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FRIDAY - OCTOBER 17, 2008 - ISSUE NO. 333

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BLOOSTON LAW

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BloostonLaw Telecom Update

Published by the Law Offices of Blooston, Mordkofsky, Dickens, Duffy & Prendergast, LLP

[Selected portions reproduced here with the firm's permission.]

www.bloostonlaw.com

   Vol. 11, No. 37 October 15, 2008   

FCC Clarifies Junk Fax Rules

The FCC has adopted an Order on Reconsideration clarifying its rules implementing the Junk Fax Prevention Act of 2005. In general, the Order clarifies that:

(1) facsimile numbers compiled by third parties on behalf of the facsimile sender will be presumed to have been made voluntarily available for public distribution so long as they are obtained from the intended recipient’s own directory, advertisement, or Internet site;

(2) reasonable steps to verify that a recipient has agreed to make available a facsimile number for public distribution may include methods other than direct contact with the recipient; and

(3) a description of the facsimile sender’s opt-out mechanism on the first webpage to which recipients are directed in the opt-out notice satisfies the requirement that such a description appear on the first page of the website.

The FCC believes the clarifications will assist senders of facsimile advertisements in complying with the Commission’s rules in a manner that minimizes regulatory compliance costs while maintaining the protections afforded consumers under the Telephone Consumer Protection Act (TCPA).

BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.

FCC Sets Comment Cycle For USF Oversight Inquiry

The FCC has established a comment cycle for its Notice of Inquiry (NOI) seeking comment on ways to further strengthen management, administration, and oversight of the Universal Service Fund (USF), how to define more clearly the goals of the USF, and to identify any additional quantifiable performance measures that may be necessary or desirable (BloostonLaw Telecom Update, September 17). The Commission also seeks comment on whether and, if so, to what extent the Commission's oversight of the USF can be improved. In conducting this inquiry, the FCC plans to build upon the comprehensive audit oversight conducted by the Commission's Inspector General in 2007. Comments in this WC Docket No. 05-195 proceeding are due November 13, and replies are due December 15.

The FCC’s primary goal in initiating this NOI is to ensure sufficient safeguards are in place for the USF to operate as Congress intended. In recent years, the Commission has undertaken a series of steps to improve and strengthen oversight, including support of the Inspector General's audit program. Still, the FCC is concerned about the error rates the Inspector General identified. The Commission has already taken a number of steps to address the problems identified by the Inspector General and others, for example, implementing program-wide debarment measures in 2007, initiating recovery of any improperly disbursed funds, and executing a Memorandum of Understanding (“MOU'') with the USF Administrator. These recent steps have provided tangible benefits.

For example, an independent auditor audited the Commission's finance and accounting activities and issued a positive opinion that identified no material weaknesses in these activities in fiscal years 2006 or 2007. The independent auditor's opinion expressly covers the Commission's financial controls over the USF and represents a marked improvement over the period covering fiscal years 1999 through 2005. The importance and size of the USF demands constant scrutiny and assessment of the Commission's oversight efforts.

Commenters should propose measures that the USF Administrator could take to prevent improper payments and collect all sums that should be paid to the fund and address the error rates identified in the Inspector General's audit results. Commenters should also propose measures that the Commission could take to prevent improper payments and address error rates, as well as measures that program participants can take to prevent improper payments and address error rates. The FCC seeks comment on whether the Commission should adopt an independent audit requirement for program beneficiaries and contributors. Commenters should address whether safeguards should be adopted uniquely for certain USF programs and contributions or if the safeguards should remain more or less uniform, and if so, why. Commenters should discuss the costs versus benefits of their proposals in specific, rather than general, terms.

The FCC seeks comment on whether the Commission should establish additional rules pertaining to document retention and enforcement. The FCC also seeks comment on whether it should take steps to more clearly define the goals of the federal universal service programs.

Should the Commission continue to use a permanent administrator of the USF? Alternatively, the Commission could obtain the services of a contractor or contractors to perform the USF Administrator's functions. The FCC seeks comment on this option.

The Commission also seeks comment on a number of other issues, including performance management techniques, internal control mechanisms, and the application process.

BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.

LAW & REGULATION

FCC TESTS TENTATIVELY FIND NO INTERFERENCE BETWEEN AWS-3, AWS-1 OPERATIONS: The FCC’s Office of Engineering and Technology (OET) has tentatively concluded that nationwide broadband operations in the advanced wireless services-3 (AWS-3) band (2155- 2180 MHz) will not interfere with operations in the advanced wireless services-1 (AWS-1) band (2110-2155 MHz). The OET report is an analysis of laboratory bench tests conducted Sept. 3 - 5 in Seattle on the potential for interference between the two bands. The results could possibly signal that the Commission is close to issuing final rules for an auction next year. However, T-Mobile, which has a large investment in AWS-1 licenses, disputed the OET test results, claiming they were flawed and that interference from AWS-3 operations did occur. The OET report “tentatively concludes that for the static case that is examined AWS-3 devices could operate at a power level of up to 23 dBm/MHz equivalent isotropic radiated power (EIRP) and with out-of-band emissions (OOBE) attenuated by 60 + 10*log(P) dB without a significant risk of harmful interference. However, this report also notes that the Commission has in the past adopted less stringent OOBE standards under flexible service rules whereby the licensees and industry work together cooperatively to manage potential interference.” BloostonLaw contacts: Hal Mordkofsky, John Prendergast, and Cary Mitchell.

FCC DELETES AGENDA FOR OCTOBER 15 OPEN MEETING: The FCC has deleted all seven items on its agenda for the October 15 open meeting: (1) an Order, Further Notice of Proposed Rulemaking, and Memorandum Opinion and Order considering issues with respect to the low power television digital transition (2) an Order addressing Sprint Nextel’s June 17, 2008, Petition for Relief regarding its 800 MHz spectrum holdings in the Interleaved Band (809-815/854-860 MHz), Expansion Band (815-816/860-861 MHz) and Guard Band (816- 187/861-862 MHz); (3) a Second Order on Reconsideration concerning the Secondary Markets proceeding; (4) a Report and Order whether to adopt geographic service licensing and competitive bidding rules for spectrum presently unencumbered within the spectrum currently allotted at 900 MHz for Business/Industrial Land Transportation (B/ILT) use. The Commission will also consider appropriate interference protection standards and whether the Commission should lift the "freeze" placed on applications for new 900 MHz B/ILT authorizations; (5) an Order addressing the dismissal of thirteen applications filed by EFL Realty Trust, proposing non-Specialized Mobile Radio trunked service in the Industrial/Business Pool 900 MHz band; (6) an Eighth Report and Order and Order On Reconsideration concerning issues raised in the Third Further Notice of Proposed Rulemaking in this proceeding, IB Docket No. 00-248; and (7) a Second Annual Report to the United States Congress on the status of competition in the markets for domestic and international satellite communications services, as required by Section 703 of the Communications Satellite Act. Thus, the meeting was canceled, and replaced by one in Nashville on pediatric obesity. Items No. 3 through 7 on the Sunshine Agenda were adopted on circulation. BloostonLaw contacts: Hal Mordkofsky, Ben Dickens, Gerry Duffy, and John Prendergast.

RCA PETITION REGARDING EXCLUSIVITY ARRANGEMENTS PLACED ON PUBLIC NOTICE: On May 20, the Rural Cellular Association (RCA) filed a petition asking the FCC to initiate a rulemaking to investigate the widespread use and anticompetitive effects of exclusivity arrangements between commercial wireless carriers and handset manufacturers, and, as necessary, adopt rules that prohibit such arrangements when contrary to the public interest. The Wireless Telecommunications Bureau (WTB) now seeks comment on the Petition. Comments in this RM No. 11497 proceeding will be due 40 days after publication of the item in the Federal Register, and replies will be due 20 days thereafter. BloostonLaw contacts: Hal Mordkofsky, John Prendergast, Cary Mitchell, and Bob Jackson.

FCC SETS COMMENT CYCLE FOR NPRM ON COLLECTING INDUSTRY-WIDE DATA: The FCC has established comment dates for its Notice of Proposed Rulemaking (NPRM) in which it recognizes that the collection of certain service quality, customer satisfaction, infrastructure, and operating data information might be warranted, if tailored in scope to be consistent with Commission objectives, and if obtained from the entire relevant industry of facilities-based providers of broadband and/or telecommunications. In the Memorandum Opinion and Order that accompanies the NPRM, the Commission conditionally granted in part petitions filed by certain carriers to forbear from their obligation to file the Automated Reporting Management Information System (ARMIS) Reports (BloostonLaw Telecom Update, September 10). In the NPRM, the Commission seeks comment on what information the Commission should collect on an industry- wide basis. The Commission tentatively concludes that collection of infrastructure and operating data information would be useful to the Commission's public safety and broadband policymaking and seeks comment on the specific information that the Commission should collect. The Commission seeks comment on this tentative conclusion. The Commission further finds that this data would be useful only if they are collected from the entire relevant industry. Therefore, any such data collection would gather this information from all facilities-based providers of broadband and/or telecommunications. The Commission also recognizes the possibility that service quality and customer satisfaction data contained in ARMIS Reports 43-05 and 43-06 might be useful to consumers to help them make informed choices in a competitive market, but only if available from the entire relevant industry. The Commission thus tentatively concludes that it should collect this type of information, and seeks comment on the specific information that it should collect. The Commission seeks comment on this tentative conclusion. Again, the Commission finds that these data would be useful only if they are collected from the entire relevant industry. Thus, any such data collection would gather this information from all facilities-based providers of broadband and/or telecommunications. To the extent that the Commission collects any of the types of information described above, the Commission also seeks comment on the appropriate mechanism for such data collection. The Commission tentatively concludes that it should collect the infrastructure and operating data through Form 477, and seeks comment on that tentative conclusion. In addition, the Commission notes that while ARMIS information generally has been publicly available, carrier-specific Form 477 data is treated as confidential. What confidentiality protections, if any, are appropriate for the information here? To the extent that commenters support Commission collection of service quality and customer satisfaction data, the Commission also seeks comment on the appropriate mechanisms for such collections. Finally, the Commission seeks comment on possible methods for reporting information, as well as suggestions of methods to maintain and report the information, that achieve the purposes of the information collection while minimizing the burden on reporting entities, including small entities. Comments in this WC Docket No. 08-190 proceeding are due November 14, and replies are due December 15. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.

INDUSTRY

SPRINT CONFIRMS INTEREST IN NEXTEL UNIT: According to several press reports, including Cellular-News and FierceWireless, Sprint Nextel has confirmed that it has received “significant interest” from companies interested in acquiring its Nextel iDEN division - but warned that it doubts any bidder would be able to raise the funds in the current economic climate. Sprint Nextel’s CEO, Dan Hesse said that while there has been considerable interest in the asset, a sale was not the company’s only option and that any deal requiring a suitor to raise capital would be difficult in current market conditions, Cellular- News said. “There is no question that if a bidder was relying on financing that’s become more difficult,” he said. Alltel’s previous owners TPG Capital and GS Capital Partners had been recently named as possible bidders - although they would presumably have to wait until they in turn complete their sale of Alltel to Verizon Wireless before being able to take on Nextel. According to Cellular-News sources, the estimated price of the iDEN network is between $5 billion and $6 billion - considerably lower than the $35 billion which was originally paid by Sprint for the company. Deutsche Telekom was rumored earlier this year to be eyeing a possible takeover of Sprint Nextel. At the time it was felt that a network operating on CDMA, GSM and iDEN would prove problematic and that the iDEN section would be likely to be sold off. The existence of a possible group waiting to take the network off its hands may resurrect interest from companies who are only interested in the CDMA network. In related news, he confirmed that the merger of the Wi- MAX subsidiary with Clearwire is still on track for completion by the end of this year, according to Cellular-News.

DEADLINES

NOVEMBER 1: RED FLAG RULES MUST BE IN PLACE: The Federal Trade Commission (FTC) has established “Red Flag” Rules which are designed to prevent identity theft. Under the new rules, all businesses that maintain a creditor-debtor relationship with customers, including virtually all telecommunications carriers, must adopt written procedures designed to detect the relevant warning signs of identify theft, and implement an appropriate response. The Red Flag compliance program must be in place by November 1, 2008. However, the requirements are not just binding on telcos and wireless carriers that are serving the public on a common carrier basis. They also apply to any “creditor” (which includes entities that defer payment for goods or services) that has “covered accounts” (accounts used mostly for personal, family or household purposes). This also may affect private user clients who use radios internally, as well as many telecom carriers’ non-regulated affiliates and subsidiaries. If you have any question about whether the Red Flag Rules apply to you, please contact the firm. BloostonLaw has prepared a Red Flag Compliance Manual to help your company achieve compliance with the Red Flag Rules. The program must be managed by the Board of Directors or senior management employees of the company, and must provide appropriate training and oversight of the company’s staff. These measures are required in addition to those mandated by the FCC’s CPNI rules. The cost of the compliance manual is $400.00. Under the Red Flag Rules, you must develop a written program (i.e., manual) that identifies and detects the relevant warning signs – or “red flags” – of identity theft. These may include, for example, unusual account activity, fraud alerts on a consumer report, or attempted use of suspicious account application documents. The program must also describe appropriate responses that would prevent and mitigate the crime and detail a plan to update the program. The program must be managed by the Board of Directors or senior employees of the financial institution or creditor, include appropriate staff training, and provide for oversight of any service providers. The Red Flag Rules provide all financial institutions and creditors the opportunity to design and implement a program that is appropriate to their size and complexity, as well as the nature of their operations. Guidelines issued by the FTC, the federal banking agencies, and the National Credit Union Administration (NCUA) should be helpful in assisting covered entities in designing their programs. The FTC issued the Red Flags Rules under the Fair and Accurate Credit Transactions Act (FACT Act), which amended the Fair Credit Reporting Act (FCRA). Under the FCRA, the FTC may impose monetary penalties of up to $2,500 per violation for “knowing violations” of the rule that “constitute a pattern or practice.” If the FTC finds that a company somehow engaged in conduct that is “unfair and deceptive,” the fine may be higher. It is too early to know exactly how a violation of the Red Flag Rules will be treated, but obviously it is best to avoid any liabilities that may arise from Red Flag Rule violations. As noted above, BloostonLaw has developed a Compliance Manual for the Red Flag Rules. Please contact Gerry Duffy and Mary Sisak with any questions or to request the manual.

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 recent 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 (Form 499-A) that was due April 1. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.

DECEMBER 30: FCC FORM 507, UNIVERSAL SERVICE QUARTERLY LINE COUNT UPDATE. Line count updates are required to recalculate a carrier's per line universal service support, and is filed with the Universal Service Administrative Company (USAC). This information must be submitted on July 31 each year by all rate-of-return incumbent carriers, and on a quarterly basis if a competitive eligible telecommunications carrier (CETC) has initiated service in the rate-of-return incumbent carrier’s service area and reported line count data to USAC in the rate-of-return incumbent carrier’s service area, in order for the incumbent carrier to be eligible to receive Interstate Common Line Support (ICLS). This quarterly filing is due December 30 (for lines served as of June 30, 2008; and March 31, 2009, for lines served as of September 30, 2008)), and July 31, 2009, for lines served as of December 31, 2008. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.

DECEMBER 31: FCC FORM 525, COMPETITIVE CARRIER LINE COUNT QUARTERLY REPORT. Competitive eligible telecommunications carriers (CETCs) are eligible to receive high cost support if they serve lines in an incumbent carrier’s service area, and that incumbent carrier receives high cost support. CETCs are eligible to receive the same per-line support amount received by the incumbent carrier in whose study area the CETC serves lines. Unlike the incumbent carriers, CETCs will use FCC Form 525 to submit their line count data to the Universal Service Administrative Company (USAC). This quarterly report must be filed by the last business day of March (for lines served as of September 30 of the previous year); the last business day of July (for lines served as of December 31 of the previous year); the last business day of September (for lines served as of March 31 of the current year); and the last business day of December (for lines served as of June 30 of the current year). CETCs must file the number of working loops served in the service area of an incumbent carrier, disaggregated by the incumbent carrier’s cost zones, if applicable, for High Cost Loop (HCL), Local Switching Support (LSS), Long Term Support (LTS), and Interstate Common Line Support (ICLS). ICLS will also require the loops to be reported by customer class as further described below. For Interstate Access Support (IAS), CETCs must file the number of working loops served in the service area of an incumbent carrier by Unbundled Network Element (UNE) zone and customer class. Working loops provided by CETCs in service areas of non-rural incumbents receiving High Cost Model (HCM) support must be filed by wire center or other methodology as determined by the state regulatory authority. CETCs may choose to complete FCC Form 525 and submit it to USAC, or designate an agent to file the form on its behalf. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.

JANUARY 1: CARRIERS MUST NOTIFY CUSTOMERS OF “DO NOT CALL” OPTIONS: The FCC requires each common carrier (wireline and wireless) offering local exchange service to inform subscribers of the opportunity to provide notification to the Federal Trade Commission (FTC) that the subscriber objects to receiving telephone solicitations. The carrier must inform subscribers of (1) their right to give or revoke a notification of their objection to receiving telephone solicitations pursuant to the national “Do Not Call” database; and (2) the methods by which such rights may be exercised. Beginning on January 1, 2004, and annually thereafter, such common carriers shall provide an annual notice, via an insert in the customer’s bill, to inform their subscribers of the opportunity to register or revoke registrations on the national Do Not Call database. BloostonLaw will provide clients with the wording for an appropriate notice upon request. BloostonLaw contacts: Hal Mordkofsky, Ben Dickens, Gerry Duffy, and John Prendergast.

JANUARY 12: DTV EDUCATION REPORT. New 700 MHz licensees from Auction No. 73 are required to file a report with the FCC concerning their efforts to educate consumers about the upcoming transition to digital television (DTV). Last summer, we explained that the FCC’s Part 27 rules require 700 MHz licensees that won licenses in Auction No. 73 to file quarterly reports on their DTV consumer outreach efforts through the Spring of 2009. However, in an apparent contradiction, the same rules do not impose any substantive consumer education requirements on 700 MHz license holders. This situation has not changed. The reporting rule simply states that “the licensee holding such authorization must file a report with the Commission indicating whether, in the previous quarter, it has taken any outreach efforts to educate consumers about the transition from analog broadcast television service to digital broadcast television service (DTV) and, if so, what specific efforts were undertaken.” Many licensees may not have initiated 700 MHz service as of yet. However, to the extent they are also an Eligible Telecommunications Carrier (ETC) and recipient of federal USF funds, separate FCC rules found in 47 C.F.R. Part 54 (Universal Service) require ETCs to send monthly DTV transition notices to all Lifeline/Link-Up customers (e.g., as part of their monthly bill), and to include information about the DTV transition as part of any Lifeline or Link-Up publicity campaigns until March 31, 2009. BloostonLaw contacts: Hal Mordkofsky and Cary Mitchell.

JANUARY 19: FCC FORM 497, LOW INCOME QUARTERLY REPORT. This form, the Lifeline and Link-Up Worksheet, must be submitted to the Universal Service Administrative Company (USAC) by all eligible telecommunications carriers (ETCs) that request reimbursement for participating in the low-income program. The form must be submitted by the third Monday after the end of each quarter. It is available at: www.universalservice.org. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.

JANUARY 30: REPORT OF EXTENSION OF CREDIT TO FEDERAL CANDIDATES. This report (in letter format) must be filed by January 30 and July 31 of each year, but ONLY if the carrier extended unsecured credit to a candidate for a Federal elected office during the reporting period. BloostonLaw contacts: Hal Mordkofsky and John Prendergast.

FCC Meetings and Deadlines

Oct. 15 – FCC open meeting.

Oct. 20 – Deadline for reply comments on NPRM tentatively concluding that FCC should clarify that low power auxiliary stations within the 700 MHz band should not be permitted at the end of the DTV transition (WT Docket Nos. 08-166, 167).

Oct. 22 – Deadline for reply comments on FNPRM on EBS spectrum in Gulf of Mexico (WT Docket Nos. 03-66, 67).

Oct. 27 – Deadline for reply comments on FNPRM regarding ways to improve regulatory fee process (MD Docket No. 08- 65).

Oct. 27 – Deadline for reply comments on 2008 Biennial Regulatory Review (CG Docket No. 08-177, EB Docket No. 08-178, IB Docket No. 08-179, ET Docket No. 08-180, PS Docket No. 08-181, WT Docket No. 08-182, and WC Docket No. 08-183).

Nov. 1 – Deadline for developing and implementing written “Red Flag Rules” identity theft prevention program.

Nov. 1 – FCC Form 499-Q, Telecommunications Reporting Worksheet, is due.

Nov. 3 – Deadline for comments on FNPRM regarding FCC’s modified rules for 700 MHz D Block licenses (WT Docket No. 06-150 and PS Docket No. 06-229).

Nov. 5 – Auction No. 85, LPTV, TV Translator Digital Channel auction is scheduled to begin.

Nov. 12 – Deadline for reply comments on FNPRM regarding FCC’s modified rules for 700 MHz D Block licenses (WT Docket No. 06-150 and PS Docket No. 06-229).

Nov. 13 – Deadline for comments on NOI regarding oversight of USF (WC Docket No. 05-195).

Nov. 14 – Deadline for comments on NPRM regarding collection of industry-wide data (WC Docket No. 08-190).

Dec. 15 – Deadline for reply comments on NOI regarding oversight of USF (WC Docket No. 05-195).

Dec. 15 – Deadline for reply comments on NPRM regarding collection of industry-wide data (WC Docket No. 08-190).

Dec. 30 – FCC Form 507, Universal Service Quarterly Line Count Update, is due.

Dec. 31 – FCC Form 525, Competitive Carrier Line Count Quarterly Report, is due.

Jan. 1 – Carriers must notify customers of “Do Not Call” options.

Jan. 12 – Auction 73 winners must file quarterly report covering DTV consumer education outreach efforts for period Oct.-Dec. 2008.

Jan. 12 – DTV Education Report is due.

Jan. 15 – HAC report is due. Note: CMRS resellers and MVNOs that offer two or fewer digital wireless handsets are exempt from the HAC handset requirements but must participate in the January 2009 HAC reporting requirements.

This newsletter is not intended to provide legal advice. Those interested in more information should contact the firm.

Source: Blooston, Mordkofsky, Dickens, Duffy and Prendergast, LLP
For additional information, contact Hal Mordkofsky at 202-828-5520 or halmor@bloostonlaw.com

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