BloostonLaw Telecom Update
Published by the Law Offices of Blooston, Mordkofsky, Dickens, Duffy & Prendergast, LLP
[Portions reproduced here with the firm's permission.]
| Vol. 13, No. 39 || October 6, 2010 |
FCC Plans To Address Bill Shock, Mobility Fund, CableCard Items At Oct. 14 Open Meeting
The FCC’s “Sunshine Agenda” for its October 14 open meeting tomorrow indicates that it plans to consider the following items:
- Bill Shock NPRM: A Notice of Proposed Rulemaking seeking comment on rules requiring mobile carriers to provide usage alerts and related information that will assist consumers in avoiding unexpected charges on their bills.
- Mobility Fund NPRM: A Notice of Proposed Rulemaking seeking comment on a proposal to use recently reserved universal service funds to create a Mobility Fund to support private investment in current- (3G) and next-generation mobile services in areas where consumers currently lack such services.
- CableCARD Third R&O and Order on Reconsideration: A Third Report and Order and Order on Reconsideration that will make changes to the FCC’s CableCARD rules to improve the consumer experience with the video navigation devices used with cable services and promote the development of a competitive market for such devices.
BloostonLaw contacts: Hal Mordkofsky, Ben Dickens, Gerry Duffy, and John Prendergast.
INSIDE THIS ISSUE
- Mich. Federal court upholds Obama health care mandate.
- Obama signs 21st Century Video Accessibility Act into law.
- FCC wants HAC proceeding comments to address Video Accessibility legislation.
- Sen. Udall introduces wireless “bill shock” bill.
- GAO says Obama team slow to implement cyber security recommendations.
Mich. Federal Court Upholds Obama Health Care Mandate
A federal district court in Detroit arguably has handed the Obama Administration its first victory in the multiple complex challenges to the Patient Protection and Affordable Care Act, or the controversial health care legislation known simply as “Obamacare.” In Thomas More Law Center, et al. v. Barack Hussein Obama, et al., U.S. District Judge George Caram Steeh ruled that Congress did indeed have the authority to require American citizens to purchase health care insurance or pay a fine. He also rejected the government’s claims that the plaintiffs had no standing and that the case was not ripe for review.
Judge Steeh ruled only on the petitioners’ request to stop the insurance-purchase requirement and the penalty that would be assessed for failure to have insurance by 2014. The same lawsuit also raises other issues, contending that the new Health Care Act intrudes on states’ rights under the Tenth Amendment, violates religious rights, and violates guarantees of legal equality and due process. Those other challenges remain pending before Judge Steeh.
In his opinion, Judge Steeh noted that “The costs of caring for the uninsured who prove unable to pay are shifted to health care providers, to the insured population in the form of higher premiums, to governments, and to taxpayers. The decision whether to purchase insurance or to attempt to pay for health care out of pocket, is plainly economic. These decisions, viewed in the aggregate, have clear and direct impacts on health care providers, taxpayers, and the insured population who ultimately pay for the care provided to those who go without insurance. These are the economic effects addressed by Congress in enacting the Act and the minimum coverage provision.”
The judge said that the health care market is unlike other markets, and that no one can guarantee his or her health, or ensure that he or she will never participate in the health care market. “Indeed, the opposite is nearly always true,” he said. “The question is how participants in the health care market pay for medical expenses — through insurance, or through an attempt to pay out of pocket with a backstop of uncompensated care funded by third parties. This phenomenon of cost-shifting is what makes the health care market unique. Far from ‘inactivity,’ by choosing to forgo insurance plaintiffs are making an economic decision to try to pay for health care services later, out of pocket, rather than now through the purchase of insurance, collectively shifting billions of dollars, $43 billion in 2008, onto other market participants.”
As this cost-shifting is exactly what the Health Care Reform Act was enacted to address, the judge wrote, there is no need for “metaphysical gymnastics.” He said “the plaintiffs have not opted out of the health care services market because, as living, breathing beings, who do not oppose medical services on religious grounds, they cannot opt out of this market. As inseparable and integral members of the health care services market, plaintiffs have made a choice regarding the method of payment for the services they expect to receive. The government makes the apropos analogy of paying by credit card rather than by check. How participants in the health care services market pay for such services has a documented impact on interstate commerce. Obviously, this market reality forms the rational basis for Congressional action designed to reduce the number of uninsureds.”
Judge Steeh said that the Supreme Court has consistently rejected claims that individuals who choose not to engage in commerce thereby place themselves beyond the reach of the Commerce Clause. “Similarly, plaintiffs in this case are participants in the health care services market. They are not outside the market. While plaintiffs describe the Commerce Clause power as reaching economic activity, the government’s characterization of the Commerce Clause reaching economic decisions is more accurate,” the judge said.
He said the Health Care Act regulates a broader interstate market in health care services. “This is not a market created by Congress, it is one created by the fundamental need for health care and the necessity of paying for such services received,” Judge Steeh wrote. “The provision at issue addresses cost-shifting in those markets and operates as an essential part of a comprehensive regulatory scheme. The uninsured, like plaintiffs, benefit from the ‘guaranteed issue’ provision in the Act, which enables them to become insured even when they are already sick. This benefit makes imposing the minimum coverage provision appropriate.”
The Supreme Court recognized Congress’s power to regulate wholly intrastate, wholly non-economic matters that form “an essential part of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated,” Judge Steeh wrote. In 2014, he said, the Act will bar insurers from refusing to cover individuals with pre-existing conditions and from setting eligibility rules based on health status or claims experience. At that time, he continued, all Americans will be insurable. Without the minimum coverage provision, there would be an incentive for some individuals to wait to purchase health insurance until they needed care, knowing that insurance would be available at all times. As a result, the most costly individuals would be in the insurance system and the least costly would be outside it. In turn, he said, this would aggravate current problems with cost-shifting and lead to even higher premiums. “The prospect of driving the insurance market into extinction led Congress to find that the minimum coverage provision was essential to the larger regulatory scheme of the Act. The minimum coverage provision, which addresses economic decisions regarding health care services that everyone eventually, and inevitably, will need, is a reasonable means of effectuating Congress’s goal,” the judge said.
Having concluded that Congress has the power under the Commerce Clause to enact the Health Care Reform Act, the judge concluded, it is unnecessary for the court to address the issue of Congress’s alternate source of authority to tax and spend under the General Welfare Clause.
Petitioners may appeal to the 6th U.S. Circuit Court of Appeals in Cincinnati. There are also two similar lawsuits pending in district courts in Virginia and Florida.
BloostonLaw contacts: Hal Mordkofsky, Ben Dickens, Gerry Duffy, and John Prendergast.
Obama Signs 21st Century Video Accessibility Act
President Obama last week signed into law the Twenty-First Century Communications and Video Accessibility Act of 2010. The Act updates current law and is supposed to increase access to Internet, television and telecommunications technologies using such tools as closed captioning and video description. The bill will also help improve delivery of emergency information during a disaster or crisis to ensure that no person with a disability is without the necessary information. Some examples of how the bill could help Americans with disabilities include:
- Expanding the range of telephones that are required to be compatible with hearing aids. This means that the hearing-impaired will have greater access to new telephones and mobile devices with functions like access to the Internet.
- Requiring video description on the most popular television channel and cable channel programming.
- Updating television closed captioning policies. As more and more television migrates to the Internet, this legislation requires captioned television programs to also be captioned when they are shown over the web. This means that the deaf will be able to enjoy television programming regardless of the distribution medium.
- Requiring a wide range of communications equipment and devices to be accessible to the deaf and blind. This means that equipment manufacturers of all sorts will need to consider how to make their devices accessible by individuals with disabilities early in the innovation process.
- Setting up a committee to make recommendations to the Federal Communications Commission about how to facilitate more reliable emergency communications with the disabled community.
BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.
FCC Wants HAC Proceeding Comments To Address Video Accessibility Legislation
In light of the new Video Accessibility Law (see story above), the FCC has asked that comments in its WT Docket No. 07-250 Hearing Aid Compatible (HAC) proceeding address the new legislation. The FCC noted that Section 102 of the Accessibility Act extends hearing aid compatibility requirements to customer premises equipment “used with advanced communications services that is designed to provide 2-way voice communications via a built-in speaker intended to be held to the ear in a manner functionally equivalent to a telephone.” The Act preserves the exemption of mobile handsets from the general requirement that all telephones be hearing aid-compatible, while maintaining the Commission’s authority to revoke or limit such exemption if certain conditions are met.
On August 5, the Commission released a Further Notice of Proposed Rulemaking (FNPRM) seeking comment on proposed revisions to the rules governing hearing aid compatibility of mobile handsets. Among other things, the Commission proposed to extend its rules to include customer equipment used to provide wireless voice communications over any type of network among members of the public or a substantial portion of the public. The Commission sought comment on whether considerations of technological feasibility or marketability prevent application of these requirements to such customer equipment.
The FCC now requests that comments on the FNPRM address the effect of the new legislation, if any, on the proposed rules. Comments remain due on October 25, and reply comments are due on November 22.
BloostonLaw contacts: Hal Mordkofsky, John Prendergast, Cary Mitchell, and Bob Jackson.
SEN. UDALL INTRODUCES WIRELESS “BILL SHOCK” BILL: Sen. Tom Udall (D-N.M.) last week introduced S. 3872, the Cell Phone Bill Shock Act of 2010, to improve billing disclosures to cellular telephone consumers. The bill would require cell phone companies to notify customers with a free e-mail or text message when they have used 80 percent of their monthly limits. It would also require the company to obtain consent before charging for services that are not covered by their regular monthly service plan. This provision would prevent billing problems such as the Verizon Wireless "mystery fees" that are the subject of an ongoing FCC investigation, Udall said. Verizon Wireless reportedly overcharged 15 million customers to the tune of tens of millions of dollars. According to news reports, some customers were charged $1.99 whenever they inadvertently pressed a button on their cell phone that launched a Web browsing service that was not included in their monthly plan.
In a letter to the FCC, the senator is asking the Commission to take a strong position against bill shock at its open meeting on Thursday (see separate story on page 1). In his letter, Udall notes that an FCC survey found almost 85 percent of American consumers who suffered bill shock were not alerted when they were about to exceed their allowed phone usage. As such, he is encouraging FCC Chairman Julius Genachowski to consider the notification and customer consent principles in his legislation to help consumers avoid unwittingly exceeding their monthly limits for voice limits, text messages, or data usage during the FCC’s Oct. 14 meeting. "In many cases, a simple alert message would help consumers avoid bill shock and overcharges," Udall said. BloostonLaw contacts: Hal Mordkofsky, John Prendergast, Cary Mitchell, and Bob Jackson.
GAO SAYS OBAMA TEAM SLOW TO IMPLEMENT CYBER SECURITY RECOMMENDATIONS: Based on a National Journal report, the Government Accountability Office (GAO) said last week that the White House has made slow progress in fully implementing a set of recommendations included in a cybersecurity review released by the Obama administration in May 2009. The GAO report says the White House has fully implemented only two of the 24 recommendations in the 2009 report, while 22 have been partially implemented. The two that have been implemented called for appointing a cybersecurity coordinator within the National Security Council and a privacy and civil liberties official. Howard Schmidt was named by the president last year to serve as the federal government's cyber security coordinator, while the administration has designated a privacy and civil liberties official, according to a July National Security Council update on the cybersecurity report, the National Journal said. Among the recommendations that have been partially implemented include the call for developing "research and development strategies." GAO noted that the White House Office of Science and Technology Policy is developing a framework for cybersecurity research and development strategies that is expected to be completed next year. National Journal noted some of the key agencies involved said they have been slow to implement the recommendations because they have not been assigned roles and responsibilities related to the recommendations. To help complete the other recommendations included in the report, the GAO urged Schmidt to designate "roles and responsibilities and develops milestones and plans for the recommendations that lacked these key planning elements," according to the National Journal.
ULTRA-WIDEBAND RULES BECOME EFFECTIVE NOVEMBER 12: The FCC has published in the Federal Register a November 12 effective date for certain rules and procedures for ultra-wideband (UWB) devices that operate on an unlicensed basis. This action terminates the ET Docket No. 98-153 and 04-352 Ultra-Wideband Transmission Systems proceeding and thus provides certainty for the continued development of UWB equipment, including ground penetrating radars for underground imaging, through wall imaging systems, short-range high capacity data links, and other applications. BloostonLaw contacts: Hal Mordkofsky, John Prendergast, and Richard Rubino.
FCC CLARIFIES CPNI RULE REGARDING CHILD PORNOGRAPHY: The FCC has issued a declaratory ruling, clarifying that section 222 of the Communications Act does not prevent a telecommunications carrier from complying with the obligation to report violations of specific federal statutes relating to child pornography. In 2006, the Commission issued a declaratory ruling that clarified the relationship between a telecommunications carrier’s duty to protect the privacy of customer proprietary network information (CPNI) under section 222 to report violations of child pornography statutes to the CyberTipline operated by the National Center for Missing and Exploited Children (NCMEC). Specifically, 42 U.S.C. § 13032 required providers of an “electronic communication service or remote computing service” to report apparent violations of specific federal statutes involving child pornography to the NCMEC CyberTipline. Section 222(c)(1) of the Communications Act provides that, “[e]xcept as required by law,” all telecommunications carriers, including wireless carriers, have a duty to protect the privacy of CPNI. In the CPNI Declaratory Ruling, the Commission interpreted the “[e]xcept as required by law” exception contained in section 222(c)(1) of the Communications Act as applying to any report a telecommunications carrier must make to NCMEC under 42 U.S.C. § 13032. The Commission therefore concluded that making such a report did not violate section 222 of the Communications Act. It further concluded that “this exception to section 222 only applies to the extent disclosure of CPNI is ‘required’ and therefore would not cover voluntary disclosures.” In 2008, Congress enacted new reporting requirements for electronic communication service providers and remote computing service providers related to child pornography that supersede the reporting obligations set forth in 42 U.S.C. § 13032, which was repealed. The guidance the Commission provided in the CPNI Declaratory Ruling remains valid even though Congress replaced the specific statutory provision at issue in that declaratory ruling with a new federal reporting statute related to child pornography. The new statutory reporting obligations set forth in 18 U.S.C. § 2258A are similar to the former requirements of 42 U.S.C. § 13032. Under the new statute, providers of an “electronic communication service or remote computing service” are still required to report to the CyberTipline the facts and circumstances regarding any apparent violations of specific federal statutes involving child pornography. Consequently, and consistent with the Commission’s previous clarification, to the extent a telecommunications carrier that is a provider of electronic communication services or remote computing services is compelled by 18 U.S.C. § 2258A to disclose CPNI in a report to the CyberTipline, that carrier would not be in violation of its privacy duties under section 222 of the Communications Act. Of course, as the Commission also previously explained, this exception to section 222 applies only to the extent disclosure of CPNI is “required” and therefore would not cover voluntary disclosures. BloostonLaw contacts: Gerry Duffy, Mary Sisak, and John Prendergast.
ALLCOM UNVEILS “THREE-IN-ONE” COMMUNICATONS TOOL: AllCom recently introduced the GenieMessenger, a new communications tool that purports to combine telephone, text and email, the three most common ways people stay in touch with their friends, family, and business associates, into one system, for $1 a month. The service includes a personal toll free telephone number answered in the customer’s voice and with their name, good anywhere in the U.S. and Canada (people can let you know from any phone that they would like to hear from you). This toll free number is not associated with the customer’s home, office or cell numbers, and when someone leaves a message the customer reportedly will be notified via text, email or by phone, how ever they prefer. The customer is supposed to be able to call back from anywhere using their GenieMessenger without disclosing personal caller ID, with the only number displayed being the customer’s Genie Number. Time will determine whether this product meets its claims, but it is another example of pressure on the traditional revenue sources of telephone carriers. BloostonLaw contact: John Prendergast.
VERIZON PLANS LTE LAUNCH IN 38 MARKETS, CONTINUES TO EXPRESS INTEREST IN ARRANGEMENTS WITH RURAL TELCOS: According to Dow Jones, Verizon will launch its fourth generation (4G) wireless network, using Long-Term Evolution (LTE), in 38 markets over the next 18 months, with full nationwide coverage expected by 2013. The company said that there will be a half dozen smartphones and tablets compatible with LTE on display at the upcoming Consumer Electronics Show in January, and that they would hit stores in the first half of next year. Dow Jones stated that Verizon officials declined to comment on a Wall Street Journal report that Apple Inc. is planning to mass produce an iPhone compatible with Verizon Wireless's network by the end of the year, with the intent for the carrier to sell it in the first half of 2011. Verizon only noted that it expects Apple and Verizon Wireless's interests to eventually line up, according to Dow Jones.
Verizon continues to express interest in arrangements with rural telecom carriers, and is apparently in discussions with several concerning a spectrum lease arrangement that would be designed to accomplish coverage in rural areas that are not on Verizon’s current buildout plan. However, the identity of the rural carriers and details of the arrangements have not been made public.
The wire service said that Verizon Wireless is pushing ahead with an early move to 4G wireless technology in an effort to capitalize on the exploding demand for data services like video, online access and mobile gaming. But the move to LTE comes with its share of risk. Critics say there will be fewer products compatible with the technology early on, and prices for the devices will likely be higher. Verizon Wireless will also have to ensure the products are able to seamlessly hop back and forth between the 3G and 4G networks, according to Dow Jones.
CTIA SEMI-ANNUAL SURVEY CONTINUES TO SHOW UPTICK IN WIRELESS USE: The current CTIA semi-annual survey on wireless trends (through June 2010) has found that wireless subscriber connections rose to 292.8 million, an increase of roughly 16 million since June 2009 and represents a penetration rate of 93 percent. These subscribers used 2.26 trillion minutes (up by 19 billion minutes), 1.8 trillion SMS messages (up by 33 percent) and 56.3 billion MMS messages (an increase of 187 percent). Despite these increases in usage, the average local monthly bill fell by 4.2 percent to $47.47 over the same period. Smart phones and wireless-enabled PDAs also grew substantially over the past year, increasing from 40.7 million in July 2009 to 61.2 million in June 2010. This brings the total number of data-capable devices on carriers’ networks to 264.5 million. Wireless carriers reported handling 161.5 billion megabytes of data in the six months ending in June 2010, up 49.8 percent from the last half of 2009. SMS-capable devices increased to 243.7 million as of June 2010, which is up from 235.3 million in June 2009. There were more than 243.5 million Internet-capable devices during this survey period, which was an increase of more than 6.4 million since June 2009. While there are challenging economic conditions, the industry continued to invest heavily in wireless infrastructure. Starting in of July 2009, carriers spent $21.6 billion in capital expenditures in the past year for a cumulative total of $295.2 billion since CTIA began tracking the data in 1985.
This newsletter is not intended to provide legal advice. Those interested in more information should contact the firm.