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. 31 || July 28, 2010 |
NOTICE TO CLIENTS: The BloostonLaw Telecom Update newsletter will be on vacation during the month of August. We will resume publication on September 8. Meanwhile, we will keep clients informed via memos and special supplements of developments requiring immediate attention.
INSIDE THIS ISSUE
- Boucher, Terry introduce USF reform legislation.
- FCC extends deadline for replies in inquiry into survivability of broadband networks.
- Univision pays $1 million to resolve “pay for play” investigation.
- FCC, FDA agree to promote wireless-enabled medical devices.
Boucher, Terry Introduce USF Reform Legislation
U.S. Reps. Rick Boucher (D-Va.) and Lee Terry (R-Neb.) have introduced H.R. 5828, the Universal Service Reform Act of 2010, which is designed to promote broadband deployment and rein in the size of the Universal Service Fund (USF). The congressmen released a discussion draft of the legislation last fall (BloostonLaw Telecom Update, November 11, 2009).
According to its sponsors, the Universal Service Reform Act of 2010 proposes to limit universal service support in areas where there is competition and implement competitive bidding for wireless providers; allow use of the Universal Service Fund (USF) for broadband deployment; broaden the base of contributions to the fund; and maintain rate-of-return regulation. It also makes a number of other changes that are intended to improve fund administration.
Broadband deployment: The bill declares broadband to be a universal service, so support for the buildout of broadband lines would be explicit. It requires Universal Service Fund recipients, within five years of the date of enactment, to be offering high-speed broadband service throughout the areas where they receive universal service support at a minimum data rate determined by the FCC, either themselves or through resale of satellite broadband services. The FCC may waive this requirement for providers for whom offering such service would be technically or economically infeasible, and it would automatically be waived for providers that can demonstrate that their cost per line of deploying such service is at least three times the nationwide average cost of providing high-speed broadband service.
Developing a new cost model for universal service support: The bill directs the FCC to develop a new cost model for calculating high-cost support that takes into account the cost of providing voice service and high-speed broadband service. The new cost model would replace the FCC’s existing calculation methodology for rural and non-rural carriers.
Limiting universal service support in competitive areas: The bill directs the FCC, within one year of completing the new cost model, to implement a mechanism for reducing or eliminating high-cost support to incumbent carriers in areas where at least 75 percent of households can receive voice and high-speed broadband service from a competitive provider that does not receive universal service support. An incumbent carrier whose high-cost support is reduced in a competitive area may demonstrate to the FCC how much per-line support it requires in the non-competitive parts of the service area to ensure that rates for supported services remain comparable in the competitive and non-competitive parts of the service area. The non-incumbent provider in an area that the FCC has determined is competitive must meet statutory provider-of-last-resort requirements.
Changing to competitive bidding for wireless carriers: The bill directs the FCC to adopt a competitive bidding process to determine eligibility of mobile wireless communications service providers for universal service support. The total amount of support the FCC awards pursuant to the competitive bidding process must be no more than the amount of high cost support received by all mobile wireless communications service providers in the year before the date of enactment.
In areas where at least 3 mobile wireless communications service providers are eligible to participate in competitive bidding, the FCC shall issue a request for proposals identifying the area a winning bidder must serve and the minimum requirements for serving the area. The FCC shall select up to 2 winning mobile wireless communications service providers in each service area and should consider the amount of the bid and minimum proposed broadband speeds as primary factors when evaluating applications. Winning bidders shall receive a flat amount of subsidy per year for up to 10 years, as determined by the FCC.
In areas where fewer than 3 mobile wireless communications service providers are eligible to participate in competitive bidding, the FCC shall continue to provide universal service support at the per-line level in effect prior to the date of enactment.
Constraining fund size: The bill provides that in making the changes required by the Communications Act, the FCC shall ensure that the contribution burden on consumers does not unreasonably increase.
Tribal lands: The bill prohibits the FCC from reducing high-cost support to tribal lands, absent a finding that such reductions are in the public interest.
The bill assesses contributions on:
- Any entity that pays into the universal service fund under the current system (e.g., long distance providers);
- Any provider of a service that uses telephone numbers, IP addresses or their functional equivalents to provide or enable real time voice communications and in which the voice component is the primary function (e.g., VoIP providers); and
- Any provider that offers a network connection to the public (e.g., DSL, cable modem, WiMax and broadband over powerline providers).
The FCC determines whether to use a contribution methodology based on revenues, numbers or a combination of the two. If the FCC opts for a revenues approach, it can assess contributions based on revenues derived from the provision of intrastate, interstate and foreign communications services.
The FCC could limit the contributions of providers whose customers typically make a low volume of calls on a monthly basis (e.g., prepaid wireless customers) or for additional phone numbers provided under a group or family pricing plan for residential customers.
The FCC could exempt from the contribution requirement providers whose communications activities are so limited that their level of contributions to the preservation and advancement of universal service would be de minimis.
Performance measures: The bill directs the FCC to establish and implement outcome-oriented performance goals and measures for each universal service fund program and to report to Congress about progress toward meeting such goals.
Audits: The bill directs the FCC to determine the appropriate methodology for audits of universal service fund recipients and ensure that auditors are trained in universal service fund program compliance and that they may only audit records that universal service fund recipients are required to retain pursuant to the FCC’s rules. It provides that any appeal of a USAC finding related to an audit must be resolved by the FCC within 6 months after the date of filing.
Intercarrier compensation reform: The bill directs the FCC to complete a proceeding to reform intercarrier compensation within one year of the date of enactment.
Traffic pumping: The bill addresses the issue of traffic pumping by prohibiting access charge recovery when an entity offers a free or below cost service and shares the switched access revenues with a local exchange carrier.
Traffic identification: The bill requires carriers to identify all traffic which originates on their networks and requires all intermediate carriers to pass through that identification so that carriers which terminate that traffic can seek appropriate intercarrier compensation.
Rural health care support mechanism: The bill clarifies who qualifies as a “health care provider” eligible for rural health care support. It revises the definition of “rural area” to among other things grandfather areas which qualified under a previous FCC definition. The bill bases support for advanced telecommunications services on the difference between the cost of service in an urban area and a rural area, instead of on the flat percentage rate discount in current FCC regulations.
Eliminating the parent trap: The parent trap is an FCC regulation which provides that a carrier which acquires telephone exchanges from an unaffiliated carrier receives universal service support at the same level for which those exchanges were eligible prior to the transfer. Eliminating it will encourage the sale of exchanges to rural carriers.
Permanent Anti-Deficiency Act exemption: The bill permanently exempts the universal service fund from the Anti-Deficiency Act to avoid the need to renew the exemption annually.
Prohibition on primary line restriction: The bill prohibits the FCC from adopting a primary line restriction.
BloostonLaw contacts: Hal Mordkofsky, Ben Dickens, Gerry Duffy, and John Prendergast.
FCC EXTENDS DEADLINE FOR REPLIES IN INQUIRY INTO SURVIVABILITY OF BROADBAND NETWORKS: The FCC has extended the reply comment deadline for its Notice of Inquiry (NOI) regarding the ability of existing broadband networks to withstand significant damage or severe overloads as a result of natural disasters, terrorist attacks, pandemics or other major public emergencies, as recommended in the National Broadband Plan. The deadline for reply comments in this PS Docket No. 10-92 NOI has been extended until September 3. BloostonLaw contacts: Hal Mordkofsky, Ben Dickens, Gerry Duffy, and John Prendergast.
UNIVISION PAYS $1 MILLION TO RESOLVE “PAY FOR PLAY” INVESTIGATION: The FCC’s Enforcement Bureau has released a Consent Decree entered into with Univision Radio, Inc., to resolve allegations that Univision radio stations or their employees secretly accepted payment from a record label in exchange for the radio stations giving more frequent airplay to the label’s artists, without making the disclosures to listeners required by Section 507 of the Communications Act. In a companion criminal action, a federal district court has accepted the plea of Univision Services, Inc., to charges filed by the U.S. Department of Justice (DOJ), based on the same facts. The FCC and the DOJ coordinated their respective investigations and enforcement actions. “Payola — the idea of pay-for-play — misleads the listening public,” said FCC Chairman Julius Genachowski. “This agreement with Univision underscores the FCC’s focus on consumer protection and our commitment to ensuring that broadcasters play it straight with the public.” As part of the FCC settlement and the DOJ action, the Univision companies will pay $1 million to the U.S. Treasury. The FCC-Univision Consent Decree also obligates Univision to implement certain business reforms and compliance measures designed to ensure future compliance with the Commission’s rules. Key provisions of the settlement include:
- General prohibition on Univision stations and employees exchanging airplay for cash or other items of value, except under specified conditions, and provided that such exchanges comply with sponsorship identification laws;
- Limits on the size of gifts, concert tickets, and other valuable items that Univision stations and employees can accept from record labels;
- Appointment of a Compliance Officer and regional Compliance Contacts responsible for monitoring and reporting company performance under the settlement; and
- Regular training of programming personnel on payola restrictions.
BloostonLaw contacts: Hal Mordkofsky, Ben Dickens, Gerry Duffy, and John Prendergast.
FCC, FDA AGREE TO PROMOTE WIRELESS-ENABLED MEDICAL DEVICES: The FCC and the Food and Drug Administration (FDA) have signed a Joint Statement of Principles and a Memorandum of Understanding to cooperate on promoting innovation and investment in wireless-enabled medical devices. The FCC/FDA partnership stems from a National Broadband Plan recommendation. In general, the agencies recognize that wireless medical devices benefit all Americans, and that the public should be afforded the opportunity to benefit from this technology. Additionally, the agencies will work together to ensure that the public is protected with proper safeguards when using such technology. One advantage such an agreement could bring, FCC Chairman Julius Genachowski pointed out, is remote diagnostics and health care in isolated parts of America. He noted that broadband enables remote medical monitoring, and that wireless devices can help diabetes patients track their glucose levels, or heart patients monitor cardiovascular data. BloostonLaw contacts: Hal Mordkofsky, John Prendergast, and Richard Rubino.
COMMERCE DEPT. TASK FORCE SEEKS COMMENT ON CYBERSECURITY ISSUES: The Department of Commerce's Internet Policy Task Force is conducting a comprehensive review of the nexus between cybersecurity challenges in the commercial sector and innovation in the Internet economy. The Department seeks comments from all stakeholders, including the commercial, academic and civil society sectors, on measures to improve cybersecurity while sustaining innovation. Preserving innovation, the Task Force says, as well as private sector and consumer confidence in the security of the Internet economy, are important for promoting economic prosperity and social well being overall. In particular, the Department seeks to develop an up-to-date understanding of the current public policy and operational challenges affecting cybersecurity, as those challenges may shape the future direction of the Internet and its commercial use, both domestically and globally. After analyzing comments on this Notice of Inquiry (NOI), the Department intends to issue a report that will contribute to the Administration's domestic and international policies and activities in advancing both cybersecurity and the Internet economy. Comments on this Docket No.: 100721305-0305-01 proceeding are due September 13. 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.