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FRIDAY - SEPTEMBER 19, 2008 - ISSUE NO. 329

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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. 33 September 17, 2008   

FY 2008 Regulatory Fees Due Sept. 25

Fiscal Year (FY) 2008 regulatory fee payments must be made by 11:59 p.m. ET on September 25. Payments received after that time will be assessed a 25% late payment penalty.

The Report and Order (R&O) on the Assessment and Collection of Regulatory Fees for FY 2008 retains the same formula, policies, and procedures for collecting regulatory fees that the Commission adopted in Fiscal Years 2007 and 2006, as well as in prior years. In conjunction with the R&O, the FCC adopted a Further Notice of Proposed Rulemaking (FNPRM) to examine ways to improve its methods for collecting regulatory fees.

Comments in this MD Docket No. 08-65 proceeding are due September 25, and replies are due October 27.

Phishing Warning: The FCC has received complaints that non-government entities may be using Internet sites to misdirect parties seeking to submit their regulatory fee payments. The complainants have alleged that these non-government websites are attempting to collect financial information. Because the allegations indicate potential fraudulent and illegal conduct, the Office of Managing Director has referred the matter to the Inspector General for further investigation.

The FCC also urges regulatory fee payers to make any Internet payments directly through the Commission’s authorized Internet website. Payment may be submitted electronically at www.fcc.gov/feefiler.

BloostonLaw contacts: Hal Mordkofsky, John Prendergast, and Richard Rubino.

Ike, Wall Street Crisis Hit U.S. With One-Two Punch

First, Hurricane Ike blew across Galveston and laid waste to Houston, leaving millions flooded and without power last weekend as the storm moved north. There is no doubt the damages will be in the tens of billions of dollars.

Then Monday, it was revealed that Lehman Brothers, the fourth largest investment bank, had filed for bankruptcy; Merrill Lynch had merged with Bank of America; and America International Group (AIG), the nation’s largest insurance company, was looking for financial assistance, which eventually resulted in a government takeover. At the close of business Monday, the Dow Jones Industrial Average (DJIA) had fallen 504.48 points. Oil dropped to $91.55 a barrel.

How did telecommunications do? Verizon was down 1.25; AT&T was down 1.58; and Qwest was down 0.21. Despite a catastrophic storm that severely affected the power grid and most assuredly damaged telecommunications infrastructure in the Gulf Coast region, and despite a Wall Street calamity, the stock prices of the three largest telcos did not appear to suffer much last Monday. Further, the stock prices of telecom manufacturer Motorola dropped only 0.48; Nokia was down 0.57; and Ericsson declined 0.43. (We picked these stocks at random.) Although telecom stocks slumped, they did not do as badly as those in other sectors.

On Tuesday, the DJIA actually was up 141.51. Verizon lost 32 cents a share, while AT&T and Qwest were down 0.10 and 0.08, respectively. Nokia was up 31 cents, while Motorola was down 42 cents, and Ericsson was off 0.08. Today, the market was down 449.36 points. Verizon was off 1.58, AT&T 1.08, and Qwest 0.12. Motorola was down 0.42, Nokia 0.93, and Ericsson 0.62. So, the slump continued, but again it was not a disaster. Some analysts say that the technology sector, in general, has escaped the catastrophe so far thanks to overseas sales. But if the effects of the Wall Street collapse reaches Asia, there could be grim prospects for technology. One early warning sign is a softening in the PC market, as Dell’s stock fell 7% on Monday. Whether that spreads to telecommunications remains to be seen.

FCC ACTIVATES DIRS SYSTEM

The FCC activated the Disaster Information Reporting System (DIRS) in response to Hurricane Ike. DIRS is a voluntary, efficient, web-based system that communications providers, including wireless, wireline, broadcast, and cable providers, can use to report communications infrastructure status and situational awareness information during times of crises.

The Commission requests that communications providers expeditiously submit and update information through DIRS regarding the status of their communications equipment, restoration efforts, power (i.e., whether they are using commercial power, generator or battery), and access to fuel, if they provide service to any areas listed below. Communications providers can accomplish this by accessing DIRS at https://www.fcc.gov/nors/disaster/ or under e-filing on the Commission’s main webpage or PSHSB webpage. Providers that have not previously done so will be asked to first provide contact information and obtain a User ID when they access DIRS.

The Commission compiles the DIRS data into reports which it shares with the National Communications System (NCS) in support of NCS’s role as the primary agency for Emergency Support Function-2 (ESF-2) (Communications) of the National Response Framework. Because the information that communications companies input into DIRS is sensitive, for national security and/or commercial reasons, DIRS filings are non-public, and are considered presumptively confidential upon filing.

DIRS had its initial activations during this 2008 hurricane season, first in response to Tropical Storm Fay, and then in response to Hurricane Gustav. In both cases, the information collected by DIRS was of significant value. It has become evident that sharing the data with other Federal government agencies involved in ESF-2 functions directly would enhance the value of DIRS by streamlining the reporting process and facilitating the accurate assessment of any damage to carrier infrastructure and the rapid restoration of that infrastructure. Accordingly, in future DIRS activations, the FCC will share DIRS data with NCS as well as with other Federal agencies authorized to participate in ESF-2 activities. The distribution of DIRS data to Federal agencies involved in ESF-2 does not alter the presumptively confidential nature of DIRS filings. DIRS data will remain non-public, and any Federal agency to which DIRS data is distributed must, under Federal law respect the confidential nature of DIRS filings.

AT&T’s EFFORTS

AT&T last Monday reported that it had mobilized significant resources to repair damage from Hurricane Ike, to attempt to maintain network services in areas without commercial power, and support evacuees. 600 technicians from as far away as Wisconsin and Minnesota moved into the area as the hurricane passed, and began assessing damage and restoring service. They will supplement the existing 1,400-plus technicians already in place in the area, AT&T said.

The company said its core network supporting wireless and wireline services continues to perform well. Only two of the 154 central offices in the affected area — one on Galveston Island and a small central office in Port Bolivar — are out of service. The company’s video hub office for AT&T U-verse services is operational.

Although high winds and rain affected hundreds of wireless sites, particularly on Galveston Island, the majority of sites in the impacted areas are operational. Portable cell towers have been deployed to supplement coverage in damaged areas. Included in that deployment are three portable cell towers on Galveston Island to assist state and local emergency workers.

Hundreds of neighborhood terminals for wired voice, data and entertainment services are without commercial power and are operating on battery or generator backup. 2,800 generators have been moved into affected areas to power facilities and recharge batteries, and trucks have been deployed to refuel generators. More generators are en route to the affected areas from other locations across the country. But maintaining power to all affected parts of the network remains a significant challenge, AT&T said.

Evacuee Support: To help evacuees stay in touch with family and friends, AT&T is enabling free Wi-Fi access at hundreds of hot spots in Texas, Louisiana, Alabama and Mississippi, including at select McDonald's restaurants, Barnes & Noble locations, and AT&T Experience Stores.

The company also is providing free services at primary evacuation shelters in San Antonio, Dallas and Tyler, Texas, including: Wired telephone lines with free local and long distance calling; AT&T High Speed Internet Service; Charging stations for wireless phones; and AT&T | DISH Network digital satellite television service so evacuees can access news and entertainment during their stay.

Although we are certain that other carriers are in the process of restoring service in the Gulf region, we had not yet received any other reports at our deadline. We note also that nearly 2 million households remained without power as of Tuesday evening in the Gulf Coast area.

BloostonLaw contacts: Hal Mordkofsky, Ben Dickens, Gerry Duffy, and John Prendergast.

9th Circuit Reverses Own Panel, Rules Localities Can Regulate Wireless Facilities

The full 9th U.S. Circuit Court of Appeals in San Francisco has reversed a three-judge panel of the same court and ruled that cities and counties can regulate the location and appearance of wireless towers and poles. In Sprint Telephony PCS v. County of San Diego, the court upheld San Diego County's limits on the placement, size and design of towers and poles that are needed for companies to provide cell phone service and wireless Internet connections.

The court also voted 11-0 to discard a standard it had established in 2001 that barred local governments from adopting any restrictions that "may have the effect of prohibiting" wireless services. Federal courts in the nine-state circuit have relied on the 2001 ruling in City of Auburn v. Qwest to overturn restrictions on telecommunications structures in several communities.

The 9th Circuit said that it had misinterpreted federal law when it issued the earlier ruling, and that local governments can regulate wireless towers and poles as long as they don't actually prohibit wireless service within their borders or create a "significant gap in service coverage."

San Diego County's 2003 ordinance was intended to keep unsightly structures out of neighborhoods. It required poles to be camouflaged in residential areas, set height limits, required companies to submit a "visual impact analysis," and allowed a zoning board to deny an application if it was inconsistent with the character of the community.

Sprint argued that, on its face, the ordinance prohibited or had the effect of prohibiting the provision of wireless service in violation of the Communications Act.

But the 9th Circuit said that while Section 253(a) of the Act states that “no State or local statute or regulation … may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service,” the San Diego ordinance “plainly is not an outright ban on wireless facilities. We thus consider whether the Ordinance effectively prohibits the provision of wireless facilities. We have no difficulty concluding that it does not.”

The court said it was equally un-persuaded by Sprint’s challenges to the substantive requirements of the Ordinance. “Sprint has not identified a single requirement that effectively prohibits it from providing wireless services. On the face of the Ordinance, requiring a certain amount of camouflage, modest set-backs, and maintenance of the facility are reasonable and responsible conditions for the construction of wireless facilities, not an effective prohibition,” the court said.

“That is not to say, of course, that a plaintiff could never succeed in a facial challenge,” the 9th Circuit said. “If an ordinance required, for instance, that all facilities be underground and the plaintiff introduced evidence that, to operate, wireless facilities must be above ground, the ordinance would effectively prohibit it from providing services. Or, if an ordinance mandated that no wireless facilities be located within one mile of a road, a plaintiff could show that, because of the number and location of roads, the rule constituted an effective prohibition. We have held previously that rules effecting a ‘significant gap’ in service coverage could amount to an effective prohibition, and we have no reason to question that holding [in this case].”

In conclusion, the court said the San Diego ordinance does not effectively prohibit Sprint from providing wireless services. Therefore, the Act does not preempt the County’s wireless telecommunications ordinance.

BloostonLaw contacts: Hal Mordkofsky, John Prendergast, and Cary Mitchell.

Verizon Pushes “$0.0007” Intercarrier Comp. Plan

Both Verizon and AT&T have reinforced their commitments to their plan to unify all terminating interstate, intrastate, and local/reciprocal compensation access rates to a non-cost-based rate of $0.0007 per minute for price cap and rate of return (RoR) carriers in the FCC’s longstanding CC Docket No. 01-92 intercarrier compensation proceeding.

Verizon’s plan builds on the “dial” framework introduced by AT&T in July. It includes a uniform default termination rate of $0.0007 per minute for all carriers, provides opportunities for companies to recover a portion of lost revenues from their own end users, and ensures that other lost revenues may be recovered through a new recovery mechanism that would be part of the universal service fund, according to Verizon.

Meanwhile, representatives of AT&T recently met with members of the FCC’s Wireline Competition Bureau and the Office of General Counsel to discuss intercarrier compensation reform issues to deliver an ex parte presentation on the same subject. AT&T said it believes that a single low and unified terminating rate will eliminate arbitrage opportunities and allow for the transition from the old “plain old telephone service” (POTS) business model to the Internet Protocol (IP) world.

What Verizon is trying to solve with the so-called “$0.0007 Plan” is the unworkable scheme of “widely varying rates based on arbitrary jurisdictional and technological distinctions” in the “new world of communications.” Verizon argues that it is difficult, if not impossible, to measure and categorize the traffic that is exchanged “in order to apply different rates to different types of traffic— especially in the age of wireless and IP.” Essentially, Verizon argues that new technologies do not adhere to old assumptions about location-based and device-based phone numbers, or local and long distance, or inter- or intrastate.

The Verizon proposal for intercarrier compensation reform is based on the four “dials” identified by AT&T in the plan it submitted last July.

First, the FCC would set the dial for terminating intercarrier charges by establishing a single federal default termination rate of $0.0007 per minute of use. This rate would apply equally to all traffic and to all providers, regardless of jurisdiction or technology, unless the parties reach a voluntary commercial agreement to the contrary.

Second, the FCC would require all providers to transition simultaneously to this uniform terminating rate over three years. During this transition, the Commission should consider stepping down rates by using rates by using rates in existence today, such as by reducing intrastate access to interstate levels. Relying on existing rates for a step-down, rather than by creating by new, blended or hybrid rates, will eliminate disputes about whether a provider has appropriately calculated its transition rates. Such stepping down must be simultaneous for all providers, Verizon emphasized. It is only through simultaneous rate reductions that the Commission can eliminate— rather than exacerbate—the existing rate disparities that have led to arbitrage and fraud, Verizon said.

Third, Verizon’s proposal would set the remaining three dials—the National Comparability Benchmark, Subscriber Line Charges (SLCs), and a universal service “Replacement Mechanism” fund—to give providers the opportunity to recover revenues that they have previously collected through access charges.

According to Verizon, the FCC should set establish a Replacement Mechanism and, at the same time, bring equity to the retail rates that consumers pay for voice services throughout the nation. The Commission should set the Benchmark dial at a level that reflects what residential end users in today’s communications environment can reasonably be expected to pay for monthly telecommunications service.

The Commission would also set the SLC dial by establishing a new, flexible SLC cap that would allow (but not require) providers to raise their SLCs to meet the Benchmark.

A provider who wishes to draw from the Replacement Mechanism would calculate the amount of its revenue reduction under the new regime. To determine the provider’s draw from the fund, however, this reduction would be offset by the revenues that would be gained if the provider had in fact taken advantage of the opportunity to meet the Benchmark. By creating incentives for companies to re-balance retail rates, the Commission would both limit the size of the universal service fund (USF) and ensure that any new funding does not result in disparate treatment of consumers.

According to Verizon, many carriers, particularly those in rural areas, depend on access charges to maintain their infrastructure. Yet, today these carriers’ access revenues face very real threats on several fronts, especially from wireless and IP services, Verizon said. It argued that the Replacement Mechanism is designed to provide carriers with a more predictable and reliable source of support than access charges. Under the Verizon plan, price cap and RoR carriers would recover the full amount of their access reduction, after imputing the additional benchmark revenues. In five years, the FCC would open a rulemaking to determine whether and how to transition this replacement support to a new model such as a fund to support broadband capital or facilities.

NECA Filing: On the other hand, a National Exchange Carrier Association (NECA) Ex Parte filing argues that the Commission should refrain from imposing a “one size fits all” uniform termination rate (e.g., $0.0007/minute) on RoR carriers. NECA said that its data shows that the proposed $0.0007/minute rate doesn't even cover its pool members’ cost of billing, let alone network costs. Plus, mandatory below-cost rates are likely to result in network abuse, new forms of uneconomic arbitrage, and unnecessary legal challenges, NECA said.

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

LAW & REGULATION

FCC PROPOSES 11.4% USF CONTRIBUTION FACTOR FOR FOURTH QUARTER 2008: The FCC has proposed setting the Universal Service Fund (USF) contribution factor at 0.114 or 11.4% for the fourth quarter of 2008. This is the same figure for the third quarter, but up slightly from the 11.3% figure for the second quarter. And it is up from 10.2% figure for the first quarter, and the 11.0% figure from the fourth quarter of 2007. It is also up from the 11.3% figure for the third quarter of 2007, and down from the 11.7% for the second quarter of last year. The proposed 11.4% contribution factor for the fourth quarter of 2008 will be used to calculate the line item charge on the customer’s bill (i.e., to calculate the charges on revenues that a carrier receives). The FCC’s USF Interim Contribution Methodology order prohibits carriers from marking up the USF line item higher than the contribution factor. If the FCC takes no action by September 26, the contribution factor will become effective. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.

VIRGINIA SUPREME COURT OVERTURNS ANTISPAM LAW: The Virginia Supreme Court has overturned the state's "anti-spam" law, designed to prevent the sending of masses of unwanted e-mail, by saying the law broadly violated the First Amendment right to freedom of speech, in particular anonymous speech, according to the Washington Post. The ruling, arising from the Loudoun County criminal prosecution of Jeremy Jaynes of Raleigh, North Carolina, was also remarkable because the state Supreme Court reversed itself: Just six months ago, the same court upheld the anti-spam law by a 4-3 margin, the Post said. But Jaynes' attorneys asked the court to reconsider, typically a long shot in appellate law, and the court not only reconsidered but changed its mind, the Post noted. It said that Jaynes was convicted in 2004 of sending tens of thousands of e-mails through America Online servers in Loudoun. He was the first person tried under the law, enacted in 2003, and Loudoun Circuit Court Judge Thomas D. Horne sentenced him to nine years in prison. But Horne allowed Jaynes to remain free, even as his appeals were heard first by the state Court of Appeals, which rejected them, and then by the state Supreme Court. The instant ruling was written by Justice G. Steven Agee, who participated in the rehearing but has since retired. There were no dissenting opinions, the Post said. Virginia's anti-spam law makes it a misdemeanor to send unsolicited bulk e-mail by using false transmission information, such as a phony domain name or Internet protocol address. The domain name is the name of the Internet host or account, such as "aol.com." The Internet protocol is a series of numbers, separated by periods, assigned to specific computers, according to the Post. The crime becomes a felony if more than 10,000 recipients are mailed in a 24-hour period. Agee noted that in order to send an anonymous email, the sender must "enter a false IP address or domain name." And "the right to engage in anonymous speech, particularly anonymous political or religious speech, is 'an aspect of the freedom of speech protected by the First Amendment," Agee wrote, citing a 1995 U.S. Supreme Court opinion, the Post said. The statute is “unconstitutionally overbroad on its face, because it prohibits the anonymous transmission of all unsolicited bulk emails including those containing political, religious or other speech protected by the First Amendment to the United State Constitution," the court said.

COPPS RECOMMENDS THAT MARTIN TAKE ADDITIONAL STEPS FOR DTV TRANSITION: In the wake of the Wilmington, N.C., Digital TV test, FCC Commissioner Michael Copps has written Chairman Kevin Martin, emphasizing that “this is not a national transition to digital television; it is millions of individual transitions in millions of American homes.” Copps said that “Unless we sharpen our approach to reflect that reality, we face the possibility of enormous consumer disruption on February 17, 2009—now less than 160 days away.” Based on the Wilmington test, Copps made the following recommendations: (1) Conduct additional field testing; (2) Dedicate a special FCC Team to the needs of at-risk communities; (3) Ramp up the FCC Call Center; (4) Prepare comprehensive DTV contingency plans; (5) Create an online DTV Consumer Forum; (6) Educate consumers on DTV trouble-shooting, including antenna issues and the need to “re-scan” converter boxes and sets; (7) Ensure that broadcasters meet their construction deadlines; (8) Encourage the rapid deployment of small, battery-powered DTV sets; and (9) Find a way to broadcast an analog message to consumers following the transition. BloostonLaw contacts: Hal Mordkofsky, Ben Dickens, Gerry Duffy, and John Prendergast. FCC LAUNCHES NOI ON USF OVERSIGHT: The FCC has launched a 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. The FCC also seeks comment on whether and, if so, to what extent its oversight of the USF can be improved. In conducting this inquiry, it plans to build upon the comprehensive audit oversight conducted by the Commission’s Inspector General in 2007. 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. The FCC is initiating this NOI to continue its assessment, solicit input from the public, and develop additional rules and safeguards to protect the Fund. Comments in this WC Docket No. 05-195 proceeding will be due 30 days after publication of the item in the Federal Register, and replies will be due 30 days thereafter. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.

IOWA SEEKS E-RATE RELIEF ON BEHALF OF FLOOD AND TORNADO VICTIMS: The State of Iowa has filed a petition for waiver of and relief from rules pertaining to the schools and libraries universal service support mechanism, also known as the E-rate program. In the late spring and summer of 2008, Iowa experienced tornadoes and heavy rainfall that resulted in extensive flooding. Iowa estimates the replacement costs for E-rate eligible services in damaged schools and libraries to be approximately $3 million. Iowa requests relief similar to the E-rate program relief that was granted to Hurricane Katrina victims. Among other things, Iowa requests that the Commission: (1) re-open the Funding Year 2008 FCC Form 471 filing window for all applicants affected by the storms and floods in Iowa; (2) allow affected eligible entities to receive 90 percent discounts for reconstruction and/or temporary services; (3) waive the technology plan approval requirement for services requested within the window; and (4) extend applicable form deadlines for affected entities. Comments in this CC Docket No. 02- 6 proceeding are due October 1, and replies are due October 8. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.

DEADLINES

SEPTEMBER 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 July 31 and covers lines served as of December 31, 2007. Incumbent carriers filing on a quarterly basis must also file on September 30 (for lines served as of March 31, 2008); December 30 (for lines served as of June 30, 2008), and March 31, 2009, for lines served as of September 30, 2008).. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.

SEPTEMBER 30: 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.

OCTOBER 1: STATE CERTIFICATION OF UNIVERSAL SERVICE SUPPORT. State regulatory commissions must certify by October 1 that eligible rural carriers are using universal service support for the intended purposes. State commissions must file this annual certification with the FCC and the Universal Service Administrative Company (USAC) stating that all federal high-cost support provided to rural incumbent local exchange carriers (ILECs) and competitive eligible telecommunications carriers (CETCs) serving lines in rural ILEC service areas "will be used only for the provision, maintenance, and upgrading of facilities and services for which the support is intended." Failure of a state commission to provide certification will mean that non-certified carriers in that state will not receive high-cost support for the first quarter of 2008. If you have any doubts about your state's status, contact your state commission immediately. Carriers not subject to state jurisdiction must certify directly to the FCC and USAC. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak. OCTOBER 1: LOCAL SWITCHING SUPPORT FORMS. All incumbent eligible telecommunications carriers (ETCs) serving study areas with 50,000 or fewer access lines must file projections for Local Switching Support (LSS) with the Universal Service Administrative Company (USAC) no later than October 1 in order to receive LSS in calendar year 2006. Average schedule companies must submit USAC Form LSSa, and cost companies must submit USAC Form LSSc. Whereas the National Exchange Carrier Association (NECA) normally files these forms for participants in its Traffic Sensitive Pool, carriers maintaining their own interstate access tariffs for traffic sensitive services (or services that are otherwise not included in the pool) must file the forms themselves. Contact the firm if you need assistance with these forms. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.

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.

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 Flags 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 Flags 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. 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.

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BloostonLaw Private Users Update

   Vol. 9, No. 9 September 2008   

FCC Addresses SVRS Issues In LoJack Rulemaking

The FCC has adopted a Report and Order, addressing proposed revisions to its rules and policies regarding stolen vehicle recovery systems (SVRS) and the use of frequency 173.075 MHz. It had issued a Notice of Proposed Rulemaking (NPRM) in response to a petition for rulemaking filed by LoJack, in which LoJack sought to modify Section 90.20(e)(6) of the Commission’s rules to accommodate its future narrowband operations on frequency 173.075 MHz, to improve the recovery services its products provide, and to permit other services in addition to SVRS. The Report and Order implements some of the proposals set forth in the NPRM, as well as additional changes related to operations on frequency 173.075 MHz. The major decisions in this Report and Order are as follows:

(1) Increases the effective radiated power (ERP) limit for narrowband (12.5 kHz bandwidth or less) base stations from 300 watts to 500 watts;
(2) Increases the power output limit for narrowband (12.5 kHz bandwidth or less) mobile transceivers from 2.5 watts to five watts;
(3) Modifies the duty cycle for base stations from one second every minute to five seconds every minute;
(4) Increases the tracking duty cycle for mobile transceivers from 200 milliseconds every ten seconds to 400 milliseconds every ten seconds and, correspondingly, increases the tracking duty cycle for mobile transceivers that are being tracked actively from 200 milliseconds every second to 400 milliseconds every second;
(5) Increases the uplink duty cycle for mobile transceivers from 1800 milliseconds every 300 seconds to 7200 milliseconds every 300 seconds;
(6) Retains the requirement for TV Channel 7 interference studies and requires that the studies be served upon affected TV Channel 7 stations;
(7) Permits the licensing of mobile transceivers by rule;
(8) Expands the scope of Section 90.20(e)(6) to permit the tracking and recovery of lost and stolen cargo and hazardous materials, missing or wanted persons, and individuals at risk or of interest to law enforcement when established boundaries are violated;
(9) Also permits mobile transceivers to transmit automatic collision notifications, vehicle fire notifications, and carjacking alerts; and
(10) Relaxes the limitation on emissions to permit flexibility in modulation as well as analog and digital signals.

BloostonLaw contacts: Hal Mordkofsky, John Prendergast, and Richard Rubino.

FCC Proposes Fines For Unauthorized Marketing Of Non-Compliant Devices

The FCC has issued a Notice of Apparent Liability for Forfeiture (NAL) in the amount of $14,000 against Microboards Technology for apparently marketing unauthorized and non-compliant digital devices. Microboards acknowledged that its Orbit 3 Disc Duplicator and the MicroOrbit Disc Duplicator are subject to the verification equipment authorization procedures specified in Parts 2 and 15 of the Rules. Microboards indicated that these two devices are manufactured by its subsidiary, Microboards Manufacturing, LLC, in Salida, California. Microboards stated that it marketed the Orbit 3 Disc Duplicator for approximately six months before it was verified in September 2007 and again in March 2008 with a different power supply.

Microboards also stated that it marketed the MicroOrbit Disc Duplicator from March 2007, when the device’s controller (CPU) was changed to a different, larger board, until it was retested for verification in March 2008. Microboards indicated that when the MicroOrbit Disc Duplicator was tested in March 2008, it was found to comply with the Class A limits for conducted and radiated emissions but did not comply with the Class B radiated emission limits. Microboards further stated that it has taken steps to ensure that the MicroOrbit Disc Duplicator will be marketed only for commercial use until it can be brought into acceptable margins for Class B radiated emission limits. Finally, Microboards admitted that it sold units of the Orbit 3 Disc Duplicator and the MicroOrbit Disc Duplicator in the United States prior to verification of those devices.

Microboards admitted that it marketed and sold units of the Orbit 3 Disc Duplicator for approximately six months before it was verified in September 2007. Microboards also admitted that it marketed and sold units of the MicroOrbit Disc Duplicator from March 2007, after it had received a CPU upgrade, until it was retested for verification in March 2008. The FCC, accordingly, found that the Orbit 3 Disc Duplicator and MicroOrbit Disc Duplicator were marketed in the United States prior to authorization.

Additionally, Microboards acknowledged that the Micro- Orbit Disc Duplicator is not compliant with the Class B radiated emission limits. Based on FCC review of Microboards’ website, it appears that Microboards was marketing the MicroOrbit Disc Duplicator for general Class B use prior to March 2008. Thus, the FCC found that Microboards apparently willfully and repeatedly violated Section 302(b) of the Act and Section 2.803(a)(2) of the Rules by marketing unauthorized digital devices in the United States and, in the case of the MicroOrbit Disc Duplicator, by marketing a non-compliant digital device in the United States.

Separately, Leetek, the United States subsidiary of Lee Technology Korea Co., Ltd. (LTK), manufactures pager transmitter systems, or devices used for communicating in, for example, restaurants and hospitals, was also the recipient of an FCC proposed fine. LTK established Leetek as its United States subsidiary in September, 2007. Since then, Leetek has marketed and sold LTK’s pager transmitter systems in the United States via a website, http://www.leetekorea.com.

The pager transmitter systems involved in this matter must be authorized by the Commission via the certification process prior to being marketed in, or imported into, the United States. Further, users of these systems must obtain licenses from the Commission under Part 90 of the Rules to use them on a secondary basis. Finally, users of these systems may not cause harmful interference to operations authorized on a primary basis and are not protected from interference from those primary operations.

However, its website did not contain the disclaimer notice required by Section 2.803(c). Therefore, Leetek’s marketing of these units prior to authorization is not permitted. The FCC proposed a $14,000 fine for Leetek.

BloostonLaw contacts: Hal Mordkofsky, John Prendergast, and Richard Rubino.

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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