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. 49|| December 15, 2010 |
Mobility Fund NPRM
Auctions; Clients Should Oppose
Comments regarding the FCC’s proposed $100-to-$300 million 3G Mobility Fund are due tomorrow (Thursday, December 16). While the Mobility Fund itself is a small, transitional one, the FCC is proposing to use a reverse auction to determine its recipients. This appears likely to be a dry run for setting up a reverse auction protocol for the much more critical Connect America Fund (CAF) that will replace existing High-Cost Fund mechanisms.
A group of Blooston clients is opposing particular aspects of the proposed reverse auction, especially a feature that would unduly favor large carriers by allowing them to take advantage of their purchasing power and economies of scale to bid on the basis of the lowest dollar amount of support per unit for a service area that they themselves designate. The Blooston clients are also challenging the potential use of Mobility Fund dollars to support 3G facilities that a not readily convertible to 4G, a forerunner of the scalability principles we will urge in the forthcoming CAF proceeding to prevent lower-cost wireless broadband facilities from pushing out fiber optic facilities that offer higher capacities at lower costs in the long run.
Finally, the Blooston clients are proposing conditions that would preclude Mobility Funds from entering into exclusive equipment design and procurement arrangements with manufacturers and vendors to the detriment of smaller carriers and their customers. Any additional clients desiring to participate in this effort should contact Gerry Duffy (e-mail: firstname.lastname@example.org; phone: 202-828-5528) or Althea Pierce (e-mail: email@example.com; phone: 202-659-0830) by 3:00 PM Eastern time on Thursday.
BILL SHOCK COMMENTS DUE DEC. 27: BloostonLaw is preparing comments on the FCC’s “bill shock” NPRM, which proposes to require mobile service providers to provide usage alerts and other information to assist consumers in avoiding unexpected charges on their bills. Will these requirements impose unnecessary costs and hassles on small, rural carriers? We seek client input. (Continued below.)
INSIDE THIS ISSUE
- 2010 is “Year of NBP,” but no action on USF Reform.
- FCC to auction leftover 700 MHz licenses
- FCC proposes to amend CORES system.
- FCC proposes record 15.5% USF contribution factor for first quarter.
- FCC seeks comment on TracFone petition for declaratory ruling on USF issues.
- FCC acts to advance interoperability for public safety broadband communications.
- FTC seeks comment on how to strengthen telemarketing Caller ID rules.
2010 Is “Year of NBP,” But No Action on USF Reform
Although the FCC intends to cap its final open meeting of the year next week with a vote on net neutrality, 2010 will go down as the year of the National Broadband Plan (NBP)—a plan to ensure every American “access to broadband capability.” Without a doubt, the NBP is FCC Chairman Julius Genachowski’s signature effort, perhaps even his legacy. But what happened to the NBP in 2010, and what does it portend for rural telcos, especially with respect to universal service? It does not appear that the FCC will address this aspect of the Plan until at least February of next year.
First, a little background: On March 17, 2010, the FCC sent the NBP to Congress, following a presentation to the Commission by Blair Levin, then-Executive Director of the FCC’s Omnibus Broadband Initiative (OBI), who said that the agency should view the Plan as a “first step,” and that it would “evolve over time.” In other words, this was the beginning, not the end. Nevertheless, the NBP would largely dismantle the Universal Service Fund (USF) and wreak havoc on rural telco business models. In general, the NBP, as delivered to Congress, would do the following:
- Create the Connect America Fund (CAF) to support the provision of broadband and voice service with at least 4 Mbps actual download speeds and shift up to $15.5 billion over the next decade from the existing USF.
- Create a Mobility Fund to provide targeted funding to ensure no states are lagging significantly behind the national average for 3G wireless coverage.
- Transition the “legacy” high-cost component of the USF over the next 10 years and shift all resources to the new funds.
- Reform inter-carrier compensation, which provides implicit subsidies to telephone companies by eliminating per-minute charges over the next 10 years and enabling adequate cost recovery to the CAF.
The FCC subsequently began to implement the NBP recommendations through a series of rulemakings.
USF Reform: At its April 21, 2010, open meeting, the Commission adopted a Notice of Inquiry (NOI) and Notice of Proposed Rulemaking (NPRM), which proposed cutting inefficiencies in existing support of voice services and creating a CAF that directly supports broadband without increasing the size of the USF over the current baseline projection. The NOI asked for comment on the use of an economic model to precisely target support for areas where there is no private-sector business case for carriers to provide broadband and voice services. (The comment cycle in this WC Docket No. 10-90, GN Docket No. 09-51, and WC Docket No. 05-337 proceeding closed August 11.)
Mobility Fund: At its October 2010 open meeting, the FCC adopted an NPRM seeking comment on using reserves accumulated in the USF to create a new Mobility Fund. The purpose of the Mobility Fund is to improve coverage of current-generation or better mobile voice and Internet service for consumers in areas where such coverage is currently missing, and to do so by supporting private investment. The Mobility Fund would use market mechanisms — specifically, a reverse auction — to make one-time support available to service providers to “cost-effectively” extend mobile coverage in specified unserved areas. (The comment cycle in this WT Docket No. 10-208 proceeding is set to close January 18, 2011.)
Rural Industry Position: This fall the National Exchange Carrier Association (NECA), National Telecommunications Cooperative Association (NTCA), Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO), and the Western Telecommunications Alliance (WTA) joined forces to present a united rural industry position.
They have told the FCC that their members rely upon support from the universal service fund (USF) and inter-carrier compensation (ICC) to recover the majority of their network deployment and operating costs. Proposals to redirect this support to larger carriers’ unserved areas – or eliminate it altogether – will cause their rural networks to fail or suffer severe degradation, resulting in less, not more, broadband service for rural consumers and businesses, the associations said. They said history demonstrates that shifting from proven rate-of-return (RoR) cost recovery methods to price cap “incentive” regulation is likely to minimize, if not eliminate, incentives to expand and improve broadband networks in costly rural areas. They noted that reforms proposed in the National Broadband Plan, including the expectation that urban consumers will have 100 Mbps broadband in urban areas while limiting cost recovery for rural networks to 4 Mbps, risk creating and perpetuating a digital divide with serious negative consequences for rural consumers and rural economies.
To address these shortcomings and risks, the Rural Associations recommended that any USF and ICC reforms serve the following objectives:
1. Ensure that sufficient universal service funds are available.
The FCC should take immediate steps to make the USF more sustainable and capable of truly achieving the NBP’s broadband goals.
a. Eliminate the Identical Support Rule for non-incumbent USF recipients.
b. Fund only one fixed and one mobile provider of last resort (POLR) in each geographic area.
c. Avoid arbitrary caps on the USF and expand the USF contribution base to provide the support necessary to do the job outlined by the NBP
2. Appropriately structure the new CAF.
After an appropriate transition period, replace the current USF mechanisms with a new Connect America Fund, or CAF, that includes appropriate provisions to ensure efficiency and accountability, while providing appropriate incentives for the construction and operation of the rural networks necessary to achieve the NBP’s goals. The CAF should recognize the legitimate differences between small rural carriers and larger carriers that serve both rural and urban markets.
a. Small Rural Carriers
- Each CAF recipient would be required to act as the Provider of Last Resort (POLR) throughout its service area and satisfy robust availability, affordability, and service quality obligations.
- The CAF would work in concert with RoR regulation to provide incentives for needed infrastructure investment, and support the actual cost of deploying and operating broadband-capable networks, subject to reasonable measures to ensure efficient operations.
- Carriers would be given the option to reduce intrastate access rates to interstate levels, with federal universal service support providing replacement cost support – subject to a reasonable local rate benchmark.
b. Larger Carriers
- For larger POLRs that have not deployed broadband in rural portions of their service areas, the FCC should establish rules that ensure CAF support is appropriately tailored to enable such deployment in an efficient and accountable manner.
3. Ensure that all Americans have access to reasonably comparable broadband access services.
To avoid the creation of a harmful “Digital Divide,” the FCC should focus on enabling POLRs to offer broadband services and rates that are reasonably comparable to those in urban areas, in accordance with Section 254(b)(3).
The associations said that small rural providers have made tremendous strides deploying broadband-capable networks throughout their service territories. Despite serving sparsely populated areas representing nearly 40% of the country’s land mass, these carriers have deployed at least DSL-capable broadband to over 92% of their subscribers as of 2009 (up from 79% in 2005). With long-standing commitments to their communities, these carriers have been gradually moving forward with investments in scalable network technologies that support today’s and tomorrow’s broadband-enabled applications and services. However, the job is far from complete in many places to reach the speeds and capabilities envisioned by the NBP, and the long-term availability and affordability of broadband in rural America needed to achieve desired adoption rates depends upon continuing sustainable support for investment and operations in hard-to-serve areas.
Unfortunately, the groups said, these investments and operations are at risk, and rural consumers and small businesses could suffer. While policymakers have indicated that affordable universal broadband should be a priority objective, certain NBP universal service fund (USF) reform proposals could have the unintended consequence of undermining this objective. Reforms focused primarily on reaching “unserved” areas fail to acknowledge that many areas have access to broadband today precisely because high-cost universal service funding continues to support those investments and operations. Such reform proposals also fail to recognize that many rural areas may appear “served” under current definitions of broadband, but not under the definitions contemplated by the NBP.
Proposals to redistribute USF funds not only run the risk of limiting future investment in broadband, but also present the very real prospect that existing investments in rural broadband infrastructure will become unsustainable. This means that fewer rural Americans might ultimately enjoy access to affordable high-speed broadband services as a result of reform, the associations said.
BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.
The FCC has proposed to amend its Registration System (also known as CORES). Because of the technical nature of this NPRM, we advise clients to contact the firm. No comment cycle has been published in the Federal Register as of our deadline.
FCC TO AUCTION “LEFTOVER 700 MHz LICENSES IN JULY: The FCC today issued a public notice announcing that it will auction 16 “leftover” 700 MHz licenses that were not sold in Auction 73. The licenses include 2 BEA-sized markets and 14 CMA-sized markets, as shown below. The licenses would be sold in Auction No. 92, scheduled to begin on July 19, 2011. The FCC is taking comments on the proposed auction rules, with initial comments due January 12, 2011 and reply comments due January 27.
The available licenses are:
Grand Forks, ND-MN
North Carolina 2 - Yancey
South Carolina 1 - Oconee
South Carolina 6 - Clarendon
Texas 12 - Hudspeth
Virginia I - Lee
Puerto Rico 2 - Adjuntas
Puerto Rico 3 - Ciales
The above licenses will be subject to the stricter Auction 73 buildout obligations, including a requirement to cover at least 35% of the geographic area of the license (rather than population) within 4 years of grant, and at least 70% geographic area within 10 years.
Clients interested in participating in the auction, and/or filing comments on the procedures, should contact us asap. BloostonLaw contacts: John Prendergast and Cary Mitchell.
FCC PROPOSES RECORD 15.5% USF CONTRIBUTION FACTOR FOR FIRST QUARTER: The FCC’s Office of Managing Director (OMD) has proposed a record universal service contribution factor of 0.155 or 15.5% for the first quarter of 2011. The increase appears, in part, to result from (1) a decrease in the 1Q 2011 contribution base of $14.317294 billion from the 4Q base of $15.317737 billion; (2) an increase in 1Q 2011 Low Income projected support of $370.72 million over $361.66 million in 4Q 2010; and an increase in Rural Health Care projected support of $20.52 million for 1Q 0ver $15.67 million in 4Q 2010. The projected High Cost Fund support program actually decreased from 1,160.61 million in 4Q 2010 to 1,095.84 in 1Q 2011. And the projected E-rate support program dropped from $552.99 million in 4Q 2010 to $543.31 in 1Q 2011. This 1Q 15.5% USF contribution factor is up from 12.9% in the fourth quarter; 13.6% for the third quarter; and from the former record 15.3% figure for the second quarter of 2010. And it compares with 14.1% for the first quarter; 12.3% for the fourth quarter of 2009; and 12.9% for the third quarter of 2009. If the Commission takes no action by December 27, the 15.5% contribution factor for the first quarter of 2011 will be deemed approved by the Commission. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.
FCC SEEKS COMMENT ON TRACFONE PETITION FOR DECLARATORY RULING ON USF ISSUES: The FCC has requested comments on TracFone Wireless’ petition for declaratory ruling that (1) an eligible telecommunications carrier (ETC) may not receive reimbursement from the federal Universal Service Fund (USF) for providing Link Up benefits unless the ETC has and routinely imposes on its customers a customary charge for commencing telecommunications service; (2) a wireline ETC may not expand its USF-supported services to include wireless service without obtaining approval from the proper authority; and (3) to be designated as an ETC in a particular state, a carrier must use some of its own facilities to provide USF-supported services within the carrier’s service area in that state. Comments in this WC Docket Nos. 09-197 and 03-109 proceeding are due December 23, and replies are due January 10. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.
FCC ACTS TO ADVANCE INTEROPERABILITY FOR PUBLIC SAFETY BROADBAND COMMUNICATIONS: The FCC has adopted an Order that establishes a technical framework to ensure interoperability in the public safety mobile broadband networks that states, counties and cities approved for early deployment are planning to construct. These regional broadband networks must be technically compatible and fully interoperable with one another, as well as the nationwide network envisioned for America’s first responders. The FCC requirements for a baseline technical framework address core aspects for interoperable communications, such as roaming capabilities, system identifiers, service coverage and secure communications, to ensure that public safety officials can communicate effectively and seamlessly with one another regardless of what network they are operating on. The Order is based on recommendations made by the FCC’s Emergency Response Interoperability Center (ERIC) to ensure that public safety broadband communications are interoperable nationwide. Under the baseline technical framework, waiver recipients will:
- Construct networks that support Long Term Evolution (LTE) interfaces that support roaming and interoperability;
- Construct networks that provide outdoor coverage at minimum data rates of 256 Kbps uplink and 768 Kbps downlink for all types of devices throughout the cell coverage area;
- Provide 95 percent reliability of signal coverage for all services and applications throughout the network;
- Conduct conformance testing on devices to ensure compliance with technical requirements associated with 3GPP Release 8 (LTE) and higher release standards;
- Perform interoperability testing of the LTE interfaces to determine their roaming capabilities and make sure that these capabilities are sufficient;
- Build security and encryption features into their networks based on certain optional features of the 3GPP security features for LTE Network Access Domain;
- Allow to use permanent fixed point-to-point and point-to-multipoint stations only on an ancillary basis and on a non-interference basis to the primary mobile operations; and
- Coordinate with one another when their networks overlap or operate adjacent to one another to avoid signal/spectral interference or disruption to communications.
BloostonLaw contacts: Hal Mordkofsky, John Prendergast, Richard Rubino, and Cary Mitchell.
FTC SEEKS COMMENT ON HOW TO STRENGTHEN TELEMARKETING CALLER ID RULES: The Federal Trade Commission (FTC) has asked for comment on whether and how to strengthen the Caller ID provisions of the Telemarketing Sales Rule. By requiring telemarketers to provide Caller ID information, the Rule allows consumers to screen out unwanted calls. The FTC seeks comments on how to make Caller ID more useful to consumers and combat technologies that hide telemarketers’ identities. Currently, the Rule’s Caller ID provisions require telemarketers to provide consumers who use Caller ID services with either a telephone number for the telemarketer or the number of the seller or charitable organization represented by the telemarketer. Some Caller ID services also display names of up to 15 characters to identify the caller. Our clients should ask whether their switches can handle the additional telemarketing Caller ID information proposed by the FTC.
The Rule promotes telemarketer accountability and helps the FTC and other law enforcement agencies to identify telemarketers that engage in improper telemarketing, including telemarketers that call numbers on the Do Not Call Registry. Under the Rule, telemarketers must provide the name of the telemarketer, seller, or charitable organization to such Caller ID services, if the telemarketer’s carrier makes this available. The Caller ID regulations give telemarketers flexibility in determining what telephone numbers to transmit, and in determining whether the name of the telemarketer, or the name of the seller or charity, is displayed on Caller ID services.
Not all businesses abide by the these Caller ID requirements, however, as seen in recent FTC cases that charge telemarketers pitching fraudulent extended auto warranties and credit card interest rate reduction programs with violating the Caller ID requirements. Since 2005, the FTC has initiated 10 enforcement actions that charge abusive telemarketers with concealing their identities from consumers. The FTC’s request for comments notes that “spoofing” or manipulating Caller ID names and numbers may become more common as telemarketers increasingly use advanced telecommunications technologies.
The Advance Notice of Proposed Rulemaking does not put forward a specific plan for strengthening the Telemarketing Sales Rule’s Caller ID provisions. Instead, it provides information on how Caller ID services work, and explains how the benefits of Caller ID services are undermined when telemarketers use technology to block transmission of Caller ID, to transmit false information, or to transmit a telephone number or name that does not clearly identify the source of the call.
The FTC is seeking comments on a range of Caller ID-related questions to help inform its understanding of this issue, including: How widespread is consumer use of Caller ID services to screen unwanted calls, and do consumers use other services that rely on the transmission of calling party numbers (CPN), such as call-blocking equipment, to avoid unwelcome telemarketing calls? Would changes to the Telemarketing Sales Rule improve the ability of Caller ID services to accurately disclose the source of telemarketing calls or improve the ability of service providers to block calls in which information on the source of the call is not available, or has been spoofed? Should the FTC amend the Caller ID provisions of the Rule to recognize or anticipate specific developments in telecommunications technologies relating to the transmission and use of Caller ID information, and if so, how?
Should the FTC amend the Caller ID provisions of the Rule to further specify the characteristics of the phone number that a telemarketer must transmit to a Caller ID service? For example, should the Rule require that the phone number transmitted be one that is listed in publicly available phone directories, a number with an area code and prefix that are associated with the physical location of the telemarketer’s place of business, a number that is answered by a live representative, or automated service that identifies the telemarketer by name?
Should the FTC amend the Caller ID provisions to allow a seller or telemarketer to use trade names or product names, rather than the actual name of the seller or telemarketer, in the name information displayed by Caller ID services? Comments submitted in response to the questions in the notice must be received by January 28, 2010, referencing [RIN 3084-AB19]. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.
This newsletter is not intended to provide legal advice. Those interested in more information should contact the firm.