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. 36 || October 5, 2011 |
Ownership Changes May Require FCC Approval
We want to remind our clients that many types of reorganizations and other transactions require prior FCC approval; and given the frequent need to implement such transactions by the end of the year, companies engaging in such transactions should immediately evaluate whether they must file an application for FCC approval, and obtain a grant, before closing on a year-end deal. Transactions requiring prior FCC approval include (but are not limited to):
- Any sale of a company that holds FCC licenses;
- A change in the form of organization from a corporation to an LLC, or vice versa, even though such changes are not regarded as a change in entity under state law.
- Any transfer of stock that results in a shareholder attaining a 50% or greater ownership level, or a shareholder relinquishing a 50% or greater ownership level;
- Any transfer of stock, partnership or LLC interests that would have a cumulative effect on 50% or more of the ownership.
- The creation of a holding company or trust to hold the stock of an FCC license holder;
- The distribution of stock to family members, if there are changes to the control levels discussed above;
- The creation of new classes of stockholders that affect the control structure of an FCC license holder.
- Certain minority ownership changes can require FCC approval ( e.g., transfer of a minority stock interest, giving the recipient extraordinary voting rights or powers through officer or board position).
Fortunately, transactions involving many types of licenses can often be approved on an expedited basis. But this is not always the case, especially if microwave licenses are involved. Also, in some instances Section 214 authority is required. Clients planning year-end transactions should contact us as soon as possible to determine if FCC approval is needed. BloostonLaw contacts: Hal Mordkofsky, Ben Dickens, Gerry Duffy, John Prendergast, and Richard Rubino.
On October 6, at 10:30 am, FCC Chairman Julius Genachowski will deliver remarks on proposed reforms to the Universal Service Fund (USF) and Intercarrier Compensation (ICC) system. Later that day, staff will circulate a USF/ICC reform order to the Commissioners for their consideration at the Commission’s October 27 open meeting. The Chairman’s remarks will be broadcast at www.fcc.gov/live .
INSIDE THIS ISSUE
- Verizon, Free Press sue FCC over “Net Neutrality” rules.
- FCC sets comment dates on revising rules under RFA.
- Terry bill would allow robocalls to cellphones.
- FCC establishes comment cycle for NPRM on program carriage rules.
- Reminder: commercial broadcast licensees must file 2011 biennial ownership reports.
Verizon, Free Press Sue FCC Over “Net Neutrality” Rules
Humboldt Access Also Files Lawsuit
Verizon Communications has filed a lawsuit in the U.S. Court of Appeals for the District of Columbia Circuit, challenging the FCC’s “Net Neutrality” or “Open Internet” rules on the grounds that the FCC does not have such broad authority “to impose potentially sweeping and unneeded regulations on broadband networks and services and on the Internet itself.” Verizon said “this assertion of authority is inconsistent with the statute and will create uncertainty for the communications industry, innovators, investors and consumers."
Advocacy group Free Press filed its lawsuit challenging the Net Neutrality rules on the grounds that they don't protect wireless traffic from interference by phone companies. The suit was filed in the 1st U.S. Circuit Court of Appeals in Boston. The Net Neutrality rules, which prohibit Internet service providers (ISPs) from either favoring or discriminating against Internet content and services, were adopted last December, and will take effect on November 20 (BloostonLaw Telecom Update, September 28 and September 21).
Free Press argues that the rules are discriminatory because “they fail to protect wireless users from discrimination, and they let mobile providers block innovative applications with impunity." The group also argues that the proposed rules will impact those who rely on the mobile Internet as their only Internet connection, such as younger users and market segments such as users of prepaid services. In short, Free Press says that the distinction between landline and wireless Internet access is arbitrary. Specifically, Free Press is asking the 1st Circuit to find that the rules are "arbitrary and capricious, an abuse of discretion or otherwise contrary to law.”
Another advocacy group, Humboldt Access , has filed a similar suit in the 9 th U.S. Circuit Court of Appeals in San Francisco.
Earlier this year, Verizon and MetroPCS Communications filed lawsuits in the D.C. Circuit, challenging the Net Neutrality rules on the grounds that the FCC’s Order unlawfully modified their wireless licenses. They also argued that the FCC does not have authority to regulate Internet traffic (BloostonLaw Telecom Update, February 2 and January 26). Those lawsuits were thrown out by an appeals court that said they were filed prematurely. Verizon and MetroPCS can now refile their appeals because the rules have been published in the Federal Register.
Congressional Response :
Sen. Kay Bailey Hutchison (R-Texas), Ranking Member of the Senate Commerce, Science and Transportation Committee, recently denounced the FCC’s Net Neutrality rules. She said: “I’m very disappointed that the FCC has decided to move forward with its misguided net neutrality order. Companies and industries that use broadband communications have flourished over the last decade without government intervention, yet the FCC has chosen to ‘fix’ a problem that does not exist. Rather than imposing new, unnecessary regulations on one of the few thriving sectors of our economy, government should get out of the way, and allow new jobs and investment in broadband technologies. In order to turn back the FCC’s onerous net neutrality restrictions, I will push for a Senate vote this fall on my resolution of disapproval.”
On the other hand, Committee Chairman John D. (Jay) Rockefeller IV (D-W.Va.) said: "Americans want the Internet to stay free and open. After a long, deliberative process, the FCC came up with balanced rules that promote transparency and prohibit discrimination. I am disappointed that my colleagues want to use a legislative short cut to unravel these rules. I fear their actions will do nothing more than impede the investment and innovation we need in our digital economy."
BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.
FCC Sets Comment Dates on Revising Rules Under RFA
The FCC has set comment dates for its review of rules under section 610 of the Regulatory Flexibility Act (RFA). The purpose of the review is to determine whether Commission rules whose ten-year anniversary dates are in the year 2010 should be continued without change, amended, or rescinded in order to minimize any significant impact the rules may have on a substantial number of small entities (BloostonLaw Telecom Update, March 9). Upon receipt of comments from the public, the Commission will evaluate those comments and consider whether action should be taken to rescind or amend the relevant rules. Comments in this CB Docket No 11-72 proceeding are due November 28 . There is no opportunity for reply comments.
Pursuant to the RFA, the FCC has published a plan for the review of rules adopted by the agency in calendar year 1999 which have, or might have, a significant economic impact on a substantial number of small entities. These rules include universal service, wireless, customer proprietary network information (CPNI), local number portability (LNP), and other regulations that affect small businesses adopted a decade ago. The purpose of the review is to determine whether such rules should be continued without change, or should be amended or rescinded, consistent with the stated objective of section 610 of the RFA, to minimize any significant economic impact of such rules upon a substantial number of small entities.
The FCC plans to review these regulations during the next 12 months. In succeeding years, as here, the Commission will publish a list for the review of regulations adopted 10 years preceding the year of review. In reviewing each rule in a manner consistent with the requirements of section 610 the FCC will consider the following factors:
(a) The continued need for the rule;
(b) The nature of complaints or comments received concerning the rule from the public;
(c) The complexity of the rule;
(d) The extent to which the rule overlaps, duplicates, or conflicts with other federal rules and, to the extent feasible, with state and local governmental rules; and
(e) The length of time since the rule has been evaluated or the degree to which technology, economic conditions, or other factors have changed in the area affected by the rule.
Areas that may be of interest to our clients include:
- Part 1 – Rules concerning content of wireless applications and frequency coordination with Canada;
- Part 2 – Equipment Authorization Procedures involving procedures and conditions under which applications can be granted, dismissed, limited or revoked;
- Part 6 – Rules which concern access to telecommunications service, telecommunications equipment and CPE by persons with disabilities and enforcement provisions;
- Part 7 – Rules which addresses access to voicemail and interactive menu services by persons with disabilities;
- Part 20 – Rules which established the 218 – 219 MHz Service as a CMRS service;
- Part 22 – Rules which amended the paging rules in connection with the paging auctions and the cellular rules in connection with the handling of 911 calls by analog cell phones;
- Part 42 Rules involving preservation of records of communication common carriers in connection with interexchange services;
- Part 43 – Rules which requires the disclosure of certain contracts and arrangements between US carriers and foreign carriers with the FCC and the requirement for confidential treatment;
- Part 54 – Universal Service for High Cost, Health Care and Administration of Universal Service;
- Part 61 – Tariffs – Definitions adopted to define terms used elsewhere in the FCC’s rules applicable to interstate, domestic and interexchange services and rules for dominant non-dominant carriers (domestic and international);
- Part 63 – Elimination of Section 214 requirement for extension of lines, in accordance with Section 402 of the Telecom Act of 1996 and provide rules for International 214 authorizations;
- Part 64 – Rules which require operator services providers to meet requirements of Communications Act when filing international tariffs, allocation of costs, eliminate unauthorized changes in subscriber’s telecommunications carriers (slamming/cramming), protect CPNI and provide for truth in billing;
- Part 68 – Requirement that certain telephone handsets be labeled with “HAC” to indicate consumers that the handset is hearing aid compatible;
- Part 69 – modifications to access charges and pricing flexibility;
- Part 80 – Rules involving co-channel interference for Public Coast VHF stations;
- Part 87 – technical requirements for aircraft stations an multicom stations; and
- Part 90 – Rules involving the public safety pool and the industrial/business pool.
Some of the above rules may be candidates for deletion or change, either because they have become outdated (such as rules governing analog cellular) or because they have not been successful. If there is a particular rule that your company would like to see changed or eliminated, please contact the firm, and advise us accordingly.
BloostonLaw contacts: Hal Mordkofsky, Ben Dickens, Gerry Duffy, John Prendergast and Richard Rubino.
TERRY BILL WOULD ALLOW ROBOCALLS TO CELLPHONES: Rep. Lee Terry (R-Neb.) has introduced HR 3035, the Mobile Informational Call Act of 2011, which would allow robocalls to cellphones “for informational purposes.” The bill would: (1) exempt informational calls from the restriction on auto-dialer and artificial/prerecorded voice calls to wireless numbers; (2) clarify the "prior express consent" requirement to ensure that the Telephone Consumer Protection Act (TCPA) facilitates communications between consumers and the businesses with which they choose to interact; and (3) excludes from the restriction equipment that merely stores predetermined numbers or that has latent (but unused) capacity to generate random or sequential numbers. According to supporters, the proposed legislation would modernize the TCPA by enacting limited revisions to facilitate the delivery of time-sensitive consumer information to mobile devices, while continuing to protect wireless consumers from unwanted telemarketing calls. Businesses increasingly rely on advanced communications technologies to convey timely and important information to consumers. Supporters of the bill say these calls notify consumers about threats such as data breaches and fraud alerts, provide timely notice of flight and service appointment cancellations and drug recalls, and protect consumers against the adverse consequences of failure to make timely payments on an account. Unfortunately, the supporters argue, the TCPA restricts informational calls that utilize assistive technologies to mobile devices even though the law permits such calls to be made to wireline phones. As a result, the supporters say, the approximately 40% of American consumers who identify their mobile device as their primary or exclusive means of communication do not receive many of these calls. This restriction imposes unwarranted costs and inconveniences on consumers, businesses, and the economy as a whole, the supporter say. They add that when enacted in 1991, Congress intended this restriction to protect consumers against the then-daunting per-minute costs and privacy concerns associated with unsolicited incoming calls from telemarketers. But this restriction applies equally to informational calls, it is noted. In addition, supporters of the bill say, most wireless consumers are now covered by flat-rate plans, and even for those who are not, technological advances and increased competition have greatly reduced per-minute charges. A strong consumer-protection environment depends on appropriate communication between businesses and their customers. As consumers increasingly rely on wireless phones as their primary, or even sole, means of communication, the TCPA's outdated restriction on the use of assistive technologies in contacting wireless consumers for non-telemarketing purposes is now doing far more harm than good for the consumers such restriction was intended to protect, the supporters say. Detractors, of course, point to the potential for a flood of unwanted calls to wireless phones, costing time and in many cases additional usage charges. BloostonLaw contacts: Hal Mordkofsky, John Prendergast, Cary Mitchell.
FCC SETS COMMENT DATES ON NANC LNP RECOMMENDATIONS FOR NON-SIMPLE PORTS: The FCC has set comment dates for the submission by the North American Numbering Council (NANC) recommending a set of standard thresholds and intervals for non-simple ports and “projects”—port requests that involve a large quantity of telephone numbers. Specifically, the Commission seeks comment on whether the thresholds and processing timelines for non-simple ports and projects are appropriate and whether the Commission should adopt the recommendation as a rule. Comments in this WC Docket No. 07-244, CC Docket No. 95-116; and DA 11-1558 proceeding are due October 31, and replies are due November 29. On June 20, 2011, the NANC submitted a report on local number portability (LNP) Best Practice 67. The Report notes that since the inception of LNP, service providers have imposed varying thresholds, or limits, on the quantity of telephone numbers they will port within four business days—the porting interval for non-simple ports. To address these variations, Best Practice 67 recommends a set of standard thresholds and intervals for non-simple ports and “projects”—port requests that involve a large quantity of telephone numbers. The NANC notes that at present, port requests above the service provider's maximum threshold can result in an undetermined due date that is ultimately negotiated between the old and new service providers. There is currently no industry-wide standard on what is considered a “project” by the old service provider for the purpose of porting numbers. Best Practice 67 addresses this issue. The NANC also recommends revisions to the NANC LNP Provisioning Flows in support of Best Practice 67. The Commission seeks comment on Best Practice 67 and the proposed provisioning flows. Specifically, the Commission seeks comment on whether the thresholds and processing timelines for non-simple ports and projects are appropriate and whether the Commission should adopt Best Practice 67 as a rule. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.
FCC ESTABLISHES COMMENT CYCLE FOR NPRM ON PROGRAM CARRIAGE RULES: The FCC has set comment dates for its Notice of Proposed Rulemaking (NPRM) to revise its Program Carriage Rules. In the Program Carriage NPRM, the Commission seeks comment on proposed revisions to or clarifications of the program carriage rules, which are intended to improve the Commission’s procedures and to advance the goals of the program carriage statute. Comments in this MB Docket No. 11-131 proceeding are due November 28, and replies are due December 28. In 1993, the FCC adopted rules pertaining to carriage of video programming vendors by multichannel video programming distributors (MVPDs), known as the “program carriage rules.” The rules are intended to benefit consumers by promoting competition and diversity in the video programming and video distribution markets. In this NPRM, the FCC seeks comment on proposed revisions to or clarifications of the program carriage rules, which are intended to further improve the Commission's procedures and to advance the goals of the program carriage statute. BloostonLaw contact: Gerry Duffy.
REMINDER: COMMERCIAL BROADCAST LICENSEES MUST FILE 2011 BIENNIAL OWNERSHIP REPORT: The FCC has issued a reminder that all commercial broadcast licensees must file a 2011 biennial ownership report. The filing window for the 2011 biennial Ownership Report for Commercial Broadcast Stations opens on October 1, and closes on December 1. All commercial AM, FM, TV, LPTV, and Class A stations, as well as all entities with attributable interests in such stations, are required to file a Form 323 on or before December 1. Filings must include information reflecting ownership interests existing as of October 1. The form must be filed using the FCC’s CDBS database. Paper submissions will not be accepted. To assist filers, the Commission’s website contains detailed information on Form 323, including a list of “The Most Common Form 323 Filing Errors,” compiled based upon experience during the last biennial filing period. Affected parties should visit http://www.fcc.gov/form323 for guidance on completing the 2011 Form 323 submission. The FCC encourages filers to use care in preparing their submissions and to submit their Form 323 filings well in advance of the deadline whenever possible. BloostonLaw contacts: Hal Mordkofsky, Gerry Duffy, John Prendergast, and Richard Rubino.
FCC PROPOSES AMENDING DEFINITION OF “AUDITORY ASSISTANCE DEVICE”: The FCC has asked for comment on a proposal to amend the definition of “auditory assistance device” in the Commission's rules to allow such devices to be used by anyone at any location for simultaneous language interpretation, where the spoken words are translated continuously in near real time. The FCC adopted this Notice of Proposed Rulemaking (NPRM) in response to a petition for declaratory ruling filed by Williams Sound Corporation, a provider of wireless auditory assistance devices. The current definition restricts the use of part 15 auditory assistance devices that operate in the 72.0-73.0 MHz, 74.6-74.8 MHz, and 75.2-76.0 MHz bands (72-76 MHz bands) to auditory assistance to a handicapped person or persons; such devices may be used for auricular training in an educational institution, for auditory assistance at places of public gatherings, such as a church, theater, or auditorium, and to handicapped individuals, only, in other locations. The proposed amendment would permit part 15 auditory assistance devices that operate in the 72-76 MHz bands to be used by anyone at any location for simultaneous language interpretation. Comments in this ET Docket No. 10-26 proceeding are due November 4, and replies are due November 21. BloostonLaw contacts: Hal Mordkofsky, John Prendergast, and Richard Rubino.
This newsletter is not intended to provide legal advice. Those interested in more information should contact the firm.