Alert: Failure to Make Appropriate Felony Disclosures Could Result in Enforcement Action In response to a petition for reconsideration, the FCC has reiterated that applicants must ensure that appropriate disclosures of felony convictions are made. Depending upon the circumstances, felony convictions of corporate entities as well as shareholders, officers and directors may be necessary. A failure to make this disclosure could lead to a finding that the applicant deliberately tried to misrepresent material facts to the FCC – which could lead to dismissal of the application, loss of licenses and possible fines. For the wireless services, the FCC asks whether the applicant, any party to the application or any party directly or indirectly controlling the applicant has ever been convicted of a felony by any state or federal court. Because of the way that the FCC asks this question, there is no time-limit on the look-back. Thus, convictions that might be 100 or more years old would still be deemed relevant despite the remoteness in time. Additionally, in order to determine the proper answer to this question it may be necessary not only to look at shareholders with control, but also officers/directors/managers, etc. who have the capability to exert control over the licensee – whether part of the licensee itself or up the ownership chain. Clients with questions regarding felony disclosures should contact our office as soon as possible. FCC Denies Rule Waiver to Permit Use of Off-Set Frequencies in Guard Band The FCC received five requests for rule waiver to permit the use of the frequency pairs 454/459.009375, 454/459.990625 and 454/459.996875 MHz, which are allocated for land mobile operations but are not currently designated for use on a primary basis by the Industrial Business Pool Service or any other communications service. The frequency 454.009375 is located between the designated Part 90 Industrial/Business Pool Service and the Part 22 Paging and Radiotelephone Service/Rural Radiotelephone Service, while the frequencies 454.990625 and 454.996875 MHz are located between the Part 22 General Aviation Air-Ground Radiotelephone Service and the Part 74 Broadcast Auxiliary Service. Finally, the frequencies 459.990625 and 459.996875 MHz are located between the Part 22 General Aviation Air-Ground Radiotelephone Service and the Part 90 Public Safety Pool. While the proposed frequency proposals will not result in the overlap of any frequencies already designated for another use, the FCC noted that that prior rule waiver requests of this nature sought frequencies located in gaps between the Industrial/Business Pool and a block of frequencies designated for another use so that the rule waiver grants resulted in a slight expansion of the Industrial/Business Pool frequency block. Here, however, the rule waiver requests seek frequencies in gaps between two non-Industrial/Business Pool services or between an isolated Industrial/Business Pool frequency and a non-Industrial/Business Pool block. Because the Commission’s frequency blocks are designed to consolidate similar uses together, the FCC concluded that inserting Industrial/Business operations between blocks of non-Industrial/Business spectrum could “frustrate the purpose of the Commission’s spectrum management policy and practices.” FCC Seeks Comment on Proposal to Allow Railroad Police Officers Access to Public Safety Interoperability and Mutual Aid Channels The FCC has released a Notice of Proposed Rulemaking in which it is proposing to allow Railroad Police Officers access to public safety interoperability and mutual aid channels so that they can communicate with public safety entities that are already authorized to use those channels. The proposed interoperability and mutual channels are in the VHF (150-174 and 220-222 MHz), UHF (450-470 MHz), 700 MHz Narrowband (764-776/794-806 MHz) and 800 MHz NPSPAC (806-809/851-854 MHz) bands. In addition to these bands, the FCC also proposes to include a list of the designated nationwide VHF, UHF, 700 MHz and 800 MHz public safety interoperability channels. Comments in this proceeding are due November 13, 2015 and Reply Comments will be due November 30, 2015. In making this proposal, the FCC believes that expanding the spectrum rights to include railroad police will assist railroad police in carrying out their official law enforcement responsibilities by providing interoperable communications with Federal, state, local and tribal public safety entities. The rational is that railroad police “have an increasing need for effective and expeditious communications interoperability with members of local and state law enforcement, fire and emergency medical organizations that . . . meet the Commission’s eligibility requirements.” As has been seen in recent railroad accidents and security incidents, there has been an increased need for railroad police to communicate with their Federal, state and local partners as well as other first responders. Many of these incidents, such as train derailments and chemical spills, have the potential to impact the safety of life and property and therefore can require large, multi-jurisdictional responses – including railroad police, state and local police officers, fire and EMS personnel as well as officials from the Department of Homeland Security and the FBI. As a result, the FCC has tentatively concluded that these sorts of large multi-jurisdictional events justify expanding the eligibility for the Public Safety Interoperability and Mutual Aid Channels. The FCC is seeking comment on its proposal to expand the eligibility to include the railroad police as well as how the FCC should implement this change if adopted. In that regard, the FCC is also seeking comment on simplifying its rules to facilitate interoperability between public safety and railroad police nationwide. A key question is the definition of a railroad police officer. The FCC is proposing to use the Federal Railroad Administration (FRA) definition for railroad police officer in order to promote regulatory clarity and consistency at the Federal level. Alternatively, the FCC is seeking comment on whether to expand eligibility to railroad police officers employed by a Class I, Class II and Class III railroad (as defined by DOT’s Surface Transportation Board) to operate on public safety interoperability channels. National Public Safety Telecommunications Council (NPSTC) State of Michigan Obtains Waiver to Share State-wide 800 MHz System with Electric Utility During Emergencies The Michigan Department of Telecommunications Management and Budget requested a waiver of the FCC’s Rules to permit it to share the use of its statewide 800 MHz Michigan Public Safety Communications System (MPSCS) with the Cherryland Electric Cooperative (Cherryland) during emergencies and for other purposes. The MPSCS is used by various state agencies, including the Michigan State Police as well as over 1450 county, city, township and tribal public safety agencies throughout the state with over 68,000 radios. Michigan stated that this is one of the largest state-wide public safety systems in the United States and that it provides “infrastructure for fully interoperable communications throughout the entire State of Michigan.” The MPSCS system primarily uses frequencies in the 800 MHz NPSPAC band, which is allocated for public safety use. Michigan is requesting a waiver to permit Cherryland, a nonprofit rural electric cooperative that serves several counties in Michigan’s northern Lower Peninsula, access to and use of the MPSCS system for the exchange of critical information with government agencies through the use of selected emergency and primary talk groups on the trunking system. Additionally, under the proposal, Cherryland would also have access to Michigan’s analog 800 MHz mutual aid channels. In justifying the rule waiver, Michigan stated that “the interoperability would provide dedicated communications paths between local emergency conditions and during regular first responder efforts for structure fires and other mandatory joint response emergencies.” Even with the addition of Cherryland, Michigan states that it would monitor its system infrastructure in order to ensure that there is “an adequate grade of service for public safety users.” Further justifying its plan, Michigan notes that it was affected by the great power blackout in 2003 which included much of the northeastern US, the Midwest and Ontario, Canada. In granting this waiver request, the FCC noted that it has previously granted similar requests to permit Michigan to share its 800 MHz public safety system with Detroit Edison and ITC Transmission – subject to certain conditions. Here, Cherryland is not eligible to license public safety spectrum and there is sufficient capacity to accommodate Cherryland’s use. The FCC also noted that Cherryland has committed to fund the construction of additional infrastructure using Business/Industrial Land Transportation spectrum in order to minimize its impact on the MPSCS system. As a result, the FCC determined that a waiver would not frustrate the purpose of its eligibility rules. FCC Cites First National Bank and Lyft Ridesharing Service for Telemarketing Violations For those of our clients who may utilize telemarketing services, the FCC’s Enforcement Bureau has issued citations to First National Bank and on-demand car service Lyft over unwanted autodialed text messages, putting both companies on notice that they have violated the prerecorded message Telephone Consumer Protection Act (TCPA). Violations of the TCPA can lead to significant fines from the FCC and potentially other enforcement or civil actions. First National Bank requires its online banking and Apple Pay customers to agree to receive autodialed telemarketing texts in order to use its services. Lyft purports to allow consumers who sign up for its ride-sharing service to opt out of receiving autodialed or prerecorded telemarketing calls and texts, but it does not allow users to access the service if they do exercise their right to opt out of marketing calls and texts. In separate Orders released by the Enforcement Bureau (FNB Citation and Order, Lyft Citation and Order), the FCC found that both of these companies' practices violate the Commission’s rules implementing the TCPA. The TCPA imposes limits on the use of autodialed calls and robocalls delivered to both landline and wireless phones. FCC regulations implementing the TCPA require prior express written consent for all telephone calls that use an automatic telephone dialing system or a robocall to deliver an advertisement or telemarketing message to a wireless number or a residential line. Under FCC precedent, text messages are considered “calls” to a wireless number for the purposes of the TCPA. Clients who utilize automated calling systems for recorded calls or text messages to their customers should take care to obtain a customer’s prior express written consent before sending any telemarketing or advertising calls or texts. Under FCC Rules, “prior express written consent” from consumers means: - The agreement must be in writing;
- The agreement must bear the signature of the person who will receive the advertisement/telemarketing calls or texts;
- The language of the agreement must clearly authorize the caller to deliver or cause to be delivered advertisements or telemarketing messages via autodialed calls, texts or robocalls;
- The written agreement must include the telephone number to which the person signing authorizes advisements or telemarketing messages to be delivered; and
- The written agreement must include a clear and conspicuous disclosure informing the person signing that:
- By executing the agreement, the person signing authorizes the caller to deliver or cause to be delivered ads or telemarketing messages via autodialed calls, texts, or robocalls; and
- The person signing the agreement is not required to sign the agreement (directly or indirectly), or agree to enter into such an agreement as a condition of purchasing any property, goods, or services.
Callers contending that they have fulfilled the prior express written consent requirement bear the burden of demonstrating that a clear and conspicuous disclosure was provided and that unambiguous consent was obtained. Under the TCPA, it is unlawful to require a consumer to consent to receive autodialed or prerecorded telemarketing or advertising calls/texts as a precondition to the purchase of any property, good, or service. With respect to the First National Bank, customers who wished to enroll in the bank’s Apple Pay service were required to give their consent to receiving autodialed and prerecorded-message calls for non-marketing purposes, such as validating or processing a requested transaction. But at the same time, enrolling in the service also purported to serve as consent to receiving text messages and emails for marketing purposes. Likewise, the Lyft Terms of Service agreement purported to recognize the consumer’s right to refuse consent to receive promotional messages, but this statement was contradicted by the consumer's actual experience using the Lyft app and website. Instead of immediately fining these companies for their alleged unlawful marketing and advertising calls (presumably because they did not hold any FCC authorizations), the Enforcement Bureau’s “Citation and Order” puts the recipient on notice that their conduct or business practice has been found to violate the TCPA, and provides the company with an opportunity to respond by (1) a written statement, (2) a teleconference interview, or (3) a personal interview at the nearest Commission Field Office. If either company’s alleged violations continue, the Commission may impose forfeitures not to exceed $16,000 for each such violation or each day of a continuing violation, and up to $112,500 for any single act or failure to act. The FCC’s recent Declaratory Ruling and Order regarding TCPA enforcement policies (FCC 15-72) has numerous critics, with the U.S. Chamber of Commerce as the seventh organization to challenge the Commission’s TCPA ruling. In the petition, the Chamber argued that the FCC acted arbitrarily and capriciously when it vastly expanded the scope of the TCPA in several ways, including: - The adoption of an extremely broad definition of the types of equipment covered by the TCPA such that it “sweep[s] in calls to wireless numbers made from equipment that is not currently able ’to store or produce telephone numbers to be called, using a random or sequential number generator,”
- The improper definition of the term “called party” as the current subscriber or customary user of the phone instead of the intended recipient of the call,
- The impractical “one-call” exemption for reassigned numbers before imposing TCPA strict liability, and
- The significant limitation placed on the TCPA’s consent defense such that “a called party may revoke consent at any time and through any reasonable means” while a caller is prohibited from “limit[ing] the manner in which revocation may occur.”
Following up on his lengthy dissent of the TCPA Declaratory Ruling and Order, FCC Commissioner Mike O’Rielly issued a stinging rebuke of the Enforcement Bureau’s actions. “Today’s Enforcement Bureau action showcases once again the Commission’s complete cluelessness when it comes to the tech economy, missing the point about how these free, popular, and entirely optional services actually work,” wrote O’Rielly. “These citations are sure to be just the first of many harmful real-life effects of the Commission’s march to drastically expand the scope of the TCPA.” At least with respect to Lyft, however, the “shot over the bow” from the FCC appears to have had its desired effect. The company last weekend revised is terms of service and it now allows users to specifically opt out of receiving autodialed or prerecorded “promotional” texts and calls. “You may opt-out of receiving promotional or marketing texts or calls from Lyft at any time by texting the word END to 46080 from the mobile device receiving the messages,” according to a new paragraph added to the terms of service. FCC Commissioner Wants Government Users to Pay Spectrum Fees FCC Commissioner Michael O’Rielly has published an item on the FCC Blog in which he proposes “Agency Spectrum Fees” (ASF) as a way to recover government spectrum for reallocation to the private sector. This is significant since the Commission has been wrestling with the reality of federal user resistance to the surrender of spectrum to the FCC for reallocation. After pointing out the difficultly of statutorily forcing agencies to move to other bands, and drawbacks of providing “carrots” ( i.e., incentives) to encourage voluntary surrender of bands, O’Rielly proposes charging spectrum usage fees to Federal agencies as a “stick” approach to ensure that spectrum is used efficiently. “Spectrum should be treated as just another factor that agencies should account for as they prepare their annual budgets,” wrote O’Rielly. “And such fees put a more accurate price on all of the costs for a particular agency or function.” The article discusses pros and cons of this approach, and proposes that NTIA (in consultation with OMB) set an annual rate on a per-MHz basis in order to set a price for a given frequency band. O’Rielly cites a 2012 GAO Report which first raised this idea. “Fees could help to free spectrum for new uses,” wrote the GAO, “since licensees that use spectrum inefficiently may reduce their holdings or pursue sharing opportunities once they bear the opportunity cost of letting their spectrum remain fallow or underused.” While government spectrum usage fees may be a clever theory, actually putting this theory into practice would be very difficult and would likely touch off a firestorm of controversy. As a result, it is not likely that the Commissioner’s proposal will garner much support. The good news for our clients is that despite the advantages he sees when applying this concept to government agencies, Commissioner O’Rielly does not believe spectrum user fees are practical or appropriate for commercial users. “First, most commercial spectrum users have already paid for their spectrum in one form or another. While some have purchased licenses at an FCC auction, others effectively paid for their spectrum when original licenses were made available on the secondary market. Second, many commercial spectrum holders are in the midst of spectrum reevaluations and subject to market pressures. For example, television broadcasters are about seven months from the broadcast incentive auction, where Congress established a different regime for promoting spectrum efficiency. Lastly, the attempted application of spectrum fees to commercial users was a contributing factor in preventing their establishment in past debates. As such, the correct thing to do is to focus on the government users.” Warrants Now Required to Track Cellphone Locations On September 3, the U.S. Department of Justice announced the implementation of a new policy requiring law enforcement agencies to obtain a search warrant, supported by probable cause and issued pursuant to the Federal Rules of Criminal Procedure, before using cell-site simulator technology to track cell phone locations. Cell-site simulation technology functions by transmitting as a cell tower. In response to the signals emitted by the simulator, cellular devices in the proximity of the device identify the simulator as the most attractive cell tower in the area and thus transmit signals to the simulator that identify the device in the same way that they would with a networked tower. A cell-site simulator receives and uses an industry standard unique identifying number assigned by a device manufacturer or cellular network provider. When used to locate a known cellular device, a cell-site simulator initially receives the unique identifying number from multiple devices in the vicinity of the simulator. Once the cell-site simulator identifies the specific cellular device for which it is looking, it will obtain the signaling information relating only to that particular phone. When used to identify an unknown device, the cell-site simulator obtains signaling information from non-target devices in the target's vicinity for the limited purpose of distinguishing the target device. There are two circumstances in which a warrant is not required: exigent circumstances under the Fourth Amendment (such as the need to protect human life or avert serious injury; the prevention of the imminent destruction of evidence; the hot pursuit of a fleeing felon; or the prevention of escape by a suspect or convicted fugitive from justice), and exceptional circumstances in which obtaining a warrant is impracticable. | 
