BloostonLaw Telecom Update
Published by the Law Offices of Blooston, Mordkofsky, Dickens, Duffy & Prendergast, LLP
[Reproduced here with the firm's permission.]
| Vol. 14, No. 41 || November 2, 2011 |
Outline of FCC’s New CAF/ICC Order
Following is an outline/index of the FCC’s landmark Connect America Fund (CAF)/Intercarrier Compensation (ICC) Order to reform the universal service and access charge regimes:
- CAF: Approximately $2 billion to be made available to carriers.
- Rate-of-Return (RoR) carriers: Effect of Order on rate-of-return (RoR) carriers.
- Mobility Fund: $300 million initial support, followed by reverse auction in third quarter 2012.
- Price cap carriers: Effect of Order on price cap carriers.
- Identical Support Rule: FCC eliminates rule.
- Remote Areas Fund: To provide support for remote areas.
- Reporting obligations and enforcement.
- INTERCARRIER COMPENSATION
- Access stimulation, phantom traffic.
- Bill and Keep.
- Multi-year transition.
- New recovery mechanism.
- REACTIONS & COMMENTS ON ORDER.
—FCC Commissioners, Congress & industry .
Open Internet Network Manual
BloostonLaw has available an Open Internet or Net Neutrality Compliance Manual so that clients can meet their reporting obligations by the Nov. 20 deadline. The manual provides you with a template to be posted on your website and furnished to customers. You must describe your terms & conditions, network restrictions, and other aspects of operations to comply with the Net Neutrality rules. We are available to review the template (at our usual rates) to help ensure that your specific compliance protocol satisfies the FCC’s rules. Contact Gerry Duffy (202-828-5528); Ben Dickens (202-828-5510); or Mary Sisak (202-828-5554.
INSIDE THIS ISSUE
- FCC Adopts Order, FNPRM To Push USF/ICC Reform
- FCC Aims To Phase Out Intercarrier Compensation
- Reactions to FCC’s Order On Reforming USF/ICC Regime
- OBAMA NOMINATES ROSENWORCEL, PAI TO FCC
- MetroPCS APPEALS FCC’s “NET NEUTRALITY” RULES
- FCC PROPOSES ADOPTING 2011 ANSI STANDARD FOR HAC HANDSETS
- COMMENT DATES SET FOR NPRM IN BASIC SERVICE TIER ENCRYPTION PROCEEDING
- COMMENT CYCLE SET FOR PROPOSED RULES GOVERNING VRS PROVDERS
- FCC ACTS TO MODERNIZE TV BROADCAST PUBLIC INSPECTION FILES
- OPEN RANGE FILES FOR BANKRUPTCY
- COURT RULES AGAINST SAN FRANCISCO CELL PHONE WARNING LAW
FCC Adopts Order, FNPRM To Push USF/ICC Reform
At last week’s open meeting, the FCC adopted an Order and Further Notice of Proposed Rulemaking (FNPRM) on Universal Service Fund (USF) and intercarrier compensation (ICC) reform. The text of the Order has not been released. The Order creates a new Connect America Fund (CAF) with an annual budget of no more than $4.5 billion over the next six years. This is the same level of funding for the high-cost USF program in fiscal year (FY) 2011.
(Ed. Note: This first story deals with the USF/CAF measures adopted in the Commission’s Order. The ICC reform measures are treated in the following separate story. A third story focuses on comments and reactions to the landmark Order.)
The FCC will now require all eligible telecommunications carriers (ETCs) to offer broadband service.
Rate-of-Return Carriers. The FCC acknowledged that although small rate-of-return (RoR) carriers serve less than 5% of access lines in the U.S., they operate in many of the country’s most difficult and expensive areas to serve. Rate-of-return carriers’ total support from the high-cost fund is approaching $2 billion annually, the FCC said. It added that its Order will reform its rules for RoR companies in order to support continued broadband investment while increasing accountability and incentives for efficient use of public resources. According to the Commission, RoR carriers receiving legacy universal service support, or CAF support to offset lost ICC revenues, must offer broadband service meeting initial CAF requirements, with actual speeds of at least 4 Mbps downstream and 1 Mbps upstream, upon their customers’ reasonable request. The Commission added: “Recognizing the economic challenges of extending service in the high-cost areas of the country served by rate-of-return carriers, this flexible approach does not require rate-of-return companies to extend service to customers absent such a request.”
Additionally, the FCC adopted the following rules to:
(1) Establish a framework to limit reimbursements for excessive capital and operating expenses, which will be implemented no later than July 1, 2012, after an additional opportunity for public comment;
(2) Encourage efficiencies by extending existing corporate operations expense limits to the existing high-cost loop support and interstate common line support mechanisms, effective January 1, 2012;
(3) Ensure fairness by reducing high-cost loop support for carriers that maintain artificially low end-user voice rates, with a three-step phase-in beginning July 1, 2012;
(4) Phase out the Safety Net Additive component of high-cost loop support over time;
(5) Address Local Switching Support as part of comprehensive ICC reform;
(6) Phase out over three years support in study areas that overlap completely with an unsubsidized facilities-based terrestrial competitor that provides voice and fixed broadband service, beginning July 1, 2012; and
(7) Cap per-line support at $250 per month, with a gradual phasedown to that cap over a three-year period commencing July 1, 2012.
Price Cap Carriers. The FCC stated that more than 83% of the approximately 18 million Americans that lack access to residential fixed broadband at or above the Commission’s broadband speed benchmark live in areas served by price cap carriers—Bell Operating Companies (BOCs) and other large and mid-sized carriers. In these areas, the CAF will introduce targeted, efficient support for broadband in two phases.
Phase I. To spur immediate broadband buildout, the FCC said it will provide additional funding for price cap carriers to extend robust, scalable broadband to hundreds of thousands of unserved Americans beginning in early 2012. “To enable this deployment, all existing legacy high-cost support to price cap carriers will be frozen, and an additional $300 million in CAF funding will be made available. Frozen support will be immediately subject to the goal of achieving universal availability of voice and broadband, and subject to obligations to build and operate broadband-capable networks in areas unserved by an unsubsidized competitor over time. Any carrier electing to receive the additional support will be required to deploy broadband and offer service that satisfies the new public interest obligations to an unserved location for every $775 in incremental support. Specifically, carriers that elect to receive this additional support must provide broadband with actual speeds of at least 4 Mbps downstream and 1 Mbps upstream, with latency suitable for real-time applications and services such as VoIP, and with monthly usage capacity reasonably comparable to that of residential terrestrial fixed broadband offerings in urban areas,” the FCC said. In addition, the FCC reduced existing support levels in any areas where a price cap company charges artificially low end-user voice rates.
Phase II. This phase of the CAF will use a combination of a forward-looking broadband cost model and competitive bidding to efficiently support deployment of networks providing both voice and broadband service for five years. The FCC expects that the CAF will expand broadband availability to millions more unserved Americans.
In the FNPRM, the FCC seeks comment on establishing a long-term broadband-focused CAF mechanism for RoR carriers, and relatedly seek comment on reducing the interstate rate-of-return from its current level of 11.25 percent. The FCC expects that RoR carriers will receive approximately $2 billion per year in total high-cost universal service support through 2017.
In areas where the incumbent declines the state-level commitment, the FCC will use competitive bidding to distribute support “in a way that maximizes the extent of robust, scalable broadband service subject to an overall budget.” In the FNPRM, the Commission proposes a structure and operational details for the competitive bidding mechanism, in which any broadband provider that has been designated as an ETC for the relevant area may participate. As noted above, the second phase of the CAF will distribute a total of up to $1.8 billion annually in support for areas with no unsubsidized broadband competitor. The FCC expects that the model and competitive bidding mechanism will be adopted by December 2012, and disbursements will ramp up in 2013 and continue through 2017.
CAF Mobility Fund. Mobile broadband carriers will receive significant legacy support during the transition to the Mobility Fund, and will have opportunities for new Mobility Fund dollars, the FCC said. It added that the providers receiving support through the CAF Phase II competitive bidding process will also be eligible for the Mobility Fund, but carriers will not be allowed to receive redundant support for the same service in the same areas. Mobility Fund recipients will be subject to public interest obligations, including data roaming and collocation requirements.
Phase I. The FCC says it will provide up to $300 million in one-time support to immediately accelerate deployment of networks for mobile voice and broadband services in unserved areas. Mobility Fund Phase I support will be awarded through a nationwide reverse auction, which the FCC expects to occur in third quarter 2012. The agency said that eligible areas “will include census blocks unserved today by mobile broadband services, and carriers may not receive support for areas they have previously stated they plan to cover. The auction will maximize coverage of unserved road miles within the budget, and winners will be required to deploy 4G service within three years, or 3G service within two years, accelerating the migration to 4G.” The FCC is also establishing a separate and complementary one-time Tribal Mobility Fund Phase I to award up to $50 million in additional universal service funding to Tribal lands to accelerate mobile voice and broadband availability in these remote and underserved areas.
Phase II. To ensure universal availability of mobile broadband services, the FCC said the Mobility Fund will provide up to $500 million per year in ongoing support. “The Fund will expand and sustain mobile voice and broadband services in communities in which service would be unavailable absent federal support. The Mobility Fund will include ongoing support for Tribal areas of up to $100 million per year as part of the $500 million total budget,” the FCC said. In the FNPRM, the FCC proposes a structure and operational details for the ongoing Mobility Fund, including the proper distribution methodology, eligible geographic areas and providers, and public interest obligations. The FCC says it expects to adopt the distribution mechanism for Phase II in 2012 with implementation in 2013.
Identical Support Rule. The FCC eliminated the identical support rule that determines the amount of support for mobile, as well as wireline, competitive ETCs. The FCC froze identical support per study area as of year-end 2011, and phased down existing support over a five-year period beginning on July 1, 2012. The FCC said the gradual phase down, in conjunction with the new funding provided by Mobility Fund Phase I and II, will ensure that an average of over $900 million is provided to mobile carriers for each of the first four years of reform (through 2015). The phase down of CETC support will stop if Mobility Fund Phase II is not operational by June 30, 2014, ensuring approximately $600 million per year in legacy support will continue to flow until the new mechanism is operational, the FCC said.
Remote Areas Fund. The FCC allocated at least $100 million per year to ensure that Americans living in the most remote areas in the nation, where the cost of deploying traditional terrestrial broadband networks is extremely high, can obtain affordable access through alternative technology platforms, including satellite and unlicensed wireless services. The FCC proposed in the FNPRM a structure and operational details for that mechanism, including the form of support, eligible geographic areas and providers, and public interest obligations. The FCC expects to finalize the Remote Areas Fund in 2012 with implementation in 2013.
Reporting and Enforcement. The FCC established a national framework for certification and reporting requirements for all universal service recipients to ensure that their public interest obligations are satisfied, that state and federal regulators have the tools they need to conduct meaningful oversight, and that public funds are expended in an efficient and effective manner. The FCC emphasized that it did not disturb the existing role of states in designating ETCs and in monitoring that ETCs within their jurisdiction are using universal service support for its intended purpose. In the FNPRM, the Commission seeks comment on whether and how it should adjust federal obligations on ETCs in areas where legacy funding is phased down. As a safeguard to protect consumers, the FCC said, it provides for an explicit waiver mechanism under which a carrier can seek relief from some or all of our reforms if the carrier can demonstrate that the reduction in existing high-cost support would put consumers at risk of losing voice service, with no alternative terrestrial providers available to provide voice telephony.
BloostonLaw will analyze the details of the FCC’s Connect America Fund and Intercarrier Compensation Order and the Further Notice of Proposed Rule-making when the text of the Order and FNPRM is released. In the meantime, clients are invited to share their initial concerns with our offices.
Please contact: Ben Dickens (202-828-5510); Gerry Duffy (202-828-5528); or Mary Sisak (202-828-5554).
FCC Aims To Phase Out Intercarrier Compensation
The second part of the FCC’s Order focuses on Intercarrier Compensation (ICC) reform. In general, the Order addresses the following:
- Access Stimulation. The FCC adopted rules to address the practice of access stimulation, in which carriers artificially inflate their traffic volumes to increase ICC payments. The FCC said its revised interstate access rules generally require competitive carriers and RoR incumbent local exchange carriers (LECs) to refile their interstate switched access tariffs at lower rates if the following two conditions are met: (1) a LEC has a revenue sharing agreement and (2) the LEC either has (a) a 3-1 ratio of terminating-to-originating traffic in any month or (b) experiences more than a 100% increase in traffic volume in any month measured against the same month during the previous year.
- Phantom Traffic. The FCC adopted rules to address “phantom traffic,” i.e., calls for which identifying information is missing or masked in ways that frustrate intercarrier billing. Specifically, the FCC required telecommunications carriers and providers of interconnected VoIP service to include the calling party’s telephone number in all call signaling, and required intermediate carriers to pass this signaling information, unaltered, to the next provider in a call path.
Bill and Keep. The FCC adopted a uniform national bill-and-keep framework as the ultimate end state for all telecommunications traffic exchanged with a LEC. Under bill-and-keep, carriers look first to their subscribers to cover the costs of the network, then to explicit universal service support where necessary. Nevertheless, the FCC said that states will have a key role in determining the scope of each carrier’s financial responsibility for purposes of bill-and-keep, and in evaluating interconnection agreements negotiated or arbitrated under the framework in sections 251 and 252 of the Communications Act. The FCC also said it will address concerns expressed by some commenters about potential fears of traffic “dumping,” and seeks comment in the FNPRM on whether any additional measures are necessary in this regard.
Multi-Year Transition. The FCC said it will focus initial reforms on reducing terminating switched access rates, which are the principal source of arbitrage problems today. It added that this approach will promote migration to all-IP networks while minimizing the burden on consumers and staying within the FCC’s universal service budget.
First, the FCC required carriers to cap most ICC rates as of the effective date of its CAF/ICC Order. To reduce the disparity between intrastate and interstate terminating end office rates, the FCC will next require carriers to bring these rates to parity within two steps, by July 2013. Thereafter, the FCC will require carriers to reduce their termination (and for some carriers also transport) rates to bill-and-keep, within six years for price cap carriers and nine for rate-of-return carriers .
The framework and transition are default rules and carriers are free to negotiate alternatives that better address their individual needs. Although the Order begins the process of reforming all ICC charges by capping all interstate rate elements and most intrastate rate elements, the FNPRM seeks comment on the appropriate transition and recovery for the remaining originating and transport rate elements. The FCC said that states will play a key role in overseeing modifications to rates in intrastate tariffs to ensure carriers are complying with the framework adopted in this Order and not shifting costs or otherwise seeking to gain excess recovery. The FNPRM also seeks comment on interconnection issues likely to arise in the process of implementing a bill-and-keep methodology for ICC.
New Recovery Mechanism. The FCC adopted a transitional recovery mechanism to mitigate the effect of reduced intercarrier revenues on carriers and facilitate continued investment in broadband infrastructure, while providing greater certainty and predictability going forward than the status quo .
The FCC will permit incumbent telephone companies to charge a limited monthly Access Recovery Charge (ARC) on wireline telephone service, with a maximum annual increase of $0.50 for consumers and small businesses, and $1.00 per line for multi-line businesses, to partially offset ICC revenue declines. The FCC adopted a strict ceiling that prevents carriers from assessing any ARC for any consumer whose total monthly rate for local telephone service, inclusive of various rate-related fees, is at or above $30. Although the maximum ARC is $0.50 per month, the FCC expects the actual average increase across all wireline consumers to be no more than $0.10-$0.15 a month, which translates into an expected maximum of $1.20-$1.80 per year that the average consumer will pay.
Additionally, the FCC said that the ARC will phase down over time as carriers’ eligible revenue decreases, and the FCC prevents carriers from charging any ARC on Lifeline customers or further drawing on the Lifeline program, so that ICC reform will not raise rates at all for these low-income consumers. The FCC also seeks comment in the FNPRM about reassessing existing subscriber line charges (SLCs), which are not otherwise implicated by this Order, to determine whether those charges are set at appropriate levels.
The FCC adopted a cap on the combination of the ARC and the existing SLC to ensure that multi-line businesses do not bear a disproportionate share of recovery and that their rates remain just and reasonable. Specifically, carriers cannot charge a multi-line business customer an ARC when doing so would result in the ARC plus the existing SLC exceeding $12.20 per line.
The FCC adopted measures to ensure that carriers must apportion lost revenues eligible for ICC recovery between residential and business lines, appropriately weighting the business lines ( i.e., according to the higher maximum annual increase in the business ARC) to prevent carriers that elect not to receive ICC CAF from recovering their entire ICC revenue loss from consumers. Carriers may receive CAF support for any otherwise-eligible revenue not recovered by the ARC. In addition, carriers receiving CAF support to offset lost ICC revenues will be required to use the money to advance the FCC’s goals for universal voice and broadband.
The FCC limited carriers’ total eligible recovery to reflect the existing downward trends on ICC revenues with declining switching costs and minutes of use. For price cap carriers, baseline recovery amounts available to each price cap carrier will decline at 10 percent annually. Price cap carriers whose interstate rates have largely been unchanged for a decade because they participated in the Commission’s 2000 CALLS plan will be eligible to receive 90% of this baseline every year from ARCs and the CAF. In those study areas that have recently converted from rate-of-return to price cap regulation, carriers will initially be permitted to recover the full baseline amount to permit a more gradual transition, but will decline to 90% recovery for these areas as well after 5 years. All price cap CAF support for ICC recovery will phase out over a three-year period beginning in the sixth year of the reform.
For RoR carriers, recovery will be calculated initially based on rate-of-return carriers’ fiscal year 2011 interstate switched access revenue requirement, intrastate access revenues that are being reformed as part of the CAF/ICC Order, and net reciprocal compensation revenues. This baseline will decline at 5% annually to reflect combined historical trends of an annual three percent interstate cost and associated revenue decline, and ten percent intrastate revenue decline, while providing for true ups to ensure CAF recovery in the event of faster-than-expected declines in demand. The FCC said that both recovery mechanisms provide carriers with significantly more revenue certainty than the status quo, enabling carriers to reap the benefits of efficiencies and reduced switching costs, while giving providers stable support for investment as they adjust to an IP world.
Treatment of VoIP Traffic. The FCC adopted a transitional framework for VoIP intercarrier compensation. The FCC determined that default charges for “toll” VoIP-public switched telephone network (PSTN) traffic will be equal to interstate rates applicable to non-VoIP traffic, and default charges for other VoIP-PSTN traffic will be the applicable reciprocal compensation rates. Under this framework, all carriers originating and terminating VoIP calls will be on equal footing in their ability to obtain compensation for this traffic.
CMRS-Local Exchange Carrier (LEC) Compensation. The FCC clarified that certain aspects of commercial mobile radio service (CMRS)-LEC compensation in order to reduce disputes and address existing ambiguity. The FCC adopted bill-and-keep as the default methodology for all non-access CMRS-LEC traffic. To provide RoR LECs time to adjust to bill-and-keep, the FCC adopted an interim transport rule for RoR carriers to specify LEC transport obligations under the default bill-and-keep framework for non-access traffic exchanged between these carriers.
The FCC also clarified the relationship between the compensation obligations in section 20.11 of the Commission’s rules and the reciprocal compensation framework, thus addressing growing concerns about arbitrage related to rates set without federal guidance. Further, in response to disputes, the FCC made clear that a call is considered to be originated by a CMRS provider for purposes of the intra-MTA rule only if the calling party initiating the call has done so through a CMRS provider. Finally, the FCC affirmed that all traffic routed to or from a CMRS provider that, at the beginning of a call, originates and terminates within the same MTA, is subject to reciprocal compensation, without exception.
IP-to-IP Interconnection. In the FNPRM, the FCC seeks comment regarding the policy framework for IP-to-IP interconnection. It also makes clear that even while the FNPRM is pending, the FCC expects all carriers to negotiate in good faith in response to requests for IP-to-IP interconnection for the exchange of voice traffic.
BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.
Reactions to FCC’s Order On Reforming USF/ICC Regime
At last week’s open meeting, all four FCC Commissioners voted for the new Universal Service Fund (USF) and intercarrier compensation rules. Chairman Julius Genachowski said that “over the next year, the Connect America Fund will bring broadband to more than 600,000 Americans who wouldn't have it otherwise. Over the following five years, millions more rural families will be connected.” He said that the Order “puts us on the path to get broadband to every American by the end of the decade – to close the broadband deployment gap which now stands at close to twenty million Americans. We are also extending the benefits of mobile broadband coverage to tens of thousands of unserved road-miles, areas where millions of Americans work, live, and travel. These are areas of frustration and economic stagnation for so many people – where mobile connections are needed but unavailable, where small businesses lose out on customers and productivity, and where people in traffic accidents can’t reach 9-1-1.” He also noted that the Order makes “mobility an independent universal service objective for the first time, providing dedicated support through the world’s first Mobility Fund. Over the next three years, we will provide almost $1 billion in funding per year for universal mobility.”
Commissioner Michael Copps said that the FCC “is repairing two broken systems and putting in place a more credible and efficient framework that will benefit consumers, carriers and the country. We are approving a framework for allocating limited resources to mitigate serious communications shortfalls. It is a framework that should give all stakeholders a clearer picture of how these systems will work going forward and that will provide predictability for rate-payers, businesses and policy-makers. I would have much preferred a higher budget for the Fund—a budget that I believe consumers would accept because of its importance to putting the nation back to work and providing our kids with the tools they need for their futures. That being said, we set out down a good and welcome road here with steps that will make a huge difference, and that is why I am able to approve the item even though it is not, in several respects that would come as a surprise no one, the precise item I would have written.”
But, Copps said his “enthusiasm here is tempered by the fact that end-user charges (under the label of ‘Access Recovery Charges’) are allowed to increase, albeit incrementally, for residential consumers. My first preference was to prevent any increase. Alternatively, we could require individual carriers to demonstrate their need for additional revenues before imposing the ARC. Perhaps some of the largest and most profitable companies should not be able to charge the ARC. However, the Commission does adopt some important measures to protect consumers even as it allows additional charges. In particular, consumers already paying local phone rates of $30 or more cannot be charged the ARC. The use of this ceiling recognizes that some early adopter states have already tackled intrastate access rates, and their citizens may already be footing a reasonable part of the bill. In the end, I am grateful that, at the very least, additional charges to end-users are not as great as they might have been, are spread over a longer period of time, and should be offset (and hopefully more than matched) by savings and efficiencies realized because of the more rational programs we begin to put in place. And I am hopeful the Commission will do everything it can to assure that these savings are passed on to consumers, although I continue to lament that the fact that we don’t have a more competitive telecommunications environment that would better ensure consumer-friendly outcomes.”
Commissioner Robert McDowell said: “Of course, there is nothing we can do to prevent future Commissions from voting to comprehensively alter what we have done and spend more money later. That would be true as a matter of law whether we called our fiscally prudent action today a ‘definitive budget,’ ‘cap,’ ‘beret’ or ‘sombrero.’ If the FCC of tomorrow wants to undo what we have done today, however, good luck with that. You’re going to need it. If history is our guide, the alacrity with which the Commission can accomplish comprehensive USF reform is nothing short of glacial. Nonetheless, I hope future Commissions will keep their caps on out of respect for fiscal responsibility and the consumers who pay for these subsidies.” McDowell added that “we are only addressing the high cost program of the distribution side of the Universal Service Fund. We are not addressing the entire Universal Service Fund, which currently distributes over $8 billion per year. To put that figure in context, USF is larger than the annual revenues of Major League Baseball. In separate proceedings, we will also reform the other USF spending programs. I cannot stress enough that all of the fiscal efficiencies that we will realize in the wake of today’s reforms will be lost if similar fiscal discipline is not applied to all Universal Service programs as well.”
Commissioner Mignon Clyburn said that an underlying theme of the Order “is shared sacrifice for the common good. After all, we are talking about the people’s money. We are accountable to them, and I am confident that the adjustments being made to the legacy USF support, and the funding mechanisms being adopted for the new Connect America Fund, are sensible. These reforms will put both the USF and ICC regimes on a sounder footing, so we may better accomplish our goal and Congress’ mandate, to serve more Americans with advanced communications networks—no matter where they live, work, or travel in this great nation.”
Clyburn added that “services cannot be truly available, if consumers cannot afford to purchase them, the devices they need to access them are not available, or if they cannot attain the skills they need to know how to use these services. I appreciate those who have called for us to address these consumer needs today, and I agree with you that we need to do more in this area. Our broadband adoption task force is working diligently to find solutions to these issues, and I fully expect that we soon will be addressing the proposal in our Lifeline proceeding to adopt pilot projects for broadband adoption to benefit low-income Americans who qualify for the Lifeline program. I look forward to our continued work with our task force, including finishing the Lifeline proceeding before the end of the year, so that we can make more headway on this significant issue for low-income consumers.”
Senate Commerce Committee Chairman Jay Rockefeller (D-W.Va.) said: “For too long, this system has been focused on supporting the technology of the last generation—basic voice telephone service. I am pleased it will now also tackle the challenge of the digital age—bringing high-speed Internet and wireless service everywhere in this country. I recognize that reform means that some stakeholders will be unhappy because they prefer the status quo, but our Nation's communications infrastructure is too important to delay reform any longer. Our economy cannot afford missing out on the opportunities broadband enables, such as expanding business, fostering innovation, increasing access to education and health care, and even transforming entertainment. And consumers deserve more than a support system built only on the technology needs of the past.”
In a joint statement, the National Telecommunications Cooperative Association (NTCA), Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO), and the Western Telecommunications Alliance (WTA) said they are hopeful that the Order “will help restore some measure of regulatory certainty and predictability in support for rural carriers by resolving a number of key issues, but must reserve judgment until complete details of the order can be analyzed. Questions surrounding the precise nature of transitions, impacts on rural consumers and service quality, and recovery of investment must still be examined and addressed.” Positive aspects of the Order “appear to include the FCC’s action to confirm that VoIP traffic falls within the ICC framework and to resolve long-standing concerns about so-called ‘phantom traffic’ and other arbitrage schemes,” the associations said. They said they are also pleased that the FCC appears to have recognized the need for an ICC restructure mechanism to help carriers of last resort continue providing affordable services in rural America.
The associations, however, “remain concerned that parts of the current reform package will have substantial adverse impacts on rural consumers and the small, community-based carriers of last resort committed to serve them. For example, the caps that the FCC plans to adopt on certain supported costs have yet to be defined. These caps could create drastic adverse impacts on companies and their customers if they are developed and implemented incorrectly. There are also indications that the FCC may depart in some ways from rate-of-return cost recovery mechanisms in the order, even if it will maintain these mechanisms as a whole. Existing rate-of-return cost recovery mechanisms have been proven effective and efficient in promoting broadband-capable investment. While the order appears to retain many of these mechanisms, it is not clear yet how the adjustments that the FCC has adopted will affect the ability of small carriers to continue investment in sustainable rural broadband.”
CTIA-The Wireless Association said that “aiming only 11% of the fund at mobile does "not appear to fully take into account the significant consumer migration to mobile broadband services."
BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.
OBAMA NOMINATES ROSENWORCEL, PAI TO FCC: President Obama has nominated Jessica Rosenworcel and Ajit Pai to the FCC. Rosenworcel is currently an adviser to Senate Commerce Committee Chairman Jay Rockefeller (D-W.Va.). She would replace Commissioner Michael Copps, when his term expires at the end of the year. Rosenworcel previously worked for Sen. Daniel Inouye (D-Hawaii) from 2007-2008, and was Copps’ legal adviser from 2003-2007. Pai is a partner in the law firm of Jenner and Block. He would fill the seat vacated by Meredith Atwell Baker earlier this year. Pau previously served as chief counsel to the Senate Judiciary Committee’s subcommittee on civil rights, and as senior counsel for the Office of Legal Policy at the Justice Department. He has also served as general counsel for Verizon. BloostonLaw contacts: Hal Mordkofsky, Ben Dickens, Gerry Duffy, and John Prendergast.
MetroPCS APPEALS FCC’s “NET NEUTRALITY” RULES: MetroPCS has filed a Notice of Appeal with the U.S. Court of Appeals for the District of Columbia Circuit to challenge the FCC’s “Net Neutrality Order.” MetroPCS said the Commission's Order purports to modify and condition the FCC licenses of all wireless service providers, including those Commission licenses held by MetroPCS, by imposing certain requirements on mobile broadband Internet access services and providers, relying on its authority to "change the license ... terms," and "to impose new requirements on existing licenses beyond those that were in place at the time of grant.” MetroPCS seeks relief on the grounds that the Order: (1) exceeds the Commission's statutory authority; (2) is arbitrary, capricious, and an abuse of discretion within the meaning of the Administrative Procedure Act; (3) violates MetroPCS' constitutional rights; and (4) is otherwise contrary to law. MetroPCS joins Verizon, Free Press, People’s Production House, Media Mobilizing Project, and Access Humboldt in challenging the Net Neutrality rules (BloostonLaw Telecom Update, October 5 and 12). BloostonLaw contacts: Hal Mordkofsky, Ben Dickens, Gerry Duffy, and John Prendergast.
FCC PROPOSES ADOPTING 2011 ANSI STANDARD FOR HAC HANDSETS: The FCC has proposed adopting the 2011 American National Standards Institute (ANSI) Standard as an applicable technical standard for evaluating the hearing aid compatibility (HAC) of wireless phones. In a Second Further Notice of Proposed Rulemaking (FNPRM), the FCC tentatively concluded that adoption of this new technical standard would not raise any major compliance issues or impose materially greater obligations with respect to newly covered frequency bands and air interfaces than those already imposed under Commission rules. The FCC also seeks comment on whether adoption of the 2011 ANSI Standard would impose new or additional costs on handset manufacturers. Comments in this WT Docket No. 07-250 proceeding will be due 30 days after publication in the Federal Register, and replies will be due 15 days thereafter. BloostonLaw contacts: Hal Mordkofsky, John Prendergast, Cary Mitchell, and Bob Jackson.
COMMENT DATES SET FOR NPRM IN BASIC SERVICE TIER ENCRYPTION PROCEEDING: The FCC has asked for comments on its Notice of Proposed Rulemaking (NPRM) regarding compatibility between cable TV systems and consumer electronics. In the NPRM, the Commission requests comment on whether to retain the basic service tier encryption prohibition for all-digital cable systems if the cable operator complies with consumer protection measures for a limited period of time to minimize subscriber disruption. Comments in this PP Docket No. 00-67 proceeding are due November 28, and replies are due December 12. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.
COMMENT CYCLE SET FOR PROPOSED RULES GOVERNING VRS PROVDERS: The FCC has set a comment cycle for its Notice of Proposed Rulemaking (NPRM) clarifying that certified video relay service (VRS) providers may rollover VRS traffic to another eligible provider only when unable to handle an unexpected and temporary surge in call traffic due to exigent circumstances, such as in the event of a natural disaster or other comparable emergency that is outside the provider's control. Specifically, the Commission proposes to provide that a certified provider may subcontract with another certified provider for, or otherwise authorize the provision by another certified provider of, communications assistants (CA) services or call center functions only in the event of an unexpected and temporary surge in call traffic due to exigent circumstances, and seeks comment on this proposal. The purpose of this rule change is to better ensure the integrity of VRS by requiring that it be provided by qualified, stand-alone providers who operate their own call centers and employ their own CAs. In all other circumstances, certified providers must provide the core components of VRS using their owned facilities and their full- or part-time employees. The Commission finds this proposed modification to be consistent with its stated VRS program goals. The Commission seeks comment on the specific types of exigent circumstances that would warrant subcontracting or similar arrangements between eligible providers. Transfer of call traffic between eligible providers should not routinely occur, but rather should be the rare exception that occurs only in exigent circumstances. Comments in this CG Docket No. 10-51 proceeding are due November 30, and replies are due December 30. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.
FCC ACTS TO MODERNIZE TV BROADCAST PUBLIC INSPECTION FILES: The FCC has taken action to modernize the way television broadcasters inform the public about how they serve their communities. The Commission adopted (1) an Order on Reconsideration that vacates a 2007 Report and Order (R&O); and (2) a Further Notice of Proposed Rulemaking (FNPRM), which proposes a new approach that would require commercial and noncommercial television stations to submit documents to an online public file hosted by the Commission. The 2007 R&O largely replaced a decades-old requirement that television stations maintain a paper public inspection file in their main studio with one that required the files be available on their stations’ Internet website, if they have one. Those rules were never put into effect because of legal challenges. The FNPRM seeks comment on proposals that would reduce burdens on the broadcast industry. The Further Notice proposes to streamline the information broadcasters will need to provide, by requiring the Commission to import information already filed with the FCC, and exempts certain items from being posted online such as letters and emails from the public. It further seeks comment on posting sponsorship identification information, now disclosed only on-air, and shared services agreements online as part of the public inspection file hosted by the Commission. Comments in this MM Docket No. 00-168 proceeding will be due 30 days after publication of the item in the Federal Register, and replies are due 15 days thereafter. BloostonLaw contact: Hal Mordkofsky.
OPEN RANGE FILES FOR BANKRUPTCY: Open Range, a Greenville, Colo., company supported by $267 million in Rural Utilities Service (RUS) loan commitments, has filed for bankruptcy. Open Range had planned to use cutting-edge technology to bring high-speed Internet service to remote rural areas, according to the Washington Post. It added that lawmakers have asked that Open Range be included in the House investigation of failed solar-panel company Solyndra, which recently filed for bankruptcy after receiving some $535 million in loan guarantees. The Post noted that Open Range’s loan was originally granted by the Bush administration. In 2008, the then-RUS Administrator James Andrews praised Open Range’s unique plan to get broadband to neglected areas by using a network of satellites owned by Globalstar. Open Range and Globalstar needed a special waiver from the FCC to partner on the project. The Post reported that three of the FCC Commissioners approved the request, saying they wanted to support the RUS loan. Those who disagreed said it was inappropriate to give one company special favors. Problems at the companies quickly emerged. An equipment partner provided shoddy technology, according to Open Range’s bankruptcy filing. The RUS money was dispersed slowly and inefficiently, the filing said. Globalstar also ran into delays in launching its satellites and failed to meet deadlines set by the FCC. On several occasions, Globalstar asked for more time. In September 2010, as it looked increasingly clear that the FCC was not going to give the venture an extension, then-RUS Administrator Jonathan Adelstein sent a letter to Genachowski warning that its entire loan was at risk if more time was not granted. The FCC turned the request down a few days later. That led the USDA to slash its original loan commitment of $267 million to Open Range in half. In a prepared statement, Adelstein said that he was “disappointed” Open Range went bankrupt, and that 99% of all RUS broadband loans are paid back.
COURT RULES AGAINST SAN FRANCISCO CELL PHONE WARNING LAW: U.S. District Judge William Alsup has blocked San Francisco's ordinance requiring retail outlets to inform consumers about the alleged effects of cell phone radiation, according to CNN. The ordinance was challenged by CTIA-The Wireless Association, which claimed the ordinance's requirement that retailers post messages about cell phone safety violated the First Amendment. Judge Alsup agreed, adding that the ordinance also failed to pass scientific muster. "Whether or not cell phones cause cancer is a debatable question and, at this point in history, is a matter of opinion, not fact. San Francisco has its opinion. The industry has the opposite opinion," wrote Judge Alsup. The fact-sheet required by the ordinance is "misleading and must be corrected," he noted. "Although each factoid in isolation may have an anchor in some article somewhere, the overall message of the fact-sheet (and the poster, for that matter) is misleading by omission in two important ways. The overall impression left is that cell phones are dangerous and that they have somehow escaped the regulatory process." CNN noted that the World Health Organization (WHO) issued a report that seemingly supported San Francisco's position in May when it labeled cell phones "possibly carcinogenic," meaning that there is "limited evidence of carcinogenicity in humans and less than sufficient evidence of carcinogenicity in experimental animals." But results of a massive, 15-year-long study released earlier this month showed absolutely no link between cell phone use and cancer, echoing the findings of numerous other studies. The judge stayed the effectiveness of the cell phone warning law until November 30 to allow the parties time to appeal his ruling. CTIA said it respectfully disagrees with the judge's determination that the City could compel distribution of the revised fact sheet as discussed in the court's opinion. CTIA is considering its options regarding further proceedings on this issue.
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