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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.
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BloostonLaw Telecom Update
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Vol. 18, No. 36
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September 16, 2015
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FCC Regulatory Fees Must Be Paid by Thursday, September 24, 2015
This is a reminder that all annual regulatory fee payments for fiscal year 2015 will be due no later than Thursday,
September 24, 2015
. Please note that failure to make a timely payment will result in the imposition of a 25 percent late payment fee. All regulates that pay annually must make their regulatory fee payments electronically via the Commission’s online Fee Filer payment system or by wire transfer directly to the US Treasury. The FCC no longer accepts paper checks, cashier’s checks or money orders.
Good news: Regulatees whose total FY 2015 annual regulatory fee is $500 or less are exempt from payment of FY 2015 regulatory fees. The
de minimis
threshold applies only to filers of annual regulatory fees (not regulatory fees paid through multi-year filings), and it is not a permanent exemption. Rather, each regulate will need to reevaluate their total fee liability each fiscal year to determine whether they meet the
de minimis
exemption. In order to minimize the potential for being placed in a red-light status for non-payment of the regulatory fee, we recommend that any client with an exemption file a letter with the FCC that specifically states that they are exempt from the payment of regulatory fees for FY 2015. We will be glad to prepare and file such letter for you if desired.
Headlines
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/
.
A Covered 911 service provider is any entity that:
“(A) Provides 911, E911, or NG911 capabilities such as call routing, automatic location information (ALI), automatic number identification (ANI), or the functional equivalent of those capabilities, directly to a public safety answering point (PSAP), statewide default answering point, or appropriate local emergency authority as defined in §§64.3000(b) and 20.3 of this chapter; and/or
(B) Operates one or more central offices that directly serve a PSAP. For purposes of this section, a central office directly serves a PSAP if it hosts a selective router or ALI/ANI database, provides equivalent NG911 capabilities, or is the last service-provider facility through which a 911 trunk or administrative line passes before connecting to a PSAP.”
The term “covered 911 service provider” 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’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. Substantial progress 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.
Schools and Libraries USF Details Released for 2016 Program
The Wireline Competition Bureau (WCB) has released the eligible services list (ESL) for funding year 2016 for the schools and libraries universal service support program. (WC Docket No. 13-184) According to the WCB, the Universal Service Administrative Company (USAC) is authorized to open the annual application filing window no earlier than 60 days after the ESL release.
The WCB has maintained the basic structure of the ESL while modifying it to reflect the changes the Commission made to the E-rate program for funding year 2016 in the Second E-rate Modernization Order, and to provide some minor clarifications. In the Second E-rate Modernization Order, the Commission, among other things, made the following changes and clarifications to the eligible services framework of the E-rate program: (1) equalized the E-rate program’s treatment of lit and dark fiber; (2) allowed applicants to self-provision high-speed broadband networks if the applicant is able to demonstrate that self-provisioning is the most cost-effective option and is able to satisfy certain other conditions; and (3) clarified the cost allocation requirements for circuits carrying both voice and data services.
In light of these changes, the WCB adopted the proposal to separately list Leased Lit Fiber, Dark Fiber, and Self-Provisioned Broadband Networks as eligible services under the list of eligible Data Transmission Services and Internet Access and delete the explanation of differing eligible costs for leased lit and dark fiber. The WCB reminded applicants that they must seek bids for lit fiber service and fully consider all responsive bids before selecting and requesting support for a dark fiber or a self-provisioned broadband network. The WCB also clarified the treatment of certain construction costs and clarified that the eligible costs for lit fiber, dark fiber, and self-provisioned broadband networks include the monthly charges, special construction, installation and activation, Network Equipment, and maintenance and operation charges. The WCB clarified that Network Equipment and maintenance and operation are eligible under Category One when purchased for existing self-provisioned networks and existing leased dark fiber that is lit by an E-rate applicant. The WCB also clarified that one-time costs that are part of special construction, such as design and engineering and project management, are only E-rate eligible as part of a special construction funding request that includes the costs of constructing network facilities. The WCB also reminded all applicants that all E-rate eligible services and equipment must be competitively bid and applicants are required to choose the most cost-effective option, using price as the primary factor.
The WCB adopted the proposed addition of ISDN to the list of eligible voice services. However, the WCB noted that ISDN may be purchased as a bundled voice and data service. ISDN, therefore, also remains on the list of eligible Data Transmission Services and Internet Access so that an applicant that purchases bundled ISDN can cost allocate the voice and data portions of the service as discussed in the Second E-rate Modernization Order. The WCB also adopted the clarification that firewall protection that is provided by a vendor other than the Internet access provider or priced out separately will be considered a Category Two internal connections component.
The WCB found that virtualized products, including hardware and software, that perform the same functions as eligible internal connections equipment are eligible. This includes virtualized functionalities such as Software Defined Networking (SDN) and Network Function Virtualization (NFV), that virtualize eligible routing, switching, controller, and firewall functionalities. However, the WCB rejected requests to make eligible cloud-based applications that replace equipment that is not E-rate eligible, such as servers.
For additional information on this issue, please contact the firm.
USF Contribution Factor 16.7% for Fourth Quarter
The Office of Managing Director (OMD) has announced that the proposed universal service contribution factor for the fourth quarter of 2015 will be 0.167 or 16.7 percent and the proposed circularity discount factor for the fourth quarter of 2015 will be 0.144526.
If the Commission takes no action regarding the proposed contribution factor, it shall be deemed approved by the Commission and used by USAC to calculate universal service contributions for the third quarter of 2015. USAC will reduce each provider’s contribution obligation by a circularity discount approximating the provider’s contributions in the upcoming quarter. USAC includes contribution obligations less the circularity discount in invoices sent to contributors. According to the OMD, “[c]ontributors failing to pay contributions in a timely fashion may be subject to the enforcement provisions of the Communications Act of 1934, as amended, and any other applicable law. In addition, contributors may be billed by USAC for reasonable costs of collecting overdue contributions.”
Contributors are reminded that they may not markup federal universal service line-item amounts above the contribution factor. Thus, according to OMD, “carriers may not, during the fourth quarter of 2015, recover through a federal universal service line item an amount that exceeds 16.7 percent of the interstate telecommunications charges on a customer’s bill.”
OMD also reminds contributors that, “under the limited international revenues exception (LIRE) in section 54.706(c) of the Commission’s rules, a contributor to the universal service fund whose projected collected interstate end- user telecommunications revenues comprise less than 12 percent of its combined projected collected interstate and international end-user telecommunications revenues shall contribute based only on projected collected interstate end-user telecommunications revenues, net of projected contributions.” According to OMD, "[t]he rule is intended to exclude from the contribution base the international end-user telecommunications revenues of any entity whose annual contribution, based on the provider’s interstate and international end-user telecommunications revenues, would exceed the amount of its interstate end-user revenues." Because the proposed contribution factor exceeds 12 percent, OMD states that this could result in a contributor being required to contribute to the universal service fund an amount that exceeds its interstate end-user telecommunications revenue. According to OMD, “[s]hould a contributor face this situation, the contributor may petition the Commission for waiver of the LIRE threshold.”
Law & Regulation
FCC Cites First National Bank and Lyft Ride-sharing Service for Telemarketing Violations
The FCC Enforcement Bureau last week 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).
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 last week (
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:
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The agreement must be in writing;
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The agreement must bear the signature of the person who will receive the advertisement/telemarketing calls or texts;
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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;
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The written agreement must include the telephone number to which the person signing authorizes advisements or telemarketing messages to be delivered; and
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The written agreement must include a clear and conspicuous disclosure informing the person signing that:
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By executing the agreement, the person signing authorizes the caller to deliver or cause to be delivered ads or remarketing messages via autodialed calls, texts, or robocalls; and
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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.
It is unlawful to require a consumer to consent to receive autodialed or prerecorded telemarketing or advertising calls/texts as a condition of purchasing any property, good, or service. With respect to the First National Bank, customers who wished to enroll in the bank’s Apple Pay service grant 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 the companies for their alleged unlawful marketing and advertising calls, 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.
As we recently reported, 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:
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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,”
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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,
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The impractical “one-call” exemption for reassigned numbers before imposing TCPA strict liability, and
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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) a way to recover government spectrum for reallocation to the private sector.
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 re-evaluations 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.”
Industry
FCC Chairman Urges Engineers to Take Lead on Resolving LTE-U Interference Issues
FCC Chairman Tom Wheeler wants engineering standards bodies rather than government regulators to work on finding a solution to enable mobile technology and Wi-Fi users to coexist as the planned deployment of LTE-Unlicensed (LTE-U) technology by commercial carriers moves forward.
Speaking at the CTIA Super Mobility conference in Las Vegas last week, Wheeler pointed out that the FCC was faced with new policy challenges as licensed and unlicensed users increasingly look to share finite spectrum resources. He also suggested that having the FCC develop and impose standards was an undesirable outcome.
Backers of the LTE-U standard, including Verizon, T-Mobile and Qualcomm, have been at odds with the tech community over the potential for the proprietary technology to interfere with and seriously harm open technologies like Wi-Fi and Bluetooth. In late July, a group of Democratic lawmakers sent a
letter
to the FCC Chairman, urging the Commission to carefully examine the effect of new technologies on existing operations in unlicensed bands. The inquiry led the FCC’s Office of Engineering and Technology to
send
a letter to members of the LTE-U Forum seeking further information about four separate versions of the technology that are under development.
“In the past, industry has generally cited the benefits of international harmonization and reliance on the private sector to develop standards in order to gain economies of scale and minimize development costs,” wrote OET Chief Julius Knapp. “Given this historical view, we seek to understand the reasons behind the strong interest in implementing the LTE-U specification in the new future that would be unique to the United States.”
Wheeler’s remarks recognized there were “many flavors” of the LTE-U technology, but that the key is getting maximum efficiency out of both licensed and unlicensed. “If they can work together to achieve that,” he said, “That’s good.” But, he said, “if some of the things that are envisioned end up affecting the ability of Wi-Fi to deliver, that's bad.”
More Companies Authorized for Rural Broadband Experiment Support
The Wireline Competition Bureau (WCB) has authorized $1,299,730.45 in rural broadband experiment support for First Step Internet, LLC (First Step) and Northeast Rural Services, Inc. (Northeast Rural Services). (WC Docket Nos. 10-90 and 14-259) According to the WCB, this support will bring new broadband to 202 census blocks in Oklahoma, Idaho and Washington.
The WCB directs the Universal Service Administrative Company (USAC) to obligate and disburse from the Connect America reserve account the support amounts. USAC shall disburse the support amounts to Northeast Rural Services in 120 equal monthly installments over the 10-year support term. USAC shall disburse 30 percent of First Step’s total support amount with the first monthly payment, and disburse the remaining 70 percent of its support in 120 equal monthly installments over the 10-year term.
According to the WCB, “a winning bidder that has been authorized to receive rural broadband experiment support will default if it fails to meet its build-out obligations to offer service delivering the requisite speed, latency, usage and pricing, fails to keep open and renew its LOC, or fails to fulfill any other term or condition of rural broadband experiment support. Under the terms of the LOC, the Commission will be entitled to draw upon the LOC upon a recipient’s default after the opportunity to cure. Recipients may also be subject to other sanctions for non-compliance with the terms and conditions of the rural broadband experiments or the Commission’s rules.”
The WCB also notes that price cap carriers that serve the census blocks where the rural broadband experiment winning bidders have been authorized to receive support no longer have a federal high-cost ETC obligation to continue to offer voice in those census blocks pursuant to the forbearance granted in the
December 2014 Connect America Order.
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 seven companies for 3,332 census blocks in eight states for a total of $21,319,723.71 in support. (WC Docket Nos. 10-90 and 14-259) The provisionally selected bids include census blocks in Iowa, Michigan, Minnesota, Nebraska, North Dakota, South Dakota, Texas and Oregon. 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 September 29, 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.
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.
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. 9 – Reply comments are due on Transparency Exemption proceeding.
Sep. 15 – Reply comments on Lifeline Further Notice of Proposed Rulemaking are due.
Sep. 21 – Reply comments are due on Video Programming Competition report.
Sep. 25 – Comments are due on Section IV.B of the Special Access Data NPRM.
Sep. 30 – FCC Form 396-C (MVPD EEO Program Annual Report).
October
Oct. 15 – 911 Reliability Certification.
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.
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