BloostonLaw Telecom Update
Published by the Law Offices of Blooston, Mordkofsky, Dickens, Duffy & Prendergast, LLP
[Portions reproduced here with the firm's permission.]
| Vol. 14, No. 3|| January 19, 2011 |
CIC Reports Due Jan. 31
Carrier Identification Code (CIC) Reports must be filed by January 31 and July 31 of each year. These reports are required of all carriers who have been assigned a CIC code by NANPA, e.g., local exchange carriers (LECs), purchasers of Feature Group B or D access, switchless resellers, and billing and collection clearinghouses. Failure to file could result in an effort by NANPA to reclaim it, although according to the Guidelines this process is initiated with a letter from NANPA regarding the apparent non-use of the CIC code. The assignee can then respond with an explanation. (Guidelines Section 6.2).
The CIC Reporting Requirement is included in the CIC Assignment Guidelines, produced by ATIS. According to section 1.4 of that document: At the direction of the NANPA, the access providers and the entities who are assigned CICs will be requested to provide access and usage information to the NANPA, on a semi-annual basis to ensure effective management of the CIC resource. (Holders of codes may respond to the request at their own election). Access provider and entity reports shall be submitted to NANPA no later than January 31 for the period ending December 31, and no later than July 31 for the period ending June 30. It is also referenced in the NANPA Technical Requirements Document, which states at 7.18.6: CIC holders shall provide a usage report to the NANPA per the industry CIC guidelines … The NAS shall be capable of accepting CIC usage reports per guideline requirements on January 31 for the period ending December 31 and no later than July 31 for the period ending June 30. These reports may also be mailed and accepted by the NANPA in paper form.
Finally, according to the NANPA website: If no local exchange carrier reports access or usage for a given CIC, NANPA is obliged to reclaim it. The semi-annual utilization and access reporting mechanism is described at length in the guidelines. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.
INSIDE THIS ISSUE
- Circuit rules AT&T is not entitled to refunds from certain USF payments.
- FCC to decide CAF, ICC issues at Feb. 8 open meeting.
- FCC OKs Comcast-NBCU merger, with conditions.
- FCC sets comment dates on NG911 proceeding.
- FCC sets comment dates on proposed rules for special CPE for low income individuals who are “deaf-blind.”
5th Circuit Rules AT&T Is Not Entitled To Refunds From Certain USF Payments
The 5th U.S. Circuit Court of Appeals in New Orleans has ruled that AT&T, a “taxpayer,” is not entitled to a refund on certain Universal Service Fund (USF) payments it received because those funds were “income” rather than “capital contributions.” More specifically, the Court said, in AT&T v. United States, that the funds AT&T received from federal and state governmental entities for providing “universal service”—viz., affordable telephone service mainly for lower-income consumers and those in high-cost rural, remote or isolated areas—or else is entitled to treat those funds as non-shareholder contributions to capital under the Internal Revenue Code, because the “universal service” support payments were income rather than capital contributions.
AT&T filed this suit in federal district court seeking tax refunds totaling $505,245,517. AT&T contended that the USF payments were capital contributions excludable from its gross income. The government filed a motion for summary judgment, arguing that the undisputed facts and applicable law demonstrate that the government payors of USF support payments did not intend to make capital contributions to AT&T in making payments from the USFs; and that they instead intended to supplement the carriers’ operating income by compensating them for some of their costs of servicing high-cost customers and by reimbursing carriers for discounts that they were required to give low-income consumers. The government further relied on the 11th Circuit’s decision in United States v. Coastal Utilities, which held that payments from USFs to support high-cost users did not constitute capital contributions.
AT&T opposed the motion, arguing that there was a genuine issue as to a material fact, viz., whether the FCC and state payors intended to make contributions to AT&T’s capital in making the USF payments, which required a trial; that the USF payments were intended to pay for the expansion and upgrading of the carriers’ network infrastructure and must be treated as capital contributions; and that Coastal Utilities was erroneously decided because the court there did not examine the requirements for a payment to be held to be a capital contribution set forth in United States v. Chicago, Burlington & Quincy Railroad Co.
According to the 5th Circuit, the district court referred the government’s motion for summary judgment to a magistrate judge, who recommended that the court should grant the motion. She indicated that “[t]he parties agree that the test for determining whether a payment is a contribution to capital is the transferor’s intent.” However, she rejected AT&T’s argument that the court is required to rigidly apply the test identified in CB&Q. Instead, the 5th Circuit said, the magistrate judge determined that the court could discern the state and federal governments’ intent by examining the method by which the FCC and state utility commissions decided to make payments from the USFs to support service to high-cost and low-income subscribers. The magistrate judge stated that these payments were intended to supplement “lost revenues” from servicing these customers and that “the cost of capital improvements is not part of the calculation of the universal service payments”; “[a]lthough the cost of capital improvements [such as building telephone lines] undoubtedly affects the amount a carrier claims, the computations of payments focuses on revenue (the amount of universal service charges), not capital improvements.” Therefore, the 5th Circuit said, because “carriers provide service at discounted rates and governments reimburse carriers for revenues lost in providing discounted services,” nothing in the payment structure for servicing high-cost or low-income customers directly implicates capital contributions.
Accordingly, the 5th Circuit continued, the magistrate judge rejected AT&T’s contention that there was a genuine issue of material fact requiring a trial. She stated that “AT&T [had] submitted a large volume of summary-judgment evidence . . . but did not explain why or how this evidence raises a material fact question” and that she had “found nothing raising a fact question about whether universal service payments to AT&T constitute non-shareholder contributions to capital.”
After reviewing the record, the recommendations of the magistrate judge, and the arguments of the parties, the district court accepted and adopted the magistrate judge’s recommendation in its entirety, and granted the government’s motion for summary judgment, rejecting AT&T’s claim for a refund of income taxes paid. AT&T appealed.
As the 5th Circuit read the statutes authorizing the USF payments, the administrative orders implementing those statutes, and the resulting regulations, the USF payments were not intended to be capital contributions to AT&T, but to be supplements to AT&T’s gross income to enable it to provide universal service programs while meeting competition newly introduced by the 1996 Act.
In this manner, the 5th Circuit said, the authorizing statutes, administrative orders and regulations demonstrate a consistent governmental intent that the USF payments were designed to provide the telephone companies with supplemental revenue to offset their extra costs in or decreased revenue resulting from providing high-cost and low-income customers with affordable telephone services. That intent was implemented by the payment mechanisms, which distribute the USF payments in a manner so as to supplement the recipient companies’ revenue from services. The Supreme Court’s decision in Texas & Pacific Railway confirms that such a regulatory and legislative framework dictates that the payments were income. Thus, the 5th Circuit affirmed the judgment of the district court.
BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.
FCC To Decide Connect America Fund, Intercarrier Comp Issues at February 8 Open Meeting
At its February 8 open meeting, the FCC has tentatively scheduled to consider the following items:
Connect America Fund and Intercarrier Compensation Reform NPRM: A Notice of Proposed Rulemaking to get broadband to all of rural America and spur investment and job creation, by modernizing the Universal Service Fund and intercarrier compensation (ICC) system while cutting waste and inefficiency. Through the use of market-driven, incentive-based policies and increased accountability, the NPRM proposes near-term support for broadband deployment in unserved areas and measures to address ICC arbitrage, as well as a long-term transition from current high-cost support and ICC mechanisms to a single, fiscally responsible Connect America Fund.
Data Innovation Initiative Presentation: A presentation on the status of the comprehensive reform efforts to modernize and streamline how the Commission collects, uses, and disseminates data in order to improve the agency’s fact-based, data-driven decision-making.
Broadband and Voice Data Modernization NPRM: A Notice of Proposed Rulemaking, initiated as part of the Commission’s Data Innovation Initiative, to streamline and modernize the collection of data via Form 477, in order to ensure that the data the Commission collects enables informed policymaking while minimizing burdens on voice and broadband service providers.
CEI/ONA Reporting Elimination NPRM: A Notice of Proposed Rulemaking, initiated as part of the Commission’s Data Innovation Initiative, to eliminate the legacy narrowband comparably efficient interconnection (CEI) and open network architecture (ONA) reporting requirements that currently apply to the Bell Operating Companies (BOCs), due to a lack of continuing relevance and utility.
BloostonLaw contacts: Hal Mordkofsky, Ben Dickens, Gerry Duffy, and John Prendergast.
FCC OKs Comcast-NBC Merger, With Conditions
The FCC has granted—with conditions and enforceable commitments—approval of the assignment and transfer of control of broadcast, satellite, and other radio licenses from General Electric Company (GE) to Comcast Corporation. The approval will allow GE and Comcast to create a joint venture involving NBC Universal, Inc. (NBCU) and Comcast. An Order further explaining the Commission’s reasoning and the conditions and commitments will be issued shortly. As part of the merger, Comcast-NBCU will be required to take affirmative steps to foster competition in the video marketplace. In addition, Comcast-NBCU will increase local news coverage to viewers; expand children's programming; enhance the diversity of programming available to Spanish-speaking viewers; offer broadband services to low-income Americans at reduced monthly prices; and provide high-speed broadband to schools, libraries and underserved communities, among other public benefits. More specifically, the conditions imposed by the Commission address potential harms posed by the combination of Comcast, the nation’s largest cable operator and Internet service provider, and NBCU, which owns and develops some of the most valuable television and film content. These targeted conditions and commitments, which generally will remain in effect for seven years, include:
Ensuring Reasonable Access to Comcast-NBCU Programming for Multichannel Distribution. Building on successful requirements adopted in prior, similar transactions, the Commission is establishing for rival multichannel video programming distributors (MVPDs) an improved commercial arbitration process for resolving disputes about prices, terms, and conditions for licensing Comcast-NBCU’s video programming. The Commission is also requiring Comcast-NBCU to make available through this process its cable channels in addition to broadcast and regional sports network programming.
Protecting the Development of Online Competition. Recognizing the risks this transaction could present to the development of innovative online video distribution services, the Commission has adopted conditions designed to guarantee bona fide online distributors the ability to obtain Comcast-NBCU programming in appropriate circumstances. These conditions respond directly to the concerns voiced by participants in the proceeding — including consumer advocates, online video distributors (OVDs), and MVPDs — while respecting the legitimate business interests of the Applicants to protect the value of their content. Among other things, the Commission requires that Comcast and/or Comcast-NBCU:
- Provides to all MVPDs, at fair market value and non-discriminatory prices, terms, and conditions, any affiliated content that Comcast makes available online to its own subscribers or to other MVPD subscribers.
- Offers its video programming to legitimate OVDs on the same terms and conditions that would be available to an MVPD.
- Makes comparable programming available on economically comparable prices, terms, and conditions to an OVD that has entered into an arrangement to distribute programming from one or more of Comcast-NBCU’s peers.
- Offers standalone broadband Internet access services at reasonable prices and of sufficient bandwidth so that customers can access online video services without the need to purchase a cable television subscription from Comcast.
- Does not enter into agreements to unreasonably restrict online distribution of its own video programming or programming of other providers.
- Does not disadvantage rival online video distribution through its broadband Internet access services and/or set-top boxes.
- Does not exercise corporate control over or unreasonably withhold programming from Hulu.
Access to Comcast’s Distribution Systems. In light of the significant additional video programming Comcast will control after the merger with NBCU—programming that may compete with third-party programming Comcast currently carries or otherwise would carry on its MVPD service—the Commission requires that Comcast not discriminate in video programming distribution on the basis of affiliation or non-affiliation with Comcast-NBCU. Moreover, if Comcast “neighborhoods” its news (including business news) channels, it must include all unaffiliated news (or business news) channels in that neighborhood. The Commission also adopts as a condition of the transaction Comcast’s voluntary commitment to provide 10 new independent channels within eight years on its digital tier.
Protecting Diversity, Localism, Broadcast and Other Public Interest Concerns. The Commission is also imposing conditions and accepting voluntary commitments concerning a numbers of other public interest issues, including diversity, localism, and broadcasting, among others. For example, to protect the integrity of over-the-air broadcasting, network-affiliate relations, and fair and equitable retransmission consent negotiations with the joint venture, the Commission adopts a series of conditions that were independently negotiated between the Applicants and various network affiliates.
The Applicants have also made a number of additional voluntary commitments, many of which the Commission has adopted as conditions to the transaction’s approval. Most of these commitments are geared towards enhancing the public interest as a result of the joint venture. These commitments include:
Broadband Adoption and Deployment. Comcast will make available to approximately 2.5 million low income households: (i) high-speed Internet access service for less than $10 per month; (ii) personal computers, netbooks, or other computer equipment at a purchase price below $150; and (iii) an array of digital-literacy education opportunities. Comcast will also expand its existing broadband networks to reach approximately 400,000 additional homes, provide broadband Internet access service in six additional rural communities, and provide free video and high-speed Internet service to 600 new anchor institutions, such as schools and libraries, in underserved, low-income areas.
Localism. To further broadcast localism, Comcast-NBCU will maintain at least the current level of news and information programming on NBC’s and Telemundo's owned-and-operated (“O&O”) broadcast stations, and in some cases expand news and other local content. NBC and Telemundo O&O stations also will provide thousands of additional hours of local news and information programming to their viewers, and some of its NBC stations will enter into cooperative arrangements with locally focused nonprofit news organizations. Additional free, on-demand local programming will be made available as well.
Children’s Programming. Comcast-NBCU will increase the availability of children’s programming on its NBC and Telemundo broadcast stations, and add at least 1,500 more choices to Comcast’s on-demand offerings for children. It will provide additional on-screen ratings information for original entertainment programming on the Comcast-NBCU broadcast and cable television channels and improved parental controls. Comcast-NBCU also will restrict interactive advertising aimed at children 12 years old and younger and provide public service announcements addressing children’s issues.
Programming Diversity. Building on Comcast’s voluntary commitments in this area, we require Comcast-NBCU to increase programming diversity by expanding its over-the-air programming to the Spanish language-speaking community, and by making NBCU’s Spanish-language broadcast programming available via Comcast’s on demand and online platforms. As noted above, Comcast also will add at least 10 new independent channels to its cable offerings.
Public, Educational, and Governmental (PEG) Programming. Comcast will safeguard the continued accessibility and signal quality of PEG channels on its cable television systems and introduce new on demand and online platforms for PEG content.
BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.
FCC SETS COMMENT DATES ON NG911 PROCEEDING: The FCC has established a comment cycle for its Notice of Inquiry (NOI) initiating a comprehensive proceeding to address how Next Generation 911 (NG911) can enable the public to obtain emergency assistance by means of advanced communications technologies beyond traditional voice-centric devices (BloostonLaw Telecom Update, September 29, 2010). The NOI seeks to gain a better understanding of how the gap between the capabilities of modern networks and devices and today's 911 system can be bridged and seeks comment on how to further the transition to IP-based communications capabilities for emergency communications and NG911. Comments in this PS Docket No. 10-255 proceeding are due February 28, and replies are due March 14. As recommended in the National Broadband Plan, the NOI initiates a comprehensive proceeding to address how NG911 can enable the public to obtain emergency assistance by means of advanced communications technologies beyond traditional voice-centric devices. In the telecommunications industry overall, competitive forces and technological innovation have ushered in an era of advanced Internet-Protocol (IP)-based devices and applications that have vastly enhanced the ability of the public to communicate and send and receive information.
At the same time, the legacy circuit-switched 911 system is unable to accommodate the capabilities embedded in many of these advanced technologies, such as the ability to transmit and receive photos, text messages, and video. Accordingly, in this proceeding, the FCC seeks to gain a better understanding of how the gap between the capabilities of modern networks and devices and today's 911 system can be bridged. The FCC also seeks comment on how to further the transition to IP-based communications capabilities for emergency communications and NG911. BloostonLaw contacts: Hal Mordkofsky, Ben Dickens, Gerry Duffy, and John Prendergast.
FCC SEEKS COMMENT ON PROPOSED RULES FOR SPECIAL CPE FOR LOW INCOME INDIVIDUALS WHO ARE “DEAF-BLIND”: The FCC has issued a Public Notice requesting comment on proposed rules to create an effective and efficient process governing the distribution of specialized customer premises equipment (CPE) to enhance and promote access to telecommunications and related communications services by low-income individuals who are deaf-blind. Comments in this CG Docket No. 10-210 proceeding are due February 4, and replies are due February 14. The Twenty-First Century Communications and Video Accessibility Act of 2010 (CVAA), signed into law by President Obama on October 8, 2010, requires the FCC to take various measures to ensure that people with disabilities have access to emerging communications technologies in the 21st Century. Section 105 of this law directs the Commission to establish rules within six months of enactment of the new statute that define as eligible for relay service support those programs approved by the Commission for the distribution of specialized customer premises equipment (specialized CPE) to people who are deaf-blind. The goal of this National Deaf-Blind Equipment Distribution Program (NDBEDP) is to make telecommunications service, Internet access service, and advanced communications, including interexchange services and advanced telecommunications and information services, accessible by low income individuals who are deaf-blind. The Commission issued a Public Notice on November 3, 2010, seeking comment on a range of issues related to the Commission’s implementation of the requirement for an NDBEDP. The comments filed in response to this Public Notice informed the Commission’s preparation of this Notice of Proposed Rulemaking (NPRM). BloostonLaw contacts: Ben Dickens, Gerry Duffy, Cary Mitchell and Mary Sisak.
SENATOR HUTCHISON ANNOUNCES RETIREMENT: Texas Republican Sen. Kay Bailey Hutchison, who had been the Ranking Member of the Senate Commerce Committee, has announced she will not seek a fourth term, the first incumbent up for reelection in 2012 to retire. With Hutchison formally ending her political career, attention will immediately turn to Lt. Gov. David Dewhurst who most handicappers regard as the frontrunner if he decides to seek the open seat, according to various press reports. Dewhurst received more than 3 million votes on election night 2010 — eclipsing even Republican Gov. Rick Perry's total — and is widely seen as the most popular elected official in the state. Dewhurst also has massive personal wealth — a huge advantage in such a large and expensive state as Texas. In a statement released a few hours after Hutchison's announcement, Dewhurst said: "While my focus remains on the challenges we face here at the state level and making this upcoming session successful, I fully intend to explore running for the United States Senate, and should I run, I will run with the intention of winning and continuing to serve the people of Texas just as I have done throughout my career." It is also widely believed that Connecticut Sen. Joe Lieberman (I) will not seek a fifth term in 2012, according to two Democratic sources familiar with the decision. BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.
STEARNS PLANS TO REINTRODUCE ONLINE PRIVACY BILL: Rep. Cliff Stearns (R-Fla.) is planning to reintroduce an online privacy bill he worked on last year with former Rep. Rick Boucher (D-Va.). The draft legislation would address concerns raised about the measure in comments provided to the lawmakers last year, according to the National Journal. "Rep. Stearns has taken those comments and is working with stakeholders on developing legislation that he plans to offer soon," a Stearns spokesman said. The draft Boucher-Stearns bill would have required websites to inform users how they collect and use personally identifiable information. Under the bill, consumers, for the most part, would have to opt out of having such information collected, although it would mandate that users opt in before websites could collect sensitive information such as financial and health data or share personally identifiable data with some third parties. Third-party ad networks would be exempt from the opt-in requirement as long as they adhere to certain guidelines.
This newsletter is not intended to provide legal advice. Those interested in more information should contact the firm.